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Thursday, 14 May 2020 22:00

NJ Requires Insurance Companies to Refund Premiums in Wake of Coronavirus

Written by Cole Schotz, JD Supra

The New Jersey Department of Banking and Insurance (DOBI) on May 12 issued a bulletin requiring certain insurance carriers to assess whether the statewide lockdown due to coronavirus warrants reduced premiums and refunds for policyholders. 

DOBI’s commissioner noted the governor’s executive orders compelling many to remain at home has curtailed automobile travel and economic activity which, in turn, has reduced loss risks for many insurance companies.

 

Accordingly, DOBI is requiring insurance companies to recalculate rates and issue refunds, credits, dividends or other appropriate relief.  The bulletin provides alternative methods for conducting those calculations and specifies that it applies to the following lines of insurance:

 

  • Private passenger automobile insurance
  • Commercial automobile insurance
  • Workers’ compensation insurance
  • Commercial multiple-peril insurance
  • Medical malpractice insurance
  • Any other line of coverage where the measures of risk have become substantially overstated as a result of the COVID-19 pandemic

 

Insurers have until June 1 to submit proof their current rates are not excessive, inadequate or discriminatory. Assuming they are unable to do so, DOBI is requiring all insurers to notify policyholders by June 15 of the amount and basis for calculating the refund or adjustment and related information.

 

A copy of the bulletin is available here and additional information can be found on the DOBI’s website.

 

We thank JD Supra for reprint permission. 

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