N.J. Auto Reform Plan Has Consumer Focus

|

By Mark E. Ruquet

|

NU Online News Service, Jan. 16, 3:09 p.m.EST?New Jersey's latest effort to reform its autoinsurance laws must be "acceptable for all policyholders" andretain protections for consumers that include rate controls, thestate's top insurance regulator said.

|

New Jersey's Banking and Insurance Commissioner Holly C. Bakke,in an interview with National Underwriter, also expressedthe view that what will be good for consumers, in the long run,will benefit insurance agents and the industry as a whole.

|

Her department is looking to strike a balance between consumerprotections and attracting companies to the state.

|

Ms. Bakke's boss, Gov. James E. McGreevey, on Tuesday in hisState of the State message, outlined a plan to revamp New Jersey'sauto insurance system, with an emphasis on consumer protection,while attempting to address a serious problem on the businessside.

|

Ms. Bakke, said his speech was well received by the carriercommunity because the companies feel the "governor understands theproblem and that it has to be solved."

|

The difficulty, she said, is that there are not enough companiesin the state to underwrite, and until the deficit of carriers iscorrected, the state's policyholders will continue to havedifficulty getting the insurance they need.

|

"The key message to the world is that this is a governor whorecognizes the problem and the need to confront it," she said.

|

Currently, there is a "very strong industry bill" receivingbipartisan support in the state legislature to address thisproblem, but it lacks consumer protections, Ms. Bakke said.

|

The governor, she said, has made it clear he will work withcompanies on this reform legislation, but there needs to beconsumer protection within the bill.

|

One thing that must remain, said Ms. Bakke, is that thedepartment continues its role determining appropriate and adequateauto premium rates for companies and the insureds. Notification bycarriers to consumers when a rate adjustment is being sought, andmaking sure consumers play an active role in their choice ofcoverage are also some of the hallmarks of the administration'sproposal, she noted.

|

Agents, she said, would play a critical role in increasing thatdiscussion. They will present the policy review to consumers.

|

Among some of "the tools" included among department proposals toprotect auto insurance purchasers is a requirement that insurersoffer three coverage scenarios so consumers can compare options; arequirement that independent agents post an Auto Insurance Bill ofRights; and creation of a state Auto Insurance Report Card ratingof insurers.

|

The administration is working with an industry grouprepresenting a cross section of interests, including agents, todevelop manageable solutions for these proposals, Ms. Bakkeexplained.

|

While the reform work proceeds, the department will continue toenforce current laws, Ms. Bakke said. Recently, the department didan undercover investigation, which uncovered carrier non-compliancewith the Basic Policy program. The program sets a low cost autopolicy for consumers that investigators found was not being honoredby some agents and carriers.

|

"We will use all the regulatory tools available to thedepartment through this transition period to protectpolicyholders," Ms. Bakke promised.

|

Looking to the future, Ms. Bakke said she hoped by next yearexisting companies in the state would introduce more capital and,in turn, devote more agents to the market, especially in urbanareas. She would also like to see rating agencies develop afavorable view of New Jersey that would encourage more insurancecapital in the state and attract more carriers.

|

With those two things in place, it would help us achieve ourmost important goal--that auto insurance in New Jersey isaffordable and acceptable for all policyholders," Ms. Bakkesaid.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.