Morton I. Greenberg, J.s.c.
[159 NJSuper Page 419] Plaintiff Commissioner of Insurance of New Jersey brought this action on March 1, 1978 against defendants Nationwide Mutual Insurance Company, Inc. and Nationwide Mutual Fire Insurance Company, related Ohio companies authorized to do business in New Jersey (together hereinafter, Nationwide). The complaint set forth that Nationwide determined on October 13,
1977 to terminate its fire and casualty business in New Jersey. In furtherance of this plan its agency contracts were to be canceled as of September 30, 1978. Plaintiff further alleged that on or about December 19, 1977 Nationwide forwarded a form letter to each of its agents with an enclosed agreement to be signed releasing the agency obligations and that most Nationwide agents accepted the agreement. It was further claimed that Nationwide on February 2, 1978 started nonrenewing commercial policies and that it intended not to renew other fire and casualty policies as well. Plaintiff stated that Nationwide was violating its obligations under N.J.S.A. 17:22-6.14a which requires that a carrier, upon termination of an agency, continue to offer certain renewal options to the insureds for a period of nine months beyond the agency termination. On March 2, 1978 the court, after a hearing, issued a temporary restraining order barring defendant from sending notices of nonrenewal unless the insureds were advised that Nationwide would renew if the insured had not obtained satisfactory replacement coverage in the voluntary market.
On March 9, 1978 plaintiff filed an amended verified complaint alleging that defendant, in indicating that it would not renew automobile policies, was violating N.J.S.A. 39:6A-3, the New Jersey Automobile Reparation Reform Act (hereinafter, the No Fault Act), and N.J.A.C. 11:3-8.1, a regulation implementing the statute. Thereafter the matters set forth in the original complaint were settled, leaving for determination the issues set forth in the amendment. The parties agree that there are no disputes of material fact and that the matter is ripe for summary disposition. See N.J.S.A. 17:32-20. The trial on April 18, 1978 was thus limited to arguments of law. Nationwide has stated that notwithstanding the withdrawal it does not intend to surrender its certificate of authority to do business in New Jersey. N.J.S.A. 17:32-2(d). Apparently retention of the certificate is a convenience in servicing large national accounts.
N.J.S.A. 39:6A-3, after requiring that every owner or registered owner of an automobile maintain liability insurance, provides:
No licensed insurance carrier shall refuse to renew the required coverage stipulated by this act without the consent of the Commissioner of Insurance.
It will be noted that while N.J.S.A. 39:6A-3 announces no express standards for the Commissioner in determining whether to consent to the refusal to renew, N.J.S.A. 39:6A-19 authorizes him "to prescribe, adopt, promulgate, rescind and enforce such reasonable rules and regulations as may be required to effectuate the purposes of this act." The Commissioner has adopted N.J.A.C. 11:3-8.1(e) which includes ten grounds of nonrenewal, the last of which is as follows:
Request by producer of record not to renew policy, provided such request is accompanied by a true statement by the producer that he has replaced like coverage at approved rates in the voluntary market with an admitted carrier, specifying the name of the carrier; provided also that the transferor carrier has advised the insured in writing of his right to renewal in the same company before obtaining the insured's consent to transfer, and of the insured's right to renew if he or she is cancelled by the new carrier for reasons other than nonpayment or suspension or revocation of registration or driver's license. The producer's request for nonrenewal shall be made no later than 90 days prior to the expiration of the policy and a copy thereof shall be sent by the producer to the named insured. A nonrenewal based on such request shall be invalid and the company shall renew the policy at the request of the insured through an active agent and/or broker, or directly if the replacement policy is cancelled by the carrier for any reason other than the reasons allowed for cancellation by N.J.S.A. 17:29C-7 (nonpayment of premium or suspension or revocation of registration or driver's license). [ N.J.A.C. 11:3-8.1(e)(11)]
The regulation further provides that failure of a terminated agent to request renewal within the nine months from the effective date of termination, as provided in N.J.S.A. 17:22-6.14a, shall be construed as a request not to renew. N.J.A.C. 11:3-8.1(f).
The initial matter for decision involves statutory and administrative regulation construction and the interplay between N.J.S.A. 39:6A-3 and N.J.S.A. 17:22-6.14a. Nationwide contends that insureds with policies in New Jersey in satisfaction of the requirements of N.J.S.A. 39:6A-1 et seq. not otherwise subject to nonrenewal may be nonrenewed by reason of the withdrawal of Nationwide from New Jersey, their rights being limited to the short-term rights under N.J.S.A. 17:22-6.14a above discussed. Nationwide argues that N.J.A.C. 11:3-8.1 was not intended to apply when the insurer was eliminating a line of coverage but rather was aimed at a situation where the insurer was canceling a particular policy or group of policies arbitrarily and without just cause, though remaining generally in the automobile insurance business.
The court holds that the regulation should be construed as written. Nothing in N.J.S.A. 39:6A-3 makes any suggestion that the obligation of the carrier to the insured is dependent upon the continuation of an agency relationship. It was the intention of the Legislature that an insured have the advantage of guaranteed renewals of indefinite duration with a particular company so long as that company was a licensed insurance carrier. While it is true that N.J.S.A. 17:22-6.14a authorizes a carrier, subject to certain limited renewal obligations, to terminate an insured upon cancellation of an agency servicing the insured, that section is general in nature and is not particularly addressed to ...