Jun 11, 2018

Producer duty-of-care bill, PIANJ’s top priority, reported out of committee

A bill, A-2034, which would prohibit application of a fiduciary standard to insurance producers, was reported out of the Assembly Financial Institutions and Insurance Committee on June 11.

PIANJ past President Paul Monacelli, CIC, CPIA, and PIANJ-YIP past President Casey Yarger, CIC, CRM, testified before the committee with PIANJ lobbyist Carol Katz.  New Jersey law is unclear about the duty-of-care required of insurance producers, and has left the question to be resolved by case law.

New Jersey law is unclear about the duty-of-care required of insurance producers, and has left the question to be resolved by case law. The result is that New Jersey is an outlier in this arena compared to other states.

This legislation, sponsored by Assembly Speaker Craig J. Coughlin, D-19, and AFI Committee Chair John F. McKeon, D-27, would standardize the producer duty of care. Under the terms of the legislation, insurance producers are expected to exercise ordinary and reasonable care and skill in renewing, procuring, binding or placing insurance, and are fully liable for negligent actions, but that they are not subject to civil liability under standards governing the conduct of a fiduciary or a fiduciary relationship.

The legislation also will strengthen the existing “affidavit of merit” statute that in theory makes sure that lawsuits must have some merit before proceeding, but which in practice often falls short of that goal.

The legislation will bring New Jersey in line with most other states. Only Alabama, Arizona, Idaho and Pennsylvania impose a level of producer liability on par with that of New Jersey.

This legislation protects consumers—both individuals and the many small businesses that turn to insurance agents for their business coverage—by ensuring that they will continue to have the access to the expertise and personal attention of an insurance agent whom they know and who, in turn, is familiar with their individual needs.

Amendments to the bill included a provision that clarifies that insurance producers retain fiduciary liability when handling client funds.

PIANJ applauds Speaker Coughlin, Committee Chair McKeon and the members of the Assembly Financial Institutions and Insurance Committee for their support of professional independent insurance producers.