Two state senators − both personal injury attorneys − are pushing a bill that would raise the minimum requirement for automotive liability insurance and could lead to an increase in the cost of those premiums for drivers.
Senate President Nicholas Scutari, D-Union, and Sen. Jon Bramnick, R-Union, claim the change would ultimately benefit motorists. But insurance experts - and even their colleagues in the Legislature - say the pair stand to gain financially from the insurance overhaul if Gov. Phil Murphy signs their legislation into law.
Bramnick, who also practices stand-up comedy, and Scutari, the most powerful elected official behind Murphy, wasted little time bringing the legislation to the forefront. It's Bramnick's first sessions as a senator after years in the Assembly. And it's Scutari's first session as Senate president.
Bramnick said the legislation is happening now because "you have somebody leading the Senate now who actually represents individuals and not insurance companies."
Both dismissed questions of whether their proposed legislation violates the state's policy on conflicts of interest. The Office of Legislative Services, which includes an ethics counsel to advise members of the Legislature, declined to comment.
"I've never asked" for a legal opinion "because I know it's an unfair question, and I think if you raised it you're saying things that are 100% untrue," Bramnick said.
Scutari said raising ethics questions was "ridiculous" and suggested that since he's been in the Legislature for two decades he knows the rules and would not violate them.
But even their colleagues are not convinced.
Assemblymembers Robert Auth and Beth Sawyer spoke out against the bill before voting no last month. Auth said he would understand if there was a "real need for this" but the bill, if signed, is just "going to force New Jersey motorists to pony up more money for insurance."
"We're just really trying to accommodate a small section of the legal community off the backs of New Jersey motorists," said Auth, R-Bergen. "It's the average middle- and lower-class New Jerseyan who's trying to make ends meet who is going to have to fight for this."
Similarly, Sawyer asked people to vote against the bill, which the Gloucester County Republican said is "only going to support lawyers getting richer."
Douglas Heller, an insurance expert with the Consumer Federation of America, said that this will likely impact consumers negatively while benefiting attorneys who are bringing in higher claims.
"The lawyers who bring claims, they'll be OK because they have a bigger pot of money for claims and to cover their fees, but the consumers who are most financially vulnerable are the ones being attacked by this legislation," he said.
Bruce Nagel, an attorney known for handling personal injury, transportation accident and class-action lawsuits, said the legislation will benefit the injured parties as well as the attorneys representing them.
In New Jersey, lawyers typically charge a fee of 33.3%, or one-third, for the first $750,000 of an insurance settlement or judgment, and then a declining percentage thereafter, according to Nagel.
"If the recoveries are higher, by definition the fees of the lawyers will be higher because it's a percentage of the recovery," Nagel said.
Ethics rules for lawmakers
Public officials must avoid conduct that violates the public trust or gives a "justifiable impression" that that trust has been violated, according to a 1972 state law.
Among those standards are rules for legislators voting for their own interest, or those of immediate family members. They are not to "participate by voting or any other action, on the floor of the General Assembly or the Senate, or in committee or elsewhere, in the enactment or defeat of legislation in which he has a personal interest."
In this case "personal interest" is if legislators or members of their immediate family will directly gain or lose money because of the legislation - but only if the individual legislator would be impacted more than other people in the same business, profession or group, according to the law.
While Scutari did not elaborate on why it was "ridiculous" to ask whether his support for the bill might violate that law, Bramnick said lawmakers all have different professions and that "as long as it is not specific to me, which it's not, and it's generally to the industry," it is not a violation of the conflict of interest law.
Updating insurance premiums has been needed for two decades, Bramnick said, but the bill was first introduced last year. Bramnick was not a sponsor of that bill but is a primary sponsor of the one sent to Murphy when it passed both chambers June 29.
"I couldn't be more proud that once again myself and the Senate president are willing to take the heat to protect policy holders and not necessarily work for insurance companies," Bramnick said.
Two premium increases proposed
State law requires all drivers have car insurance. The type and coverage for accidents varies, but a standard policy covers $15,000 for bodily injury per person; $5,000 for property damage; and $30,000 for uninsured motorists.
The bill would require the standard car insurance policy increase in January and then again in 2026. These changes would more than double the minimum requirement for a standard policy from $15,000 now to $35,000 in 2026.
