State Farm Indemnity, New Jersey’s largest auto insurer, announced plans to withdraw from the market citing a failure to obtain regulatory reforms and consistently poor loss experience over the last three years.
Another NJ-based company, rating agency A.M. Best, took immediate action by downgrading CFI’s ratings from A-(Excellent) to B+ (Very Good). “Since 1998 the company’s results have deteriorated significantly, as evidenced by substantial underwriting losses,”said A.M.Best. While other insurers are subject to the same regulations SFI has cited as the reasons behind its decision, Best’s points out that they’re still managing to produce better results.
SFI has has been seeking a 16.8 percent rate increase, which so far hasn’t materialized, and it’s quite possible that the announcement is timed to coincide with an upcoming hearing on the request.
Any eventual withdrawal would take quite a while, as SFI would have to file a formal plan with state regulators, and comply with applicable provisions.