The Alliance of Automotive Service Providers of New Jersey late last month encouraged lawmakers to permit consumers to sue auto insurers for violations of the state unfair insurance business practices law.

AASP-NJ said Tuesday that both it and the Insurance Council of New Jersey met with Assembly Minority Leader Jon Bramnick (R-Plainfield) and Deputy Minority Leader Ronald Dancer, R-Plumstead Township, virtually on Aug. 28.

The trade group wrote in a news release that its Collision Chairman Dennis Cataldo Jr. (D&M Auto Body) had contacted both lawmakers about “insurer-related issues, including constant violations of Title 11 of the New Jersey Administrative Code, Unfair Claims Settlement Practices and lack of care or responsibility when trying to negotiate a fair claim settlement for a properly and safely repaired vehicle. The letter stated that AASP/NJ had already made numerous unsuccessful attempts to work out these matters through the New Jersey Department of Banking and Insurance and the New Jersey Motor Vehicle Commission.”

Executive Director Charles Bryant said regulations exist regarding insurer claims practices.

For example, New Jersey 17:29B-4 prohibits activities like “Refusing to pay claims without conducting a reasonable investigation based upon all available information,” “Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear,” and “Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.”

However, a consumer lacks the ability to sue — known as a “private right of action” — over being mistreated in these ways. It’s left up to DOBI to enforce these.

But the insurance department won’t act on a single complaint; it must have received enough complaints about a behavior to represent a general business practice, Bryant said.

New Jersey 17:29B-4 defines such “Unfair claim settlement practices” as “Committing or performing with such frequency as to indicate a general business practice.”

In a virtual town hall meeting Aug. 19, Bryant likened the business practice concept to telling a police officer that they can’t ticket someone for running a red light until the offender is caught three times in a week.

“It’s ineffective,” he said then. “It doesn’t work very well.”

DOBI might take even longer to discover a general practice if New Jersey residents don’t file complaints about insurer behavior.

The Auto Body Association of Texas on Aug. 19 began a push to give consumers simple forms allowing them to check off violations encountered during a claim. A collision repairer would then submit these signed document to the Texas Department of Insurance and lawmakers.

“Based on the prior meetings that I have had with The Texas Department of Insurance (TDI) and Texas Legislators, the major rebuttal I have gotten is that they are not getting any complaints from consumers,” ABAT President Burl Richards (Burl’s Collision Center) wrote in an email to members.

AASP-NJ President Jerry McNee (Ultimate Collision Repair) said Aug. 19 his trade group has talked to ABAT about this effort and is working on a similar concept.

Under a private right of action, consumers wouldn’t need to wait for DOBI to collect enough examples before they received relief. They could just sue the insurer over the specific violation encountered on their claim.

AASP-NJ said Tuesday it talked to the two Republican leaders about Assembly Bill 1659, which would permit such a right of action for any violations of 17:29B-4 and “an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy.”

These lawsuits could be filed by “an individual, corporation, association, partnership or other legal entity asserting an entitlement to benefits owed directly to or on behalf of an insured under an insurance policy.”

Consumers who won the lawsuit would be eligible for actual and triple damages, as well as attorney’s fees.

The bill currently carries six sponsors, including Bramnick, Dancer and House Majority Conference Leader Annette Quijano, D-Elizabeth.

McNee during the town hall said its passage would be a “game-changer.” He noted that an insurer attorney once told Bryant that it wasn’t bad faith if the carrier broke the law once. “There are no consequences” for such violations, he said. Repairers needed the bill to pass.

Bryant said  insurers will come out “real strong” against the measure and claim premiums will skyrocket.

But the rules already exist on the books, he said — they’re just not followed. “They’re being abused on a regular basis,” Bryant said.

Any increase caused by paying claims that should have been paid would mean rates were “only up to where it should have been” anyway, he argued.

According to the AASP-NJ news release Tuesday, insurers at the virtual meeting with Dancer and Bramnick “expressed intentions to work to block passage of legislation of this nature.”

“The meeting was successful in opening the lines of communication,” Bryant said in a statement. “We brought up some important points that the legislators may not have been aware of, and we had an opportunity to express our concerns with insurance industry representatives. The bottom line is that our industry needs something strong enough to make insurers in our state follow the rules.”

AB 1659 is similar to Senate Bill 2144, which cleared the Senate in 2019. However, an Assembly committee stripped their chamber’s version of the measure down to cover only uninsured and underinsured motorist policyholders and removed idea of treble damages. Ultimately, Assembly Bill 4293 failed to get a floor vote before time ran out in the session.

Be heard: Complaints can be filed at the Department of Banking and Insurance here. New Jersey senator and assembly member contact information can be found here.

More information:

“AASP/NJ Meets with Legislators and Insurance Reps on Claim Settlement Issues”

Alliance of Automotive Service Providers of New Jersey, Sept. 8, 2020

Images:

The New Jersey Legislature is shown. (Aneese/iStock)

Assembly Minority Leader Jon Bramnick, R-Plainfield, left, and Deputy Minority Leader Ronald Dancer, R-Plumstead Township, are shown. (Provided by New Jersey Legislature)

Alliance of Automotive Service Providers of New Jersey Executive Director Charles Bryant speaks to a virtual town hall meeting on Aug. 19, 2020. (Screenshot from AASP-NJ video)