St. Patrick’s Day in Trenton NJ took on a decidedly political character as supporters of proposals to change the state’s restrictive automobile insurance regulations gathered at the state capital both inside and outside the legislature to push for reforms they feel are needed to protect NJ drivers.
Many members of the Professional Insurance Agents of New Jersey Inc., led by President David J. Madara, joined nearly 300 insurance producers and other representatives of New Jersey’s insurance community at a rally on the capital steps, organized by the Coalition for Auto Insurance Competition Reform, to implore lawmakers to overhaul the state’s auto insurance laws. “As an independent insurance agent serving my community, it is frustrating to be unable to help my customers and do what I am in business to do–to provide insurance to those who need it,” Madara stated.
Meanwhile NJ legislators heard testimony during a public hearing from Richard M. Stokes, Esq., Assistant Regional Manager and Counsel for the Alliance of American Insurers and John D’Agostino Jr., CIC, PIANJ VP in support of efforts to increase competition in the NJ auto market by restoring free market conditions and providing increased coverage availability to the state’s beleaguered drivers.
Stokes thanked the committee for giving the Alliance representative the opportunity to present his organization’s views, and indicated that it welcomed “the opportunity to comment on the need for automobile insurance reform in New Jersey and offer some of our ideas of what is necessary to make the marketplace work better. We agree with many of the others who have testified that the system requires much needed reform and that the marketplace is under significant stress.”
He cited figures that over 4000 drivers a month are no longer able to renew their policies, that new drivers “cannot find a company to insure them, in many cases going without insurance,” and that “close to 50%” of NJ auto insurers are facing financial difficulties, or have announced their intention to withdraw from the New Jersey marketplace.
“We are facing an insurance availability crisis in our state that worsens everyday,” D’Agostino told the committee. “It is hurting New Jersey consumers and threatening the livelihood of independent insurance agencies. There is one simple reason for this crisis–insurance companies don’t want to do business here.”
According to D’Agostino, the legislation the committe is considering, Bill No. 1999, would make several changes to the current system that would re-establish competition, including providing certain exemptions to insurance companies; and over time would eradicate the take-all-comers law, which requires insurers to accept virtually every applicant, regardless of risk. The bill also amends the current rules for approving rate increases to ensure requests for increases are acted upon promptly.
“We are grateful for Commissioner Bakke’s efforts to consider all methods of reform,” Stokes stated. “We believe that it has been helpful to have the working groups study the various issues and discuss different approaches. Moreover, we are pleased with the bipartisan initiative of the state legislature to consider legislation that will help make solid and significant changes. We believe Gov. McGreevey and other public policy leaders recognize the need for reform and are working for a bipartisan solution.”
“However,” he continued, “we are concerned that we have yet to see a solution to the problems with auto insurance regulation in New Jersey. It has been over a year and a half since State Farm Indemnity announced its intention to leave the state, exacerbating some of the difficulties we are presently seeing in the marketplace. The Alliance respectfully calls on the state legislature and public policy officials for action that will produce a ‘predictable, stable and fair’ regulatory system.”
D’Agostino indicated that, while the PIANJ largely supports the bill, it does have some problems with parts of it, notably requirements that potential insureds be given three premium scenarios to demonstrate the effect of different coverage choices. “If this new provision is adopted, it would place an enormous administrative burden on insurance agents and would result in further delays and confusion for consumers,” he stated. D’Agostino explained that many agents represent several companies, and to provide three quotes for each company would be overkill. “While PIANJ understands and appreciates the rationale behind this three-scenario proposal,” he continued, “it must be narrowly tailored to provide real benefit to the consumer and to avoid undue hardship on agents.”
Madara ended his remarks at the rally by pointing out that “My hands are tied. Only the Legislature can fix this problem for consumers by reforming our laws to attract new insurance companies into the state and to keep existing carriers form leaving.” He stressed the need to change the laws, “such as the take-all-comers law, the excess profits laws and the current rules for approving rate increases, which have historically discouraged new companies from entering the state and forced existing ones to leave.”
“Without these changes the problem will only worsen, forcing consumers to go without insurance and forcing many independent agents out of business,” Madara concluded.