ASSEMBLY, No. 5254 STATE OF NEW JERSEY 221st LEGISLATURE INTRODUCED JANUARY 30, 2025
ASSEMBLY, No. 5254
STATE OF NEW JERSEY
221st LEGISLATURE
INTRODUCED JANUARY 30, 2025
Sponsored by: Assemblywoman HEATHER SIMMONS District 3 (Cumberland, Gloucester and Salem) SYNOPSIS Establishes "Car Insurance Reduction Act"; modifies current law addressing requirements of automobile insurers for underwriting; rate calculations and reductions; and reporting requirements to State. CURRENT VERSION OF TEXT As introduced.
Sponsored by:
Assemblywoman HEATHER SIMMONS
District 3 (Cumberland, Gloucester and Salem)
SYNOPSIS
Establishes "Car Insurance Reduction Act"; modifies current law addressing requirements of automobile insurers for underwriting; rate calculations and reductions; and reporting requirements to State.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning automobile insurance rates, amending P.L.1997, c.151, and supplementing Title 17 of the Revised Statutes. Be It Enacted by the Senate and General Assembly of the State of New Jersey: 1. Section 15 of P.L.1997, c.151 (C.17:29A-46.2) is amended to read as follows: 15. a. Insurers shall put in writing all underwriting rules applicable to each rate level utilized pursuant to section 14 of P.L.1997, c.151 (C.17:29A-46.1). An insurer may take into account factors [, including, but not limited to, driving record characteristics] appropriate for underwriting and classification in formulating its underwriting rules; provided that no underwriting rule based on motor vehicle violations shall be formulated in such a manner as to assign any named insured to a rating tier other than the standard rating tier applicable to the insured's territory solely on the basis of accumulating four motor vehicle points or less. In addition to other factors that an insurer may consider, an insurer shall take into account driving record characteristics to formulate its underwriting rules. No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of the territory in which the insured resides or any other factor which the commissioner finds is a surrogate for territory. No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of an insured holding a standard motorcycle license or standard basic driver's license issued pursuant to R.S.39:3-10, or standard probationary license issued pursuant to section 4 of P.L.1950, c.127 (C.39:3-13.4). No underwriting rule shall operate in a manner as to assign a risk to a rating plan on the basis of the education level, occupation, or credit history of the insured. An insurer which knowingly fails to transact automobile insurance consistently with its underwriting rules shall be subject to a fine of not less than $1,000 for each violation. b. All underwriting rules applicable to each rate level as provided for in section 14 of P.L.1997, c.151 (C.17:29A-46.1) shall be filed with the commissioner and shall be subject to the commissioner's prior approval. All underwriting rules shall be subject to public inspection. Except as provided in subsection d. of section 27 of P.L.1990, c.8 (C.17:33B-15), insurers shall apply their underwriting rules uniformly and without exception throughout the State, so that every applicant or insured conforming with the underwriting rules will be insured or renewed, and so that every applicant not conforming with the underwriting rules will be refused insurance. c. An insurer with more than one rating plan for private passenger automobile insurance policies providing identical coverages shall not adopt underwriting rules which would permit a person to be insured for private passenger automobile insurance under more than one of the rating plans. d. An insurer that revises its underwriting rules with respect to the assignment of insureds to rating tiers based on the number of accumulated motor vehicle points, as provided by subsection a. of this section, as amended by P.L.2003, c.89, shall certify to the commissioner that the revised rule will produce rates that are revenue neutral based upon the insurer's current coverages and book of business. (cf: P.L.2019, c.271, s.19) 2. (New section) Every insurer authorized to write private passenger automobile insurance policies in this State shall: a. as part of a policy, provide to each insured a detailed explanation of the rating plan used to determine the premium charged to an insured, including if factors unrelated to the driving record of the insured were used. The explanation provided to the insured shall be made available through the Internet website of the insurer; and b. allow the insured, or a consumer if not yet insured by the insurer, to compare coverage options offered by the insurer, along with estimated premiums for each coverage option offered by the insurer, within the Internet website of the insurer. 3. (New section) Every rate filing for private passenger automobile insurance shall contain an appropriate reduction for personal injury protection coverage, bodily injury liability coverage, property damage coverage, and physical damage coverage for any named insured or the principal operator of the insured automobile, if other than the named insured, that demonstrates safe driving behavior. An insurer may require the use of telematics systems to be eligible for a rate reduction pursuant to this section. The reduction in premium charges shall be an amount justified by the actuarial experience of the insurer. 4. (New section) The Department of Banking and Insurance, in consultation with the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety, shall no later than 18 months following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and every three years thereafter, report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), concerning its activities and any recommendations relating to facilitating the detection of insurance fraud in this State. The report shall include, but not be limited to, recommendations concerning the ways in which the sharing of information and data between and among State agencies and insurers may facilitate the detection of insurance fraud. 