YOUR TURN: ‘Bad faith’ bill endangers NJ insurance market

The decision to buy insurance is one of the most consequential decisions a person or family can make. Insurance gives us the peace of mind knowing the ones we love will be protected in the event of an unforeseen accident or emergency without the debilitating fear of financial ruin.

New Jersey is already one of the most expensive places to live with some of the highest taxes in the nation, without even considering the added cost of insurance. Instead of trying to ease this financial burden, the New Jersey Legislature recently introduced a bill that could force carriers to exit the market and severely threaten the ability of independent agents like myself to provide Garden State residents with quality, affordable insurance options.

Independent agents provide a necessary service in New Jersey. As small business owners, we are on the ground in local communities, which gives us an intimate understanding of the specific needs and issues affecting the local population. With that knowledge, we carefully walk our customers through different coverage options based on a host of factors, including familial obligations, business needs and affordability.

The Assembly is currently considering a bill that, on its face, seems like it’s protecting consumers. A-4293/3850 would expand the grounds for “bad faith” lawsuits by allowing policyholders to sue insurance companies for delays in processing claims. Instead of benefiting consumers, however, this overly broad bill would allow swindlers to take advantage of the law by giving them the green light to sue for simple mistakes that cause delay. These carriers would then be forced to pay artificially high settlements rather than risk potential expensive and time-consuming litigation. As a result, the insurance companies would calculate these extra costs in the form of higher premiums. Unsurprisingly, this bill is being pushed by the state’s trial bar without the interests of consumers in mind.

Independent agents, like myself, would seemingly benefit from these rate hikes since higher premiums translate into higher commissions for us. But the unintended consequences of this bill would completely disrupt the markets by driving up the cost of doing business for carriers operating in New Jersey. Any threat to the delicate balance of the market does not bode well for the agents on the front line advocating for consumers.

This bill would take New Jersey backwards to a time when carriers fled the state because it was prohibitively expensive to sell insurance in our marketplace. Without competitive markets, independent agents would simply not be able to provide consumers with the affordable choices they deserve. A cost-prohibitive market could force consumers to buy less coverage, exposing their assets due to being underinsured. Even worse, some could choose to take the risk and drive on our roads without insurance, putting us all in danger and further driving up the cost of insurance in New Jersey. We have seen this happen before, and we do not want to go back. 

This bill would be the final straw that broke the camel’s back in a system that does not need any additional weight. The ripple effect of this legislation would cripple the state’s insurance markets and have a devastating impact on New Jerseyans’ ability to obtain quality, affordable insurance. Our legislators must stand up to the state’s trial bar, protect consumers, and reject this bill.

Frank A. Jones is a partner with Mints Insurance Agency in Millville, and the government affairs director for Independent Insurance Agents & Brokers of NJ.