N.J. Challenges Lure Mercury General

July 29The chairman of California-based Mercury GeneralCorp. said the firms recently announced decision to enter the NewJersey auto insurance market was brought on by recent regulatoryreform and a belief there is enormous opportunity for growth.

George Joseph, who is also chief executive of the LosAngeles-based insurer, told National Underwriter, “I thinkwhat we can see now is the beginning of less micro-managing of thebusiness to encourage companies to come into that state.” Foryears, he said, New Jerseys department of insurance and its statelegislature had been micro-managing auto insurance.

“New Jersey is a state with a lot of automobiles, and that isour business,” he continued. “When we started here in California,we had the same thing. A lot of companies shied away fromCalifornia. And some of them shy away right now. Weve been throughthat.”

He said his company has had a history of going into states whereothers fear to tread: taking up homeowners coverage when State Farmleft California; and going into Florida to sell auto policies in1998, when others were leaving. The company was formed inCalifornia in 1961 and began underwriting in that market in 1962.It writes over $2 billion in premium annually.

Mercury General, he said, does not have a problem being instates where there is micro-management of carriers, just as long asthey understand what is going on in the state.

“We are specialists in automobile,” he said. “Our approach is tolearn the statute and the regulations very carefully and to findways to live within them. We have a reputation among independentagents that when we come to a state. We come to stay.”

“We never entered a state where we could not overcome orunderstand what the statutes were,” he added. “We look at NewJersey as a challenge, a big challenge. We are a company that isnot uncomfortable with challenge.”

Mr. Joseph said that the companys application is nearly completeand hoped it would begin doing business in New Jersey some time inAugust.

He said the companys practice is to carefully screen the agentsit decides to work with and have them go through a training periodof at least three weeks before beginning to sell insurance.

The company said it plans to appoint 50 independent agents toinitially sell policies in New Jersey.

Eventually, Mr. Joseph said, the company will sell otherpolicies in the state because the agents and customers demandit.

Of the eight states Mercury General writes in, it does not writehomeowners insurance in Texas, because “the situation is not clearthere,” he said.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 4, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.