New Jersey Governor James McGreevey took further steps Monday toward a consumer-directed, competitive auto insurance market, announcing the adoption of additional consumer initiatives as part of his auto insurance reforms – a series of consumer protection regulations designed to put consumers in the driver’s seat.
These protections include the “Automobile Insurance Consumer Bill of Rights,” a user-friendly “New Jersey Auto Insurance Buyer’s Guide” and an innovative “Consumer Information Scenarios” (Three Scenarios) program. These initiatives – in addition to the new Auto Insurance Purchasing Planner, the new requirement to notify policyholders of rate increase requests, and soon-to-be-released Auto Insurance Company Report Card – provide consumers with the information they need to negotiate insurance coverage that fits their needs and pocketbooks.
“For years, consumers did not have the tools they needed to make informed decisions about auto insurance—we are changing that,” McGreevey said. “We are empowering consumers, arming them with the information they need to take advantage of our emerging competitive auto insurance marketplace. The message is clear: in New Jersey, consumers are in the driver’s seat.”
“With these new tools, New Jersey is taking the lead in building a consumer-directed, competitive marketplace,” Commissioner Holly Bakke said. “Policyholders can now determine what coverage they need, how much they want to pay and what company works best for them.”
The Consumer Information Scenarios program requires insurers and agents to provide specific information to help consumers better understand the components of their policy and the costs of different coverage choices. The scenarios demonstrate the costs of the different lawsuit liability options, personal injury protection options and collision options, including deductibles.
“Three Scenarios takes its place alongside the wide range of consumer tools now available to consumers, such as the Auto Insurance Purchasing Planner, to help them make informed decisions about the types of coverage available and how much they cost,” Bakke said.
The Department also made the Buyer’s Guide that insurance companies must send to all prospective clients user friendly.
“Because auto insurance is an important consumer purchase, the guide provides the information needed to understand what is being purchased. The new Buyer’s Guide includes examples and terms that make understanding auto insurance easier for policyholders,” Bakke commented.
The Automobile Insurance Consumer Bill of Rights sets forth a consumers’ rights and responsibilities regarding auto insurance. Insurers are required to post the Consumer Bill of Rights in their offices and they could face a fine for violating its provisions.
“For the first time, New Jersey drivers have a list of rights guaranteed by law that they can read and understand. New Jersey drivers asked for this and we delivered,” McGreevey said.
Bakke added, “For years New Jersey drivers have struggled with a dysfunctional auto insurance system that confused and frustrated them. They were not aware of their rights or where they could go if they were dealt with unfairly. This Administration has changed that.”
Other consumer protection initiatives by the Department include:
· Consumer Centers in Newark and Camden;
· Tour of motor vehicle offices to talk directly to drivers about their auto insurance options.
· Educational programs for consumer groups around the state;
· The Auto Insurance Purchasing Planner, an Internet-based program to help consumers better understand their choices regarding auto insurance, and
By making insurance companies meet their obligations to policyholders, the Department reportedly recovered nearly $12 million from insurance companies in all lines on behalf of policyholders since January 2002.
The Governor’s auto reforms also created the Dollar-A-Day program for low-income families who are on federal Medicaid, added a new standard deductible of $750, maintained the current $250,000 medical expense benefit standard coverage under PIP, and made auto insurance fraud a specific crime.
Other major reported accomplishments since the reform law was signed in June 2003 include:
· Mercury Insurance has entered the marketplace, the first new auto insurer in seven years;
· Allstate has added new agents and is actively trying to enroll good drivers;
· State Farm decided to suspend its practice of dropping coverage for 4,000 New Jersey drivers per month;
· USAA and State Farm voluntarily reduced rates;
· Appointment of more than 1,000 new auto insurance agents, and
· 37,000 previously uninsured drivers now contributing more than $54 million through the Governor’s “Last Chance” program.
The Automobile Insurance Consumer Bill of Rights, new user-friendly Buyer’s Guide and innovative Three Consumer Information Scenarios program were adopted March 15. As of today, the documents can be found on the Web at www.njdobi.org.