New Jersey S 4040: Revises territorial rating plans used by insurers writing private passenger automobile insurance.

Bill Text

S4040 

SENATE, No. 4040 

STATE OF NEW JERSEY

222nd LEGISLATURE

� 

INTRODUCED MARCH 19, 2026

Sponsored by:

Senator� JOSEPH F. VITALE

District 19 (Middlesex)

SYNOPSIS

���� Revises territorial rating plans used by insurers 
writing private passenger automobile insurance. 

CURRENT VERSION OF TEXT 

���� As introduced.

�� 

An Act concerning territorial rating plans for automobile 
insurance and amending P.L.1998, c.21.

���� Be It 
Enacted by the Senate and General Assembly of 
the State of New Jersey:

���� 1.��� Section 26 of P.L.1998, 
c.21 (C.17:29A-48) is amended to read as follows:

���� 26.� Every insurer writing 
private passenger automobile insurance in this State and every rating 
organization establishing territorial rating plans on behalf of its member 
companies shall establish new territorial rating plans in place of the 
insurer's or filer's territorial rating plan in effect on June 1, 1998, which 
shall include territorial definitions, territorial relativity factors and 
territorial base rates, and which are in accordance with the provisions of 
sections 26 through 29 of this amendatory and supplementary act.� The 
Commissioner of Banking and Insurance shall promulgate regulations establishing 
standards governing the establishment of new rating territories, which 
standards shall include, but not be limited to:

���� a.���� Territories shall be 
defined in such a manner as to recognize throughout the territorial rating plan 
both qualitative similarities and qualitative differences in driving 
environments or mix of driving environments, which may include, but not be 
limited to, traffic density, population density, comparative severity of loss, 
and the degree of homogeneity within a territory in terms of driving 
environments, population, and driver classification, and the territory shall be 
comprised of towns or cities which are contiguous;

���� b.��� Territories shall 
contain a sufficient number of exposures to result in statistically credible 
experience, in accordance with regulations established by the commissioner, and 
shall be defined in a manner which minimizes the effect of variability of loss in 
a territory on a year-to-year basis;

���� c.���� Territory definitions 
shall take into account the impact of the overlapping of traffic patterns on 
exposure to loss, including the relative number of intraterritory trips and 
inter-territory trips applicable to each proposed territory, for which the commissioner 
shall make available to the insurer, filer, or the commission established 
pursuant to section 28 of this amendatory and supplementary act, appropriate 
information collected pursuant to the provisions of section 1 of P.L.1987, 
c.450 (C.43:21-14a) by the Department of Labor and Workforce Development;

���� d.��� Territories shall be 
created in a manner which results in an equable distribution of exposures among 
territories throughout the State and no territorial rating plan shall result in 
territories which are arbitrary, unfairly discriminatory, significantly disproportionate 
in terms of the number of exposures per territory, or created in a manner which 
is primarily for marketing purposes rather than measuring relativity of 
exposure to probable loss, or created in a manner which can be used to avoid 
the insurer's or filer's obligations under section 27 of P.L.1990, c.8 
(C.17:33B-15);

���� e.���� Territories shall be 
created in a manner which does not result in disproportionate differences in 
territorial relativity factors or territorial base rates between contiguous 
territories with similar driving environments or similar mix of driving 
environments;

���� f.���� Factors to be 
considered in establishing territorial rate relativities shall include taking 
into account similarities or differences in driving environments or mix of 
driving environments, including traffic density, population density, mix of 
driver classifications within a territory, including classifications capped 
pursuant to the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36), 
comparative degree of severity of loss, and the relative number of 
intraterritory and inter-territory trips;

���� g.��� Territories shall be 
defined in a manner which does not result in unfair inter-territorial 
subsidization among territories with significant differences in driving 
environments or mix of driving environments, population density, traffic 
density, mix of driver classifications, including classifications capped 
pursuant to the provisions of section 7 of P.L.1983, c.65 (C.17:29A-36) and 
comparative degree of severity of loss;

���� h.��� For the purpose of 
defining territories and establishing territorial relativity factors, loss 
experience allocated to any territory by an insurer or filer (1) shall take 
into account any recovery applicable to exposures in the territory which are 
attributable to subrogation or any other kind of recovery by the insurer 
reporting the losses a