Bill allowing policyholder suits over slow insurance claims advances

By: - December 15, 2021 7:05 am

Sen. Nicholas Scutari speaks with reporters after his caucus appointed him Senate President in a symbolic vote on Nov. 12, 2021. (Dana DiFilippo for the New Jersey Monitor)

New Jerseyans could soon sue their own insurance carriers for slow-rolling select claims involving uninsured drivers.

The Assembly Financial Institutions and Insurance Committee on Monday advanced a bill that would allow policyholders to sue their carriers for unreasonably slow responses or unreasonable denials of claims involving an uninsured or underinsured driver. Such plaintiffs do not have to prove their carrier engaged in such delays as a broader business practice.

“If it’s an extremely valuable case and the only reason they’re not paying you is because they’re slow-walking the case because the maximum they can lose is $15,000, they’re going to slow walk you sometimes,” said Assembly Minority Leader Jon Bramnick (R-Union), one of  the bill’s prime sponsors.

The committee advanced the bill in a 9-4 vote along party lines, with each of the panel’s four Republican members voting against it.

Bramnick, incoming Senate President Nicholas Scutari (D-Union), and advocates said the measure would extend a requirement to negotiate in good faith already imposed upon insurers dealing with individuals holding coverage from a different carrier to their own customers.

“If it’s your own company, they have no obligation under the current law to deal with you or negotiate with you in good faith, as you would a tortfeasor that causes the accident,” said Scutari, a prime Senate sponsor.

Representatives from the insurance industry who testified at Monday’s hearing charged the bill did little to benefit consumers and chaffed at newly added amendments barring carriers from passing on any rate increases that result from the bill onto their customers.

Another new amendment to the bill would also bar insurers from disseminating false information about its impacts, though it’s not clear how those provisions would be enforced.

“It doesn’t sit right. I’m not sure what it’s there to achieve other than it is to somehow put up a blockade of incurred expenses that we can’t actually talk about,” said Christine O’Brien, president of the Insurance Council of New Jersey.

The sponsors said insurers had nothing to fear so long as they did not attempt to delay or diminish payments to their policyholders.

“Deal in good faith, you’ll never worry about this bill. You’ll never see the consequences. I’ve practiced in this area, and I understand there are times when insurance companies slow-walk, and some based on their limited policy,” said Bramnick, who is a personal injury attorney. “I think once we pass this, I think the insurance companies will act reasonably.”

O’Brien noted the bill did not expressly define what constitutes an unreasonable delay or denial, adding the language left the bill vulnerable to changes in case law.

She charged the bill itself was not redundant because the Department of Banking and Insurance can already suspend or refuse to renew the licenses of adjusters who act in bad faith.

“The fact is it put the insured in an adversarial position with their own insurance company,” she said. “And are there bad actors out there? Are those conversations happening that the woman before me cited? If that is happening, we already do have a mechanism in place by which that adjuster should be held accountable for acting in bad faith.”

The bill has seen significant lobbying from insurance carriers and industry groups since being introduced in January and has been pared down somewhat as a result. Past versions allowed policyholders to recover legal fees, and seek treble damages, but those provisions have since been removed by amendments.

More reforms in down the pipe

The fight over this bill may presage an increase to policy limits in the coming legislative session. Under existing law, New Jersey’s insurers must provide $15,000 of bodily injury liability coverage under a standard policy.

That figure is among the lowest in the nation. Only Florida, which has no requirement for bodily injury liability coverage, has lower coverage requirements.

“We haven’t raised the policy limits in the state of New Jersey for 30 years, since before I were here. If we start talking about that, then we are tinkering, which I would argue that we should,” Scutari said.

Assemblyman John McKeon (D-Essex), who chairs the Assembly Financial Institutions and Insurance Committee, said he and the senator were of one mind on raising insurance limits but said those discussions would be left to the next legislative session.

“We certainly agree as it relates to those $15,000 limits. It’s something I think that maybe next year we can really think about,” he said. “I guess fortunately, only about 20% of the drivers in the state have $15,000 limits, but in the cases where somebody is injured, it’s heartbreaking when that’s all there is for them to recover.

The industry isn’t opposed to changes in that arena, O’Brien said.

“At the insurance council, we’ve said over and over we are more than happy to have that conversation as to what that means if we raise the minimum liability limits that we should mandate drivers to buy,” O’Brien said. “That is a policy discussion the legislature can certainly have.”

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Nikita Biryukov
Nikita Biryukov

Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. His tenure there included revelatory stories on marijuana legalization, voting reform and Rep. Jeff Van Drew's decamp to the Republican Party. Earlier, he worked as a freelancer for The Home News Tribune and The Press of Atlantic City.