A bill requiring insurance companies operating in New Jersey to report regulatory actions taken against them or face thousands of dollars in fines has advanced in the Senate.

Jack Conners

The bill (A-1878), proposed by Assemblyman Jack Conners (D-Camden), would require the insurers to provide the state’s department of banking and insurance with a report of any disciplinary action taken by the Financial Industry Regulatory Authority (FINRA) or another non-governmental regulatory authority within 30 days of the final outcome.

Insurers failing to produce the report within that time frame, according to the proposed bill, would face a temporary suspension of their license to sell insurance in the state. That suspension would continue until the insurance department receives the proper documentation and determines that the insurer has taken appropriate action to address the complaint.

Conners’ bill also authorizes the New Jersey Department of Banking and Insurance (DOBI) to assess fines for insurers failing to provide appropriate documentation of disciplinary action. The proposed fines are $10,000 for a first offense; $25,000 for a second offense; and up to $100,000 for all subsequent offenses.

“Giving DOBI the power to assess hefty fines and suspend insurers’ operating licenses during an investigation, rather than at the completion, will help to separate honest insurers from unscrupulous ones,” said Conners in a statement. “Think of it as insurance company quality assurance.”

Conners said he drafted the bill after learning that there were no requirements in New Jersey for insurers to report administrative or disciplinary action to DOBI.

“When it comes to monitoring the actions taken by non-governmental agencies against insurers, the state has a bit of a blind spot,” Conners said. “To better protect consumers in a tightening insurance market, we must enhance our oversight.”

The measure passed the Senate Commerce Committee, 78-0, and was approved by the State Assembly in September 2008.

The bill is also sponsored by Assembly members Gary Chiusano (R-Sussex/Hunterdon/Morris) and Denise Coyle (R-Morris/Somerset). Sen. Christopher Bateman (R-Somerset) is also a Senate sponsor of the bill.