Changes In Auto Insurance System Urged In N.J.

NU Online News Service, Feb. 21, 4:50 p.m.EST?At a hearing this week held by the New Jerseylegislature, industry experts urged lawmakers to change the state'sauto insurance system and make it less difficult for insurers towrite business.

"Improved market stability would help attract new insurancecompanies to the state, enabling drivers to more readily obtain thecoverage they need at a fair price," said Richard Stokes, Northeastgovernment affairs representative for the Downers Grove, Ill.-basedAlliance of American Insurers.

Mr. Stokes was one of several representatives who testified atan informational hearing on auto insurance held by N.J. Assembly'sBanking & Insurance Committee.

The problem with the New Jersey market, Mr. Stokes observed, isthat, for the past three decades, it has not projected the climateof stability and certainty that is necessary to entice insurers tocommit capital and other resources to the state.

The state must enact a prompt, objective and fair rate reviewsystem, Mr. Stokes argued; under current conditions, it can take upto two years for insurers to obtain rate approvals.

"This is not the proper signal to send when the objective is toexpand auto insurance availability by encouraging new companies toenter the state," he said.

More than 26 auto insurers have left the state in the last tenyears, six in just the last 11 months. And five of the six largestauto insurance companies in the United States no longer writebusiness in New Jersey, according to the Insurance Council of NewJersey, which also took part in the hearing.

The group estimates that more than 740,000 vehicles will neednew auto insurance coverage this year but that consumers willexperience increasing difficulty finding new coverage.

Additionally, State Farm Indemnity, the state's largest autoinsurer, will non-renew some 50,000 vehicles this year while thestate's number of registered private passenger vehicles is expectedto grow by 120,000. The group also forecasts that some 570,000vehicles will not renew their current coverage and seek newcoverage this year.

"State lawmakers and regulators must act on the Governor's plansto modernize the state's auto insurance laws to stem the tide ofwithdrawing carriers. Action is needed now; availability problemswill only grow worse without action," said John K. Tiene, presidentat the Insurance Council of New Jersey in Ewing, N.J.

According to David Snyder, general counsel at the Washington,D.C.,-based American Insurance Association, New Jersey hasrelatively few companies writing private passenger auto insurancecompared to neighboring states and those with similardemographics--such as Pennsylvania, Connecticut and Illinois.

"New Jersey lacks competition in personal auto insurance.Consumers need choices in the marketplace, and competition in theauto insurance market will ensure the lowest feasible rate levelsfor New Jersey motorists," said Mr. Snyder, who also testified atthe hearing.