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

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

John D'Agostino, president of the Professional Insurance Agents of 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 of thousands of independent agents, the small business owners throughout the state," by safeguarding information obtained and used to provide their clients with professional service.

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

Mr. D'Agostino explained that when an insurance company stops writing business and finds another carrier to assume its obligations to provide coverage, it will transfer policy information to the new company so it can offer coverage to policyholders.

This information, known as "policy expirations" or "renewal rights," is a fundamental asset that has come into jeopardy in recent years, he noted, as transfers of business have surged, including several companies that discontinued and transferred their personal automobile insurance business.

"Before the passage of this bill, agents were very concerned about the shrinking market in New Jersey," Mr. D'Agostino explained. "And with all the mergers and acquisitions that were taking place--where companies were selling off their books of business--one of the concerns was what would happen if a large direct writer came in from out of state and purchased one of these existing books from a New Jersey carrier and then refused to recognize the agents."

But, Mr. D'Agostino added, this bill now guarantees the ownership of all policies and information to protect the ownership rights of agencies in the state of New Jersey. "If you are buying a book of business, you must honor the ownership of agents in that book of business. We wanted agents to continue to service these existing customers," he said.

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

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

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