In a news release issued by the State of New Jersey Department of Banking and Insurance (“DOBI”) on May 7, 2010 (the “News Release”), DOBI Commissioner Tom Considine applauded two pieces of proposed legislation which, he said, “would make some common sense changes to regulation and allow captive insurers, and carriers of reinsurance and surplus lines to operate more expansively in New Jersey.”
Assembly Bill 2360 (AB 2360), which would permit a captive insurance market to exist in New Jersey, has successfully moved through the Assembly Financial Institutions and Insurance Committee (“AFIC”). AB 2360 is based on Vermont’s captive insurance bill, which is viewed as the state model with the best design for the captive insurance market so far.
The News Release also unveiled a forthcoming bill that would (a) incentivize the most financially sound reinsurers to do business in New Jersey by affording reinsurers more flexibility in how they deploy their capital; and (b) amend state law to permit surplus lines insurers domiciled in New Jersey to write surplus lines insurance in the state. The proposed bill would make New Jersey the second state in the U.S. after Illinois to allow its domestic surplus lines companies to write insurance in the home state’s surplus lines market.