Among his first items of insurance business, on August 25, 2015, Acting New Jersey Commissioner of Banking and Insurance Richard J. Badolato (Commissioner) issued Order No. A15-109, adding “transportation company contingent liability for workers compensation” insurance to the state’s surplus lines insurance exportable list.
Under N. J. S. A. 17:22-6.43, no insurance coverage is eligible for “export” --- i.e., placed with an unauthorized insurer --- unless such coverage is not procurable after diligent effort from an authorized insurer doing business in the state. Under N. J. A. C. 11:1-33.2, “diligent effort” requires that a New Jersey licensed insurance producer attempt to obtain coverage for the risk from three authorized insurers in New Jersey’s admitted market. The state maintains an “Exportable List,” however, which lists the class or classes of insurance coverage or risks for which there is no reasonable or adequate market among authorized insurers, and thus, where evidence of three declinations in the admitted market is not required in order to obtain coverage from an unauthorized insurer. In accordance with the process established in N. J. A. C. 11:1-34.3, the Commissioner designates a hearing officer to conduct a hearing on an annual basis in November or December of each year, so that he may add or delete any class or classes of insurance coverage or risk for which there exists no reasonable or adequate market among authorized carriers in the state.
On December 18, 2014, the annual exportable list hearing was held, during which testimony was offered by ACE USA to support the addition of transportation company contingent liability for workers compensation to the exportable list. The coverage is intended for the trucking and motor carrier industry, which relies heavily on independent contractors who are not required to be covered by workers compensation insurance under the state’s workers compensation insurance laws. When an independent contractor driver is injured in the course of employment, he or she often applies for workers compensation benefits as an employee, and the claim is reported to the company’s workers compensation carrier. In such cases, the independent contractor either will have no coverage, or the company will be determined to be liable by a court for workers compensation settlements or benefits. ACE USA testified that this contingent coverage, which fills a gap in coverage and may include a duty to defend such claims and to make such payments on behalf of the transportation company, is not offered in New Jersey’s admitted market.
Based on the submissions received, on August 24, 2015, the Hearing Officer recommended that transportation company contingent liability for workers compensation be added to the state’s Exportable List, at N. J. A. C. 11:1-34(a)36. On August 25, 2015, the Commissioner adopted the recommendation in Order No. A15-109 and designated the coverage as eligible for export, making the coverage available directly from the surplus lines market.
Click here for a copy of the Commissioner's Order.
Click here for a copy of the Hearing Officer's Report.