Bill > S2490

Introduced Session

This bill would require counties and municipalities, and their agencies and authorities, and boards of education to use the established competitive contracting process, and to follow new supplemental requirements, for procuring any insurance products and insurance consulting services. Under current law, such contracts are exempt from public bidding requirements. Specifically, the bill would require boards of education and local contracting units seeking to procure any insurance products and insurance consulting services to do so by the award of a contract through the competitive contracting process set forth in sections 45 through 49 of P.L.1999, c.440 (C.18A:18A-4.1 et seq.) and sections 1 through 5 of P.L.1999, c.440 (C.40A:11-4.1 et seq.), as applicable. This bill would supplement these provisions with respect to insurance product and insurance consulting service contracts as follows: First, an insurance consultant providing any insurance consultant services to a board of education or local contracting unit would be required to be compensated directly and exclusively by the board of education or local contracting unit at a fixed amount, an hourly rate, or on another common and readily comparable basis, provided that the compensation shall not be determined as a percentage of any insurance product costs, and would not be permitted to accept any commission or other form of compensation from an insurer for any insurance consultant services provided to the board of education or local contracting unit. Compensating insurance consultants in this manner is intended to help ensure that their interests are solely aligned with those of the board of education or local contracting unit. Second, insurance consultants and insurers would both be subject to several certification and disclosure requirements related to the restrictions on insurance consultant compensation. Third, the request for proposal documentation would be required to include additional items including the terms of compensation; the certification and disclosure requirements; the penalties for violations; and certain details with respect to current insurance use and anticipated insurance needs. Fourth, the competitive contracting proposal solicitation process would be supplemented in several respects. The notice of the availability of request for proposal documentation would be required to be published through more outlets and in a new timeframe, at least 60, but no more than 120, days prior to the date anticipated for the commencement of the contract. The request for proposal documentation would also have to be submitted to at least one joint insurance fund, established pursuant to N.J.S.40A:10-36 et seq., and with respect to health insurance, to the State Health Benefits Plan, at the same time it is published. Each interested insurer or insurance consultant would be required to submit a proposal at least 30 days prior to the date anticipated for the commencement of the contract. At least three proposals would be required to be obtained. The report evaluating and recommending the award of a contract or contracts would be required to include an analysis and discussion of the availability, terms, and price of comparable coverage from at least one joint insurance fund and, with respect to health insurance, the State Health Benefits Plan, ensuring that alternative insurance products available to the board of education or contracting unit, which may be more cost-effective options, are considered. Finally, this bill would subject insurers and insurance consultants to civil liability for violations of its provisions. Insurance is one of the major expenses of boards of education and local contracting units. Requiring boards of education and local contracting units to use an open, transparent, and competitive process for the award of insurance contracts would help ensure that the lowest possible cost is realized and help protect against waste, abuse, and insider deals, ultimately saving taxpayer money.

Committee Categories

Shirley Turner (D)*, 

Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee (on 02/05/2024)

Official Document