HB Ad Slot
HB Mobile Ad Slot
Department of Banking and Insurance Mandates Insurance Premium Refunds
Wednesday, May 13, 2020

On May 12, 2020, the New Jersey Department of Banking and Insurance issued Bulletin No. 20-22.  As a result of the COVID-19 pandemic and the resulting reduction in loss exposure for insurers, the Department has ordered insurers to make an initial premium refund or other adjustment for certain specified lines of insurance.  Premium refunds are required for the following types of insurance: (1) medical malpractice insurance; (2) commercial liability insurance; (3) commercial multiple-peril insurance; (4) workers compensation insurance; (5) commercial automobile insurance; (6) private passenger automobile insurance; and (7) any other line of coverage where the measures of risk have become substantially overstated as a result of the COVID-19 pandemic.

The premium refund may be provided as a premium credit, a reduction in premium, a return of premium, dividend, or other appropriate premium adjustment.  The premium refunds must be implemented “as quickly as practicable,” but in no event later than June 15, 2020.

Insurers may also provide additional premium relief to individual policyholders on a case-by-case basis for recent, current, and upcoming policy periods or any portion thereof.  Examples of reclassifications set forth in the Bulletin include, but are not limited to: (1) reclassifying a personal automobile exposure from “commute use” to “pleasure use”; (2) reclassifying a physician practice to part-time status; or (3) excluding payroll for employees who are being paid but not actively working.

Insurers are required to notify each affected policyholder no later than June 15, 2020 regarding the amount of the refund or adjustment.  In addition, insurers are required to provide an explanation of the basis for the adjustment, including a description of the policy period that was the basis of the premium refund and any changes to the classification or exposure basis of the affected policyholder.

While the across the board initial premium refunds referenced above will not require any action by individual policyholders, businesses and individuals should review their current and projected activities and reach out to their insurer to see if there is an opportunity for an additional “case-by-case” premium reduction.  For example, if a physician practice has reduced hours for its physicians so that all physicians are working part-time, this may provide the opportunity for a further reduction in medical malpractice premiums.

The text of the bulletin can be found here.

HB Ad Slot
HB Ad Slot
HB Mobile Ad Slot
HB Ad Slot
HB Mobile Ad Slot
HB Ad Slot
HB Mobile Ad Slot
 

NLR Logo

We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up to receive our free e-Newsbulletins

 

Sign Up for e-NewsBulletins