A3247

An Act concerning homeowners insurance and supplementing chapter 36 of Title 17 of the Revised Statutes.

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

1. a. The Commissioner of Banking and Insurance shall promulgate rules and regulations establishing a plan for the provision of insurance coverage to homeowners who are unable to procure homeowners insurance through ordinary methods. The plan shall give special consideration to homeowners who are unable to procure coverage due to the presence or threat of flooding to their property. Every insurer admitted to transact and transacting any line of insurance in the State of New Jersey shall participate in the plan and provide insurance coverage to the extent required in the rules and regulations.

b. The governing board of any plan established pursuant to the commissioner's rules and regulations shall continue to exercise administrative authority, subject to the commissioner's oversight, as necessary to ensure the plan's efficient operation, including, but not limited to: the authority to investigate complaints and hear appeals from applicants, insureds, producers, servicing carriers or participants about any matter pertaining to the plan's proper administration, as well as the authority to appoint subcommittees to hear appeals. Any determination of an appeal by a plan's governing board shall be subject to review by the commissioner on the record below, and shall not be considered a contested case under the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). The commissioner's determination shall be a final order and shall be subject to review by the Superior Court.

c. As used in this act, "homeowners insurance" means personal lines insurance provided against loss to real and personal property as defined in the standard fire policy and extended coverage endorsement thereon, a dwelling policy, the homeowners multiple peril policy, insurance against the perils of vandalism, malicious mischief, burglary, or theft, or liability insurance or any combination thereof, or any other such policy delivered, issued or renewed or approved by the commissioner for issuance, delivery or renewal in this State.

2. a. The plan established pursuant to section 1 of this act shall provide:

(1) for a rating system which shall produce rates for each coverage which are adequate for the safeness and soundness of the plan, and are not excessive nor unfairly discriminatory with regard to risks in the plan involving essentially the same hazards and expense elements, which rates may be changed from time to time by a filing with the commissioner in a manner and form approved by the commissioner;

(2) for rates charged to plan insureds which shall be sufficient to meet the plan's expenses and the plan's losses on an incurred basis, including the establishment and maintenance of actuarially sound loss reserves to cover all future costs associated with the exposure;

(3) for a limited assignment distribution system permitting insurers to enter into agreements with other insurers or qualified entities to transfer applicants and insureds; and

(4) that the plan shall not be subsidized by any source external to the plan.

b. Prior to the adoption or amendment of rules and regulations, the commissioner shall consult with members of the insurance industry, as the commissioner deems appropriate. The consultation shall be in addition to any otherwise required public hearing or notice with regard to the adoption or amendment of rules and regulations.

c. The governing body administering the plan shall report annually to the Legislature and the Governor on the activities of the plan. The report shall contain an actuarial analysis regarding the adequacy of the rates for each coverage for the safeness and soundness of the plan.

3. This act shall take effect immediately.

STATEMENT

This bill establishes a plan for the provision of coverage to homeowners who are otherwise unable to procure homeowners insurance.

The bill requires the Commissioner of Banking and Insurance to promulgate rules and regulations establishing a plan for the provision of insurance coverage to homeowners who are unable to procure homeowners insurance through ordinary methods, especially those who unable to procure coverage due to the presence or threat of flooding to their property. Every insurer admitted to transact and transacting any line of insurance in the State of New Jersey is required to participate in the plan and provide insurance coverage to the extent required in the rules and regulations.

The bill requires the homeowners insurance plan to provide:

(1) for a rating system which shall produce rates for each coverage which are adequate for the safeness and soundness of the plan, and are not excessive nor unfairly discriminatory;

(2) for rates charged to plan insureds which shall be sufficient to meet the plan's expenses and the plan's losses on an incurred basis;

(3) for a limited assignment distribution system permitting insurers to enter into agreements with other insurers or qualified entities to transfer applicants and insureds; and

(4) that the plan shall not be subsidized by any source external to the plan.

Prior to the adoption or amendment of rules and regulations, the commissioner is required to consult with members of the insurance industry, as the commissioner deems appropriate. The bill requires the governing body administering the plan to report annually to the Legislature and the Governor on the activities and soundness of the plan.