The break in the dam, that started with the announcement by State Farm Indemnity that it planned to leave New Jersey’s auto insurance market, now threatens to become a flood, as yet another state carrier, Newark Insurance Co. wants out too.
According to a report from A.M. Best, the State Department of Banking and Insurance on Wednesday granted Newark’s request to stop accepting new business in the State, a departure from the regulations, which normally require that New Jersey’s auto insurers accept all applicants.
Newark, with about $19 million in written premium is the State’s 24th largest auto insurer, covering around 90,000 vehicles. Reports indicate it was losing as much as $1 million a month on its business.
As with State Farm and AIG of New Jersey, who are also seeking to exit the market, the problem sited is the failure of state regulatory authorities to approve rate raises, which would allow the State’s auto insurers to regain some measure of profitability.
Three withdrawal requests in less than 10 days might serve as a wake up call, that something needs to be done. It remains to be seen if any more Garden State auto insurers are going to swell the flood.