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  • NJ A2295
  • Increases loss ratio reporting and disclosure requirements for carriers offering individual and group health insurance plans; applies loss ratio requirement to large group health insurance plans.
In Committee
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill applies enhanced reporting and public disclosure requirements to the 80% loss ratio requirements currently applicable to carriers offering individual and small group health insurance plans in the State. The bill also applies a new 85% loss ratio requirement to carriers that provide large group health insurance plans in the State, and applies the same enhanced reporting and disclosure requirements to the loss ratio requirements of these carriers. Generally, a loss ratio requirement means that a certain percentage of every premium dollar must be expended on the payment of claims, while the remaining percentage can be used for administrative expenses. The bill's requirements apply, beginning with the calendar year starting on January 1, 2017, and in each calendar year thereafter. As to carriers participating in the individual, small employer, and large employer markets, and their obligations to provide the Department of Banking and Insurance an annual report of loss ratios, the bill requires the annual report to include, so as to provide specific information about administrative expenses in comparison to amounts expended for payment of claims: (1) a specific breakdown of the carrier's administrative expenses for the previous calendar year, which allocates costs to the following categories: (a) executive salaries and benefits; (b) commissions and other fees paid to brokers or agents; (c) utilization and other benefits management expenses; (d) advertising and marketing expenses; (e) insurance expenses, including expenses for reinsurance, general liability, and professional liability policies; (f) taxes, including insurance premium taxes, payroll taxes, and property taxes; (g) travel and entertainment expenses; (h) state and federal lobbying expenses; and (i) other expenses, including but not necessarily limited to non-executive salaries, wages and other benefits, rent and real estate expenses, certification, accreditation, board, bureau and association fees; occupancy, depreciation and amortization; cost or depreciation of electronic data processing, claims and other services, regulatory authority licenses and fees, investment expenses and aggregate write-ins for expenses; (2) total administrative expenses incurred by the carrier in the previous calendar year, which shall be the sum of the costs provided as to the categories of costs set forth in the bill; (3) total claims paid by the carrier in the previous calendar year; and (4) net earned premiums received by the carrier in the previous calendar year. The bill also requires the department to specify by regulation the instructions for submitting annual reports with the required loss ratio information, including a requirement that the annual report of each carrier be certified by a member of the American Academy of Actuaries as accurate and complete. Finally, the bill requires the department to make each carrier's annual report available to the public through its official department website, and in printed format, upon request.
Financial Institutions and Insurance
Introduced, Referred to Assembly Financial Institutions and Insurance Committee  (on 2/4/2016)
Date Chamber Action Description
2/4/2016 A Introduced, Referred to Assembly Financial Institutions and Insurance Committee
Date Motion Yea Nay Other
None specified