New Jersey Gov. James McGreevey’s report this past Friday on the status of auto reform in the state is encouraging, said a property/casualty trade group, which also plans to monitor the state’s progress on further stabilization of the marketplace.
The New Jersey Department of Banking and Insurance has moved quickly to establish more than 20 regulations necessary to implement landmark auto insurance regulatory reform enacted into law in June, 2003, noted Richard Stokes, regional manager and legislative counsel of the newly created Property Casualty Insurers Association of America (PCI).
“The department’s responsiveness has been encouraging, and is largely responsible for the gains the state’s automobile market has already experienced,” Stokes said. “Improvements we have seen in the marketplace so far are a radical departure from New Jersey’s troubled past. Insurers are returning to the state, giving consumers more options in automobile insurance, and potentially driving down prices.
“We remain cautious, however, in the event that the state legislature decides to attempt to unravel some of the progress that has been made, and potentially hinder future reforms.”
Friday’s report, prepared by the insurance department and released by the governor in a news conference, gives an update on what has been achieved in auto reforms to date.
The governor pointed to several positive signs listed in the report that the New Jersey auto market is stabilizing.
Among those include: a survey that those most consumers are now able to get auto insurance coverage within a week instead of months; Mercury General Insurance Group, the first new auto insurer to write policies for New Jersey drivers in seven years, is already covering 6,000 vehicles; a program targeting uninsured motorists has resulted in 37,000 previously uninsured drivers becoming insured, State Farm suspended its plans for dropping coverage for 4,000 New Jersey drivers each month; and AIG Companies, scheduled to leave New Jersey in December 2003, has postponed a final decision for a least two more years.
The New Jersey market suffered from 30 years of mismanagement, Stokes noted.
“During the past 10 years, the state has seen more than 40 insurers pull out of the market, citing excessive regulation, including long lag times in rate setting, an “excess profit” charge, the inability to adjust prices, and a territorial rating system designed to unfairly subsidize urban drivers, ” Stokes said. “Currently, only about 50 insurers write auto business in the state, compared with many states with 200 or more insurers competing for our business.”