2002: Auto Insurance Choice and Competition Dwindles, Consumers Suffer, According to the Coalition for Auto Insurance Co…
For New Jerseyans seeking auto insurance coverage, 2002 will likely be known as the worst year in state history for auto insurance choice and competition.
“Drivers are facing the ugly truth about auto insurance in New Jersey,” said John Friedman, chairman of the Coalition for Auto Insurance Competition. “Excessive regulation and political interference is forcing auto insurers to flee New Jersey, leaving drivers with little choice and few options.”
More than twenty-five auto insurers have left New Jersey during the last ten years. In 2002, seven auto insurers either left or announced plans to stop doing business in New Jersey:
– January: Harleysville Insurance Company agrees to pay Palisades Safety and Insurance Association and Palisades Insurance Company $4.7 million to take the 16,000 vehicles Harleysville insures.
– June: State officials approve State Farm Indemnity’s request to withdraw from New Jersey.
– September: State Farm Indemnity starts non-renewing 96,000 New Jersey auto policies as part of its withdrawal.
– September: Twin City Fire Insurance Company, part of Hartford Financial Services, agrees to pay Palisades Safety & Insurance Association and Palisades Insurance Company $9.2 million to take the 24,000 vehicles Twin City insures in New Jersey.
– September: Great American Insurance Company agrees to pay Palisades Safety & Insurance Association and Palisades Insurance Company $7.0 million to take the 24,000 vehicles Great American insurers in New Jersey.
– December: The Robert Plan shuts its New Jersey business, non-renewing its last 20,000 vehicles through a Department of Banking and Insurance-ordered “solvent run-off” precipitated by the company’s hazardous financial condition.
– December: Central Mutual Insurance Company announces it is leaving New Jersey.
– December: Merchants Insurance Group announces it is leaving New Jersey.
Each month, the owners of more than 4,000 vehicles learn that their auto insurance coverage is not being renewed, forcing these policyholders to search for replacement coverage in a market bereft of sufficient choice and competition.
The Coalition points to the state’s excessive regulation of auto insurance as the culprit behind the lack of sufficient auto insurance choice and competition.
“Without swift action by state lawmakers, consumers will likely face fewer choices in 2003 as excessive regulations and political influence continues to take its toll,” said Friedman. “Drivers 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.”
“Until reforms are made that promote greater consumer choice and industry competition, insurers will continue to lack the incentive to grow and invest capital in New Jersey, leaving drivers in a lurch,” said Friedman.
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, and two have left in the last year.
The Coalition has been working to educate New Jersey drivers and policy makers to stem the state’s unprecedented auto insurance crisis precipitated by the deterioration of the financial health of New Jersey’s auto insurance industry. The group is calling for passage and enactment of the New Jersey Auto Insurance Competition and Choice Act (A-2625 and S-1999), which outlines reforms that will attract more auto insurers to New Jersey by permitting companies to use industry-accepted standard underwriting methods already used in nearly every state.
“While 2002 has been a bad year for auto insurance consumers, 2003 does offer hope for meaningful reform,” said Friedman. “Governor McGreevey has acknowledged the problem and promised to present his own proposal in January to stimulate auto insurance choice and competition,”
The Coalition welcomes the participation of consumers, businesses, and associations 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, 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.
CONTACT: Coalition for Auto Insurance Competition
Ernie Landante, 973/799-0200
www.njcaic.org
URL: http://www.businesswire.com
LOAD-DATE: December 31, 2002
