If you’re an insurance producer in New Jersey, there’s a new piece of legislation you’ll want to keep on your radar—S-4722. This bill would set the stage for the creation of the Joint Blue Ribbon Task Force on Impacts of Climate Change on Property Insurance. Let’s unpack what this means for your business and your clients.
Big picture
S-4722 would establish a 13-member task force within, but not of, the Department of Banking and Insurance. The group will include state department commissioners, legislators from both parties, private-sector representatives and members from nonprofit advocacy organizations. Their mission would be to assess how climate change is affecting both residential and commercial property insurance—and to make recommendations on what could be done about it.
What’s driving this initiative?
New Jersey—like much of the country—is seeing more frequent and severe weather events, from sunny-day flooding to wildfires and storms. The bill notes that rapid sea level rise could make some coastal communities uninsurable, and even uninhabitable.
Between 2018 and 2023, the rate at which insurers dropped property insurance policies in the state jumped almost 70%, putting New Jersey in the same risk bracket as states like Florida and California. The state Legislature sees a need to balance the desire for affordable, available insurance with the realities of increasing risk—and to avoid outcomes like moral hazard, poor coverage or a lack of risk mitigation.
Impact on insurance producers
For insurance producers, S-4722’s impact could be significant. The task force would look at when insurance prices don’t match actual risk, how state and industry practices may be encouraging risky decisions and when properties may soon be uninsurable at reasonable rates.
They also would examine how market changes could affect affordable housing and explore alternative sources of climate data if federal data becomes less available. The findings and recommendations, due in a year, may lead to new policies or practices that change how property risk is evaluated, priced and underwritten in New Jersey.
In the short term—if the bill is passed—this means keeping an eye on how the task force’s work progresses and being prepared for potential shifts in both regulation and consumer expectations. As the landscape evolves, producers may need to help clients understand new coverage realities, risk mitigation options and possibly new products or incentives.
According to the bill, the ultimate goal is to safeguard access to high-quality, comprehensive property insurance—while making sure that insurance practices don’t unintentionally put people and property in harm’s way.
The end
But, we are getting ahead of ourselves. The bill was just introduced and has a long way to go before becoming a law, if it ever does. Stay tuned as S-4722 moves forward. As always, being proactive and informed will help you best serve your clients and adapt to the changing climate—both environmental and regulatory—of property insurance in New Jersey.
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.
