17:33B-15 Provision of automobile insurance coverage by insurers.

27. a. On or after April 1, 1992, every insurer, either by one or more separate rating plans filed in accordance with the provisions of section 6 of P.L.1988, c.156 (C.17:29A-45) prior to March 1, 1998, or section 14 of P.L.1997, c.151 (C.17:29A-46.1) on or after March 1, 1998, or through one or more affiliated insurers, shall provide automobile insurance coverage for eligible persons. This subsection shall become inoperative on January 1, 2009.

b. No insurer shall refuse to insure, refuse to renew, or limit coverage available for automobile insurance to an eligible person who meets its underwriting rules as filed with and approved by the commissioner in accordance with the provisions of section 7 of P.L.1988, c.156 (C.17:29A-46) prior to March 1, 1998 or section 15 of P.L.1997, c.151 (C.17:29A-46.2) on or after March 1, 1998. This subsection shall become inoperative on January 1, 2009.

c. Notwithstanding the provisions of subsections a. and b. of this section to the contrary, any qualified insurer engaged in writing automobile insurance in an automobile insurance urban enterprise zone pursuant to section 22 of P.L.1997, c.151 (C.17:33C-4) may limit the number of exposures written through its UEZ agent or agents, or in the case of a qualified insurer doing business on a direct writing basis, the qualified insurer may limit the number of exposures written in an automobile insurance urban enterprise zone consistent with its marketing plans and goals as provided in subsection a. of section 21 of P.L.1997, c.151 (C.17:33C-3). Nothing in this subsection shall be construed to relieve a qualified insurer from its obligation under subsections a. and b. of this section to write all eligible persons residing within an automobile insurance urban enterprise zone through its non-UEZ agent points of access.

d. (1) Notwithstanding the provisions of subsections a. and b. of this section to the contrary, an insurer may file underwriting rules by which it may refuse to issue or limit coverage available for automobile insurance in any rating territory to an eligible person if the insurer has increased its aggregate number of private passenger automobile non-fleet exposures in the rating territory during the previous year: by 5% during the one-year period beginning January 1, 2004; by 4% during the one-year period beginning January 1, 2005; by 3% during the one-year period beginning January 1, 2006; by 2% during the one-year period beginning January 1, 2007; and by 1% during the one-year period beginning January 1, 2008, provided further that an insurer may file with the commissioner for a lower percentage growth standard than that listed in this subsection and the commissioner shall approve such a filing if he finds that the insurer does not have the financial and business resources to accommodate growth statewide at a higher percentage than that proposed in the filing.

(2) Underwriting rules filed pursuant to this subsection shall provide that the rules are activated only upon the filing with the commissioner of a proper certification. The certification shall be by an officer of the insurer attesting to the aggregate number of private passenger automobile non-fleet exposures in each rating territory on June 30 and December 31 of the preceding year and clearly identify any rating territory in which the insurer has met the percentage growth standard established by this subsection. Such underwriting rules shall be operational in the identified territory on the first day of the second calendar month after the end of the calendar six-month period in which the percentage growth standard has been met. Such underwriting rules shall be operational in an identified territory for a period of six months, unless prior to their expiration, an officer of the insurer files a certification with the commissioner attesting that the percentage growth standard in an identified territory continues to be met.

(3) Notwithstanding any provision of this section to the contrary, the commissioner may make operative the provisions of subsections a. and b. of this section only by order finding one of the following circumstances:

(a) The commissioner determines, after a hearing, that a competitive market does not exist among insurers authorized to write private passenger automobile insurance in this State, which determination shall only be made pursuant to subsection f. of this section, provided, however, that there shall be a rebuttable presumption that a competitive market exists among insurers authorized to write private passenger automobile insurance in this State if the plan established pursuant to P.L.1970, c.215 (C.17:29D-1) is insuring less than 10% of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State.

(b) The commissioner certifies that the plan established pursuant to P.L.1970, c.215 (C.17:29D-1) is insuring 10% or more of the aggregate number of private passenger automobile non-fleet exposures being written in the total private passenger automobile insurance market in this State.

(4) Any order issued by the commissioner that makes operative the provisions of subsections a. and b. of this section may limit the form of policies to which the order applies and shall establish a maximum increase in an insurer's aggregate number of private passenger automobile non-fleet exposures to which the order applies, which increase shall not exceed the maximum limit set forth in paragraph (1) of this subsection d.

(5) An eligible person denied or refused renewal of automobile insurance in a rating territory by an insurer granted relief pursuant to this subsection shall be advised by the insurer that coverage may be available from another insurer or that coverage is available from the plan established pursuant to P.L.1970, c.215 (C.17:29D-1). The commissioner shall establish by regulation the form and content of the notice to be provided to such an eligible person.

(6) The provisions of this subsection d. shall not reduce an insurer's obligation to renew policies pursuant to section 26 of P.L.1988, c.119 (C.17:29C-7.1).

e. The commissioner may suspend, revoke or otherwise terminate the certificate of authority to transact automobile insurance business in this State of any insurer who violates the provisions of this section.

f. (1) A determination that a competitive market for private passenger automobile insurance does not exist may be made by the commissioner, after notice and hearing, based on two or more of the factors set forth in paragraph (2) of this subsection. A hearing under this subsection shall be held consistent with the rulemaking provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52.14B-1 et seq.), except that an order by the commissioner pursuant to this subsection shall include specific finding of fact and be supported by clear and convincing evidence. Any ruling that finds that competition does not exist within the market for automobile insurance shall include specific findings regarding: (a) the actions the State and the commissioner have taken to return the market to a competitive market; and (b) an explanation regarding why those actions have failed to return the market to a competitive market. A ruling pursuant to this subsection shall expire one year after issued unless rescinded earlier by the commissioner or unless the commissioner renews the ruling after a hearing and a finding as to continued lack of a reasonable degree of competition.

(2) The following factors shall be considered by the commissioner for purposes of determining if a reasonable degree of competition does not exist in a particular line of private passenger automobile insurance:

(a) The number of insurers or groups of affiliated insurers actively engaged in providing coverage in the market, taking into account the specialization traditionally associated with the line of insurance;

(b) Measures of market concentration and changes of market concentration over time, including, but not limited to, the Herfindahl-Hirschman Index (HHI) and the United States Department of Justice merger guidelines for an unconcentrated market;

(c) Ease of entry and exit and the existence of financial or economic barriers that could prevent new insurers from entering the market;

(d) The extent to which any insurer or group of affiliated insurers controls all or a dominant portion of the market and has actively sought to prevent competition;

(e) Whether the total number of insurers writing the line of insurance in this State is sufficient to provide multiple options;

(f) The availability of insurance coverage to consumers in the voluntary market; and

(g) The opportunities available to consumers in the market to acquire pricing and other consumer information.

(3) The commissioner shall monitor, and take all reasonable actions to maintain, the degree and continued existence of competition in this State on an on-going basis. In doing so, the commissioner may utilize existing relevant information, analytical systems and other sources, or rely on any combination thereof. Monitoring activities may be conducted internally within the department, in cooperation with other state insurance departments, through outside contractors and in any other manner determined appropriate by the commissioner.

L.1990,c.8,s.27; amended 1997, c.151, s.24; 2003, c.89, s.38.