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In re Appeal By American Millennium Insurance Co.

December 11, 2008

IN THE MATTER OF THE APPEAL BY AMERICAN MILLENNIUM INSURANCE COMPANY REGARDING ITS 2002, 2003 AND 2004 UCJF ASSESSMENTS.
IN THE MATTER OF THE APPEAL BY AMERICAN MILLENNIUM INSURANCE COMPANY REGARDING ITS 2005 AND 2006 UCJF ASSESSMENTS.



On appeal from the New Jersey Department of Banking and Insurance.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 24, 2008

Before Judges Rodríguez, Kestin and Newman.

Plaintiff American Millennium Insurance Company (AMIC) appeals from two determinations by the Commissioner of the New Jersey Department of Banking and Insurance (Commissioner), upholding the assessment by the New Jersey Property-Liability Insurance Guaranty Association (NJPLIGA) in the amount of $428,151.11 as contributions to the Unsatisfied Claim and Judgment Fund (UCJF) for the years 2002, 2003, 2004, 2005 and 2006. The first decision, concerning the 2002, 2003 and 2004 assessments, was rendered on June 19, 2006. The second decision was rendered on January 17, 2007 and concerns the 2005 and 2006 assessments.*fn1

AMIC objected to the assessments levied against it for the years 2002, 2003 and 2004. NJPLIGA rejected the objection. AMIC challenged the decision to the Commissioner. The Commissioner issued an order denying AMIC's request for an evidentiary hearing, denying AMIC's appeal, and affirming NJPLIGA's decision. This constituted a final agency decision. AMIC appealed to us (A-6052-05T5).

After filing this first appeal, AMIC challenged the UCJF assessments for 2005 and 2006. NJPLIGA rejected the challenge.

The Commissioner denied AMIC's challenge to NJPLIGA's decision. AMIC transferred $428,151.11 into NJPLIGA's operating account to cover its UCJF assessments from 2002 through 2006, and appealed the 2005 and 2006 assessment decisions to us (A-3428-06T5).

On appeal, AMIC contends that its UCJF assessments should not have been calculated on the basis of the net direct written premium formula because: (a) "NJPLIGA failed to recognize that N.J.S.A. 39:6-63(d) no longer required UCJF assessments to be based on a proportion of net direct written premiums;" (b) the Commissioner failed to give effect to the legislative deletion of the net direct written premium language; and (c) NJPLIGA's "methodology was impermissibly unfair, unreasonable and inequitable." In a supplemental brief, AMIC contends that NJPLIGA acted unreasonably by relying exclusively upon the net direct written premium formula. We disagree.

The crux of these appeals concerns the impact of the June 9, 2003 amendments to N.J.S.A. 39:6-63, which deleted the following language, requiring UCJF assessments be calculated according to the "net direct written premium" formula: Creation and Maintenance of [UCJF]

For the purpose of creating and maintaining the fund:

Such probable amount which will be needed to carry out the provisions of this act shall be assessed against insurers for each year's contributions to the fund. Such probable amount needed shall be initially apportioned on an estimated basis among such insurers in the proportion that the net direct written premiums of each bear to the aggregate net direct written premiums of all insurers . . . Such estimated sum shall be subject to adjustment . . . based upon the proportion that the net direct written premiums of each insurer bear to the aggregate net direct written premiums of all insurers . . . during the year the estimated assessment was paid . . . .

The amended statute does not specify any formula for calculating UCJF assessments. As amended, it now provides:

The probable amount needed to carry out the provisions of this section shall be assessed against insurers for that year's contribution ...


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