Bill To Protect Agents' Ownership Signed In N.J.

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NU Online News Service, Aug. 21, 4:26 p.m.EDT?An insurance agents group is hailing enactment of anew law in New Jersey designed to protect agents' ownership andcommission rights when policies are transferred from one company toanother.

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John D'Agostino, president of the Professional Insurance Agentsof New Jersey, said the law, Chapter 153, P.L.2003 (A-3319/S-2385),which passed the state legislature last June and was signed by Gov.James McGreevey last week, will protect "the livelihood ofthousands of independent agents, the small business ownersthroughout the state," by safeguarding information obtained andused to provide their clients with professional service.

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"It is perhaps the most important legislation PIANJ has taken onin New Jersey in recent years. New Jersey is the first state thatwe are aware of that now protects agents' rights like this," Mr.D'Agostino said.

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Mr. D'Agostino explained that when an insurance company stopswriting business and finds another carrier to assume itsobligations to provide coverage, it will transfer policyinformation to the new company so it can offer coverage topolicyholders.

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This information, known as "policy expirations" or "renewalrights," is a fundamental asset that has come into jeopardy inrecent years, he noted, as transfers of business have surged,including several companies that discontinued and transferred theirpersonal automobile insurance business.

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"Before the passage of this bill, agents were very concernedabout the shrinking market in New Jersey," Mr. D'Agostinoexplained. "And with all the mergers and acquisitions that weretaking place--where companies were selling off their books ofbusiness--one of the concerns was what would happen if a largedirect writer came in from out of state and purchased one of theseexisting books from a New Jersey carrier and then refused torecognize the agents."

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But, Mr. D'Agostino added, this bill now guarantees theownership of all policies and information to protect the ownershiprights of agencies in the state of New Jersey. "If you are buying abook of business, you must honor the ownership of agents in thatbook of business. We wanted agents to continue to service theseexisting customers," he said.

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"Agents work hard for years to build up their client base," heobserved. "The reason the passage of this bill is so important isthat agents need the protection and assurance that their clientbase is going to remain their property."

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