Goldmann, Freund and Foley. The opinion of the court was delivered by Goldmann, S.j.a.d.
[80 NJSuper Page 238] Insurance Company of North America (INA) appeals under R.R. 4:88-8(a) from a determination of the Commissioner of Banking and Insurance (Commissioner) that the 90-day "deemer" provision of N.J.S.A. 17:29A-7 was inapplicable to certain filings made with the Commissioner and hereinafter described.
The Insurance Rating Law of New Jersey (N.J.S.A. 17:29A-1 et seq.) requires that "every insurer, before using or applying any rate to any kind of insurance, file with the Commissioner a copy of the rating-system upon which such rate is based, or by which it is fixed or determined." The filings may, on written notice by the insurer to the Commissioner, be made on its behalf by a rating organization of which it is a member or subscriber. N.J.S.A. 17:29A-6. In compliance with this filing requirement, INA made six filings with the Commissioner, as follows: (1) Church, School-College Policy; (2) Retailers and Wholesalers Policy; (3) Inland Marine Filing: Camera and Photographic Equipment Dealers, etc., Policy (revision); (4) Merchants Property Policy (revision); (5) Inland Marine Manual (revision), and (6) Deductible Insurance Plan (revision).
1. Church, School-College Policy. This is described by INA as in fact two separate contracts -- a Church Policy and a School-College Policy. The Church Policy is designed for churches and chapels, synagogues, monasteries, convents, orphanages and homes, and provides insurance for real property, personal property, loss of income and legal liability for property damage or bodily injury. The School-College Policy is described as a specially designed package policy for educational institutions, providing fundamentally the same coverage as the Church Policy does for churches. INA characterizes both policies as similar in concept to the Homeowners Policy it introduced some 12 years ago. One of the advantages of a package policy is that there will accrue to the insured a discount in premium reflecting administrative expense savings and other factors pertinent to the issuance of a multiple-coverage contract. The coverage of the two policies making up the Church, School-College Policy is extensive, including fire, extended coverage, vandalism, burglary, medical payments, money and securities, and a number of other insurable risks. The filing was made on May 29, 1962
through the Fire Insurance Rating Organization of New Jersey (FIRO), of which INA is a member.
In the Commissioner's view, the Church, School-College Policy is essentially a combination of coverages contained in rating systems previously approved. The Commissioner points out that a Public Institutional Property Program (PIPP) was filed with him on September 8, 1960 pursuant to the Insurance Rating Law by FIRO on behalf of INA, and included coverages of fire, extended coverage, vandalism and malicious mischief, and sprinkler leakage. The Commissioner contends that the Church, School-College Policy consists of the PIPP filed by FIRO plus the rating systems filed by INA as an independent, with a range of coverage which includes burglary, medical payments, liability, money and securities, and a number of others.
INA insists that its policy is not just a combination of PIPP with other coverages: no mere joining together would provide all the coverages provided for in the most limited form of its proposed policy; the eligibility rules for PIPP are such that many risks eligible for coverage under the Church, School-College Policy would not be eligible for coverage under PIPP; and, finally, the rating procedures for this policy differ from those used for PIPP.
INA claims that the policy comprises a complete rating system and is an original filing, subject to the provisions of N.J.S.A. 17:29A-7. On the other hand, the Commissioner contends that the policy is merely an alteration, supplement or amendment of previously existing rate filings, and is therefore governed by N.J.S.A. 17:29A-14. Both statutes will be discussed hereafter.
2. Retailers and Wholesalers Policy. INA describes this policy as the first package policy in New Jersey available for mercantile establishments. It is similar in scope and coverage to the Church, School-College Policy and contains similar advantages to the insured. The policy was filed with the Commissioner through FIRO on February 27, 1962, and a revised filing was made on May 2, 1962. The Commissioner
approved the program on May 11, 1962, with the exception of its Annual Payment of Premium Plan and five forms of endorsements, all of which broaden or extend the basic coverages. INA represents that the Annual Payment of Premium Plan eliminates the expiration date and provides continuous coverage so long as the premium is paid. The premium charged is based upon the rate in effect on the policy's anniversary date.
The Commissioner calls attention to the fact that included in the basic rating system filed by FIRO on behalf of INA since the inception of rate regulation in 1944 (L. 1944, c. 27) is an annual premium payment plan. He contends that INA's Annual Premium Payment Plan is one applicable to a policy which may be written without a stated expiration date. This type of plan is not contained in the basic rating system already on file and hence constitutes an alteration, supplement or amendment of that system. Accordingly, the plan falls within N.J.S.A. 17:29A:-14. INA takes the position that the Annual Payment of Premium Plan represents an original rating system and falls under N.J.S.A. 17:29A-7, and the five forms of endorsement fall under N.J.S.A. 17:36-5.22 relating to forms and discussed below.
3. Inland Marine Filing: Camera and Photographic Equipment Dealers, etc., Policy. This policy provides protection for the stock of certain retailers and wholesalers on a broad "all-risk" basis. INA filed it with the Commissioner on May 14, 1962. It admits that the filing effected a revision in rates and rating techniques, and therefore constitutes an alteration, supplement or amendment to a rating system, falling within N.J.S.A. 17:29A-14.
