On May 12, 2020, the New Jersey Department of Banking and Insurance (“DOBI”) issued Bulletin No.20-22, which requires certain insurance carriers to assess whether the Statewide lockdown due to Coronavirus warrants reduced premiums and refunds for policyholders. DOBI’s Commissioner notes that the Governor’s Executive Orders compelling many to remain at home has curtailed automobile travel and economic activity which, in turn, has reduced loss risks for many insurance companies.
Accordingly, DOBI is requiring insurance companies to recalculate rates and issue refunds, credits, dividends or other appropriate relief. The Bulletin provides alternative methods for conducting those calculations and specifies that it applies to the following lines of insurance:
- Private passenger automobile insurance;
- Commercial automobile insurance;
- Workers’ compensation insurance;
- Commercial multiple-peril insurance;
- Medical malpractice insurance; and
- Any other line of coverage where the measures of risk have become substantially overstated as a result of the COVID-19 pandemic.
Insurers have until June 1, 2020 to submit proof that their current rates are not excessive, inadequate or discriminatory. Assuming they are unable to do so, DOBI is requiring all insurers to notify policyholders by June 15, 2020 of the amount and basis for calculating the refund or adjustment and related information.
A copy of the Bulletin is available here and additional information can be found on the DOBI’s website.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.