Senate Commerce Committee Statement to Senate, No. 1559 — State of New Jersey (January 21, 2021)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 1559 with committee amendments, State of New Jersey, dated January 21, 2021, reporting the bill favorably. As amended, the bill, the "New Jersey Insurance Fair Conduct Act," establishes a private cause of action for first-party claimants over certain unfair or unreasonable practices by their insurer. A claimant may file a civil action against an automobile insurer for unreasonable delay or unreasonable denial of a claim, or for violating section 4 of P.L.1947, c.379, without proving a general business practice. A claimant who establishes a violation is entitled to actual damages, and the amendments remove a provision for prejudgment interest, reasonable attorney's fees and litigation expenses.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
1559

with
committee amendments

STATE
OF NEW JERSEY

DATED: JANUARY
21, 2021

The
Senate Commerce Committee reports favorably and with committee amendments
Senate Bill No. 1559.

As
amended, this bill, the “New Jersey Insurance Fair Conduct Act,” establishes a
private cause of action for first-party claimants regarding certain unfair or
unreasonable practices by their insurer.

The
bill defines “insurer” to mean any individual, corporation, association,
partnership or other legal entity which issues, executes, renews or delivers an
insurance policy in this State, or which is responsible for determining claims
made under the policy. Under the bill, the term “insurer” does not include an
insurance producer as defined by P.L.2001, c.210 (C.17:22A-28) or a public
entity.

A
final party claimant means an individual injured in a motor vehicle accident
and entitled to the uninsured or underinsured motorist coverage of an insurance
policy asserting an entitlement to benefits owed directly to or on behalf of an
insured under that policy.

Pursuant
to the bill, a claimant may file a civil action in a court of competent
jurisdiction against its automobile insurer for:

(1) an
unreasonable delay or unreasonable denial of a claim for payment of benefits
under an insurance policy; or

(2) any
violation of the provisions of section 4 of
P.L.1947, c.379 (C.17:29B-4).

Section
4 of P.L.1947, c.379 (C.17:29B-4) defines certain activities as unfair methods
of competition and unfair and deceptive acts or practices in the business of
insurance including, among other things, unfair claim settlement practices and
failure to maintain complaint handling procedures.

The
bill provides that, in any action filed pursuant to the bill, the claimant
shall not be required to prove that the insurer’s actions were of such a
frequency as to indicate a general business practice.

The
bill also provides that, upon establishing that a violation of the provisions
of the bill has occurred, the claimant shall be entitled to actual damages
caused by the violation including, but not limited to, actual trial verdicts.

COMMITTEE AMENDMENTS:

The committee amended the bill to remove the provision
that entitles a claimant that establishes a violation of the provisions of the
bill to prejudgment
interest, reasonable attorney’s fees, and all reasonable litigation expenses.

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