New Jersey Department
|For Immediate Release: November 1, 2004||
For Further Information:: Mary Cozzolino - (609) 292-5064
Insurance Department Continues Inquiry into Industry Practices
Department to Inspect Broker Fees and Practices
TRENTON – Continuing New Jersey’s inquiry into recent national allegations of wrongdoing by segments of the insurance industry, Commissioner Holly C. Bakke issued an order today seeking information from major New Jersey brokers. Information regarding brokers’ contracts, compensation agreements and business practices involving insurers are being sought for review.
“New Jersey is moving quickly to get to the bottom of this issue to assure that consumers are protected in the insurance marketplace,” stated Commissioner Bakke.
Current criminal investigations in New York and other states into the sales practices of insurance companies and brokers have prompted regulators nationwide to gather information on sales practices in their respective states. Commissioner Bakke has taken a leading role in regard to this issue, participating in the nationwide task force established by the National Association of Insurance Commissioners and establishing an internal task force to investigate the matter on behalf of New Jersey consumers. The Department’s internal task force, headed by Assistant Commissioner Lee Barry, will analyze and investigate the information provided under today’s order.
“New Jersey’s dynamic, competitive insurance marketplace is built on a foundation of solid consumer protection. Our job as regulators is to safeguard that foundation, by enforcing the laws and identifying potential problems for consumers,” stated Bakke.
The Commissioner’s order requires that licensed producers doing substantial business as brokers in New Jersey turn over any and all information regarding compensation and fee arrangements with insurers. Under the order, brokers must submit actual contracts, letter agreements, and other communications regarding compensation to the Department within the next 30 days. Today’s action follows the issuance of a bulletin by the Department reminding brokers of their legal and ethical obligations under New Jersey law.
“The Department will leave no stone unturned when it comes to safeguarding the marketplace and protecting New Jersey consumers. If brokers are acting improperly or abdicating their responsibility to consumers, we will take decisive action,” declared Donald Bryan, Director of Insurance.
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 examination process which is designed to identify those brokers, agents and other licensees who are not meeting their obligations to consumers.
The order was issued to the largest brokerage houses in New Jersey.