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USA Statutes : new_jersey
Title : TITLE 17 CORPORATIONS AND INSTITUTIONS FOR FINANCE AND INSURANCE
Chapter : 17:29A-5.
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17:29A-5. Statistical plans; rules and regulations; reports of experience; statistical agent
The commissioner shall promulgate rules and regulations as to statistical plans, reasonably adapted to each of the rating systems on file with him, which may be modified from time to time and which shall be used thereafter by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid him in determining whether such rating systems comply with the standards set forth in this chapter. Such rules and regulations shall provide for the recording and reporting of loss experience of this State and of any combination of states where such combined experience is used in any manner for ratemaking, and may provide for the recording and reporting of expense experience of this State for items of expense which are specially applicable to this State. In promulgating such rules and regulations the commissioner shall give due consideration to the rating systems on file with him and in order that such rules and regulations may be as uniform as is practicable among the several states, to the rules and statistical plans used for such rating systems in other states. The commissioner shall designate the format in which such reports shall be prepared and he may require, in his discretion, that reports of experience be accompanied by punch cards or other means used for data processing, or such other source material as he deems appropriate.
The commissioner may designate one or more agencies to assist him in gathering such experience. The commissioner shall give preference in such designation to entities organized by and functioning on behalf of the insurance companies operating in this State for the kinds of insurance to which the chapter applies. If the commissioner, in his judgment, determines that one or more of such organizations designated as statistical agent is unable or unwilling to perform its statistical functions according to reasonable requirements established from time to time by him, he may, after consultation with such statistical agent and upon 20 days@ notice to any affected companies, designate another person to act on his behalf in the gathering of statistical experience. The commissioner shall in such case establish the fee to be paid to such designated person by the affected companies in order to pay the total cost of gathering and compiling such experience. Agencies designated by the commissioner shall assist him in making compilations of the reported data, and such compilations shall be made available, subject to reasonable rules and regulations promulgated by the commissioner, to insurers, rating organizations and any other interested parties.
L.1944, c. 27, p. 72, s. 5. Amended by L.1950, c. 176, p. 409, s. 1; L.1971, c. 368, s. 2, eff. Dec. 28, 1971.
17:29A-5.1. Motor vehicle insurance; rating systems; rules and regulations
The Commissioner of Insurance in promulgating rules and regulations as to statistical plans adapted to rating systems for motor vehicle liability and collision insurance for reporting an insurer@s loss experience may include sufficient detail to enable him to determine whether varying rates should be established based upon the type of safety features and equipment of various types and models of motor vehicles.
L.1975, c. 9, s. 1, eff. Feb. 6, 1975.
17:29A-5.6 Definitions.
1. As used in this act:
a. ~Actual investment income~ means that portion of income generated by investment of policyholder-supplied funds. Policyholder-supplied funds are the assets that offset the insurer@s total New Jersey private passenger automobile insurance unearned premium and loss reserves without regard to whether those funds came from private passenger automobile insurance policyholders or other policyholders or were from policyholder funds from the last seven calendar years or earlier years.
b. ~Actuarial gain~ means the remainder obtained by subtracting the allowance for profit and contingencies from underwriting income, which remainder may be positive or negative.
c. ~AIRE charges~ and ~AIRE compensation~ mean, respectively, amounts paid to or received from the New Jersey Automobile Insurance Risk Exchange pursuant to section 16 of P.L.1983, c.362 (C.39:6A-22).
d. ~Anticipated investment income~ means the amount obtained by multiplying earned premium by the percentage of premium representing investment income and used in the insurer@s approved rate filings or filings made pursuant to section 29 of P.L.1988, c.119 (C.17:29A-42), during the period of the three calendar-accident years being calculated, to calculate the allowance for profit and contingencies.
e. ~Calendar-accident year~ means the period from January 1 to December 31, during which, in the appropriate context:
(1) premium or investment income was earned;
(2) expenses were incurred; or
(3) accidents occurred which resulted in losses, loss adjustment expenses or AIRE compensation.
f. ~Car year~ means the unit of exposure equivalent to the insuring of one automobile for 12 months, two automobiles for six months each, three automobiles for four months each, and so forth.
g. ~Commissioner~ means the Commissioner of Banking and Insurance.
h. ~Development adjustment,~ for a given calendar-accident year, means the difference obtained by subtracting:
(1) The sum of
(a) Losses and loss adjustment expenses for that calendar-accident year, developed to an ultimate basis and evaluated as of March 31 of the year preceding the year in which the profits report required by section 2 of this act is due; plus
(b) AIRE compensation for that calendar-accident year, developed to an ultimate basis and evaluated as of March 31 of the year in which the profits report is due; from
(2) The sum of
(a) Losses and loss adjustment expenses for that calendar-accident year, developed to an ultimate basis and evaluated as of March 31 of the year in which the profits report is due; plus
(b) AIRE compensation for that calendar-accident year, developed to an ultimate basis and evaluated as of March 31 of the year preceding the year in which the profits report is due.
