N.J. Gears For State Farm ?Orphans'

By Daniel Hays

NU Online News Service, Sept. 9, 4:12 p.m.EST?New Jersey car insurers were waiting to learn thisweek how the state plans to have them absorb the 96,000 policiesbeing dropped by State Farm Insurance.

Regulators with the State Department of Banking and Insurancemet last week to give the companies a look at the Market AssistancePlan for a proportionate parceling out of the State Farminsureds.

According to a spokesperson for the company's Garden Stateoperation in Parsippany, N.J., State Farm Indemnity Company,notices to the affected policyholders should be out by the end ofthis month to notify the December non-renewals.

The plan is to non-renew 4,000 drivers each month over two yearson a random basis, he said.

Richard Stokes, the New Jersey representative for the Allianceof American Insurers, said the department appeared to be workinghard at "grappling" with the issue of how to equitably requirecompanies to take in the affected policyholders.

A departmental paper given to insurers said the order willrequire companies by a certain date to have a person in place whois responsible for compliance with the Market Assistance Plan.

Within five days of getting an application from a State Farminsured, companies would be required to send out an applicationform and buyers' guide, and within 10 days they would have to "makeat least one other attempt to make meaningful contact with theprospect via mail, e-mail fax or phone."

According to the proposal, "upon achieving their equitableshare," companies could apply for a directive excluding them fromthe MAP.

The proposal also mentioned New Jersey's existing UrbanEnterprise Zone program--a quota system designed to counterredlining, or avoidance of inner city business. Under UEZ, insurersdoing business in the state must have the same market share incities as suburban and rural areas.

State Farm applications from persons in the 27 cities in theUEZs will be distributed "as directed by the Department of Bankingand Insurance."

New Jersey's arrangement in June for State Farm to drop a largenumber of policyholders came after the insurer had applied to leavethe state entirely citing heavy losses.

A letter going out with non-renewals from Commissioner Holly C.Bakke, who heads the DOBI, urges policyholders to "shop for otherinsurance coverage as soon as possible." An 800-number is given forinsureds to call if they have trouble finding coverage.

A Coverage Verification Form with the insurance history of theState Farm Policyholder will go out to with the company'snon-renewal notice.