Insurance & Reinsurance

The New Jersey Supreme Court issued a decision on July 15 that significantly impacts the potential liability of insurance brokers, producers and agents that operate in the state. In Lowe v. Audet, the court unanimously held that insurance brokers are not exempt from liability under New Jersey’s Consumer Fraud Act (CFA) pursuant to the “learned professional” or “semi-professional” exceptions to the statute’s application.

The ruling reverses prior appellate decisions and reaffirms New Jersey’s strong consumer-protection stance. The court’s decision increases the risk that insurance sales professionals will face enhanced liability in New Jersey because the holding allows for an award of treble damages and attorney fees in addition to actual damages.

What Happened in Lowe

Lowe arose from a dispute involving a neurosurgeon who purchased disability insurance policies through two brokers employed by Creative Financial Group Ltd. After the neurosurgeon developed a vision impairment that prevented him from performing surgery, he sought maximum benefits under his policies. His disability insurers, however, paid only partial benefits, citing his unrelated business interests as a factor.

The neurosurgeon alleged that the insurance brokers and Creative Financial violated the CFA because they purportedly misled him about the scope of his disability coverage by not disclosing that having other business interests would limit the amount of coverage available.

The trial court dismissed the CFA claim in 2024, relying on a 2006 decision from New Jersey’s intermediate appellate court, Plemmons v. Blue Chip Insurance Services, that categorized insurance brokers as “semi-professionals” exempt from CFA liability. The New Jersey Superior Court, Appellate Division, affirmed the trial court’s dismissal of the CFA claim against the brokers and Creative Financial in 2025. The New Jersey Supreme Court granted the neurosurgeon’s petition for certification.

What the New Jersey Supreme Court Decided

The issue before the New Jersey Supreme Court was whether two common law exceptions to the CFA, referred to as the “learned professional” and “semi-professional” exemptions, applied to shield the brokers and Creative Financial from liability under the CFA.

The “learned professional” exemption protects certain professions, such as physicians and lawyers, from liability under the CFA. New Jersey courts created this exemption based on the premise that the nature of those professions, which require extensive education to provide specialized services, should not be subject to liability under a statute aimed at protecting the general public from consumer fraud. The “semi-professional” exemption, in turn, is a judicially created doctrine that provided similar protections against CFA liability to licensed but less academically rigorous professions, such as real estate agents and insurance brokers.   

In reversing the Appellate Division’s ruling, the Supreme Court first recognized that the CFA is one of the strongest and most broadly applied consumer-protection statutes in the country. The court went on to hold that insurance brokers do not fall within the narrow class of “learned professionals” historically exempt from the CFA because, unlike doctors, lawyers and other similarly situated professionals, insurance brokers are not required to hold any specialized or advanced degrees and must only complete 20 hours of coursework before obtaining a license.

Moreover, the court rejected the “semi-professional” exception altogether, noting that it lacks textual support in the CFA and conflicts with the statute’s broad remedial purpose. In reaching this result, the court reasoned that the separate licensing and regulation that brokers are subject to is not, in and of itself, sufficient to render brokers exempt from CFA liability, especially because no direct and unavoidable conflict exists between the CFA and insurance regulatory schemes.

The court’s decision vacated the dismissal of the CFA count and remanded the case for further proceedings.

Implications for Insurance Brokers and Producers

This ruling limits the defenses available to insurance sales professionals to a CFA claim. Prior to Lowe, insurance brokers, producers and agents regularly argued that they were exempt from the CFA’s reach, pointing to authority from New Jersey’s intermediate appellate court holding that they were excepted from the statute. Because this defense is no longer available, insurance sales professionals will face increased exposure to liability under the CFA because their sales practices will be subject to the statute.

Given this increased liability exposure, insurance sales professionals and the organizations that employ them should take certain proactive measures. Enhanced training on the CFA’s requirements and the conduct prohibited pursuant to the statute should be undertaken. Insurance sales professionals also should exercise heightened care in the marketing and procurement of insurance policies to ensure that the nature and scope of the coverage is fully disclosed to and understood by their clients. This is of particular importance when discussing limitations on the scope or the amount of coverage available. Prudent professionals should carefully document their communications with a client on these subjects so that there is no future doubt or confusion in the event that a deceptive sales practices claim is made.

While taking the above steps will not prevent a consumer from bringing a CFA claim, they will provide brokers, producers and agents with a strong defense on the merits of any such claim.