Nov 10, 2017
PIANJ members identify producer duty of care as top legislative priority
Recently, PIANJ conducted a survey asking you to identify the legislative issues that are most important to you. Not surprising, PIANJ members pinpointed producer duty of care as their highest priority—voted by 60 percent of survey respondents. New Jersey has one of the highest standards of care in the nation. According to one leading errors-and-omissions carrier, New Jersey has been in the top three states in E&O claims frequency for the past seven years. New Jersey’s standard of care has been developed by more than 50 years of case law. Unfortunately, this has created some ambiguity in the standard. PIANJ will work to support legislation to clarify and standardize the level of care a producer is expected to exercise.
While producer duty of care was the clear top priority for respondents, the second-most popular priority was a close call. Accurate quoting of automobile policies was identified as the second priority, by a narrow margin. This issue originated from the perceived practice of carriers re-rating policies as a result of running the individuals’ motor vehicle reports after quoting or binding coverage. So, when the applicant is agreeing to the terms and price of the policy, they are not aware that the policy could be re-rated and often the premium is increased substantially. Colloquially, this issue is known as "bait and switch." PIANJ is aware of how damaging this practice can be to producers and your association is committed to addressing this issue to ensure a level playing field for producers.
Personal auto "step-down" provisions came in at a close third on PIANJ’s legislative priority survey. Recently, carriers have begun placing step-down provisions in personal automobile policies. A step-down provision in an automobile policy states that the limits applicable to an insured will not be what the policy declarations reflect or what the insured had chosen but, instead, the limits of the financial responsibility law of the state in which the accident occurs. PIANJ already has taken steps to help producers combat this practice by creating a sample personal auto step-down provision letter that producers can send to their clients. In addition, PIANJ will look to address this issue legislatively during the 2018-19 session.
Thank you to all of those that took the time to participate in the PIANJ legislative priority survey. It provides invaluable information to your association and influences the issues that PIANJ aims to address.