NJ Responds to Public Comment on Discretionary Clauses
The NJ Department received almost 200 comments on their proposed regulation on prohibiting discretionary clauses in life and health insurance products. One of the issues raised was related to form filing and dealing with non-conforming forms that are out in the market. In their Summary of Public Comments and Agency Responses, www.state.nj.us/dobi/proposed/ad070507_disc.pdf, the Department states: "As proposed, the provision in question deemed withdrawn after January 1, [2008] all newly issued or renewing policy and contract forms that contain noncompliant discretionary clauses. Refiling noncompliant forms is not required." Note that because of the timing of the effective date, the originally published January 1, 2007 date was pushed back to January 1, 2008. Because it is the Department's policy - as expressed in this regulation - that carriers will not have the sole discretion to interpret the terms of a policy or contract, and that covered persons retain access to their appeal rights under state and federal law, they seem to conclude that re-filing of noncompliant forms is unnecessary. However, because as stated in the quoted language above, non-compliant forms are deemed withdrawn as of January 1, 2008, it remains somewhat unclear what the status will be of previously approved products that contain discretionary clauses as of January 1, 2008.
