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Coalition For Auto Insurance Competition Launches N.J. Campaign

BY Marie Suszynski
by Marie Suszynski on 5/17/02.

NEWARK, N.J. (BestWire) - The New Jersey Coalition for Auto Insurance Competition has launched a media campaign to get its message out that the state 's automobile insurance industry needs to be overhauled. In a radio advertisement, an insurance finder tells a potential customer that the insurance companies he'd like to buy from--Geico, John Hancock, Nationwide--have all left New Jersey because of excessive regulations. "More have announced their intention to leave," the ad says, "forcing over 1 million New Jersey drivers to scramble for coverage." A print ad says "New Jersey's auto insurance system is a wreck" and shows a picture of an overturned tractor-trailer blocking traffic on a highway. "What's driving auto insurers away?" another print ad asks, showing an illustration of auto insurers driving out of New Jersey. "In the past decade, 20 auto insurers have left the state. And four out of the six largest auto insurers in America don't do business here," the ad says. "New Jersey drivers now have one-third the choices available to drivers in Pennsylvania and New York." The ads started running May 15 and will run for two weeks in eight newspapers and on eight radio stations across New Jersey and in New York and Pennsylvania, said Ernie Landante, a spokesman for the coalition. The Star Ledger, Trenton Times and Philadelphia Inquirer are among the newspapers running the ads. Radio stations in Middlesex and Somerset Counties, Atlantic City, Trenton, Millville, New York City and Philadelphia are broadcasting the ads. They're a continuing effort to educate people in New Jersey and the state's policymakers that New Jersey regulations need to be changed, Landante said. "We need sensible, workable regulations that promote choice and competition. That's our goal," he said. The coalition is working on legislation to change the state 's current regulations. Four regulations--the take-all-comers law, the excess-profits law, prior rate approval and withdrawal restrictions--"strangle competition," statements from the coalition said. The take-all-comers law, which requires insurers to accept any eligible driver, restricts a company's ability to manage its growth, the coalition said. Insurers could be forced to take more customers than they could handle. While a few other states have an excess-profits law, none are as stringent as New Jersey's, which requires that companies make no more than 6% of premium as profit, the coalition said. New Jersey's prior rate-approval systems keep rate increases "artificially low," the coalition said, noting that 90% of rate increases requested are denied. And with New Jersey's withdrawal restrictions, insurers that enter the state face the possibility that if business goes bad, they have to stay in the state until they 're "near financial disaster" or pay another insurer to take the business, the coalition said. The coalition was formed this year by auto insurance industry trade associations, including the American Insurance Association, the Insurance Council of New Jersey and the National Association of Independent Insurers. Earlier this month, the Professional Insurance Agents of New Jersey joined the coalition. The coalition's primary funders are direct writers, specifically State Farm Indemnity Co. and Allstate, said Steven A. Reichman, president of the Professional Insurance Agents (BestWire, May 10, 2002). State Farm, which has about 780,000 policyholders in New Jersey, is planning to withdraw from the state because the company said regulations make it too hard to do business, although Holly Bakke, the state's banking and insurance commissioner, said she would try to persuade the company to stay (BestWire, April 18, 2002). Other members of the coalition include Citizens for a Sound Economy, the National Association of Mutual Insurance Companies, the New Jersey Food Council, the New Jersey Retail Merchants Association, the NJ Society for Environmental, Economic Development, the Somerset County Chamber of Commerce and the Commerce and Industry Association of New Jersey.