PARSIPPANY — Assemblywoman BettyLou DeCroce’s legislation to relieve insurance brokers from costly, over-burdensome requirements was approved by the Assembly. The bill (S2475/A2034) alters the standard of care for agent malpractice liability.
New Jersey law protects policyholders against errors by insurance professionals. The courts, however, established a fiduciary standard that increases broker liability.
The fiduciary standard of care requires financial professionals to put their clients’ interests above their own. The current standard in New Jersey requires insurance agents to purchase more expensive coverage than other states.
“It’s an unnecessarily rigid standard,” said DeCroce (R-Morris). “It increases the cost of doing business for brokers, driving the cost of malpractice protection through the roof. Consumers in New Jersey have some of the best protections in the nation. This standard is a belt and suspenders for policyholders that is unwarranted.”
DeCroce noted the bill ensures protections for both policy-buyers and businesses.
“Insurance is not one-size-fits-all,” said DeCroce. “Removing the need for high-cost coverage that threatens to drive brokers out of business allows consumers to retain access to insurance professionals who are familiar with their needs.”
