Last week, the New Jersey Senate Commerce Committee began its review of the New Jersey Consumer Catastrophe Preparedness and Protection Act, S. 2089 (the “Bill”), by hearing testimony from representatives of the insurance industry and first responders. We previously reported about a version of the Bill that was introduced last year, but was never enacted.
The Bill proposes the creation of a catastrophe fund to act as a backstop to residential property insurance policies should a major catastrophe strike the state. The funds would be obtained through premiums paid by insurers and the issuance of bonds by the New Jersey Economic Development Authority. Insurers would be entitled to reimbursement from the fund for a percentage of their losses in excess of their retention, along with an additional 10% for loss adjustment expenses, which would reduce the amount of reinsurance insurers currently purchase from the private market. Additionally, the Bill earmarks a portion of the investment income earned by the fund each year to be distributed to various municipal and county organizations, such as firefighters and law enforcement, for catastrophe loss prevention, preparedness, mitigation and educational programs to improve first responder programs.