On Friday the New Jersey General Assembly unanimously approved The Automobile Insurance Competition and Choice Act (S-63/A-2625), a measure designed to correct “years of politically influenced auto insurance regulations, which have eroded the availability of coverage for the state’s drivers,” as the Coalition for Auto Insurance Competition* put it in press release.
Its ultimate purpose is to attract more auto insurers to do business in New Jersey and provide consumers greater and easier access to auto insurance coverage. “Years of excessive regulations have turned New Jersey into a horror story for drivers seeking insurance,” stated Coalition Chairman John Friedman. The organization, composed of leading NJ associations, spearheaded the effort to get the reform legislation passed. “Thanks to bipartisan leadership, New Jersey drivers are closer to reaping the benefits of a more competitive auto insurance marketplace,” Friedman continued.
Ernie Landante, a spokesman for the Coalition added some personal insights to the organization’s press release. “Did you know that New Jersey has the third highest per capita income of any state in the country?” he said. “It should be a prime market for auto insurance companies.” It’s not – many of the largest, GEICO, Nationwide and Progressive to name a few, don’t do business in the state. Following an agreement with NJ’s DOBI, State Farm is refusing to renew 4000 policies a month – over and above those that aren’t renewed by natural attrition. “You see these ads on TV for auto insurance,” said Landante – “lowest rates, and all that, but when you check them out, there’s always a statement that it ‘doesn’t apply’, or it is ‘not available’ in New Jersey.”
Maybe the bill will change that, but Landante indicated that it happen won’t be overnight. “It took thirty years to get to this point,” he said, “and it will take at least two or three years before the changes really take effect.”
According to the Coalition, “Politicizing and over regulating auto insurance is the root cause of the state’s exodus of auto insurers, leaving consumers too few companies from which to purchase auto insurance. Five of the six largest auto insurers in the nation do not sell auto coverage in the state and more than twenty auto insurers have left New Jersey in the past decade.”
The National Association of Independent Insurers issued an announcement noting the Act’s passage (See following article) that described its main features as follows: — Gradually eliminates the ‘take all comers’ law, which prevents insurers from underwriting and controlling their books of business; — Repeals a requirement for prior approval of a withdrawal plan, which discourages outside insurers from entering the New Jersey auto market; — Modifies the excess profits law, making it more contemporary and not tied to economic factors from the past; and — Expands expedited rating from 3 percent to 7 percent, making the rating process more flexible.
The bill has now passed both houses of the NJ legislature and is on the desk of Governor James McGreevey, who is expected to sign it.
*Coalition members include the National Association of Independent Insurers, Insurance Council of New Jersey, American Insurance Association, New Jersey Chamber of Commerce, Independent Insurance Agents of New Jersey, Citizens for a Sound Economy, National Association of Mutual Insurance Companies, New Jersey Association of REALTORS®, Professional Insurance Agents of New Jersey, New Jersey Food Council, New Jersey Retail Merchants Association, NJ SEED (Society for Environmental, Economic Development) Latino Chamber of Commerce of Mercer County, and the Commerce and Industry Association of New Jersey