N.J. Admin. Code § 11:3-19A.3

Current through Register Vol. 56, No. 21, November 4, 2024

Section 11:3-19A.3 - Tier rating plans-general provisions

(a) Insurers that write personal private passenger automobile insurance in New Jersey shall file for approval their tier placement criteria used to assign business under a tier rating plan, in accordance with 17:29A-46.1 and this subchapter. No insurer shall use or implement any tier placement criteria for a tier rating plan not filed and approved as set forth herein.

(b) In determining the number of tiers in a multi-tier rating program, the insurer shall consider the following factors:

1. The homogeneity of risk characteristics;

2. The number of exposures for credibility determinations;

3. The experience of the insurer and its affiliates; and

4. Actuarial judgment.

(c) When requested by the Department, insurers shall demonstrate that the expected losses between the tiers will vary in accordance with the risk characteristics.

(d) The rating system associated with the various tiers shall comply with all existing statutes and rules governing private passenger automobile insurance and shall reflect all premium credits and premium discounts required by statute or rule. Pursuant to 17:33B-14.1, there shall be no differential in rates of the insured for a single speeding violation by the insured of less than 15 miles per hour.

(e) Each insurer shall provide a notice explaining the insurer's tier rating system and an applicant/insured's placement within the system upon:

1. An application for coverage;

2. The first renewal of any policy after an insured has adopted an approved tier rating plan; or

3. An insured's request.

(f) The placement of applicants and insureds at or within a tier, and the movement of insureds between tiers, shall be based on tier placement criteria that comply with 11:3-19A.5(b), are mutually exclusive per tier, shall be objective, and shall not be applied so as to violate any statute or regulation of the United States or the State of New Jersey.

(g) No insurer may assign any applicant for insurance to a rating tier solely on the basis of the applicant's occupation, education or insurance score. Occupation, education and/or insurance score may be used to determine tier placement only when used in combination with other approved tier placement criteria.

(h) Tier placement criteria shall be included in the insured's rule section of the manual. The tier placement criteria shall clearly identify the rating tier to which the criteria shall be applied and how the criteria apply to new business, renewal business or both. All tables shall be clearly labeled.

(i) The ratemaking restrictions established in 17:29A-36 shall be applied to each tier within an insurer's rate making plan.

N.J. Admin. Code § 11:3-19A.3

Amended by R.2008 d.380, effective 12/15/2008 (operative January 1, 2009).
See: 40 N.J.R. 3572(a), 40 N.J.R. 6970(b).
Section was "General provisions". Substituted "tier placement criteria" for "underwriting rule" and "underwriting rules" throughout. In (a), deleted "to accept or reject new business, to renew or nonrenew current business and" preceding "to assign"; in (f), inserted commas following the first two occurrences of "tier", inserted "shall be" and substituted "shall not be" for "not" preceding "applied"; added new (g); recodified former (g) and (h) as (h) and (i); and in (h), substituted "criteria" for "rules" twice.