Insurance producers licensed to operate in New Jersey must now report any disciplinary action against them, even those by non-governmental regulators, within 30 days of the final outcome or face up to $100,000 in fines for failure to do so.

Following unanimous approval by the New Jersey Senate and Assembly, the bill was signed into law Jan. 17 by former Gov. Jon Corzine, according to the New Jersey legislature’s website.

Jack Conners

The legislation (A1878) was drafted by Assemblyman Jack Conners (D-Camden) last year after he realized there is no requirement to report administrative action taken by non-governmental regulatory agencies to the New Jersey Department of Banking and Insurance (DOBI). Calling this “a blind spot,” Conners said in a statement, he proposed the new law “to protect consumers in a tightening insurance market” and “enhance oversight.”

The bill requires insurance producers to report action against them by the Financial Industry Regulatory Authority (FINRA) or other non-governmental authorities within 30 days of the final outcome. Failure to do so results in a temporary suspension of the producer’s license to sell insurance in New Jersey.

That suspension stays in place until DOBI receives the proper documentation and determines that appropriate actions to address the complaint are in place. DOBI also may assess fines for producers failing to provide such documentation. Under the law, a first offense can net a $10,000 fine; a second offense, $25,000; and fines of up to $100,000 for all subsequent offenses.

In a statement, Conners said the bill, which defines the subject as “insurance producers,” also includes insurance companies who have sanctions levied against them.

“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 recently. “Think of it as insurance company quality assurance.”

In a statement to IFAwebnews.com, DOBI’s director of insurance, Douglas Wheeler, said passage of the bill “enhances protections for New Jersey consumers by ensuring the timely capturing of important enforcement actions taken against producers.”

The New Jersey chapter of the National Association of Insurance and Financial Advisors took the issue to Conners, according to Dennis Cuccinelli, the group’s government relations chairman.

“The primary reason NAIFA New Jersey so strongly supported this bill was to avert the small population of producers who received fines, suspensions or bars from FINRA, but were still practicing as an insurance producer,” Cuccinelli said in a statement. “By supporting passage of this law, we provide protection to our clients from unethical producers and to the reputation of our profession.”

Leslie Beck, a spokeswoman for Financial Planning Association of New Jersey, told IFAwebnews.com that the measure “sounds like a reasonable approach” to the association.

Conner’s bill received a 78-0 vote of approval by the Assembly in September 2008 and a 37-0 vote approval by the state Senate Jan. 11. Assemblymen Gary Chiusano (R-Sussex/Hunterdon/Morris) and Denise Coyle (R-Morris/Somerset) were also sponsors of the bill, with Sen. Christopher Bateman (R-Somerset) serving as the sponsor of the Senate version (S2431).