5. (New section) Every insurer authorized to write private passenger automobile insurance policies in this State shall provide to the Department of Banking and Insurance and the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety data as determined by the Commissioner of Banking and Insurance and the Insurance Fraud Prosecutor as necessary to facilitate the detection of insurance fraud and the enforcement of the "New Jersey Insurance Fraud Prevention Act," P.L.1983, c.320 (C.17:33A-1 et seq.). 6. This act shall take effect on the 90th day next following enactment and shall apply to policies issued, executed, delivered, or renewed on or after that date. STATEMENT This bill establishes the "Car Insurance Reduction Act" and modifies current law addressing requirements of automobile insurers for underwriting; rate calculations and reductions; and reporting requirements to the State. Under the bill, an automobile insurer will be required to include the driving characteristics of insureds and prohibit the use of an insured's credit history, education, or occupation in the formulation of underwriting rules. The bill also requires an automobile insurer to provide to each insured a detailed explanation of the rating plan used to determine the insured's premium, including whether factors not related to the insured's driving record were used. The explanation provided to the insured will be made available through the Internet website of the insurer. Finally, the bill provides that every automobile insurer will be required to allow a consumer to compare coverage options offered by the insurer, along with estimated premiums for each coverage option offered by the insurer, within the Internet website of the insurer. The bill requires private passenger automobile insurers to establish premium rate reductions for safe driving behavior. Insurers are allowed to use telematics systems to determine whether drivers are in compliance with the rate reduction requirements. The bill also requires the Department of Banking and Insurance, in consultation with the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety, to issue a report concerning the activities of the department and the office and any recommendations relating to facilitating the detection of insurance fraud in New Jersey. The first report is to be issued no later than 18 months following the enactment of the bill and subsequent reports are to be issued every three years thereafter. The report is to include recommendations concerning the ways in which the sharing of information and data between and among State agencies and insurers may facilitate the detection of insurance fraud. Lastly, the bill requires insurers to provide to the Department of Banking and Insurance and the Office of the Insurance Fraud Prosecutor such information as is necessary to facilitate the detection of insurance fraud and the enforcement of the "New Jersey Insurance Fraud Prevention Act."
An Act concerning automobile insurance rates, amending P.L.1997, c.151, and supplementing Title 17 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 15 of P.L.1997, c.151 (C.17:29A-46.2) is amended to read as follows:
15. a. Insurers shall put in writing all underwriting rules applicable to each rate level utilized pursuant to section 14 of P.L.1997, c.151 (C.17:29A-46.1). An insurer may take into account factors [, including, but not limited to, driving record characteristics] appropriate for underwriting and classification in formulating its underwriting rules; provided that no underwriting rule based on motor vehicle violations shall be formulated in such a manner as to assign any named insured to a rating tier other than the standard rating tier applicable to the insured's territory solely on the basis of accumulating four motor vehicle points or less. In addition to other factors that an insurer may consider, an insurer shall take into account driving record characteristics to formulate its underwriting rules. No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of the territory in which the insured resides or any other factor which the commissioner finds is a surrogate for territory. No underwriting rule shall operate in such a manner as to assign a risk to a rating plan on the basis of an insured holding a standard motorcycle license or standard basic driver's license issued pursuant to R.S.39:3-10, or standard probationary license issued pursuant to section 4 of P.L.1950, c.127 (C.39:3-13.4). No underwriting rule shall operate in a manner as to assign a risk to a rating plan on the basis of the education level, occupation, or credit history of the insured. An insurer which knowingly fails to transact automobile insurance consistently with its underwriting rules shall be subject to a fine of not less than $1,000 for each violation.
b. All underwriting rules applicable to each rate level as provided for in section 14 of P.L.1997, c.151 (C.17:29A-46.1) shall be filed with the commissioner and shall be subject to the commissioner's prior approval. All underwriting rules shall be subject to public inspection. Except as provided in subsection d. of section 27 of P.L.1990, c.8 (C.17:33B-15), insurers shall apply their underwriting rules uniformly and without exception throughout the State, so that every applicant or insured conforming with the underwriting rules will be insured or renewed, and so that every applicant not conforming with the underwriting rules will be refused insurance.
