S4722

An Act creating a task force on the impact of climate change on property insurance.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares:

a. A changing climate presents the State with more frequent risks, such as sunny day flooding, and more extreme risks, including wildfires and intensive storms;

b. Rapid sea level rise is going to make some coastal communities not only uninsurable due to increasingly consistent flooding, but uninhabitable;

c. From 2018 to 2023, the rate at which insurers dropped property insurance policies jumped 69.54 percent from 0.47 percent to 0.8 percent, putting New Jersey in the same quintile as Florida and California, states increasingly ravaged by disasters;

d. Property owners want insurance that is affordable and available, but in risk-exposed places, this combination of incentives can produce three bad outcomes, those outcomes being moral hazard, low-quality insurance coverage, and a lack of investment in risk mitigation and preparation.

e. It is both reasonable and necessary for the State to enable, facilitate, support, and safeguard the provision of high quality, comprehensive property insurance to home and commercial property owners.

2. a. There is created in, but not of, the Department of Banking and Insurance, the Joint Blue Ribbon Task Force on Impacts of Climate Change on Property Insurance. The task force shall be comprised of 13 members as follows:

(1) the Commissioners of Banking and Insurance, Community Affairs, and Environmental Protection, or their designees, serving ex officio;

(2) two members of the Senate, who shall not be of the same political party, appointed by the President of the Senate;

(3) two members of the General Assembly, who shall not be of the same political party, appointed by the Speaker of the General Assembly;

(4) three members shall be representatives from the private sector, specifically from an insurance association, an insurer, a reinsurer, a real estate representative, or a business representative, appointed by the Governor with the advice and consent of the Senate; and

(5) three members from nonprofit entities, specifically a representative from a consumer advocacy group, planning advocacy entity, and environmental advocacy entity, appointed by the Governor with the advice and consent of the Senate.

b. The Departments of Banking and Insurance, Community Affairs, and Environmental Protection shall provide staff support to the task force, and the task force shall be entitled to call to its assistance other State department employees as necessary.

c. The purpose of the task force shall be to assess the current and predicted impacts of climate change on residential and commercial property insurance by analyzing:

(1) how the State and the insurance industry may be subsidizing risky decision-making, keeping or putting people in harm’s way;

(2) in which places does the price of insurance not reflect the risk that a property faces;

(3) in which communities properties are or will be uninsurable at a reasonable cost because of everyday risks such as tidal flooding or tail risks such as a disaster;

(4) how the State will ensure homeowners access to property insurance without subsidizing dangerous or impractical location choices;

(5) how changes in the insurance market may impact a municipality's current affordable housing inventory and its ability to meet its affordable housing requirements;

(6) given potential changes at the federal level impacting the availability of climate data, which alternative sources of information may be available in the future; and

(7) any other issues or concerns that the task force deems relevant and appropriate.

d. Not later than one year following the appointment of all task force members, the task force shall submit to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, a report containing a study and evaluation of its findings and recommendations. The report shall include, but not be limited to, a description of any present or potential concerns related to the impact of climate change on property insurance and whether existing State or federal law or practices adequately address those concerns, and any recommendations to address inadequacies in those laws or practices. The task force shall expire upon submission of the report.

3. This act shall take effect immediately.

STATEMENT

This bill creates the Joint Blue Ribbon Task Force on Impacts of Climate Change on Property Insurance. The purpose of the task force will be to assess the current and predicted impacts of climate change on residential and commercial property insurance by analyzing: