New Jersey residents every day look to licensed professionals like dentists, CPAs and attorneys to resolve problems that crop up in their lives and livelihoods.
Those professionals are also a huge part of their communities and drivers of the state's economy, yet they often struggle to meet overhead expenses. One of the biggest monthly bills is professional liability insurance, especially since New Jersey has the most restrictive insurance market in the region, they report.
Irwin Millinger, an attorney in South River, is getting close to retirement and, as a loyal customer of an insurance company, had been promised free tail coverage when he retired. Then the insurance company stopped writing professional malpractice coverage in New Jersey and he had to start over.
"I had to get another company. I don't know how many are out there who are willing to both insure you and give you a tail when you retire. If you change the statute of limitations to two years, rather than six years, more companies may be willing to write in New Jersey," said Millinger.
Now, legislation is pending that would do just that and more.
Assembly Speaker Vincent Prieto introduced A-1982, to provide stability and predictability to professional malpractice cases, protect consumers and put all professionals on a level playing field. The measure has the support of the New Jersey State Bar Association, all 21 county bar associations, and a coalition of 15 licensed professional groups, as well as insurance groups and other legal organizations.
The principle reasons New Jersey’s malpractice insurance rates are so high are the six-year statute of limitations, the longest for any attorney in the tri-state area, and mandatory attorney fee shifting to a winning party, known as Saffer fees. New Jersey is the only state to impose fee shifting and attorneys are the only profession which is liable for them. Those factors contribute to a marketplace where claims are frequent and payouts are high, which means insurance carriers struggle to make a profit and instead choose to leave, rather than write policies in New Jersey, some experts have said.
“For many years in the New Jersey marketplace, carriers have not been able to write to an underwriting profit, which has led to the lack of competition. Ultimately, this results in high premiums for New Jersey’s attorneys,” said Mike Mooney, USI Senior Vice President of Professional Liability Practice.
Supporters believe the legislation would make the New Jersey market more stable and provide stability to the cost of doing business. It would reduce the statute of limitations to bring a claim against a professional to two years, similar to what it is for doctors and professionals in New York and New Jersey, while still giving consumers two years from the date they reasonably discover a problem to file a claim.
One practitioner noted they are suffering after the insurance carrier left New Jersey's restrictive market.
“My current carrier is no longer writing policies in New Jersey. All of the rates from my broker are over twice the cost,” the practitioner said.
That is similar to what Ronald P. Peles experienced. He handles real-estate closings in Stewartsville and is now paying nearly $6,000 a year in malpractice insurance, close to a $2,000 rate hike.
"I got slammed. In one year, it increased by about 30 percent, and that was without any claims. That was a little shocking,” he said. “I wonder how many more attorneys this is going to happen to. I have to find some way to pay for it. Everybody thinks lawyers make all this money, we don't, for the most part."
To find out more about why the NJSBA supports A-1982, visit
njsba.com.