New Jersey Department
|For Immediate Release: October 22, 2004||
For Further Information:: Mary Cozzolino - (609) 292-5064
Department of Insurance to Probe Industry Practices
Urges Brokers to Meet Their Obligation to Consumers or Face Possible Sanctions
TRENTON - Moving quickly to investigate recent allegations of industry wrongdoing in other states, today Commissioner Holly C. Bakke announced an internal probe into industry and broker practices.
"New Jersey policyholders have come to rely on a dynamic, competitive insurance marketplace that protects consumers," said Commissioner Bakke. "In order to assure the integrity of that market, when we hear of potential wrongdoing, we move quickly to get the facts, and protect the public interest."
With this goal in mind, the Department
of Banking and Insurance has established an internal task force to look into
recent allegations of bid rigging and other sales-related insurance activities.
The task force includes, among others, examiners and investigators assigned
to market conduct, anti-fraud, financial and enforcement sections within the
Department. Headed by the Assistant Commissioner of Consumer Protection Services,
and former DAG, Lee Barry, the task force will work closely with the New Jersey
Attorney General's Office.
In addition to the task force, the Department issued a bulletin today reminding New Jersey agents and brokers of their statutory and regulatory fiduciary responsibility to consumers and warning that those who fail to meet their responsibilities to clients will face sanctions.
Director of Insurance Donald Bryan stated, "Brokers have a unique fiduciary obligation to their clients, outlined in New Jersey law. Brokers in New Jersey are required to disclose any potential conflicts in their fee agreements to the consumers that hired them. The Department has and will continue to hold them to this obligation." Director Bryan warned of possible penalties facing those that choose not to meet their legal obligations including probation, suspension, revocation or refusal to issue a producer license, in addition to monetary penalties.
In addition to commission disclosure requirements, New Jersey law also includes a series of other provisions designed to protect the consumer. New Jersey requires all brokers to be licensed and as part of that licensing process brokers must take courses and pass a test designed to demonstrate a clear understanding of the law and their ethical obligations to consumers. In addition, consumers have a right to request and receive different quotes from different companies so they can decide the best value for their dollar.
While there are no pending allegations in New Jersey, the Department has a proven track record of investigating broker fees thoroughly, holding those who abuse the system accountable and consistently acting to ensure that the consumer's best interest is protected. Over the last three years, the Department has taken action against several licensees resulting in fines and restitution totaling more than $1.5 million. Some of these actions resulted from consumer complaints, while others were discovered as part of the Department's routine market conduct exam process which is designed to identify those brokers, agents and other licensees who are not meeting their obligations to consumers.
Members of the public and risk managers who suspect they have been victims of wrongdoing can file a complaint online.