i. ~Excess investment income~ means the remainder obtained by subtracting the anticipated investment income from the actual investment income earned by the insurer, which remainder may be positive or negative.
j. ~Insurer~ means an entity authorized or admitted to transact private passenger automobile insurance business in New Jersey.
k. ~Private passenger automobile insurance business~ means direct insurance on private passenger automobiles as defined in subsection a. of section 2 of P.L.1972, c.70 (C.39:6A-2), excluding personal excess liability insurance and insurance on commercial vehicles.
l. ~Total actuarial gain~ means the sum of the actuarial gains for the seven calendar-accident years immediately preceding the due date of the profits report required by section 2 of this act, less the development adjustments submitted at the option of the insurer for the calendar-accident years beginning with the eleventh calendar-accident year immediately preceding the due date of the profits report and ending with the eighth calendar-accident year immediately preceding the due date of the profits report.
m. ~Underwriting income~ means the remainder obtained by subtracting the sum of all losses developed to an ultimate basis, all loss adjustment expenses developed to an ultimate basis, and all other expenses exclusive of UCJF assessments, from the sum of premiums earned and AIRE compensation developed to an ultimate basis, which remainder may be positive or negative.
n. ~UCJF assessments~ means amounts paid by insurers to the Unsatisfied Claim and Judgment Fund pursuant to section 3 of P.L.1952, c.174 (C.39:6-63).
o. ~UCJF reimbursements~ means amounts received by an insurer from the Unsatisfied Claim and Judgment Fund as a result of excess medical expense benefit payments by the insurer pursuant to section 2 of P.L.1977, c.310 (C.39:6-73.1).
L.1988,c.118,s.1; amended 2003, c.89, s.67.
17:29A-5.7 Annual profits report.
2. a. Each insurer, except those exempt from filing pursuant to section 6 of this act, shall annually file with the commissioner, on or before July 1 of each year, a profits report containing the information and calculations required by this section. The information shall be provided with respect to the insurer@s New Jersey private passenger automobile insurance business separately for each of the following coverages and for all these coverages combined:
(1) Personal injury protection, including all options;
(2) Bodily injury liability, reported at total limits;
(3) Other liability, consisting of property damage liability and uninsured and underinsured motorist coverages, all reported at total limits;
(4) Physical damage, consisting of comprehensive and collision coverages, including all deductibles.
A separate profits report shall be filed for each insurer and each insurer in an insurance holding company system. Each insurance holding company system shall file a separate combined profits report for all insurers in its system. The excess profits computation for an insurance holding company system shall be performed on its combined profits report, except that the commissioner may order an adjustment in the combined profits report if in his judgment, upon examining each insurer@s profits report in the insurance holding company system, one or more of the insurers in that system are excessively subsidizing other insurers in that system.
b. The profits report shall contain the following information, in a manner and for a time period as prescribed by the commissioner by regulation:
(1) Losses paid;
(2) Losses developed to an ultimate basis;
(3) Loss adjustment expenses paid;
(4) Loss adjustment expenses developed to an ultimate basis;
(5) AIRE compensation received; and
(6) AIRE compensation developed to an ultimate basis.
c. The profits report shall contain the following information for the calendar-accident year ending December 31 immediately preceding the date the profits report is due:
(1) Premiums written;
(2) Premiums earned;
(3) All other expenses, itemized separately as follows:
(a) All commissions and all brokerage fees;
(b) All taxes, all licenses and all fees;
(c) All AIRE charges;
(d) All UCJF assessments;
(e) All other acquisition costs and all general expenses;
(f) All policyholder dividends incurred by the insurer, including any excess profits refunded or credited to policyholders;
(g) The net of all catastrophe reinsurance premiums incurred to unaffiliated catastrophe reinsurers and all sums paid or owed by unaffiliated catastrophe reinsurers for losses that occurred during the calendar-accident year, subject to such substantiation of expense as the commissioner may require;
(h) All expenses incurred for the services of a limited assignment distribution carrier pursuant to subsection c. of section 1 of P.L.1970, c.215 (C.17:29D-1);
(4) Allowance for profit and contingencies, calculated by multiplying the premiums earned by the profit and contingency factors authorized for use with the insurer@s approved rate filings, which profit and contingency factors shall be based on the insurer@s targeted rate of return, method of doing business, the cost of capital and other relevant economic considerations of the insurer;
(5) Anticipated investment income;
(6) Actual investment income; and
(7) UCJF reimbursements received.
d. The profits report shall include a clear and explicit calculation of each of the following items, in a manner and for a time period as prescribed by the commissioner by regulation:
(1) Underwriting income;
(2) Actuarial gain;
(3) Excess investment income;
(4) Development adjustment;
(5) Total actuarial gain; and
(6) Excess profits.
