TRENTON – Property and casualty insurers from out-of-state could begin to operate a little more quickly in New Jersey under a recent rule proposed by the Department of Banking and Insurance.
Currently, a “seasoning” rule requires out-of-state property and casualty insurance companies to show that they have been operating for five years in their home state before they begin work in New Jersey.
The proposed rule would lower the five-year requirement to three years to align with more states’ regulations.
“The proposed amendments will have a positive social impact by eliminating unnecessary restrictions on the admission of otherwise qualified insurers to transact property/casualty business in this state,” according to the summary of the proposed rule from the Department of Banking and Insurance.
The summary of the proposal states that the amendment would “enhance competition for…insurance in this state by eliminating an unnecessary barrier to entry.”
The proposal also stipulates that the out-of-state insurance companies hoping to do business in New Jersey are required to have generated a net income from operations during two of the last three years.
Deana Lykins, the president of the Insurance Council of New Jersey, supports the amendment.
“The insurance industry has become much more global,” Lykins said, adding that state regulatory hurdles of the past seem to be expiring.
Michael Egenton, senior vice president of government relations at the New Jersey State Chamber of Commerce, said members in the Chamber have supported the amendment.
“Basically it would set a level playing field with how other states are operating,” Egenton said. “We support anything that puts us on an equal, level playing field with other states. We’re constantly looking at other states, benchmarking ourselves, and if other states are lowering it or have it at three years, that’s something we commend.”
The Department of Banking and Insurance does not anticipate any jobs being lost as a result of the proposed amendment, and said the change “may result in increased jobs” in New Jersey.
Christine Stearns, the vice president for health and legal affairs at the New Jersey Business and Industry Association, also spoke in favor of the proposed rule.
Stearns said the rule would “reduce unnecessary regulations” to help New Jersey compete with other states.
Marshall McKnight, a spokesperson for the Department of Banking and Insurance, said the change is being proposed to help New Jersey fall in line with other states and their regulations. The amendment would not be voted on by the Legislature, and the decision to enact the rule falls in the hands of the commissioner. Currently, the department is accepting comments on the proposal.