New Jersey's top auto insurer is dropping its rates for the second year in a row, bucking a trend among some of the largest carriers who have requested premium increases or taken no action, according to insurance department figures.

Last week, New Jersey Manufacturers, the state's top insurer by number of policies in force, said it is reducing rates an average of 5 percent on new and renewal business beginning today. The company said policyholders will save about $34.6 million in the first year of the decrease alone.

The company added, however, that due to rising medical costs, the price for personal injury protection coverage will rise 2 percent–meaning that some policyholders may see an increase as a result.

A spokesman for the New Jersey Department of Banking and Insurance, Marshall McKnight, said that while the general trend in the state is to see rates go down, some insurers have bumped rates up.

However, Magdalena Padilla, chief administrative officer and vice president for the Insurance Council of New Jersey, said the numbers were not indicative of any trends, but simply a reflection of a very competitive marketplace.

“If it weren't for the efforts to reform the state's regulations and spread the risk around, instead of concentrating much of the risk with one or two carriers, insurers would not have the confidence to look at their business and reduce rates,” she said. “[New Jersey is now] a healthier, competitive marketplace where companies can make these decisions.”

According to the state's figures:

o There were more than 5.3 million private autos written in New Jersey in 2007.

o NJM leads the total share by 15 percent, or 794,497 vehicles.

o Allstate was next, with a 13 percent share.

o GEICO had 12 percent.

o State Farm was close at 10 percent.

o Liberty Mutual Group had a 7 percent share.

Of the top-five, only NJM had premium decreases in 2007 and so far in 2008. GEICO Companies in New Jersey received decreases of approximately 4 percent in 2007; Allstate companies received increases of 2.1 and 3.4 percent; and Liberty Mutual received an increase of 0.6 percent. State Farm reduced rates between 2.9 and 6 percent.

So far this year, Amica Property and Casualty Insurance Company showed the largest decrease at 6.7 percent. The company writes less than 1 percent of the state's market.

American International Group and Proformance Insurance Company had the highest increases, at 7 percent and 10 percent, respectively.

The high water mark for reductions appears to be in 2005, when seven major companies announced they would reduce auto premiums to consumers (NU Online, May 19, 2005).

According to figures compiled by the state insurance department, the number of rate reductions and dividends paid by insurers in the state has increased from $155 million in 2003, the year the state instituted regulatory reforms, to more than $320 million in 2006. There have been more than $1 billion in reductions or payouts since 2003.

The average premium rate also has declined from $1,152 in 2003 to $1,107 as of June 2007. The state pointed out that the total private passenger auto premiums paid in the state is up slightly, from $5.8 billion to $5.83 billion as of June 2007, while the total number of vehicles insured has increased from 5.04 million to 5.26 million.

Reforms have affected the number of auto insurance complaints as well. They dropped from 5,770 in 2003 to 2,227 in 2007.

Most importantly, the number of carriers in the state has grown from 62 in 2002 to 67 in 2007.

Mr. McKnight said in an e-mail that nine new insurers have entered the state since reforms were enacted.

The first was Mercury General, followed by GEICO, Esurance, AMEX, Progressive, Unitrin Direct, 21st Century Insurance (also known as AIG Direct), Balboa Group (Balboa Insurance Company and Meritplan Insurance Company), and Personal Service Insurance Company. The last two entered the state in November of 2006.

Special Reports /

New Jersey Auto Insurers Premium Trends Mixed

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