Makes New Jersey 38th State To Join Insurance Compact
TRENTON – Legislation sponsored by Senator Nia H. Gill (D-Essex) to streamline the approval process for new insurance products, which will get products on the market faster and thereby increase competition among carriers was signed into law today by Governor Chris Christie.
The law (S-175) includes New Jersey in the ‘Interstate Insurance Product Regulation Compact,’ a contract between states that allows them to cooperate on the regulation of insurance. The compact allows insurance companies to file new products with a multi-state commission that serves as a one-stop-shop for review and approval. Once approved, the product can be sold in each of the 38 member states.
The compact is also designed to promote and protect the interests of consumers, as it holds insurance companies to uniform standards.
“Joining this compact will streamline the approval process for companies looking to sell new insurance products in New Jersey,” said Senator Gill, chair of the Senate Commerce Committee. “At the same time, the compact will help to ensure that provisions included in new insurance products are clear, and follow strict product standards that are developed by the multi-state commission.”
Previously, insurance companies seeking to get new products on the market were required to obtain approval from New Jersey individually, a slower process that puts consumers at a competitive disadvantage. Under the legislation, new insurance products, rate filings and certain advertisements would be reviewed and ruled on by the commission, which includes an individual from each member state.
The compact covers life insurance, annuity, disability income, and long-term care insurance products. It was developed by the National Association of Insurance Commissioners, in part, because consumers are increasingly mobile, and the insurance covered by the compact follows them across state lines. The association believed both insurers and consumers would benefit from uniformity in these product lines.
“Ultimately, as a result of this legislation, New Jersey residents will reap the benefits of better consumer protection,” said Gill.
The law will also allow the state to opt out of a product standard by either legislation or regulation. New Jersey would prospectively opt out of long-term care insurance products, under the bill, due to the sensitive nature of these products. Additionally, the state undertook a comprehensive update of its long-term care insurance laws in 2003.
The Senate approved the bill in October by a vote of 37-0. It passed by the Assembly by a vote of 78-0 in November.