NJ Rev Stat § 17:33B-11 (2021)
2021 New Jersey Revised Statutes|Title 17 - Corporations and Institutions for Finance and Insurance|Section 17:33B-11 - Market Transition Facility

17:33B-11. Market Transition Facility  88. a. There is created a Market Transition Facility to be operated by the Commissioner of Insurance pursuant to the provisions of this section. Every insurer authorized to transact automobile insurance in this State shall be a member of the facility and shall share in its profits and losses as provided by the commissioner pursuant to the provisions of subsection d. of this section.  b. (Deleted by amendment, P.L.1994, c.57.)  c. The facility shall arrange for the issuance and renewal of automobile insurance policies for the period commencing October 1, 1990 and ending September 30, 1992 pursuant to a plan of operation promulgated by the commissioner. The facility shall not issue or renew any policies of automobile insurance on or after October 1, 1992. The plan shall provide:  (1) The applicable levels of coverage available through the facility;  (2) That the premiums payable on policies issued by the facility shall be based on rates applicable to persons insured by the New Jersey Automobile Full Insurance Underwriting Association on September 30, 1990 but shall not incorporate the rates applicable under section 25 of P.L.1983, c.65 (C.17:30E-13) and section 22 of P.L.1988, c.119 (C.17:30E-13.1). However, the applicable rates for those insureds who do not qualify as eligible persons as provided in section 25 of P.L.1990, c.8 (C.17:33B-13) shall be those set by the plan for the provision of automobile insurance established pursuant to section 1 of P.L.1970, c.215 (C.17:29D-1);  (3) Procedures for the filing and approval of changes in rates applicable to policies issued or renewed by the facility;  (4) For the issuance and renewal of automobile insurance through servicing carriers under contract with the New Jersey Automobile Full Insurance Underwriting Association pursuant to the provisions of section 24 of P.L.1983, c.65 (C.17:30E-12), utilizing, at the discretion of the commissioner, the staff of the association;  (5) Procedures for the depopulation of the facility which shall provide that: on or after April 1, 1991 no more than 29% of the aggregate number of private passenger non-fleet exposures written in this State shall be written by the facility and the New Jersey Automobile Full Insurance Underwriting Association created by P.L.1983, c.65 (C.17:30E-1 et seq.); on or after October 1, 1991 no more than 20% of the aggregate number of private passenger non-fleet exposures written in this State shall be written by the facility; on or after April 1, 1992 no more than 10% of the aggregate number of private passenger non-fleet exposures written in this State shall be written by the facility; and on or after October 1, 1992, 0% of the aggregate number of private passenger non-fleet exposures written in this State shall be written by the facility. In establishing the quotas set forth above, the plan shall prescribe the number of voluntary market exposures which shall be written during each six-month period set forth in this paragraph in a manner consistent with the apportionment procedure established pursuant to subsection a. of section 26 of P.L.1983, c.65 (C.17:30E-14). In the event that any of the quotas established pursuant to this paragraph have not been met by the end of the applicable period, the commissioner shall direct the facility to assign the balance of the exposures needed to meet the applicable quota to member companies pursuant to the apportionment procedure. A member company which exceeds its apportionment share for any six-month period set forth in this paragraph shall receive credit for the excess against the following period's obligation. The commissioner may excuse a member company from meeting its obligations under the depopulation procedures if he determines that the company would be placed in an unsafe or unsound condition. When an exposure is assigned to a member company under this paragraph as a result of the failure of the member company to meet an applicable quota, but only in such circumstances, the following shall apply:  (a) When an assigned exposure is written by the member company assigned the exposure, the facility producer of record shall have the right to service that business, which shall include all renewals thereof, and shall be entitled to a commission for that service in accordance with subparagraph (c) of this paragraph;  (b) The facility producer of record shall retain complete control, possession and ownership of all records and renewals regarding exposures assigned pursuant to this paragraph, provided, however, that the member company may maintain such records as are provided to it under the procedure established by subsection a. of section 26 of P.L.1983, c.65 (C.17:30E-14). A member company that acquires access to records pursuant to that subsection shall not share any such records with any other producer or use any such records to solicit direct renewal of the business, a change in producer of record, other insurance products or any other products;  (c) The facility producer of record shall be paid a commission by the member company on the business serviced by the facility producer of record pursuant to this paragraph. That commission shall be paid at a percentage rate no less than that being paid by the Market Transition Facility on July 1, 1991;  (d) A copy of every notice, other than bills, and including renewal declarations, change endorsements, cancellations and reinstatements, and the corresponding payment schedules included therein, correspondence, claims checks and acknowledgements, sent to an insured by a member company with respect to business covered by this paragraph, shall be sent to the facility producer of record;  (e) The procedure established in subparagraphs (a), (b), (c), (d), (e) and (f) of this paragraph shall be applicable only to exposures assigned to member companies in accordance with this paragraph as a result of the failure by the member company to meet an applicable quota. This paragraph shall not constitute the grant of an agency contract by the member company to the facility producer