Mercury General Steps Into N.J.

By Mark E. Ruquet

NU Online News Service, Aug. 7, 4:25 p.m. EDT ?Mercury General today received the go ahead from New Jersey stateregulators to begin selling automobile insurance, the first companyto enter the state since the state passed automobile reforms inJune.

The announcement was made today by Gov. James E. McGreevey andHolly C. Bakke, state Banking and Insurance Commissioner.

"There is no doubt that our reforms are making New Jersey anattractive place to do business again," the governor said in astatement.

"Mercury is a sure sign that the market is improving, and thatwe are getting closer to our goal of giving consumers the choicesthey deserve," Ms. Bakke said.

Under the plan announced today, the Los Angeles-based companywill hire 50 independent agents to begin selling policies and tooffer those policies to drivers not renewed by State FarmIndemnity. The company is committing $100 million to doing businessin the state, the governor's office noted.

The state said that under its plan, over the next 14 months,50,000 State Farm policyholders will have the option of joiningMercury General or another carrier.

State Farm, at one time the state's largest automobile insurer,was planning to leave due to heavy losses. Under a plan worked outwith the department to help stem the losses and bring the NewJersey unit back to profitability, the state is allowing thecompany to non-renew 4,000 drivers a month. However, the plan is noguarantee that the company will not decide to eventually leave thestate.

The governor's office said that 20 insurers have left New Jerseyin the past 10 years.

"Today's announcement confirms that New Jersey is indeedremoving the barriers to competition that have plagued our statefor decades," said John K. Tiene, president of the InsuranceCouncil of New Jersey. "The recent reform is a well-balancedfoundation on which we are building a new, vibrant, competitiveautomobile insurance market."

Richard Stokes, Trenton, N.J.-based assistant regional managerfor the Alliance of American Insurers said Mercury General's entryinto the state showed the reforms that both the industry and stateofficials worked hard to create are working.

"With the reforms, we think more companies will follow Mercury'slead and take a chance on New Jersey," he said.

Professional Insurance Agents of New Jersey President JohnD'Agostino Jr., welcomed Mercury General to the state, adding, "Wewelcome efforts to restore competition to the market for theultimate benefit of consumers and hope this will encourage furtherregulatory reform, stabilization and competition in theindustry."

In also welcoming Mercury General, Jeanne Heisler, IndependentInsurance Agents of New Jersey representative to the Coalition forAuto Insurance Competition, said, "Mercury's willingness to investin New Jersey's automobile insurance market is a clear sign thatthe legislation will work to eliminate the automobile insuranceavailability crisis and create a competitive marketplace in thefuture for the benefit of N.J. drivers."

In an interview with National Underwriter (seeNU, Aug. 4, page 4), the company's Chairman and ChiefExecutive Officer, George Joseph, said he saw the state as a bigchallenge, but also a big opportunity for the company with reportedannual premium of $2 billion that is now located in ninestates.

"New Jersey is a state with a lot of automobiles and that is ourbusiness," he said.