New Jersey Department
|For Immediate Release: January 4, 2005||
For Further Information:: Jaimee Gilmartin - (609) 292-5064
New Jersey Continues Investigation of Insurance Industry Practices
TRENTON – Banking and Insurance Commissioner Holly C. Bakke today ordered 18 insurance companies domiciled in the state to submit information and documents outlining compensation and fee arrangements with their clients.
The 18 companies were selected in coordination with other state insurance regulators based solely on their national market share and premium volume. The commissioner’s order requires that these companies provide information on compensation arrangements, terms relating to processing and payment of compensation and procedures for underwriting new business. All documentation required by the order is due to the New Jersey Department of Banking and Insurance within the next 60 days.
“The Department has a proven record of determining whether consumers are being treated fairly and in accordance with New Jersey insurance laws,” Commissioner Bakke said. “The state will take decisive action if we find a carrier failing to meet its responsibilities to policyholders.”
Today’s action follows the commissioner’s order issued in November that required New Jersey’s 30 largest brokers to provide specified information regarding compensation and fee arrangements. This information is currently being evaluated by an internal task force established by the Department.
In October, the commissioner issued a bulletin which emphasized that producers who charge clients a fee must disclose any compensation arrangements with insurers to the Department.
Today’s order extends to all states in which the 18 companies write business. The New Jersey Department of Banking and Insurance, as well as insurance regulators from other states, are working through the National Association of Insurance Commissioners (NAIC) to ensure uniformity in the information requested, allow proper evaluation and avoid duplicative efforts.
In addition to the internal task force, the Department is also a member of an NAIC national task force.
“The Department of Banking and Insurance has quickly acted in conjunction with the state’s Attorney General’s Office and the NAIC to assure that New Jersey consumers are protected in the insurance marketplace,” said Insurance Director Donald Bryan.
Over the past three years, the Department has protected consumers in the insurance marketplace by sanctioning producers and companies approximately $2 million for violations of state insurance laws. While some of these actions resulted from consumer complaints, others were discovered as part of the Department’s routine market conduct examination process which is designed to identify those licensees who are not meeting their obligations to consumers.