New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 3 - AUTOMOBILE INSURANCE
Subchapter 16A - PRIVATE PASSENGER AUTOMOBILE INSURANCE TERRITORIAL RATING PLANS
Section 11:3-16A.5 - Territorial rating plan filing requirements

Universal Citation: NJ Admin Code 11:3-16A.5

Current through Register Vol. 56, No. 24, December 18, 2024

(a) An insurer's filing shall indicate which of the maps permitted by N.J.A.C. 11:3-16A.3(b) it intends to use. The filing shall be submitted on 3 1/2 inch diskette, zip disk or CD, and in hard copy.

(b) Filers shall provide the following New Jersey direct data by coverage and by zip code for basic and standard policies:

1. Not less than three-year:
i. Basic or total limits incurred losses, net of subrogation and other recoveries. Total limits losses may include PIP losses subject to reimbursement pursuant to N.J.S.A. 17:30A-8a(11);

ii. Paid or incurred allocated loss expenses;

iii. Earned exposures;

iv. Incurred claims; and

v. Average rating factors (for filers submitting on a pure premium methodology);

2. The most recent year's on-level earned premium;

3. The most recent year's in-force exposures;

4. The current base rates;

5. Indicated base rates by territory; and

6. Proposed base rates by territory.

(c) An insurer that uses the common territory map and relativities or the approved territory map of a rating organization and its relativities is only required to file the items in (b)2 through 4 and (b)6 above to demonstrate the rate neutrality.

(d) The Commissioner may request any additional information that may be necessary to evaluate the territorial plan filing.

(e) For filers submitting based on a pure premium methodology, the indicated territorial relativity from a filer's own historical data shall be adjusted to take into account any differences in the distribution of business between territories that is already reflected in other rating variables. This can be done by dividing the historical incurred losses in (b)1i above by the average rating factor in (b)1v above by zip code by year. Average factors in (b)1v above shall, if using basic limits data, include all rating factors combined other than territory and increased limits factors, and shall, if using total limits data, include all rating factors other than territory.

(f) The credibility of the filer's data shall be based upon a full credibility standard of 3,000 claims by territory. Partial credibility by territory shall be calculated based upon the square root of the filer's number of claims by territory divided by the full credibility standard.

(g) To the extent that the filer's own historical experience by territory is less than 100 percent credible, the filer shall weight the territorial indexes from its own experience with an alternate territorial index.

1. If the filer uses the common territory map, then the alternate index shall consist of the territorial rate relativities filed by the Commission and approved by the Commissioner.

2. If the filer uses a territory map approved for a rating organization, the alternate index shall be that of the members of the rating organization.

3. If an insurer files its own territory map, then the alternate index shall consist of either the prior average indicated or approved relativity applicable to the filer, or the indicated or approved relativities based on relevant industry data that may be available for its use for the zip codes making up the proposed territory, with the relativities weighted together by the latest year of exposures in each zip code by coverage.

(h) Pursuant to N.J.S.A. 17:29A-48(e), territories created in accordance with this subchapter shall not result in disproportionate differences in territorial relativity factors between contiguous territories with similar driving environments or mix of driving environments.

(i) Pursuant to N.J.S.A. 17:29A-36, the initial territorial relativity for any territory shall not be significantly disproportionate to the current relativity for that territory. For the purposes of this subchapter, the current relativity means the relativity that is in effect on the date of the initial filing pursuant to this subchapter. The current relativity shall be calculated for each zip code and compared with the indicated or selected relativity in accordance with (h) above for the territory in which the zip code is now located. The territorial relativity for a zip code shall be based on a Statewide average relativity of 1.000.

(j) Insurers shall not be required to make separate filings of basic policy data. However, filings made in accordance with this subsection shall comply with the provisions of N.J.S.A. 17:29A-36a concerning the basic policy.

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