Insurance producers and brokers have argued for years they should be treated like “semi-professionals” and therefore protected from the New Jersey’s Consumer Fraud Act (CFA).

In a significant decision issued July 15 — Lowe v. Audet, (A-12-25) — the New Jersey Supreme Court rejected that argument and held insurance brokers, producers, and agents are fully subject to the CFA.

The dispute arose after a neurosurgeon purchased disability insurance through brokers who allegedly assured him that he would receive maximum benefits if he became disabled. When a medical condition ultimately forced him to stop practicing, he learned his ownership interests in other businesses reduced the benefits available under the policies. The physician sued, alleging, among other things, violations of the Consumer Fraud Act based on deceptive and misleading conduct in the marketing and sale of the insurance products.

The lower courts dismissed the CFA claim, relying on an earlier Appellate Division decision that had characterized insurance brokers as “semi-professionals” exempt from CFA liability. The Supreme Court disagreed and reversed.

The court’s analysis began with a simple observation: the CFA does not contain any exemption for insurance producers. In fact, the statute is designed to be interpreted broadly to protect consumers from deceptive business practices. Because the CFA is a remedial consumer-protection law, any claimed exemption must be construed narrowly.

The court noted that the so-called “semi-professional” exception is a judicial creation, not a legislative one. Although some prior cases had suggested that certain licensed occupations might fall outside the CFA, the court found no support in the statutory text for exempting insurance brokers simply because they hold licenses and operate in a regulated industry.

The court also rejected the argument that insurance producers should be treated like doctors or lawyers under the CFA’s judicially recognized “learned professional” exception. Historically, that exception has been limited to professions requiring extensive education, specialized learning, and professional judgment. The court observed that insurance brokers do not fit within that narrow category. They are not among the professions historically recognized as “learned,” and the educational requirements for insurance licensing are comparatively modest.

Moreover, insurance producers were free to advertise their services when the CFA was enacted. That fact distinguished them from some traditionally learned professions whose advertising activities originally fell outside the scope of the statute. As a result, the historical rationale underlying the learned-professional exception did not apply.

A key takeaway from the decision is that regulation does not equal immunity. The court reaffirmed that the existence of a licensing and regulatory scheme does not automatically displace the CFA. An exemption exists only when there is a direct and unavoidable conflict between the CFA and another regulatory framework. The court found no such conflict in the laws governing insurance producers. In other words, insurance producers can comply with insurance regulations and still be held accountable under the CFA for deceptive sales practices, material omissions, or other fraudulent conduct.

The decision is a significant victory for consumers and businesses that purchase insurance. By holding that insurance producers remain subject to the CFA, the court preserved powerful remedies available under the statute, including treble damages and attorneys’ fees in appropriate cases. The ruling also reinforces New Jersey’s longstanding view that consumer-protection laws should be applied expansively to combat fraud and deception in the marketplace.

Pursuant to the CFA, successful plaintiffs are entitled to treble damages and reasonable attorneys’ fees. We anticipate that the decision in Lowe will lead to more lawsuits against insurance producers, brokers, and agents. We also expect that the fee shifting aspect of the CFA will lead to higher demands from plaintiffs.