N.J. Admin. Code § 11:1-22.2

Current through Register Vol. 56, No. 9, May 6, 2024

Section 11:1-22.2 - Prohibitions

(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;

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.

N.J. Admin. Code § 11:1-22.2

Amended by 51 N.J.R. 765(a), effective 5/20/2019