The National Association of Independent Insurers, the Alliance of American Insurers and the American Insurance Association all had favorable comments on the passage of New Jersey’s Auto Insurance Reform Act. (See previous article)
The bill, SCS 63/A.B. 2625, “reverses three decades of legislative micromanagement of the auto insurance business,” stated Donald S. Cleasby, assistant vice president and assistant general counsel for the (NAII), which was instrumental in developing the legislation. “We highly commend the New Jersey legislature for its committed and bipartisan support of this bill.
“While the New Jersey Legislature could have done more,” Cleasby continued,” such as enact a true competitive rating law to eliminate prior approval of rates, this is an historic departure from many previous ‘reform’ attempts that simply placed more regulatory constraints on auto insurers.”
Richard Stokes government affairs representative for the Alliance’s Northeast Region, called the bill “a good first step toward making auto coverage more available in New Jersey,” and said the Alliance expected “Gov. James McGreevey to sign the measure into law shortly, and it should improve the stability of the state’s long-suffering auto insurance market, making the state more attractive to insurers.”
The bulletin sounded a cautious note, however, warning insurance companies “who want to attract and keep good auto insurance companies in the state to continue to be vigilant against attempts to undermine these positive steps.”
Stokes also noted that the Act “institutes a long-needed framework for the rate review process that should ensure prompt and objective consideration of insurers requests, and phases out the take-all-comers provision.” In addition, it restores the personal injury protection default provision to $250,000; permits insurers to charge the Property/Liability Insurance Guaranty Association cost of the assessment to consumers, and establishes withdrawal criteria.
He also pointed out, however, that an “onerous bill,” A 3531, which would increase the number of lawsuits arising from minor injuries, was not voted down, but merely held by the Assembly. “This bill could rear its head at any time,” Stokes explained. “This highlights the fact that proponents of available, affordable auto insurance in New Jersey will need to continue to be vigilant against attempts by the trial bar to derail reform efforts.”
The AIA also praised the New Jersey General Assembly “for passage of historic legislation (AB 2625/ S 63) that promotes competition and will bring auto insurers back to the state.” Tammy Velasquez, AIA assistant vice president, mid-Atlantic region, called the reform package “the most significant auto insurance reform bill to come out of New Jersey in 30 years,” and added that the state’s “auto insurance market has long been a political minefield for insurers due to its quagmire of onerous regulations.”
The bulletin said that for the first time in many years it would begin to foster a truly competitive auto insurance market. “A2625/ S63 will at last remove some of the layers of well-intentioned, but counterproductive regulations that have turned the New Jersey auto insurance market into a bureaucratic maze,” Velasquez indicated.
The AIA said it “hopes that passage of this legislation will turn the tide on the exodus of insurers who have left the state, leaving consumers too few companies from which to purchase auto insurance. Five of the six largest auto insurers in the nation currently do not sell auto coverage in New Jersey and more than 20 auto insurers have left the state in the past decade.” A lot of other people hope so too, especially the Garden State’s beleaguered automobile owners.