N.J. Agents Back Change in Insurers’ Auto Expense Formula

The Professional Insurance Agents of New Jersey Inc. recently provided comments supporting the New Jersey Department of Banking and Insurance’s proposal to change the method for calculating the maximum allowed expense limits for commission and brokerage, other acquisition and general expenses in company rate filings.

“Currently, the rules regarding rate filings for private-passenger automobile insurance in the voluntary market place maximum limits on company expenses, including commission and brokerage expenses,” said John A. Latimer, Esq., president of PIANJ. “PIANJ supports the department’s proposal because it believes the new method is more equitable and will benefit companies by allowing them to file rates that more accurately reflect their actual expenses.”

The current formula for limiting expenses weights the average of the expense provisions of the 20 largest private-passenger automobile insurance companies or groups using the same marketing method. The department’s proposed changes would use the weighted average of all private-passenger automobile companies or groups using the same marketing method, plus an additional 5 percent.