By Campbell H. Wallace, Esq.
2011 was the second year of New Jersey’s 2010-11 legislative cycle; the conclusion of this year’s legislative activity is the perfect opportunity to reflect on PIANJ’s legislative accomplishments. A number of issues were tracked by PIANJ, and multiple items of legislation were acted on, to support the passage of bills and to work to amend problematic legislation.
On June 29, 2011, the New Jersey Assembly passed A-1467, the PIANJ-supported legislation intended to clarify the insurance requirements for certain auto-body facilities. Previously, under the prior law, an auto-body facility had to carry a minimum amount of $300,000 “garagekeepers legal liability” insurance coverage. The result was that most garages had to purchase more coverage than they needed. “Garagekeepers” coverage is a more limited type of insurance that is for the protection of a customer’s vehicle left in the care, custody or control of the repair facility. This legislation aligned the insurance coverage requirements for garages more accurately with the actual losses or risks they face. Specifically, it would maintained the $300,000 minimum for garage liability coverage for full-service licensed auto-body facilities, while reducing the minimum coverage to $50,000 for “garagekeepers legal liability.” The bill originally was passed by the Assembly in January 2011, but was amended to conform with new ISO forms. The bill was signed into law in September 2011 as P.L. 2011, c.127.
Producer compensation disclosure requirements
PIANJ worked tirelessly to monitor and act on bills that sought to inappropriately require that insurance producers divulge their commission on the sales of policies.
Health producer compensation disclosure: PIANJ continued to push for adoption of legislation that would clarify the producer compensation disclosure requirements, relating to the sale of health-benefit plans. The bills, A-3284 and S-2300, would amend the existing health producer compensation disclosure law to follow the National Association of Insurance Commissioners’ Producer Licensing Model Act language. PIANJ has been instrumental in meeting with the sponsors of the legislation to discuss this needed amendment, and in facilitating the bill’s progress through the legislative process. Although these bills did not become law, PIANJ raised the profile of this issue and has sought to revisit the issue in subsequent session activity.
Taxicab insurance legislation
A-1471, a bill to make sundry changes to the taxicab laws passed both houses in March 2011; however, it was conditionally vetoed by the governor, because it required taxicabs to hold insurance from an admitted insurance company. This requirement would, in the words of the veto message, “eliminate the role of risk retention groups, which provide a form of self insurance, and currently issue approximately 65 percent of taxicab liability insurance coverage in the state.” This barrier to RRGs violates the federal Liability Risk Retention Act, which prohibits states from discriminating against risk retention groups. The veto message recommended changes to the bill. Following that, the bill was amended, and with the governor’s recommendations, was passed June 29, 2011, and signed into law on Sept. 30, 2011.
S-2930 was approved by both the Senate and the Assembly June 29, 2011, and signed into law on Aug. 19, 2011. The law maked changes to New Jersey’s oversight over the collection and distribution of surplus-lines taxes, in accordance with the federal Nonadmitted and Reinsurance Reform Act of 2010. Upon its passage, the commissioner of DOBI was authorized to enter into an agreement to share and apportion surplus-line taxes, so the state may collect its share of surplus-line taxes flowing from New Jersey-based risks associated with a risk that has another state as its “home state.”
The specifics include: defining “home state” as “with respect to an insured: (i) the state in which an insured maintains its principal place of business or, in the case of an individual, the individual’s principal residence; or (ii) if 100 percent of the insured risk is located out of the state referred to in subparagraph (i) of this paragraph, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.”
The law also creates a test to determine the risk’s “principal place of business” and “principal residence.” While the bill changes the allocation of surplus-line tax revenue, the immediate outcome is unclear. As stated in the bill’s analysis: “The department estimates that there may be increased revenue due to capturing current out-of-state risks from ‘home state’ insureds and due to increased clarity and standardized procedures for the market participants. However, due to uncertainty as to the location of insureds, estimates on future revenue from the surplus-line premium tax cannot be made with any assurance.”
A-1930, a measure to establish a state health exchange, passed the Assembly June 29 by a close 42-32-3 vote, and was transmitted to the Senate. It did not become law. The federal health-care reform law requires states to have a health exchange up and running by Jan. 1, 2014; failure to do so allows the federal government to step in and establish one under the auspices of the Department of Health and Human Services. States must have demonstrated meaningful progress in establishing an exchange by Jan. 1, 2013. This bill sought to create, in the executive branch of the government an entity known as the New Jersey Health Benefit Exchange.
PIANJ and trade groups representing the producer community worked to establish core principles related to the establishment of an exchange, and to reinforce the importance of the role of the producer in the provision and ongoing servicing of health-benefit plans. This coalition met repeatedly to ensure that adopted legislation preserves the role of the producer community, and preserves a level playing field in the sale of health-benefit plans.
Workers' compensation for S corporations in 2011
The New Jersey Senate Labor Committee voted to release a bill (S-2826) to extend the workers’ compensation opt-in/opt-out provision that currently exists for LLCs, LLPs and sole proprietors to an S corporation individual who is the only shareholder in the corporation.
The legislation originally permitted an individual to opt out of workers’ compensation coverage, but it was amended to allow an individual to opt in to obtain the coverage. The bill also was amended to restrict the option to a one-shareholder S corporation. The bill was considered in the Assembly, but did not pass that house.
Certificates of insurance. PIANJ begun the work of seeking the introduction of legislation intended to assist Garden State insurance producers who are faced with impossible certificate of insurance requests—requests that a producer create a certificate that purports to amend, expand or alter the underlying policy. PIANJ met with key lawmakers to explain the underlying issue, and facilitated discussions regarding the necessity of this legislation. PIANJ, working with PIA National has worked with the National Conference of Insurance Legislators (NCOIL) to develop model language which can serve as the basis of legislation. 8/11