Bill Text: NJ A4165 | 2010-2011 | Regular Session | Introduced
Bill Title: Requires certain public entities to issue requests for proposals for purchase of certain insurance products and services; requires disclosure of commissions paid.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2011-06-23 - Introduced, Referred to Assembly Financial Institutions and Insurance Committee [A4165 Detail]
Download: New_Jersey-2010-A4165-Introduced.html
Sponsored by:
Assemblywoman ALISON LITTELL MCHOSE
District 24 (Sussex, Hunterdon and Morris)
Assemblyman GARY R. CHIUSANO
District 24 (Sussex, Hunterdon and Morris)
SYNOPSIS
Requires certain public entities to issue requests for proposals for purchase of certain insurance products and services; requires disclosure of commissions paid.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the procurement of certain insurance products and services by certain public entities and supplementing Title 17 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. As used in this section, "public entity" means the State, any county, municipality, authority, or any agency or instrumentality thereof.
b. Notwithstanding the provisions of the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.), the "Public School Contracts Law," N.J.S.18A:18A-1 et seq., the "State College Contracts Law," P.L.1986, c.43 (C.18A:64-52 et seq.), or any other law to the contrary:
(1) With respect to the procuring of any policy for any line of property and casualty insurance, other than participation in a joint insurance fund as permitted by law, a public entity shall issue a request for proposals at least once every three years, stating: the type of insurance required; the minimum policy limits required; the minimum financial company rating acceptable to the public entity, as rated by a nationally recognized rating agency; and any other information as may be necessary to procure the policy.
(a) In the case of any policy in which a broker of record letter is necessary to obtain a premium quotation, in the case of multiple layers of coverage in a single line of insurance, the request for proposals shall be sent to insurance producers, who shall present proposals to the public entity. The proposals submitted by the producer shall set forth the policy provisions, including deductibles, coinsurance, policy exclusions, whether the policy is subject to retrospective rating, and if so, whether the retrospective rating shall be on a claims paid or incurred loss basis, and any other information pertinent to the policy. The public entity shall select the producer with the program most suitable and favorable to the public entity and provide the producer with a broker of record letter in order for the producer to obtain premium quotations. If the public entity does not find the proposal or premium quotation satisfactory, it may reissue the request for proposals or request that the proposal submitted be modified. At the time the proposals are submitted to the public entity with the premium quotations, the submission shall include the amount of any commissions payable by the issuing insurer to the producer. If a policy is to be written in the surplus lines market, the submission shall also include a disclosure that surplus lines policies are no longer covered by a guaranty association in the event that the insurer becomes insolvent.
(b) In the case of any policy in which a broker of record letter is not necessary to obtain a premium quotation, the public entity shall select the policy or policies which are most suitable to its needs, considering the degree to which the policy meets the conditions set forth in the request for proposals. The proposals submitted by the producer shall set forth the policy provisions, including deductibles, coinsurance, policy exclusions, whether the policy is subject to retrospective rating, and if so, whether the retrospective rating shall be on a claims paid or incurred loss basis, and any other information pertinent to the policy, and the amount of the premium quoted by the insurer. The public entity shall select the producer with the program most suitable and favorable to the public entity. If the public entity does not find the policy or premium quotation satisfactory, it may reissue the request for proposals or request that the proposal submitted be modified. At the time the proposed policy is submitted to the public entity with the premium quotations, the submission shall include the amount of any commissions payable by the issuing insurer to the producer. If a policy is to be written in the surplus lines market, the submission shall also include a disclosure that surplus lines policies are no longer covered by a guaranty association in the event that the insurer becomes insolvent.
(2) If a public entity does not elect to participate in a joint insurance fund as permitted by law, the New Jersey State Health Benefits Program pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.), or the School Employees' Health Benefits Program pursuant to sections 31 through 41 of P.L.2007, c.103 (C.52:14-17.46.1 through 52:14-17.46.11), and owns or has the intention of procuring a policy of group health insurance, the public entity shall issue a request for proposals no less frequently than once every three years, stating: the type or types of health benefits plan required; the nature and scope of benefits that are required; the minimum insurance company financial rating acceptable to the public entity, as rated by a nationally recognized rating agency; any standards of performance required by the public entity with respect to the payment of claims; and any other information as may be necessary to secure the policy or coverage. The public entity shall select the producer with the program most suitable and favorable to the public entity. If the public entity does not find the policy or premium quotation satisfactory, it may reissue the request for proposals or request that the proposal submitted be modified. At the time the proposed policy is submitted to the public entity with the premium quotations, the submission shall include the amount of any commissions payable by the issuing insurer to the producer.
(3) If a public entity elects to self-insure for health benefits as permitted by law, the public entity shall issue a request for proposals no less frequently than once every three years for procuring the services of a third party administrator licensed pursuant to P.L.2001, c.267 (C.17B:27B-1 et seq.), stating: the minimum qualifications required of the third party administrator; standards of performance with respect to the administration of the health benefits plan and the payment of claims; requirements for the procuring of a network or networks, as applicable to the plan; and specifications with respect to the procurement of excess insurance with either an aggregate or individual attachment point, or both, if applicable to the plan, including the minimum insurance company rating acceptable to the public entity, as rated by a nationally recognized rating agency. The public entity shall select the third party administrator with the program most suitable and favorable to the public entity. If the public entity does not find the proposal satisfactory, it may reissue the request for proposals or request that the proposal submitted be modified. At the time the proposed contract for third party administrator services is submitted to the public entity, the submission shall include the amount of any commissions payable by the third party administrator to any person.
2. This act shall take effect immediately.
STATEMENT
This bill requires public entities, including the State, county and municipal governments, and others, to issue requests for proposals for property and casualty, health insurance, and the services of third party administrators of self-insured health benefits plans, at least once every three years.
As part of that process, with respect to property and casualty insurance, the proposals submitted shall include the policy provisions, including deductibles, coinsurance, policy exclusions, whether the policy is subject to retrospective rating, and if so, whether the retrospective rating shall be on a claims paid or incurred loss basis, and any other information pertinent to the policy. The public entity shall select the producer with the program most suitable and favorable to the public entity. If the public entity does not find the proposal or premium quotation satisfactory, it may reissue the request for proposals or request that the proposal submitted be modified. At the time the proposals are submitted to the public entity with the premium quotations, the submission shall also include the amount of any commissions payable by the issuing insurer to the producer.
With respect to a public entity procuring group health insurance, the request for proposals shall include: the type of health benefits required; the minimum insurance company financial rating acceptable; standards of performance as to the payment of claims; and other information necessary to secure the policy. The public entity shall select the producer with the program most suitable and favorable to the public entity. If the public entity does not find the proposal or premium quotation satisfactory, it may reissue the request for proposals or request that the proposal submitted be modified. At the time the proposals are submitted to the public entity with the premium quotations, the submission shall also include the amount of any commissions payable by the issuing insurer to the producer.
As part of the process of a public entity self-insuring for health benefits, the bill provides that the request for proposal for the services of a third party administrator shall include: the minimum qualifications required of the third party administrator; standards of performance as to administration of the health benefits plan and payment of claims; requirements for procuring networks; and certain qualifications concerning excess insurance. Here, too, the public entity shall select the third party administrator with the program most suitable and favorable to the public entity. If the public entity does not find the proposal satisfactory, it may reissue the request for proposals or request that the proposal submitted be modified. At the time the proposals are submitted to the public entity, the submission shall also include the amount of any commissions payable by the third party administrator to any person.
