Close to two years after New Jersey enacted a sweeping personalauto insurance reform program, an industry group said the state'smarket is showing signs of a healthy recovery, but additionalmeasures need to be taken to ensure the improvements continue.

The Property Casualty Insurers Association of America creditedthe improved market directly to reforms enacted by the New JerseyLegislature in 2003.

Richard Stokes, regional vice president for PCI, said in astatement, "New Jersey was once the poster child for how not toregulate a healthy auto insurance market."

Few companies were writing in the state at the time of thebill's passage. State Farm was considering leaving the state, aswell--and was responsible for insuring 20 percent of the state'sdrivers at the time.

Since the reforms, a number of companies--Mercury General,Esurance Insurance Company, Progressive and GEICO--have entered thestate, invigorating competition, which PCI called the mostimportant factor to keeping prices in check.

Companies in New Jersey are making money, PCI noted, but areshowing flat profits while other states report sharp increases inprofits. PCI said the flat profits of New Jersey insurers areindicative of strong competition in the state.

PCI addeed, however, that there are still three issues that needto be addressed to keep a healthy insurance market in place.

In an interview with National Underwriter, Mr. Stokes identifiedthese areas as territorial ratings, a medical fee schedule fortreatment of injuries from a car accident, and legislative actionto reverse a court ruling eliminating the requirement thatpermanent injuries must have a serious impact on a claimant's lifebefore seeking civil damages. Each issue will require differentbranches of the state's government to find a remedy.

The court's decision on the reform act's attempt to limit bodilyinjury suits was struck down by the State Supreme Court on thegrounds that the legislation did not spell out the intent oflegislators.

Justice Roberto A. Rivera-Soto said in a concurring opinion thatit will be up to the legislature to fix the language.

On the issue of territorial rating, PCI said the TerritorialRating Commission has not met in 50 years and needs to update therating structure.

A medical fee schedule can be instituted by the state'sDepartment of Banking and Insurance. The pain and sufferingthreshold will require legislative action.

While PCI plans to keep working on these reforms, a timetable inNew Jersey for doing so has not been set. Mr. Stokes said thissituation is primarily due to the state government's transitionwhile Gov. Jon S. Corzine assembles his governing team.

Gov. Corzine has named Steven M. Goldman to replace ActingCommissioner Donald Bryan to become head of the state's banking andinsurance department. Mr. Stokes said no date for a hearing on hisnomination has been set yet.

"We've made real progress in the last three years," Mr. Stokessaid. "But there is still much we can do to make the New Jerseymarket more competitive and lower the price of auto insurance forthe state's consumers."