Auto Insurance Low Priority In New Jersey Campaign For Governors Position

Iselin, N.J.

Political pros and industry professionals at a New Jersey insurance conference said last week that the issue of huge auto insurance costs is on the backburner in this years election for governor.

Their comments at the Insurance Council of New Jerseys annual meeting in Iselin, N.J., come at a time when auto rates in the Garden State are 80 percent higher than the rest of the nation.

Four years ago, a campaign directed at voters anger over insurance rates was seen as the main reason that Democratic gubernatorial candidate James McGreevy came close to unseating Republican incumbent Christie Whitman.

Not this year.

“This [insurance] issue is so complex its hard to penetrate the publics mind with it. People care more about anthrax,” commented Republican political consultant Michael DuHaime.

Mr. DuHaime was part of a panel of “Pontificating Political Pundits” presented by the Council.

Jim McQueeny, a Democratic political analyst and commentator, and owner of Newark, N.J.-based Winning Strategies advertising firm, noted that during Mr. McGreevys 1998 run for governor the candidate couldnt answer a question about his mother without bringing up auto insurance. But this year, Mr. McQueeny quipped, the issue has moved down in importance “from the First to the Fifth Station of the Cross.”

Mr. Nick Acocella, publisher of Politfax: A Weekly Electronic Newsletter on Politics in New Jersey, said in the last campaign the insurance issue had been more of a symbol in voters minds that things werent going right.

Richard T. Thigpen, a partner of the Strategy Group of Princeton, N.J., said it is likely that the election will see Democrats wrest control of the Assembly from Republicans, but that the GOP will retain the Senate.

To solve the auto rate problem, he said, legislators will have to develop a partnership with the insurance industry and “it is going to take bipartisanship and serious thinking.” The industry, he said, will have to participate in “in a meaningful way.”

John K. Tiene, council president, interviewed after the panelists spoke, said the group has spoken with Mr. McGreevy and his Republican opponent, former Jersey City Mayor Bret D. Schundler, about the insurance issue, but “both are preoccupied and havent focused on it in depth.”

He said that as a regulated industry, insurers have been barred from making large contributions, but that Mr. McGreevy had been snaring heavy contributions from doctors and trial lawyers.

Mr. McGreevy, the mayor of suburban Woodbridge Township, held a good lead in the polls last week, but political analysts think the race would tighten to within a few points in the closing moments of the campaign.

James Gorman, president of Proformance Insurance Co. of Freehold, N.J., said he thought that after the election there would be an attempt to deal with “excessive subsidization of underpriced risks” by policyholders in the rest of the state.

“The test will be whether the new administration deals with it quickly–if at all.”

He said that if State Farm carries through on its efforts to withdraw from writing auto policies in the state, it might “force the situation to be dealt with.”

Wayne, N.J.-based State Farm Indemnity Company said on June 12 that it would relinquish its position as the states largest auto insurer, citing continuing losses and burdens created by state regulation.

The company said that since September 1999, it has lost almost a quarter-of-a-billion dollars, cutting the company's net worth almost in half.

State Farm Indemnity President Brian Boyden complained in June of “the politicized auto insurance regulatory process in New Jersey,” citing restrictions imposed by the 1998 Automobile Insurance Cost Reduction Act that required all New Jersey auto insurers to reduce their rates by at least 15 percent.

Mr. Gorman expressed a concern that if there is legislation, that such legislation might result in more subsidizing of underpriced risks.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 5, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Auto Insurance Low Priority In New Jersey Campaign For Governors Position

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