Revises territorial rating plans used by insurers writing private passenger automobile insurance.

S4040

SENATE, No. 4040

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MARCH 19, 2026

Sponsored by:

Senator� JOSEPH F. VITALE

District 19 (Middlesex)

SYNOPSIS

���� Revises territorial rating plans used by insurers
writing private passenger automobile insurance.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning territorial rating plans for automobile
insurance and amending P.L.1998, c.21.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 26 of P.L.1998,
c.21 (C.17:29A-48) is amended to read as follows:

���� 26.� Every insurer writing
private passenger automobile insurance in this State and every rating
organization establishing territorial rating plans on behalf of its member
companies shall establish new territorial rating plans in place of the
insurer's or filer's territorial rating plan in effect on June 1, 1998, which
shall include territorial definitions, territorial relativity factors and
territorial base rates, and which are in accordance with the provisions of
sections 26 through 29 of this amendatory and supplementary act.� The
Commissioner of Banking and Insurance shall promulgate regulations establishing
standards governing the establishment of new rating territories, which
standards shall include, but not be limited to:

���� a.���� Territories shall be
defined in such a manner as to recognize throughout the territorial rating plan
both qualitative similarities and qualitative differences in driving
environments or mix of driving environments, which may include, but not be
limited to, traffic density, population density, comparative severity of loss,
and the degree of homogeneity within a territory in terms of driving
environments, population, and driver classification, and the territory shall be
comprised of towns or cities which are contiguous;

���� b.��� Territories shall
contain a sufficient number of exposures to result in statistically credible
experience, in accordance with regulations established by the commissioner, and
shall be defined in a manner which minimizes the effect of variability of loss in
a territory on a year-to-year basis;

���� c.���� Territory definitions
shall take into account the impact of the overlapping of traffic patterns on
exposure to loss, including the relative number of intraterritory trips and
inter-territory trips applicable to each proposed territory, for which the commissioner
shall make available to the insurer, filer, or the commission established
pursuant to section 28 of this amendatory and supplementary act, appropriate
information collected pursuant to the provisions of section 1 of P.L.1987,
c.450 (C.43:21-14a) by the Department of Labor
and Workforce Development
;

���� d.��� Territories shall be
created in a manner which results in an equable distribution of exposures among
territories throughout the State and no territorial rating plan shall result in
territories which are arbitrary, unfairly discriminatory, significantly disproportionate
in terms of the number of exposures per territory, or created in a manner which
is primarily for marketing purposes rather than measuring relativity of
exposure to probable loss, or created in a manner which can be used to avoid
the insurer's or filer's obligations under section 27 of P.L.1990, c.8
(C.17:33B-15);

���� e.���� Territories shall be
created in a manner which does not result in disproportionate differences in
territorial relativity factors or territorial base rates between contiguous
territories with similar driving environments or similar mix of driving
environments;

���� f.���� Factors to be
considered in establishing territorial rate relativities shall include taking
into account similarities or differences in driving environments or mix of
driving environments, including traffic density, population density, mix of
driver classifications within a territory, including classifications capped
pursuant to the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36),
comparative degree of severity of loss, and the relative number of
intraterritory and inter-territory trips;

���� g.��� Territories shall be
defined in a manner which does not result in unfair inter-territorial
subsidization among territories with significant differences in driving
environments or mix of driving environments, population density, traffic
density, mix of driver classifications, including classifications capped
pursuant to the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36) and
comparative degree of severity of loss;

���� h.��� For the purpose of
defining territories and establishing territorial relativity factors, loss
experience allocated to any territory by an insurer or filer (1) shall take
into account any recovery applicable to exposures in the territory which are
attributable to subrogation or any other kind of recovery by the insurer
reporting the losses and (2) shall not include any loss attributable to capping
of driver classifications pursuant to section 7 of P.L.1983, c.65 (C.17:29A-36)
;

����
i.���� Territories shall be
geographic areas of the State defined by contiguous zip code+4 that follow
municipal boundaries as closely as possible. �The maximum number of territories
in any territorial map shall not exceed 100 territories
.

���� The commissioner shall
establish by regulation the minimum number of exposures which shall be deemed
to meet the standard of being statistically credible for the purpose of
defining territories.

(cf: P.L.1998, c.22, s.5)

���� 2.��� This act shall take
effect on the 120th day next following enactment, and shall apply to
territorial rating plans filed after that date.

STATEMENT

���� This bill revises the
territorial rating plans used by insurers writing private passenger automobile
insurance in this State.� Specifically, the bill requires the Commissioner of
Banking and Insurance to establish rating territories that are geographic areas
of the State defined by contiguous zip code+4, that follow municipal boundaries
as closely as possible.� The bill provides that the maximum number of
territories in any territorial map may not exceed 100 territories.

���� Currently, regulations
established by the Department of Banking and Insurance provide for rating
territories that are geographic areas of the State defined by contiguous zip
code, with the maximum number of territories in any territorial map not exceeding
50 territories.� By allowing rating territories to be defined by zip code+4,
and increasing the maximum number of territories in the territorial map,
insurers will be able to take a more detailed, granular approach to the
territorial assignment of risk for automobile insurance.