Commissioner Announces Consumer Protection Actions
Market conduct exams ensure compliance with New Jersey laws and regulations

TRENTON - Banking and Insurance Commissioner Holly C. Bakke announced today a number of actions that underscore the Department's commitment to protecting consumers.

Recent market conduct examinations by the Office of Consumer Protection Services work to ensure that auto insurance applications and claims are filed in a timely manner, that policyholders are provided with the basis for any cancellation, and that all aspects of fraud are investigated.

In recently adopted examinations, the Department took the following actions:

• Liberty Mutual Fire Insurance Company was rejecting applications for automobile insurance in cases where the applicant failed to provide all of the information requested or simply forgot to sign the document in order to bind coverage. The company will correct the problem.
• Selective Insurance Company of America was not paying auto Personal Injury Protection (PIP) claims within the required 60-day period. Selective was cited for failure to pay those claims in a timely manner and for failure to pay interest on delayed claims. The company is in the process of tabulating and refunding the interest on those delayed claims.
• Chubb Insurance Company of New Jersey was improperly non-renewing policyholders under the 2 percent rule. Chubb had failed to give as many as 40 percent of those who were non-renewed a reason for the cancellation, thereby limiting a policyholder's ability to file an appeal. Chubb will correct the problem. Also, a review of Chubb's Web site revealed that Chubb offered information on buying auto insurance in all other states except New Jersey, giving consumers the mistaken impression that Chubb does not offer auto insurance in New Jersey. Chubb has corrected that advertising omission on its Web site.
• Prudential Property and Casualty Insurance Company improperly denied discounts for homes that are equipped with smoke detectors, resulting in an overcharge of $29,303 to 798 policyholders. The company is refunding those overcharges.
• Metropolitan Property and Casualty Insurance Company delayed the application process, having the effect of discouraging applicants and in some cases creating the need to seek auto insurance from other carriers. The company will correct the problem.
• Allstate was not investigating suspicious underwriting issues where the policy was terminated for nonpayment of premium after the company's discovery of a potentially fraudulent act. The company will correct the problem.

"The Department works every day to protect consumers in the insurance marketplace," Commissioner Bakke said. "Consumers would not be aware of market activities that may be improper or place an unfair burden on them had it not been for our examinations of companies' practices."

The Market Conduct Unit within the Office of Consumer Protection Services conducts on-site reviews of insurance company and agency operations and business practices to determine whether they are in accordance with New Jersey's laws. The unit examines life, health, property/casualty and managed care companies, with specialty lines being reviewed as appropriate.

Based on the findings of an examination, the Department issues a report that includes findings and recommendations to correct company procedures that adversely affect consumers or do not comply with New Jersey laws. Significant findings may result in further administrative action leading to fines, payments to consumers or additional benefits to policyholders.

"This important process helps promote a climate of fair competition in the marketplace and protects consumers from practices that violate their rights under insurance laws," Commissioner Bakke said.

"Market conduct examinations are important consumer protection tools," said Assistant Commissioner Lee Barry, who oversees the Office of Consumer Protection Services. "Consumers win when we gain the companies' cooperation to correct the problems found in these examinations."

"We're here to protect consumers, many of whom are not aware of the requirements our laws and regulations place on companies," said Cliff Day, manager of the Market Conduct Unit. "Many consumers are not fully aware of these requirements. Therefore, we are their advocate."

Market conduct examinations are just one way the Department monitors the insurance marketplace. It also monitors companies' financial solvency, follows up on all consumer complaints received by telephone, letter and e-mail, and interacts with consumers on a daily basis through its consumer centers based in Newark and Camden.