The Professional Insurance Agents of New Jersey Inc., in a written statement to New Jersey’s Department of Banking and Insurance (DOBI), supported the department’s goal to educate consumers regarding their choices of insurance coverages with its proposed new rules concerning insurance scenarios.
The proposal would require insurers and producers to provide each new applicant for automobile insurance—and any policyholder upon request—with three insurance scenarios demonstrating the effect of different coverage choices.
While in agreement with the overall proposal, PIANJ had several recommendations to help avoid consumer confusion. Most notably, PIANJ suggested that the new proposal eliminated the need for the existing requirement that producers provide quotes for all the companies they represent.
“The new proposal would provide consumers with all the information they need to make an educated choice concerning insurance,” PIANJ President John D’Agostino Jr., CIC, said in the statement to the DOBI. “Receiving quotes from every company a producer represents, in addition to receiving three insurance scenarios, will provide no added benefit to the consumer, but will likely only cause confusion.”
In addition to suggesting that the current requirement is no longer necessary, PIANJ identified potential negative implications to the consumer, such as requiring producers to provide quotes from financially unsound companies.
D’Agostino also provided suggestions concerning the approach taken to illustrate the price differences between various coverage options. The proposal would allow a producer to provide the three insurance scenarios by either 1.) providing the consumer with applicable, generic insurance scenarios; 2.) providing scenarios produced by an electronic data system based upon the individual characteristics and circumstances of the consumer; or 3.) providing the consumer with scenarios on a document developed by the department.
The first two options allow the premium amount associated with each scenario to be expressed either in approximate dollar amounts or as a percentage difference. However, the option to use the department’s document requires the producer to enter premium amounts.
“It will be much easier for consumers to understand their choices if the department’s document also provides either ‘approximate dollar amounts’ or ‘percentage differences’ associated with each scenario,” said D’Agostino. “Once consumers select their coverages, they will receive a binding quote, which provides the exact premium amount.”
PIANJ also asked whether producers could provide insurance scenarios in electronic, audio or videotape format.
Was this article valuable?
Here are more articles you may enjoy.