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Legislation to Get Sureties Back in Public Official Bond Market Close to Passage in New Jersey

Thursday, October 18, 2012  

New Jersey AB 1968 would permit surety companies to issue blanket bonds for municipal treasurers and tax collectors and municipal court judges and administrators. In 2006, sureties were eliminated from this market. The law requires treasurers, tax collectors, and municipal court judges and administrators to obtain blanket bonds from a state joint insurance fund (JIF). Under prior law, public officers and directors could be covered under individual or blanket bonds and either sureties or the JIF could write these bonds. Under the law enacted in 2006, a surety may provide blanket bonds in lieu of an individual bond for any officer or employee required to be bonded, but not for treasurers, tax collectors, and municipal court judges and administrators. The JIF, however, is permitted to write blanket bonds for officers and employees, as well as treasurers, tax collectors and municipal court judges and administrators.

As originally introduced, the bill corrected the problem by removing the provision that excluded sureties from writing these blanket bonds. AB 1968, however, was amended on the Assembly floor to provide that treasurers, tax collectors, and municipal court judges and administrators covered under a blanket bond shall be subject to the same individual underwriting and rating criteria as a person covered by an individual bond. That new provision applies to blanket bonds from sureties or the JIF.

The amended bill passed the Assembly in March. The Senate Commerce Committee reported AB 1968 out of committee this week, which means that it is headed to the Senate floor.


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