Insurers could cut out independent insurance agents as distributors of the state-regulated minimum auto coverage product under a new regulatory proposal, according to a New Jersey agents group, which is fighting the concept.
Battling the New Jersey insurance regulator's plan to alter the distribution of the state's basic auto insurance plan is the Professional Insurance Agents of New Jersey.
The group said it believes independent agents would be shut out under the proposed changes.
PIANJ President Andrew Anderson was critical of the state's Department of Banking and Insurance scheme that would allow insurers to alter the distribution of the state's basic insurance plan, formally called the Personal Automobile Insurance Plan (PAIP).
Mr. Anderson said the state legislature did not give the department the authority to make the changes it proposes.
He also argued that the changes would allow only PAIP-certified producers to offer these police, and it would deprive non-PAIP producers of the ability to pursue sales. He added that the change would increase the administrative burden on PAIP producers while giving insurers a break.
PAIP is a basic personal automobile insurance policy limiting liability payments on personal injury protection medical expense benefits to $15,000 per person per accident, except for extreme injuries, where the amount would not exceed $250,000. It also limits property damage coverage to $5,000.
According to the department's proposed amendment bulletin, New Jersey Administrative Code Amendments 11:3-3.2 and 3.3, the effect of the proposed changes would be to reduce administrative costs to insurers because they would no longer need to keep multiple rating systems, and the savings would ultimately be passed on to the policyholder.
If the amendment is implemented, PIANJ said the basic policy should be available through all licensed agents in New Jersey and not exclusively through PAIP-certified producers who also have access to other carriers.
"If the department truly wants to allow consumers to be able to easily obtain a basic policy, it will not limit the sales channels through which consumers can purchase the policy to just PAIP-certified producers with a company contract," said Mr. Anderson in a statement.
He added, "It will make it more difficult for consumers who wish to purchase the policy to do so if there are restrictions on which producers can offer the product."
The amendment is currently going through a comment phase that ends Aug. 4.
During this phase a department spokesman said he could not comment on the amendment.
As of June 30, there are 25,000 basic policies in force, according to the department.
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