of record authorizing the facility producer of record to write new business through the member company; provided, however, that the facility producer of record shall have the authority to provide the usual and customary servicing of the business subject to this paragraph, including adding new and replacement vehicles and adding or changing coverages on the business; and  (f) Nothing in this paragraph shall deprive an insured of the right to designate a producer of record other than the facility producer of record. Upon that designation, the rights of the facility producer of record under this paragraph shall terminate. Notwithstanding any provision in this paragraph, the rights of the facility producer of record under this paragraph shall terminate in the event of the producer's insolvency, gross and willful misconduct, fraud or license revocation;  (6) A schedule for the payment of premiums on an installment basis. Any installment payment schedule for policies issued for a one-year period shall provide for installment payments during a period of not less than nine months; (7) That no policy issued by the facility may be cancelled for nonpayment of premium unless written notice is provided at least 15 days prior to the effective date of cancellation accompanied by the reason for cancellation. Notice shall be provided to the named insured and the producer of record at their last known addresses;  (8) For notification of the named insured and the producer of record at their last known addresses no later than 15 days after the nonrenewal of a facility policy of such nonrenewal; and  (9) Such other provisions as are deemed necessary for the operation of the facility.  Notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the commissioner shall amend the plan of operation to provide for an evaluation, prioritization and disbursement of claims payable by the facility. The amended plan of operation shall contain a schedule for the prioritization of the payment of claims from the facility's assets in accordance with the order in which each class of claims is set forth in subsection c. of section 26 of P.L.1975, c.113 (C.17:30C-26). Every claim in each class shall be paid in full, or adequate funds or other assets shall be set aside for such payment before the claims of the next class receive any payment, except that, if the facility is found to have insufficient funds to pay those claims, the commissioner may deny payment of claims to any class or classes. The commissioner shall issue final orders establishing the amounts and classes of claims payable from monies available to the facility, pursuant to procedures set forth in the plan of operation. These orders may be appealed to the Superior Court, Appellate Division. The commissioner may provide for the deferral of the payment of claims for noneconomic loss payable under policies issued by the facility over a period not to exceed four years. The commissioner may also provide for the deferral of other claim payments. In providing for such a deferral, consideration shall be given to the importance of paying claims for economic loss under policies issued by the facility in relation to other claims, of maintaining the facility's infrastructure in order to ensure the service and payment of claims, both pending and future, and of protecting the interests of facility policyholders.  The commissioner shall further amend the plan of operation to provide a procedure for the commissioner to appoint qualified claims examiners and accountants to conduct independent field examinations and claims audits of servicing carriers to determine whether the servicing carriers have followed normal and prudent industry practices in their handling of claims on behalf of the facility. These examinations and audits shall be conducted at least semi-annually, and the examiners shall provide a report to the commissioner along with any findings or recommendations which have resulted from the examinations or audits. The commissioner shall annually report to the Governor and the Legislature his finding with respect to the examinations and audits of the facility servicing carriers.  d. (1) The commissioner shall apportion any losses of the facility in an amount not to exceed $439 million among member companies based on each company's apportionment share as determined for purposes of depopulation pursuant to subsection a. of section 26 of P.L.1983, c.65 (C.17:30E-14), but no apportionment shall be made after the effective date of P.L.1994, c.57 (C.34:1B-21.1 et al.). All monies paid by a member company before the effective date of P.L.1994, c.57 (C.34:1B-21.1 et al.) shall be applied as a credit against such member company's apportioned share of losses. The facility is authorized to transfer up to $100 million to the Division of Motor Vehicles Surcharge Fund created pursuant to section 12 of P.L.1994, c.57 (C.34:1B-21.12).  (2) Any amounts actually paid by a member company to the facility as payments on account or any amounts paid to the commissioner to satisfy its apportioned share for the losses of the facility shall not be passed through to any policyholder by any member company to recoup any of the amounts so paid, except as required by subsection g. of section 2 of P.L.1990, c.8 (C.17:33B-2).  e. The facility shall be subject to the provisions of P.L.1945, c.132 (C.54:18A-1 et seq.).  f. The commissioner shall, notwithstanding the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to the contrary, amend the plan of operation from time to time as may be necessary to effectuate the purposes of P.L.1994, c.57 (C.34:1B-21.1 et al.) or for any other purpose.  g. The commissioner shall undertake a review of any executory contract for services to the facility and may modify or terminate any such contract if the commissioner determines that modification or termination is in the best interest of the facility. Notwithstanding the provisions of P.L.1954, c.48 (C.52:34-6 et seq.) or the provisions of section 24 of P.L.1983, c.65 (C.17:30E-12) to the contrary, the commissioner may enter into any contract on behalf of the facility, which may include the consolidation of the servicing of the facility's policies.  L.1990,c.8,s.88; amended 1991,c.462,s.2; 1994,c.57,s.17.