Acting Governor Richard J. Codey and Banking and Insurance Commissioner Holly C. Bakke today announced that nearly $300 million has been returned to more than two million policyholders since the auto insurance reforms became law.
New Jersey Manufacturers Insurance Company (NJM), the state’s second largest personal auto insurer, reported it will issue a $59 million special dividend. The monies are currently being sent to more than 360,000 NJM policyholders across New Jersey and continuing through mid-December.
“The competitive, consumer-driven marketplace we created is working for New Jersey drivers,” Acting Governor Codey said. “NJM’s checks to policyholders are another payment on a promise made to consumers two years ago. Consumers asked for premium and coverage options and companies are finally able to provide both.”
Before the reforms, due to New Jersey’s historically unpredictable marketplace, NJM held a large reserve to guard against unanticipated losses in the state’s mechanism for paying individual medical claims over $75,000. Now that the reform law has provided long-term and reliable funding for these claims, NJM is releasing this reserve directly to policyholders in this dividend.
“The Automobile Insurance Competition and Choice Act has alleviated the strain on both policyholders and employees at NJM,” said NJM President and CEO Anthony G. Dickson. “Instead of insurers leaving, this market is stabilizing, and motorists can now shop around based on each company’s reputation for financial strength, quality service, coverage options, rating systems, and demonstrated commitment to the New Jersey marketplace.”
The percentage rate of the company’s special dividend will vary. Long-term policyholders with NJM will receive an average return of $173, while those who enrolled in NJM after 2001 will receive an average return of $94.
“The success of the auto reforms have brought great results for New Jersey drivers. Instead of receiving rate increases in the mail, more than 40 percent of the market are seeing dividend checks, rate reductions and solicitations for their business,” Commissioner Bakke said. “Three years ago good drivers were stranded and could not get policies at any price. Now they have choices in coverage and cost.”
In April, NJM opened a new 57,000 square-foot office in Hammonton. The facility currently employs 149 workers.
Since the reforms were enacted, the following companies returned money to policyholders in the form of rate reductions or dividends:
* USAA Group issued a 4.9 percent rate reduction for 2.4 percent of New Jersey’s drivers; * State Farm Indemnity issued a total of four rate reductions for 11 percent of New Jersey’s drivers; * AllstateNJ issued a special dividend for 6 percent of the market; * A Liberty Mutual Group company issued a 4.5 percent rate reduction, while another issued a dividend for 7.5 percent of New Jersey’s drivers; and * NJM’s announcement, combined with a 0.8 percent rate reduction earlier this year, went to 13.8 percent of New Jersey’s drivers.