On appeal from the Commissioner, New Jersey Department of Insurance.
Michels, Bilder and Baime. The opinion of the court was delivered by Michels, P.J.A.D.
Petitioners, Insurance Company of North America, Indemnity Insurance Company of North America, CIGNA Insurance Company, Pacific Employers Insurance Company, CIGNA Property & Casualty Insurance Company, Century Indemnity Insurance Company, CIGNA Fire Underwriters Insurance Company, Bankers Standard Insurance Company and Atlantic Employers Insurance Company (hereinafter collectively referred to as CIGNA), appeal from the final administrative action of respondent Samuel F. Fortunato, the Commissioner of the New Jersey Department of Insurance (Commissioner), which disapproved their proposed Absolute Pollution Exclusion endorsement [Form LD-6608 (7/91)].
On September 13, 1991, CIGNA filed with the Department of Insurance (Department) a proposed endorsement which sought to add a pollution exclusion to their commercial multi-peril, general liability, farm liability and professional liability insurance programs
written on and after November 15, 1991. The purpose of the proposed Absolute Pollution Exclusion was to make clear that these liability insurance policies were not to include coverage for losses resulting in any way from pollution. The Absolute Pollution Exclusion endorsement provided:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
This endorsement replaces any pollution exclusion and amends all insurance provided under the following:
COMMERCIAL GENERAL LIABILITY FORM; FARM COVERAGE FORM; OWNERS AND CONTRACTORS PROTECTIVE LIABILITY COVERAGE FORM; PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE FORM; RAILROAD PROTECTIVE LIABILITY COVERAGE FORM.
This insurance does not apply to any injury, damage, expense, cost, loss, liability or legal obligation arising out of or in any way related to pollution, however caused. Pollution includes the actual or alleged presence in or introduction into the environment of any substance if such substance has, or is alleged to have, the effect of making the environment impure, harmful, or dangerous. Environment includes any air, land, structure or the air therein, watercourse or water, including underground water.
We shall have no duty to defend any suit arising out of or in any way related to pollution.
In accordance with Department regulations, as set forth in the New Jersey Administrative Code, CIGNA's filing included an "Actuarial Services -- Property/Liability PP-1 Form," a "Commercial Lines Insurance -- General Questionnaire" and a "Commercial Lines Insurance -- Policy Approval Questionnaire." While these forms were all properly included with the filing, they were largely devoid of any additional information beyond that which was contained within the actual filing itself.
Of the limited information that was provided, CIGNA classified its filing as "new," as opposed to being a "revision." Further, CIGNA declared that the filing would have "no" impact on rates to
be charged or losses to be paid, and it stated that the anticipated overall impact of the filing would be "indeterminable." Many of the other requests for information on the forms were left unanswered by CIGNA. There were no explanatory statements or supporting statistics proffered by CIGNA in connection with this filing.
In response to this filing, the Department directed a letter to CIGNA, dated September 24, 1991, which indicated that:
In order for the review of this filing to continue, the following questions/concerns must be addressed:
(1) All reference to Farm Liability insurance must be deleted from this submission. Farm Liability is a Personal Lines Coverage [and] any changes must be submitted pursuant to the Personal Lines Regulations.
(2) The Department feels that the proposed exclusion is too broad. The pollution definition is too vague and may not be in compliance with N.J.S.A. 17:29AA-11. The Department does not permit the use of Asbestos Exclusions and the proposed endorsement could effectively exclude all losses due to Asbestos.
(3) Justification as to why you need a pollution exclusion more restrictive than ISO's must be provided. Do you have specific loss information to substantiate the need for this endorsement?
A written response to this letter must be received by the Department by October 21, 1991, in order for us to continue our review. Unless a response is received within this time frame, we will not have sufficient data/information to ...