In order to implement a 2010 statute, the New Jersey Department of Banking and Insurance has issued a proposal for public comment that would change the limits of fees for surplus lines insurance.
Under the proposal, in addition to allowing to charge a fee for the actual cost incurred for any services performed by a person that is not associated with the surplus lines producer such as inspection services, a surplus lines producer may charge a fee to an originating broker in connection with the negotiation or procurement of any contract of surplus lines insurance in the following amounts:
1. For personal lines, a fee not to exceed $50; and
2. For commercial lines, a fee that is the greater of two percent of the premium for the applicable policy period or $100, but in no event in excess of $250.
New Jersey statutes previously limited surplus lines producers to charge a fee to an originating broker in connection with the negotiation or procurement of any contract of surplus lines insurance that didn’t exceed $50, plus the actual cost incurred for any services performed by a person that is not associated with the surplus lines producer, such as inspection services. Effective October 1, 2010, the $50 maximum fee was deleted and the maximum amount was to be set by the Insurance Commissioner.
The proposed amendment retains the existing fee limit currently applicable with respect to personal lines surplus lines insurance, and increases the amount permitted for commercial lines surplus lines insurance. The proposed fee amounts are based on discussions the Department has had with surplus lines producers, trade associations and representatives.
The Department is also proposing to clarify that the applicability of the provisions on fees in that subsection to personal lines surplus lines insurance is limited to the originating or retail producer, and does not extend to the surplus lines producer.
A 60-day comment period ending September 20 is provided for this notice of proposal, and comments should be sent to Robert J. Melillo, Chief Legislative and Regulatory Affairs, Department of Banking and Insurance, 20 West State Street, PO Box 325, Trenton, NJ 08625-0325.