N.J. Auto Market Improves Faster Than Expected

NU Online News Service, Dec. 18, 4:06 p.m. EST?In a review of New Jersey's auto insurance marketplace since the passage of a legislative reform package six months ago, one industry group noted that improvements in the market have been taking place "faster than has been expected."

But other insurance trade group representatives said while the signs were good, they still have concerns.

The National Association of Independent Insurers said in its review that the New Jersey auto market, which the group called "once the nation's poster child for the dangers of overregulation," has been showing significant positive developments during the last six months.

"[The comprehensive reform package bill] was signed last June and the fact that you are now seeing companies enter the market?with other companies putting their withdrawal plans on hold, other companies increasing their producer presence, and still other companies taking rate decreases?shows that the insurance industry views the legislation as making needed improvements," said NAII assistant vice president Donald Cleasby.

These changes, he said, represent cumulative effects in the N.J. Auto market since last summer, and "the legislation is achieving intended results of increased competition."

But nonetheless, these are still "early indications," Mr. Cleasby emphasized, and much still depends on continued, effective implementations of the reform law.

"We still have to see if that's going to happen. We also think that, longer term, there is more that legislators can do to even further enhance the marketplace, such as competitive rating law," he said.

Richard Stokes, Northeast regional manager at the Alliance of American Insurers, noted that his group is also seeing indicators in the marketplace that "things are getting better. We are right at the cusp of a lot of things for the better." But he cautioned that reform efforts from the law have not yet been fully implemented.

One example of how things could still deteriorate in New Jersey auto market is a recently introduced bill (A-3531 and S. 2533) that would change a standard for lawsuits by drivers who have personal auto injury coverage under the state's no-fault system. For this year, the bill has been defeated in a Senate commerce committee hearing, "but it's possible that the bill will be reintroduced, and we actually expect it to be reintroduced next year," said Mr. Stokes.

"If this bill gets passed, it could be like throwing a monkey wrench into the whole marketplace. It will undo the current reform efforts and destabilize the marketplace."

The bill, championed by trial lawyers associations, would change the "verbal threshold" in N.J., which would allow people to sue without showing that their injury had serious impact on their life, according to NAII.

Mr. Cleasby added that the "insurance industry has found that it would increase auto insurance premiums anywhere from 98 dollars to 163 dollars per car annually."

"Our other concern, other than the cost impact, is that auto insurance consumers already can choose a policy that allows them to sue, so what this bill does is effectively denies them that choice," Mr. Cleasby said.

Special Reports /

N.J. Auto Market Improves Faster Than Expected

Related Stories

Recommended For You