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The Coalition for Auto Insurance Competition applauded today's introduction of legislation to restore competition to the state's auto insurance market.
"This bill is an important achievement toward modernizing the state's auto insurance laws and placing New Jersey in the mainstream of state regulation of auto insurance," said John Friedman, the Coalition's chairman. "The state's auto insurance marketplace is unstable and dysfunctional, requiring immediate reform that instills more company competition and more choices for consumers."
Explaining the need for the legislation, the Coalition points out that New Jersey has 47 percent fewer companies selling insurance than Illinois and more than a third fewer than neighboring states New York and Pennsylvania. New Jersey 's lack of auto insurance companies deprives motorists' sufficient choice and the benefit of vigorous market competition.
The Coalition also pointed to the New Jersey Department of Banking and Insurance recent confirmation that 19 of the state's 67 auto insurance companies
- 28 percent of the companies doing business in New Jersey - are in financial conditions that require monitoring by regulators. Nine of those companies are in a "severe" financial condition, paying more in policyholder claims than receiving in premiums.
"Good intentions have led us down the wrong path," said Friedman. "We need a regulatory system that doesn't force auto insurers from our state or into insolvency, but rather permits companies to compete in an active market that gives consumers more choices."
The bill, A-2625 and sponsored by Assemblyman Louis Greenwald (D-6) and Assemblyman Christopher Bateman (R-16), calls for eliminating the forced insurance of bad drivers; simplifying the withdrawal from the state by an insurer with safeguards to protect consumers; matching of insurance rates with risk; and adjusting the profit cap law to encourage auto insurance companies to expand and grow in New Jersey.
"Having to operate under the state's restrictive and difficult regulatory regime where insurers are told what products to sell, to whom they must sell and how much to charge, companies will lack an incentive to remain and invest in New Jersey," continued Friedman.
Friedman predicted that, if enacted, the legislation would stabilize the state's auto insurance market and be a boon to drivers.
"It's only natural to expect that consumers will shop around for the best deal if they have more choices. Competition and choice benefit consumers and when companies compete, consumers win," said Friedman.
The Coalition welcomes the participation of businesses, associations and consumers who seek to work together to bring about meaningful and responsible auto insurance reform. 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(R), Professional Insurance Agents of New Jersey, New Jersey Food Council, New Jersey Retail Merchants Association, NJ SEED (Society for Environmental, Economic Development), Somerset County Chamber of Commerce and the Commerce and Industry Association of New Jersey.