a. For almost two decades the system of motor vehicle insurance in this State has been the subject of examination, reform, review and revision in all three branches of government.

b. The common public purpose throughout this period has been to provide to the motorists of this State a comprehensive program of indemnification from the injuries and damages that may arise out of the ownership or operation of motor vehicles that is equitable, efficient and economical.

c. As various legislative or executive initiatives were taken in pursuit of this public purpose, the insurance industry itself, and the businesses and professions that provide goods and services to those involved in motor vehicle accidents, were at the same time altering the way in which they conducted their businesses to respond to a changing business and regulatory climate to ensure that they continued to benefit.

d. It has become increasingly obvious to the Legislature and the public that, as a result, one of the principal goals of this common purpose has not been attained: economy. Not only has the cost of the insurance product itself escalated, but the subsidies that most drivers contribute to support the financially-troubled New Jersey Automobile Full Insurance Underwriting Association have made the system a burden, rather than a benefit, to the citizens of the State.

e. The current law developed through legislative initiative, executive administration and judicial interpretation for: (1) the underwriting and rating of motor vehicle insurance; (2) the apportionment of drivers between a voluntary and residual market based on their characterization as “good” or “bad” drivers; (3) the provision of health care services and motor vehicle repair; (4) the payment of claims and protection of the rights and remedies of those injured or damaged; and (5) the regulation and financing of this system, and its many aspects, is cumbersome, complex, and confusing and allows for and encourages inefficiency, waste, mismanagement and the potential for misuse of public and private moneys.

f. As a result of this experience, the Legislature finds that it is necessary to address the myriad aspects and issues of this complicated and interrelated system, not through piecemeal adjustment of various statutory or regulatory provisions, but through a logical, comprehensive and complete revision of the various laws and regulatory schemes that impact, in whatever fashion, on the system and its participants.

g. To provide a healthy and competitive automobile insurance system in this State, automobile insurers are entitled to earn an adequate rate of return through the ratemaking process.

h. To that end, the Legislature declares that it is in the public interest to:

(1) revise the basic options and coverages available under automobile insurance policies, including the option to make one’s health insurance the primary source for payment of medical and hospital expenses;

(2) eliminate, over time, the current residual market mechanism, the New Jersey Automobile Full Insurance Underwriting Association, and certain of the market subsidies currently funding its losses;

(3) provide, through the appointment of an insolvency trustee, for the orderly evaluation, prioritization and satisfaction of obligations payable on behalf of the association;

(4) provide, through assessments on property-casualty insurers, a surtax on the premium taxes of automobile insurers, temporary assessments for the privilege of practicing certain professions and occupations, temporary and minimal increases in certain motor vehicle registration fees, as well as continuation of merit rating surcharges, for the funding of the debts and obligations of the association;

(5) create a new residual market mechanism in which insurers will share directly in the risk of insuring the “bad driver;”

(6) guarantee that “good drivers” secure motor vehicle insurance coverage in the voluntary market and control the apportionment of drivers in the residual market;

(7) eliminate anti-competitive aspects of the current rating laws as they apply to automobile insurers and completely eliminate combinations among automobile insurers for rate-making purposes;

(8) promote the efficient handling of claims and the elimination of fraud and other deceptive practices; and

(9) promote the participation of the insurance consumer in reducing losses through the installation and use of anti-theft devices, the successful completion of defensive driving courses, and similar activities.

L.1990,c.8,s.2.