Court Opinion

ID: 9764584
Source: CourtListenerOpinion
Date Created: 2023-08-29 03:28:02.506846+00
Date Added: 2024-06-11T07:29:58.510575
License: Public Domain

GARIBALDI, J.,
concurring.
I concur in the Court’s opinion. However, I write separately to emphasize that this statute is still susceptible to an as-applied challenge. I have grave doubts about the ability of the Commissioner of Insurance, under present regulations, to guarantee insurance companies a constitutionally-adequate rate of *67return. The present rate-making structure is lengthy and complex; the addition of the special separate-hearing procedure for rate relief will only add to existing delay. Although the length of time before rate relief is granted may not, alone, make the scheme constitutionally defective, Helmsley v. Borough of Fort Lee, 78 N.J. 200, 223, 394 A.2d 65 (1978), appeal dismissed, 440 U.S. 978, 99 S.Ct. 1782, 60 L.Ed.2d 237 (1979) the possibility for relief from confiscatory rates must be realistic. Id., at 226, 394 A.2d 65; see also Calfarm Ins. Co. v. Deukmejian, 48 Cal.3d 805, 817, 771 P.2d 1247, 1253, 258 Cal.Rptr. 161, 167 (1989) (court may strike down facially-valid law because procedures enacted under it “were so cumbersome and time-consuming that [affected persons] could not in reality obtain relief from confiscatory rates”).
Despite these doubts, I concur. The procedures established by the Commissioner may prove more effective than I predict, or he may adopt others. I have no desire prospectively to usurp his administrative expertise. As the trial court here noted, often “the effect of a delay must be judged in hindsight, and it cannot be reliably predicted to amount to a constitutional interdiction.” Nevertheless, that the Commissioner take steps presently to ensure a fair rate of return is imperative, especially in light of the holding in In the Matter of the Loans of the New Jersey Property Liability Insurance Guaranty Association to the New Jersey Automobile Insurance Guaranty Fund Pursuant to the New Jersey Fair Automobile Insurance Reform Act of 1990 (L. 1990, c. 8), 124 N.J. 69, 590 A.2d 210 (1991), a related case also decided today, that makes repayment of the NJ PLIGA “loans” an indeterminate intention rather than a contractual debt. Lack of action by the Commissioner coupled with an inability to determine when, or if, those “loans” will be recouped would make sound financial planning impossible.
*68Current economic conditions compound my concerns. In the past, insurance companies, like banks, were always considered financial bulwarks. That is no longer true. See Crenshaw, “Personal Finance: Finding The Best Life Insurance; Buyers Must Consider Firm’s Solvency As Well As Policy Cost,” Washington Post, December 16,1990, at H9 (“in the current economic uncertainty, the possibility [of an insurance company becoming insolvent] can no longer be overlooked”); Floyd, “Market Place: Failing Insurers’ Bailout Cost Rises,” New York Times, November 15, 1988, at D8, col. 3 (estimates of costs of saving failing insurance companies have soared from $82,000,000 in 1984 to $917,000,000 in 1987). Although the size of the accumulated unpaid debt of the Joint Underwriting Association is deplorable, the failure or withdrawal of insurance companies providing coverage in this state would prove even more damaging. Therefore, it is imperative that insurance companies actually receive a “fair and adequate rate of return” within a reasonable period of time. Cf Helmsley, supra, 78 N.J. at 242, 394 A.2d 65 (holding that a more moderate regulatory scheme, i.e., one that does not attempt to keep investors’ returns at the constitutional minimum, must be adopted where the governing body is not prepared to support a sophisticated administrative relief system providing for prompt, fair and efficacious processes). Neither the insurance company nor this state’s insurance market will be adequately protected by the pyrrhic discovery after it has ceased doing business here (and perhaps elsewhere) that it deserved a rate increase five years ago.
For reversal in part, affirmance in part — Chief Justice WILENTZ and Justices CLIFFORD, HANDLER, POLLOCK, O’HERN, GARIBALDI and STEIN — 7.