Seven divisions

Insurers Balk about Added Burden as N.J. Gov. Codey Signs Bill Restoring Consumer Advocate Office for 2006

New Jersey has brought back to life the state’s consumer advocate office that was killed more than 10 years ago.

New Jersey Acting Gov. Richard J. Codey recently signed into law a bill that restores the Department of the Public Advocate as a government watchdog to act on citizen complaints on insurance, utilities and other issues.

The measure was opposed by insurers.

The new executive department will begin operations in January 2006. The advocate will be appointed by the incoming governor and serve during that governor’s term of office.

The department, which will have the power to sue other state agencies on behalf of citizens, will be responsible for acting on citizens’ complaints about the action or inaction of state agencies. It will also oversee utility and insurance rates and charges; represent people with mental illness, those with developmental disabilities, children and the elderly; and represent the public interest in administrative and court proceedings.

Formally, the new agency will have seven divisions: the Division of Administration, responsible for the day-to-day operations of the department; the Division of Citizen Relations, responsible for investigating complaints from citizens on any state agencies; the Division of Mental Health; the Division of Advocacy for the Developmentally Disabled; the Division of Elder Advocacy; the Division of Rate Counsel, to serve as a watchdog of utilities and insurance rates; the Division of Public Interest Advocacy, representing the public interest in any areas not covered by one of the other divisions.

The original Department of Public Advocate was created in 1974 by former Gov. Brendan Byrne as a cabinet-level agency. In 1994, Gov. Christine Todd Whitman signed legislation to eliminate it.

The signing fulfilled a promise by Codey and his predecessor, former Gov. James McGreevy, to restore the office.

“For more than two decades the Public Advocate was an indispensable part of New Jersey government, a champion of ordinary people with real needs but without political capital,” Codey said. “Today we are accomplishing another goal I laid out in the State of the State address, by restoring that voice to the people of New Jersey.”

The bill signing by Codey, a former independent insurance agent, set off complaints from the insurance industry.

The Property Casualty Insurers Association of America said the new position would cause “excessive and unnecessary regulatory burdens.”

According to PCI, the creation the rate counsel unit within the new agency would work against New Jersey’s auto insurance regulatory reform, adopted in 2003, which is bringing new insurers to the market and encouraging existing companies to stay or expand in the market.

PCI said that its members operating in states with such advocates report that it often takes longer for approval of filings since the advocate is slow to act, combative with the insurance department and prolongs the rate review process. The office will duplicate the role of existing state offices, delay the process of rate-setting and will not benefit the state’s consumers, according to PCI.

“There is no evidence that the creation of these additional consumer advocate programs is effective, necessary or beneficial to consumers,” said Richard Stokes, PCI regional vice president.

“We are very disappointed with today’s action,” added Stokes. “This is a big step backwards in the effort to reform the state’s auto insurance marketplace.”

Supporters and sponsors

Codey was joined at the bill signing by Assemblyman Wilfredo Caraballo (D-Essex), who is a former public advocate; Sen. Joseph F. Vitale (D-Middlesex); and Lauren Skowronski, executive director of Common Cause New Jersey.

The bill’s sponsors include Caraballo, Vitale, Sen. Robert J. Martin (R-Morris, Passaic), Assemblyman Alfred E. Steele (D-Bergen), Assemblyman John J. Burzichelli (D-Cumberland) and Assemblyman Mims Hackett (D-Essex).

According to Steele, restoring the advocate will allow many of the services currently being performed by various agencies, such as ombudsmen and the state’s ratepayer advocate, to be consolidated into a single department. “Centralizing these critical services will provide both significant cost savings and a more organized, effective protection of the public interest,” he maintained.

Hackett suggested that had the office been in existence for the last 10 years, the state may have avoided problems with E-ZPass, the collapse of the HIP-NJ health care plan and others.