N.J. Admin. Code § 11:2-27.4

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:2-27.4 - Determination of hazardous financial condition; corrective action

(a) If the Commissioner determines that the continued operation of an insurer may be hazardous to its policyholders, creditors, or the general public in this State, the Commissioner may, upon such a determination, subject the insurer to administrative supervision pursuant to N.J.S.A. 17:51A-1 et seq. and may issue an order requiring the insurer to take such actions as the Commissioner deems necessary to abate such determination, including, but not limited to:

1. Reduce the total amount of present and potential liability for policy benefits by reinsurance;

2. Reduce, suspend or limit the volume of business being accepted or renewed;

3. Reduce general insurance and commission expenses by specified methods;

4. Increase the insurer's capital and surplus;

5. Suspend or limit the declaration and payment of dividends by an insurer to its stockholders or to its policyholders;

6. File reports in a form acceptable to the Commissioner concerning the market value of an insurer's assets;

7. Limit or withdraw from certain investments or discontinue certain investment practices to the extent the Commissioner deems necessary;

8. Document the adequacy of premium rates in relation to the risks insured;

9. File, in addition to regular annual statements, interim financial reports on the form adopted by the NAIC or in such format as prescribed by the Commissioner;

10. Correct corporate governance practice deficiencies, and adopt and utilize governance practices acceptable to the Commissioner;

11. Provide a business plan to the Commissioner in order to continue to transact business in this State;

12. Notwithstanding any other provision of law limiting the frequency or amount of premium rate adjustments, adjust rates for any non-life insurance product written by the insurer that the Commissioner considers necessary to improve the financial condition of the insurer; or

13. Take such other actions as the Commissioner may deem necessary in a particular case to protect the insurer's policyholders, creditors, or the general public.

(b) If an insurer is subject to an order issued by the Commissioner pursuant to (a) above, and the insurer objects to the actions ordered to be taken as set forth therein, the insurer may request a hearing before the Department on the Commissioner's determination within 10 days from the date of receipt of such order as follows:

1. A request for a hearing shall be in writing and shall include:

i. The name, address, and daytime telephone number of a contact person familiar with the matter;

ii. A copy of the order involved;

iii. A statement requesting the hearing; and

iv. A concise statement specifying the manner wherein the action(s) ordered by the Commissioner would not result in improving the condition of the insurer.

2. Pursuant to N.J.S.A. 17:51A-1 et seq., all proceedings, hearings, notices, correspondence, reports, records and other information in the possession of the Commissioner or the Department relating to the supervision of the insurer are confidential, except as otherwise provided by N.J.S.A. 17:51A-1 et seq. Any confidential proceeding in connection with an order issued pursuant to this rule and N.J.S.A. 17:51A-1 et seq. shall be held by the Commissioner or his designee at the Department.

3. The Commissioner may open such proceedings or hearings or disclose the notices, correspondence, reports, records or information to a department, agency or instrumentality of this or another state of the United States, or make such information public, if the Commissioner determines that the disclosure is necessary or proper for the enforcement of the laws of this or another state of the United States, is in the best interest of the public, or in the best interest of the insurer, its insureds or creditors.

(c) Nothing contained in this section shall be construed to limit or preclude the Commissioner from independently requiring an insurer to take specific actions or limit specified activities pursuant to other provisions of Title 17 or 17B of the Revised Statutes.

N.J. Admin. Code § 11:2-27.4

Emergency New Rule, R.1993 d.447, effective 8/16/1993 (expired October 15, 1993).
See: 25 N.J.R. 4286(a).
Adopted Concurrent Proposal, R.1993 d.556, effective 10/15/1993.
See: 25 N.J.R. 4286(a), 25 N.J.R. 5182(a).
Changes upon adoption effective 11/15/1993.
Amended by R.1996 d.3, effective 1/2/1996.
See: 27 N.J.R. 3278(b), 28 N.J.R. 152(b).
Amended by R.2014 d.041, effective 3/17/2014.
See: 45 N.J.R. 1883(a), 46 N.J.R. 543(a).
In the introductory paragraph of (a), substituted "its" for "the", and inserted ", creditors," and "the general"; in (a)9, deleted "or" from the end"; added new (a)10 through (a)12; recodified former (a)10 as (a)13; and in (a)13, substituted ", creditors, or" for "and", and inserted "general".