SENATE, No. 1612

STATE OF NEW JERSEY

INTRODUCED OCTOBER 24, 1996

By Senator MARTIN

An Act concerning unfair practices in the settlement of certain insurance claims, amending P.L.1960, c.39 and supplementing P.L.1947, c.379 (C.17:29B-1 et seq.) and chapter 30 of Title 17B of the New Jersey Statutes.

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

    1.    (New section) The Legislature finds and declares that it is in the best interests of the citizens of this State to be assured prompt and equitable resolution of individual insurance claims. To that end, every insurer shall be under an affirmative obligation to attempt, in good faith, to effectuate prompt, fair and equitable settlement of insurance claims.

    2.    (New section) a. As used in this section:

    "Claimant" means an individual, corporation, association, partnership or other legal entity asserting a right to payment under or arising from an insurance policy.

    "Commissioner" means the Commissioner of Banking and Insurance.

    "Insurance policy" means an insurance policy or contract issued, executed, renewed, maintained or delivered in this State.

    "Insurer" means an individual, corporation, association, partnership or other legal entity which issues, executes, renews, maintains or delivers any insurance policy in this State or which is responsible for determining claims made under a policy, but does not mean any entity, or servicing carrier thereof, established to operate pursuant to P.L.1983, c.65 (C.17:30E-1 et seq.) or section 88 of P.L.1990, c.8 (C.17:33B-11).

    b.    A claimant may file a civil action in a court of competent jurisdiction regarding the settlement of a claim against an insurer which is subject to the provisions of P.L.1947, c.379 (C.17:29B-1 et seq.), for the violation of any claim settlement practices standard provided in section 4 of P.L.1947, c.379 (C.17:29B-4), or by rule or regulation of the commissioner, whether or not the insurer has violated the standard with such frequency as to indicate a general business practice.

    c.    Damages recoverable shall include benefits properly due the claimant under or arising from the insurance policy at issue plus interest, as prescribed in the Rules Governing the Courts of the State of New Jersey for judgements, awards and orders for the payment of money, from the time payments should, in good faith, have been tendered, and shall include court costs and reasonable attorneys' fees and other damages determined by the trier of fact to be appropriate under the circumstances of the individual case, including damages for consequential loss and punitive damages.

    d.    In addition to any other penalty provided by law, a violation of any claim settlement practice pursuant to the provisions of P.L.1947, c.379 (C.17:29B-1 et seq.) shall be an unlawful practice pursuant to P.L.1960, c.39 (C.56:8-1 et seq.).

    3.    (New section) a. As used in this section:

    "Claimant" means an individual, corporation, association, partnership or other legal entity asserting a right to payment under or arising from an insurance policy.

    "Commissioner" means the Commissioner of Banking and Insurance.

    "Insurance policy" means an insurance policy or contract issued, executed, renewed, maintained or delivered in this State.

    "Insurer" means an individual, corporation, association, partnership or other legal entity which issues, executes, renews, maintains or delivers any insurance policy in this State or which is responsible for determining claims made under a policy.

    b.    A claimant may file a civil action in a court of competent jurisdiction regarding the settlement of a claim against an insurer which is subject to the provisions of chapter 30 of Title 17B of the New Jersey Statutes for the violation of any claim settlement practices standard provided in section 1 of P.L.1975, c.101 (C.17B:30-13.1), or by rule or regulation of the commissioner, whether or not the insurer has violated the standard with such frequency as to indicate a general business practice.

    c.    Damages recoverable shall include benefits properly due the claimant under or arising from the insurance policy at issue plus interest, as prescribed in the Rules Governing the Courts of the State of New Jersey for judgements, awards and orders for the payment of money, from the time payments should, in good faith, have been tendered, and shall include court costs and reasonable attorneys' fees and other damages determined by the trier of fact to be appropriate under the circumstances of the individual case, including damages for consequential loss and punitive damages.

    d.    In addition to any other penalty provided by law, a violation of any claim settlement practice pursuant to the provisions of P.L.1975, c.101 (C.17B:30-13.1 et seq.) shall be an unlawful practice pursuant to P.L.1960, c.39 (C.56:8-1 et seq.).

    4.    Section 1 of P.L.1960, c.39 (C.56:8-1) is amended to read as follows:

    1. (a) The term "advertisement" shall include the attempt directly or indirectly by publication, dissemination, solicitation, indorsement or circulation or in any other way to induce directly or indirectly any person to enter or not enter into any obligation or acquire any title or interest in any merchandise or to increase the consumption thereof or to make any loan;

    (b)  The term "Attorney General" shall mean the Attorney General of the State of New Jersey or any person acting on his behalf;

    (c) The term "merchandise" shall include any objects, wares, goods, commodities, services, an insurance contract or policy or anything offered, directly or indirectly to the public for sale;

    (d)  The term "person" as used in this act shall include any natural person or his legal representative, partnership, corporation, company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestuis que trustent thereof;

    (e)  The term "sale" shall include any sale, rental or distribution, offer for sale, rental or distribution or attempt directly or indirectly to sell, rent or distribute.

(cf: P.L.1967, c.301, s.1)

    5.    Section 2 of P.L.1960, c.39 (C.56:8-2) is amended to read as follows:

    2. The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing [,] concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate or any matter involving a claim under an insurance contract or policy which is subject to the provisions of P.L.1947, c.379 (C.17:29B-1 et seq.) for the violation of any claim settlement practice standard provided in section 4 of P.L.1947, c.379 (C.17:29B-4) or to the provisions of chapter 30 of Title 17B of the New Jersey Statutes for the violation of any claim settlement practice standard provided in section 1 of P.L.1975, c.101 (C.17B:30-13.1), or by rule or regulation of the Commissioner of Banking and Insurance, whether or not the insurer has violated the standard with such frequency as to indicate a general business practice, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice; provided, however, that nothing herein contained shall apply to the owner or publisher of newspapers, magazines, publications or printed matter wherein such advertisement appears, or to the owner or operator of a radio or television station which disseminates such advertisement when the owner, publisher, or operator has no knowledge of the intent, design or purpose of the advertiser.

(cf: P.L.1975, c.294, s.1)

    6.    This act shall take effect immediately and shall apply to all claims filed or pending on or after the effective date.

STATEMENT

    This bill permits persons with claims against property-casualty and life and health insurance companies to file civil suits when an insurer violates any claim settlement practices standard established by law. The bill supplements the law governing trade practices and unfair settlement practices for property-casualty and life and health insurance companies. The bill also provides that a violation of any claim settlement practice is a violation of the consumer fraud law, P.L.1960, c.39 (C.56:8-1 et seq.).

    The provisions of the bill do not apply to any claims under automobile insurance policies that were issued by the New Jersey Automobile Full Insurance Underwriting Association (JUA), or the Market Transition Facility (MTF), or their servicing carriers.