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While welcoming the release of an economic study by Rutgers University professor of economics John Worrall showing how excessive state government regulation of New Jersey's auto insurance cripples market competition, the Coalition for Auto Insurance Competition believes creating new laws and regulations that spur competition and consumer choice is the answer to New Jersey's auto insurance mess, not deregulation.
"We need a regulatory system that promotes competition, encourages companies to sell auto insurance in New Jersey, and creates a stable market that offers more choices for consumers," said John Friedman, chairman of the Coalition for Auto Insurance Competition. "But it is also important to maintain the right regulations that ensure companies adhere to fair business practices and that companies have sufficient funds to cover policyholder claims. Professor Worrall has done an excellent job of defining the problem, however we are not advocating deregulation as the solution."
The Coalition for Auto Insurance Competition, a New Jersey-based group that includes businesses, associations and consumers, believes the state's excessive regulation of auto insurance is the culprit behind limited competition by discouraging insurance companies from doing business in New Jersey.
"Four out of the six largest insurers in America already do not do business in New Jersey and when the state's largest auto insurer completes withdrawal, that number will increase to five out of six." The latest figures show New Jersey has 47 percent fewer companies selling auto insurance than Illinois and more than a third fewer than neighboring New York and Pennsylvania. More than twenty auto insurance companies have left New Jersey in the past ten years.
The group is calling for reforms that will attract more auto insurers to New Jersey, spurring competition and increasing consumer choice. These reforms include permitting companies to use industry-accepted standard underwriting methods already used in nearly every state and adjusting the low ceiling on company profits to permit a reasonable rate of return.
"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 for Auto Insurance Competition was formed by the auto insurance industry's trade associations (American Insurance Association, Insurance Council of New Jersey, National Association of Independent Insurers) and member companies. The Coalition welcomes the participation of businesses, associations and consumers who seek to work together to bring about meaningful and responsible auto insurance reform in New Jersey. Other participants include the Independent Insurance Agents of New Jersey, National Association of Mutual Insurance Companies, Citizens for a Sound Economy, Commerce and Industry Association of New Jersey, New Jersey Society for Economic and Environmental Development, New Jersey Retail Merchants Association and the Food Council of New Jersey.
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