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PIANJ’s signature duty-of-care bill gains traction in Trenton

A bill (A-2034) to prohibit application of a fiduciary standard to insurance producers was amended from the floor of the state Assembly on Dec. 17.

Under the terms of the amended legislation, producers would be expected to exercise ordinary and reasonable care and skill in renewing, procuring, binding or placing of property/casualty insurance and health benefits plans. They also would be fully liable for negligent actions, but they would not be subject to civil liability under standards governing the conduct of a fiduciary or a fiduciary relationship.

The amendments also would 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.

Unchanged from the original legislation is a section that would strengthen the existing “affidavit of merit” statute that in theory ensures that lawsuits must have some merit before proceeding, but which in practice often falls short of that goal.

This legislation, sponsored by Assembly Speaker Craig J. Coughlin, D-19, is PIANJ’s top legislative priority for the 2018-19 legislative session. It addresses a major issue in New Jersey.

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

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

The amended bill now will have to be voted on by the full Assembly.