Opinion ID: 2309224
Heading Depth: 2
Heading Rank: 4

Heading: The New-Business Condition

Text: During its withdrawal from the private-passenger automobile-insurance business over a five-year period, Twin City must comply with all provisions of the Reform Act including the requirement that it participate proportionately in the shifting of assigned risk or residual market insureds to the voluntary market. The Appellate Division sustained the conditions and upheld the constitutionality of Section 72 of the Act. 248 N.J. Super. at 641-42, 591 A. 2d 1005. The court rejected Twin City's contention that the condition requiring Twin City's affiliates to surrender their licenses within five years was an unconstitutional taking of property without just compensation. In the Appellate Division's view, Twin City's affiliates could retain their respective lines of insurance in New Jersey if Twin City continued to write private-passenger insurance. Hence, the only loss mandated by the Act was the potential reduction in profits resulting from Twin City's compliance with the residual market depopulation and other provisions of the Reform Act, which the court characterized as `a slender reed upon which to rest a takings claim.' Id. at 627, 591 A. 2d 1005 (quoting Andrus v. Allard, 444 U.S. 51, 66, 100 S.Ct. 318, 327, 62 L.Ed. 2d 210, 223 (1979)). The court also rejected Twin City's substantive-due-process argument, concluding that Section 72 of the Act and the Commissioner's order constituted a rational response to a private insurer's desire to withdraw from the private-passenger market, reflecting the strong governmental interest in encouraging all companies to share the burden of depopulating the residual market and reducing the cost of private-passenger automobile insurance. Id. at 630-38, 591 A. 2d 1005. The court summarily rejected Twin City's equal-protection and Commerce Clause arguments. Id. at 639-40, 591 A. 2d 1005. Finally, the Appellate Division remanded the matter to the Commissioner to permit Twin City to have its withdrawal proposal adjudicated on the basis of the regulations adopted subsequent to the Commissioner's order. Id. at 640-41, 591 A. 2d 1005.