c. An insurer with more than one rating plan for private passenger automobile insurance policies providing identical coverages shall not adopt underwriting rules which would permit a person to be insured for private passenger automobile insurance under more than one of the rating plans.
d. An insurer that revises its underwriting rules with respect to the assignment of insureds to rating tiers based on the number of accumulated motor vehicle points, as provided by subsection a. of this section, as amended by P.L.2003, c.89, shall certify to the commissioner that the revised rule will produce rates that are revenue neutral based upon the insurer's current coverages and book of business.
(cf: P.L.2019, c.271, s.19)
2. (New section) Every insurer authorized to write private passenger automobile insurance policies in this State shall:
a. as part of a policy, provide to each insured a detailed explanation of the rating plan used to determine the premium charged to an insured, including if factors unrelated to the driving record of the insured were used. The explanation provided to the insured shall be made available through the Internet website of the insurer; and
b. allow the insured, or a consumer if not yet insured by the insurer, to compare coverage options offered by the insurer, along with estimated premiums for each coverage option offered by the insurer, within the Internet website of the insurer.
3. (New section) Every rate filing for private passenger automobile insurance shall contain an appropriate reduction for personal injury protection coverage, bodily injury liability coverage, property damage coverage, and physical damage coverage for any named insured or the principal operator of the insured automobile, if other than the named insured, that demonstrates safe driving behavior. An insurer may require the use of telematics systems to be eligible for a rate reduction pursuant to this section. The reduction in premium charges shall be an amount justified by the actuarial experience of the insurer.
4. (New section) The Department of Banking and Insurance, in consultation with the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety, shall no later than 18 months following the enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and every three years thereafter, report to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), concerning its activities and any recommendations relating to facilitating the detection of insurance fraud in this State. The report shall include, but not be limited to, recommendations concerning the ways in which the sharing of information and data between and among State agencies and insurers may facilitate the detection of insurance fraud.
5. (New section) Every insurer authorized to write private passenger automobile insurance policies in this State shall provide to the Department of Banking and Insurance and the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety data as determined by the Commissioner of Banking and Insurance and the Insurance Fraud Prosecutor as necessary to facilitate the detection of insurance fraud and the enforcement of the "New Jersey Insurance Fraud Prevention Act," P.L.1983, c.320 (C.17:33A-1 et seq.).
6. This act shall take effect on the 90th day next following enactment and shall apply to policies issued, executed, delivered, or renewed on or after that date.
STATEMENT
This bill establishes the "Car Insurance Reduction Act" and modifies current law addressing requirements of automobile insurers for underwriting; rate calculations and reductions; and reporting requirements to the State.
Under the bill, an automobile insurer will be required to include the driving characteristics of insureds and prohibit the use of an insured's credit history, education, or occupation in the formulation of underwriting rules. The bill also requires an automobile insurer to provide to each insured a detailed explanation of the rating plan used to determine the insured's premium, including whether factors not related to the insured's driving record were used. The explanation provided to the insured will be made available through the Internet website of the insurer. Finally, the bill provides that every automobile insurer will be required to allow a consumer to compare coverage options offered by the insurer, along with estimated premiums for each coverage option offered by the insurer, within the Internet website of the insurer.
The bill requires private passenger automobile insurers to establish premium rate reductions for safe driving behavior. Insurers are allowed to use telematics systems to determine whether drivers are in compliance with the rate reduction requirements.
The bill also requires the Department of Banking and Insurance, in consultation with the Office of the Insurance Fraud Prosecutor in the Department of Law and Public Safety, to issue a report concerning the activities of the department and the office and any recommendations relating to facilitating the detection of insurance fraud in New Jersey. The first report is to be issued no later than 18 months following the enactment of the bill and subsequent reports are to be issued every three years thereafter. The report is to include recommendations concerning the ways in which the sharing of information and data between and among State agencies and insurers may facilitate the detection of insurance fraud.
Lastly, the bill requires insurers to provide to the Department of Banking and Insurance and the Office of the Insurance Fraud Prosecutor such information as is necessary to facilitate the detection of insurance fraud and the enforcement of the "New Jersey Insurance Fraud Prevention Act."