A minimum policy will require vehicle owners to maintain coverage of $25,000 for a crash that results in the injury or death of one person; $50,000 for a crash resulting in multiple injuries or death; and $25,000 for a crash with no injuries. All liability policies also include payment for all or part of what a driver is legally entitled to recover as damages from drivers of uninsured and underinsured vehicles.
Bramnick said New Jersey has among the lowest limits in the country and the changes in the bill would be a "relatively slight increase."
But Heller said that this move will "certainly raise rates" because it requires people to buy more insurance coverage than they have to right now.
Heller said that "auto insurance is like almost no other product in society" because the government requires drivers to buy it and the drivers that buy the minimum requirement because that's all they can afford will be the "ones who are going to bear the most of the pain for the rate increases that will come."
That sentiment was echoed by Alison Cooper, vice president of state government relations for the American Property Casualty Insurance Association, a group that lobbied against the bill.
Cooper said in a statement that they are "concerned that this legislation will increase costs, particularly for those who are on a fixed income and may be forced to choose between paying for basic necessities such as gas, rent, groceries, etc. or insurance."
"This type of legislation could have serious negative consequences for many New Jerseyans, not to mention the state's auto insurance market, which is currently healthy and competitive," Cooper said. "This type of legislation forces many consumers with coverage lower than the new requirement to buy more coverage."
Scutari maintains that the legislation would not lead to increases in the individual premiums of drivers throughout the state because insurance companies would have to go before the Department of Banking and Insurance to request it and it wouldn't get approved.
Scutari said that his review of the data as well as testimony from insurance companies show that their profitability margin is very high in New Jersey so that they "can't possibly" get an increase approved.
"They have to provide that additional $10,000 in coverage to motorists and they cannot raise the rates," he said. "They have no justification for it."
He also stressed that with the current minimum requirement New Jersey is "below everybody" and the $10,000 increase would "tie us for last."
Cooper noted that drivers already have the option of buying higher limits or additional underinsured and uninsured motorist coverage if they want and "forcing consumers to buy more coverage means their insurance costs will increase and this may be more coverage than they need, want, or can afford."
The legislation includes a phased increase in required minimums, the first in 2023 and the second in 2026. Gary La Spisa, vice president of the Insurance Council of New Jersey, said that the second phase is his concern.
La Spisa said that insurers already sell policies with the liability limits that the bill is requiring and that the increase in 2026, which raises the minimums to $35,000 per injury and $70,000 per accident, doesn't take into consideration what might change after the first phase.
"This second increase comes without any review of the impact that the initial increase will have on New Jersey drivers," La Spisa said. He said that "more than 1.36 million drivers would be impacted by these changes, with three-quarters of those drivers being impacted by both increases."
While there is nothing in the bill to require it, Scutari maintains that after the first increase the Legislature will "look at" the impact of the increase before the second phase takes effect. In that case, he said, there may be an increase.
"They've [the insurance industry] indicated there's a possibility of a request for a $10 a month increase," Scutari said. "Worst case scenario is that's what they could try to increase rates by in four years."
This legislation will benefit everyone except those most financially vulnerable because insurance companies will have more money to invest and injured parties potentially have access to more cover, Heller said.
Bramnick defended the legislation saying that for two decades insurance companies with "tremendous resources in Trenton" blocked policies that would benefit consumers. He said that this legislation will add benefits for drivers and said that the insurance lobby is "really good at raising all the emotional responses" which he considers "anti-consumer."
New Jersey is among the states with the lowest limits, but is among the highest in rates, which Heller says is a "bigger issue."
"You can't separate the fact that people are being charged more already than most of the country. New Jersey drivers are being charged more than what's being charged in most of the country and so you have a fundamental problem that you have to address first," he said. "That has to do with the way insurance companies are allowed to treat customers and charge them more than is necessary based on things that have nothing to do with their driving."
James Lynch, president of the New Jersey Association for Justice, said that his group strongly supports the legislation because the minimum requirements for coverage haven't been updated in 50 years.
"In the past half century the cost of medical care has exploded, there are more cars on the road than ever before, the cost of repairing a damaged car has risen dramatically - but the minimum required amounts of automobile insurance have stayed exactly the same," Lynch said. "The minimums simply have to be raised - it can be economically devastating to get into an accident without enough insurance to cover your medical costs and damages."