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2009 PIANJ legislative wrap-up

Resource kit 29002

By Campbell H. Wallace, Esq.

New Jersey's Legislature went into recess last month and probably will not reconvene until this fall. This marks a perfect opportunity to look back on PIANJ's legislative efforts. In contrast to prior years, when a single signature property/casualty issue dominated.

PIA's legislative and lobbying focus during this most recent legislative cycle was on a number of long-simmering issues as well as a larger focus on the area of producer compensation.

Compensation disclosure requirements
FamilyCare Program/Health producer compensation disclosure.
As PIANJ previously reported, Chapter 38 P.L. 2008, a comprehensive health-care-related bill, which expands New Jersey's FamilyCare Program took effect Jan. 5, 2009. The bill contains a troubling provision requiring that an insurance producer who sells, solicits or negotiates health insurance policies or contracts to New Jersey residents notify the purchaser of the insurance, in writing, of the amount of any commission, service fee, brokerage or other valuable consideration that the producer will receive as a result of the sale, solicitation or negotiation of the health-insurance policy or contract. PIANJ, recognizing that many members sell health policies in addition to property/casualty insurance fought to amend this requirement before the passage of the initial bill. Despite efforts to communicate to the many problems this posed to the producer community the requirement remained intact.

PIANJ then worked with the sponsor of pending legislation intended to amend Chapter 38, to modify the disclosure requirement. Despite the support of the sponsor of the original bill, which became Chapter 38, the bill did not pass. Accordingly, PIANJ took action and authored language that would make changes to the disclosure requirement reducing the burden on producers and making common-sense changes to the method of delivery. This language was delivered to a legislator to introduce a bill embodying these modifications.

Public-entity RFP proposal. Also introduced this session was another piece of legislation, S-2738 that attempted to impose compensation disclosure requirements on producers. The bill sought to require public entities to issue requests for proposals for property/casualty, health insurance and the services of third-party administrators of self-insured health-benefits plans, at least once every three years. As part of this proposal, producers would be required to include the amount of any commissions payable by the issuing insurer to the producer. PIANJ immediately jumped into action, and met with the sponsor to explain the problems inherent in the bill and with the concept as a general proposition. The bill was not advanced out of committee.

Other legislative issues of interest
redatory Towing Prevention Act. An issue that PIANJ has been watching and staying ahead of in recent years is the inclusion of language requiring the addition of the director of the Division of Consumer Affairs as a named insured in certain circumstances. As PIANJ reported to members and repeatedly explained to legislators, this requirement (adding a person with no insurable interest as an insured on a policy) puts producers in an impossible situation. Thus, PIANJ was gratified when A-3812, which modified the Predatory Towing Prevention Act, was signed into law by the governor April 15, 2009. This section of law now is known as Chapter 39 P.L. 2009. PIANJ identified an issue in the original legislation whereby a towing contractor was required to name the director of Consumer Affairs as an additional named insured on the towing contractor's policy. This year, after repeated attempts to fix the situation, PIANJ was able to facilitate the introduction and eventual passage of legislation addressing this problem.

Garagekeepers' liability. This session, PIANJ also worked to remedy an incorrectly applied insurance requirement relating to garagekeepers' liability. Currently, the law requires a full-service, licensed auto-body-repair facility to carry garagekeepers' liability insurance in a minimum amount of $300,000. After investigating the history of the legislation and market practices, PIA recognized that garage liability insurance is what should be carried instead by the named repair facilities. PIA initiated efforts to correct this misapprehension and, through its efforts, was able to see the introduction of A-3954, by Assemblyman John S. Wisniewski, D-19, which modifies the liability insurance certain licensed auto-body facilities must carry. The bill changes this requirement to garage liability insurance in the same amount and decreases the garagekeepers' requirement to $50,000. PIANJ pushed for this change since garage liability insurance is a more encompassing type of insurance that covers a facility's exposure to both property damage and bodily injury liability for all operations necessary or incidental to the business operations. This includes automobile liability, premises and operations liability, as well as products and completed operations liability. In contrast, garagekeepers' coverage is a more limited type of insurance that only provides coverage for damages to a customer's vehicle left in the care, custody or control of the repair facility. A-3954 has not yet progressed out of committee, but PIA remains focused on seeking the passage of this legislation. 9/09

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