2023 New Jersey Revised Statutes › Title 17 - Corporations and Institutions for Finance and Insurance › Section 17:30E-8 - Sources of income

17:30E-8. Sources of income
a. The association shall derive income from the following sources for the payment of expenses, losses, and the provision of adequate, actuarially sound reserves for unpaid losses and loss adjustment expenses, including incurred but not reported losses, in connection with association business: (1) net premiums earned; (2) income generated from any association accident surcharge system permitted or required by law; (3) that percentage of surcharges collected by the Division of Motor Vehicles prior to October 1, 1991 and deposited with the association pursuant to subsection b. of section 6 of the "New Jersey Automobile Insurance Reform Act of 1982," P.L.1983, c.65 (C.17:29A-35); (4) income collected by members of the association and by the association from the residual market equalization charge imposed prior to April 1, 1991, or flat charges (also referred to as capitation fees or policy constants, but not including premiums for uninsured motorist or towing coverage, or flattened tax and expense fees implemented pursuant to section 8 of P.L.1983, c.65 (C.17:29A-37)) imposed prior to April 1, 1991, levied on a per car and per coverage basis; (5) income from investment of moneys collected pursuant to paragraphs (1), (2), (3), (4) and (6) of this subsection; and (6) income collected by the Director of the Division of Motor Vehicles prior to October 1, 1991, pursuant to section 68 of P.L.1990, c.8 (C.17:33B-63). Residual market equalization charges collected on behalf of the association shall on a monthly basis be certified to by the carrier and shall be transferred to the association in accordance with the plan of operation. No producer commissions or premium taxes shall be paid on, or company expenses or servicing carrier compensation deducted from, the residual market equalization charge. No servicing carrier compensation or commissions shall be paid by the association on violation surcharges deposited by the Division of Motor Vehicles with the association. All premiums received by servicing carriers on behalf of the association shall on a monthly basis be certified to by the carrier and shall be transferred to the association in accordance with the plan of operation. Premiums shall be transferred to the association net of commissions paid, all premium taxes, and servicing carrier compensation, except as otherwise required by law.
All claims and claim expense payments paid on association business shall be disbursed by the servicing carriers or the association through drafts drawn on association funds in accordance with the plan of operation. Servicing carriers, as agents of the association, shall have no individual liability on claims or policies written by the association.
b. At least annually, the board shall file its experience with the commissioner, which experience shall include the projected income, expenses, losses and reserve requirements of the association for the ensuing year, any adjustment in previously established reserves for unpaid losses and loss adjustment expenses necessary to make such reserves adequate and actuarially sound, and the initial filing shall include the experience of the automobile insurance plan established pursuant to P.L.1970, c.215 (C.17:29D-1). Except in the case of the initial or other filing applicable to the first year of operation of the association, the board shall include in its filing with the commissioner, for his approval, a computation of the residual market equalization charge per insured vehicle to be collected by each member from its voluntary insureds, exclusive of principal operators 65 years of age or older, and by each servicing carrier from association insureds or insureds covered by the Market Transition Facility created pursuant to section 88 of P.L.1990, c.8 (C.17:33B-11), exclusive of principal operators 65 years of age or older, to offset the anticipated losses of the association.
At the end of the first 12 months of the operation of the association and at least annually thereafter, the board shall also include in its filing with the commissioner a review of the previous year's experience, setting forth the income, losses, and reserve requirements, including any adjustment in previously established reserves for unpaid losses and loss adjustment expenses necessary to make such reserves adequate and actuarially sound, and expenses of the association during the previous year. The filing shall be accompanied by such statistics and other information as the commissioner may deem necessary. The commissioner shall, within 60 days of such filing, approve or disapprove the filing, except that the commissioner may, for good cause, extend by not more than 60 days the period for approving or disapproving the filing. Failure to act within the period allowed for the commissioner's review of the filing shall be deemed approval of the filing, except that the running of the period shall be tolled by a request for additional information by the commissioner or until the association notifies the commissioner that it will not provide such additional information, together with the reason for not supplying the information. Failure to comply with a reasonable request for information may be a ground for disapproving all or part of the filing. If the commissioner disapproves all or part of the filing, he shall state the reasons for such disapproval, and indicate such portion of the filing he approves. Such disapproval shall be subject to review by the Appellate Division of the Superior Court.
c. The residual market equalization charge last approved by the commissioner shall continue to apply while the application for the revised charge is being processed by the commissioner pursuant to this section.
d. The residual market equalization charge per insured vehicle shall be collected following the effective date of such approval, by the insurer from its policyholders, exclusive of principal operators 65 years of age or older, on a uniform net direct car year of liability exposure basis and a net direct car year of physical damage exposure basis. Any insurer or rating organization making a residual market equalization charge pursuant to this subsection shall, 15 days prior to the date of the implementation of the proposed rate adjustment, make an informational filing with the commissioner, documenting compliance with the established method of distributing such residual market equalization charge.
e. Any insurer licensed to transact automobile insurance after the effective date of this act shall become a member of the association upon receiving such license and the determination of any such insurer's participation in the association shall be made as of the date of such membership in the same manner as for all other members of the association.
f. For purposes of this section and any other applicable provision of law, the residual market equalization charge shall not be considered insurance premium unless otherwise specifically provided therein.
L.1983,c.65,s.20; amended 1983,c.301,s.5; 1984,c.1,s.3; 1985,c.520,s.3; 1990,c.8,s.19.