SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No. 2475

with committee amendments

STATE OF NEW JERSEY

DATED:  JANUARY 17, 2019

      The Senate Commerce Committee reports favorably and with committee amendments Senate Bill No. 2475.

      This bill requires insurance producers to exercise ordinary and reasonable care and skill in issuing certain insurance policies.

      The bill also prohibits any cause of action by any person or entity against an insurance producer concerning the sale, placement, procurement, renewal, binding or cancellation of, or the failure to procure property and casualty insurance or a health benefits plan, from subjecting the insurance producer to civil liability under standards governing the conduct of a fiduciary or a fiduciary relationship, except when the conduct upon which the cause of action is based involves certain misappropriations of deposits or payments.

      The bill specifies that its provisions do not exempt an insurance producer from liability for negligence concerning the sale, placement, procurement, renewal, binding, or cancellation of, or the failure to procure, any property and casualty insurance policy or a health benefits plan or limit or prevent a producer from asserting any defenses available at common law.  The bill provides that its provisions do not invalidate any agreement between an insurance producer and an insurer. 

      This bill also specifies the qualifications of a person providing an affidavit of merit in the case of an action against a licensed insurance producer, regardless of what damages may be sought.  The person must be licensed in this State; have particular expertise in the general area or specialty involved in the action, as evidenced by a professional designation in the general area or specialty involved in the action and by devotion of the person’s practice substantially to the general area or specialty involved in the action during the five years immediately preceding the date of the occurrence that is the basis for the claim or action.  The person must have no financial interest in the outcome of the case under review, but this prohibition would not exclude the person from being an expert witness in the case.

      Finally, under current law, an insurance producer is required to notify the purchaser of health insurance, in writing, of the amount of any commission that the producer will receive as a result of the transaction.  Instead, this bill requires an insurance producer to notify purchasers of certain health benefits plans as to the availability of information concerning fees and commissions.

      As amended and reported, this bill is identical to Assembly Bill No. 2034 (2R).

COMMITTEE AMENDMENTS:

      The committee amended the bill to:

      (1)  require insurance producers to exercise ordinary and reasonable care and skill in issuing property and casualty insurance policies;

      (2)  expand the requirements for insurance producers to exercise ordinary and reasonable care and skill to include the placing of property and casualty policies as well as health benefits plans;

      (3)  create an exception from the bill’s protections for insurance producers from civil liability under standards governing the conduct of a fiduciary, in situations in which the conduct upon which the cause of action is based involves the wrongful retention or misappropriation of any money that was received by the insurance producer, as a premium deposit or as payment of a claim; and

      (4)  modify an insurance producer’s duty under current law, to provide notification of the amount of any commission, service fee, brokerage, or other valuable consideration, to specify that the notification is required to be provided to purchasers of individual health benefits plans issued through the New Jersey Individual Health Coverage Program and small employer health benefits plans issued through the New Jersey Small Employer Health Benefits Program.