4. Merchants Property Policy. This policy provides protection for the stock of certain retailers and wholesalers on a broad "all-risk" basis. It was filed with the Commissioner through FIRO on May 18, 1962. INA admits that it falls within N.J.S.A. 17:29A-14 since it, too, effected a revision in rates and rating techniques and therefore constituted an alteration, supplement or amendment to a rating system.
5. Inland Marine Manual. This is the 28th revision of the manual which INA distributes to its agents for use in ascertaining rules and rates applicable to Inland Marine Policies. The purpose of the revision was to make changes in certain coverages and to reduce certain rates so as to be more competitive. INA made the filing with the Commissioner on June 18, 1962. It is admitted that this filing also constituted an alteration, supplement or amendment to an existing rating system, and so falls under N.J.S.A. 17:29A-14.
6. Deductible Insurance Plan. For a number of years FIRO, on behalf of INA, has filed and had approved a deductible insurance program whereby the insured may purchase fire insurance with a deductible feature at a reduced rate. Under this program the insured was prohibited from securing insurance to cover the deductible amount, or any part of it: the Commissioner accepted the program on condition that the deductible amount be solely at the risk of the insured and not covered under any other policy. INA filed the Deductible Insurance Plan with the Commissioner through FIRO on August 1, 1962. The filing revised the existing plan to modify the prohibition against securing insurance to cover the deductible amount.
INA calls attention to the fact that the proposed plan contains no rates, nor is it used to ascertain rates. It is nothing more than a revision in form, and as a form filing falls under N.J.S.A. 17:36-5.22. The Commissioner, on the other hand, claims that petitioner is attempting to modify the condition which has always been imposed in approving deductible insurance plans, for it will give the insured the right to purchase insurance to any extent covering the deductible amount. This, he says, would alter the rule on file, which rule is deemed an integral part of the rating system, and so the determination of rates would also be affected. The Commissioner therefore claims that INA's proposed Deductible Insurance Plan is not merely a form, but a change affecting
rates, and so constitutes an alteration, supplement or amendment to a rating system, governed by N.J.S.A. 17:29A-14.
For purposes of orderly exposition, we again refer to N.J.S.A. 17:29A-6, which provides that
"* * * every insurer shall, before using or applying any rate to any kind of insurance, file with the commissioner a copy of the rating-system upon which such rate is based, or by which such rate is fixed or determined. The filing herein required may, on written notice by an insurer to the commissioner, be made on behalf of such insurer, by a rating organization of which such insurer is a member or subscriber. * * *"
N.J.S.A. 17:29A-7, referring to the rating systems noted in the preceding section, provides:
"If, after examination thereof, the commissioner shall find that such rating-systems * * * provide for, result in, or produce rates that are unreasonably high or excessive, or are not adequate for the safeness and soundness of the insurer, or are unfairly discriminatory between risks in this State involving essentially the same hazards and expense elements, he shall issue an order * * * directing that such rating-systems be altered in the manner and to the extent stated in such order, to produce rates that are reasonable and adequate, and not unfairly discriminatory. If the commissioner shall find that such rating-systems provide for, result in, or produce rates that are not unreasonably high, and are not inadequate for the safeness and soundness of the insurer, and are not unfairly discriminatory * * * he shall approve such rates, and such approval shall continue in effect until the commissioner shall, by order, direct that such rating-systems be changed or modified, * * *. If the commissioner shall fail to approve or disapprove any rating-systems within ninety days from the filing thereof such rating-systems shall be deemed to be approved by him. * * *." (Emphasis ours)
The section then goes on to state that whenever the Commissioner finds that rating systems theretofore approved by him provide for, result in, or produce rates which are unreasonable, or inadequate, or which discriminate unfairly, he shall issue an order directing that such rating systems be altered or revised in the manner and to the extent stated in the order.
Alterations, supplements or amendments to rating systems are dealt with in N.J.S.A. 17:29A-14:
"A rating organization, or any insurer making its own rates, may, from time to time, alter, supplement, or amend its rating-systems, or any part thereof, by filing with the commissioner copies of such alterations, supplements, or amendments together with a statement of the reason or reasons for such alteration, supplement, or amendment. If such alteration, supplement or amendment shall have the effect of increasing or decreasing rates, the commissioner shall determine whether the rates as altered thereby are reasonable, adequate, and not unfairly discriminatory. If the commissioner shall determine that the rates as so altered are not unreasonably high, or inadequate, or unfairly discriminatory, he shall make an order approving them. If he shall find that the rates as altered are unreasonable, inadequate, or unfairly discriminatory, he shall issue an order disapproving such alteration, supplement or amendment."
The above quoted sections are part of the Insurance Rating Law, L. 1944, c. 27; N.J.S.A. 17:29A-1 through 32.
N.J.S.A. 17:36-5.22, part of the Standard Fire Insurance Policy Form Law, provides that appropriate forms of contracts, supplemental contracts, or extended coverage endorsements insuring against loss, damage or liability occasioned by any accident, incidence, occurrence or peril other than fire and lightning, may be filed with the Commissioner for use with or as a part of a fire insurance policy, by a licensed ...