L.1988,c.118,s.2; amended 2003, c.89, s.68.
17:29A-5.8 Excess profits.
3. Excess profits shall exist if for the seven calendar-accident years immediately preceding the date the profits report is due, the sum of an insurer@s total actuarial gain and excess investment income for all private passenger automobile coverages combined exceeds 2.5 percent of earned premiums, except that the effect of a negative excess investment income shall be limited in the computation of excess profits, at the discretion of the commissioner, which discretion shall be exercised pursuant to a standard on the investment of policyholder-supplied funds pursuant to regulations promulgated by the commissioner not later than April 1 of the year in which excess profits reports are filed.
L.1988,c.118,s.3; amended 2003, c.89, s.69.
17:29A-5.9. First profits report
The due date for the first profits report required by subsection a. of section 2 of this act is July 1, 1989. For the first report required by this act:
a. The seven most recent calendar-accident years referred to in subsection b. of section 2 of this act are 1982 through 1988, inclusive.
b. The three calendar-accident years immediately preceding the due date referred to in subsection l. of section 1, subsection d. of section 2, section 3 and section 6 of this act are 1986, 1987, and 1988.
c. The seventh calendar-accident year immediately preceding the due date referred to in subsection l. of section 1 of this act is 1982.
d. The fourth calendar-accident year immediately preceding the date the profits report is due referred to in subsection l. of section 1 of this act is 1985.
e. The calendar-accident year immediately preceding the date the profits report is due referred to in subsection c. of section 2 of this act is 1988.
f. All remaining references to specific calendar years, calendar-accident years, and evaluation dates shall be consistent with the provisions of this section.
L. 1988, c. 118, s. 4.
17:29A-5.10. Excess profit carry forward
In the event an excess profit is returned by an insurer in accordance with section 7 of this act and subsequent development demonstrates that an excess profit did not exist or was overstated, an ~excess profit carry forward~ in the amount of the excess profit refunded or the amount overstated, whichever is less, shall be established. This ~excess profit carry forward~ shall be applied by such insurer as a credit against future determinations of excess profits until such credit is exhausted or the expiration of a 15-year period from the date such carry forward was established, whichever occurs first.
L. 1988, c. 118, s. 5.
17:29A-5.11. Certification
An insurer having fewer than 150 car years of exposure in New Jersey during the three calendar-accident years immediately preceding the date the profits report is due shall file a certification to that effect, in lieu of all other requirements of this act.
L. 1988, c. 118, s. 6.
17:29A-5.12 Plan for refund, credit.
7. If the commissioner finds that an insurer has excess profits, the insurer shall establish, subject to the approval of the commissioner, a fair, practicable, and nondiscriminatory plan for the refund or credit of the excess profits to such group or groups of policyholders as the commissioner may determine to be reasonable in consideration of the insurer@s financial and business circumstances.
L.1988,c.118,s.7; amended 2003, c.89, s.82.
17:29A-5.13. Filing of report
An insurer shall file the profits report, including all incidental calculations, in the formats and media to be prescribed by the commissioner.
L. 1988, c. 118, s. 8.
17:29A-5.14. Alteration of aberrant, unusual, irregular data
If, after examination thereof, the commissioner finds that any information or calculation contained in a profits report filed by an insurer contains, results in or is based upon aberrant, unusual or irregular data, utilization of data, judgments or assumptions, the commissioner shall issue an order to the insurer, directing that the information or calculation be altered in a manner necessary to eliminate the effect of the aberrant, unusual or irregular data, utilization of data, judgments, or assumptions.
L. 1988, c. 118, s. 9.
17:29A-5.15. Submission of additional data
Notwithstanding any other provision of this act, the commissioner may require the submission of any other data and information he deems relevant or appropriate for evaluating the profits of an insurer.
L. 1988, c. 118, s. 10.
17:29A-5.16. Rules, regulations
The commissioner shall promulgate rules and regulations in accordance with the ~Administrative Procedure Act,~ P.L. 1968, c. 410 (C. 52:14B-1 et seq.), that he deems necessary to implement the provisions of this act.
L. 1988, c. 118, s. 11.
17:29A-5.17 Review of filing; ~qualified independent actuary~ defined.
65. a. The Commissioner of Banking and Insurance may, in connection with any profits report made under P.L.1988, c.118 (C.17:29A-5.6 et seq.), require a review of all or part of the filing by a qualified independent actuary, including, but not limited to, the filer@s assumptions with respect to the development of losses or loss adjustment expenses developed to an ultimate basis, allowance for profit and contingencies and anticipated investment income.
b. For the purposes of this section, ~qualified independent actuary~ means a person or firm with annual billings of at least $5,000,000, who has not worked for the insurer or filer whose filing is under review during the previous three-year period.
L.1998,c.21,s.65.
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