N.J. Reform Effort- Is This The Year?

Mr. Friedman, who heads the Coalition For Auto Insurance Competition, which is pushing a 39-page bill to revise rules requiring regulatory approval of insurer rate revisions, was reacting to the findings of the National Association of Insurance Commissioners.

The NAIC reported that in terms of average auto expenditure in 2000 New Jersey had dropped from being the most expensive state to second place, behind the District of Columbia. The New Jersey 2000 figure was listed as $977.07 compared with $1,015 in 1999. The figure relates to liability premium for a one-car annual policy.

New Jersey was still in first place at $1,146.39 when regulators calculated the combined average premium obtained by adding average liability, collision and comprehensive premium.

In 1998, the legislature passed a cost reform act that mandated a 15 percent rollback based on anticipated revenues from cost control measures in the bill.

Mr. Friedman, who is also USAA assistant vice president and legislative counsel, said the jury is still out on whether language in the 1998 bill will save insurers money. Courts, he noted have yet to rule on how to apply language that bars claims for pain and suffering without a permanent injury.

The judicial system must interpret what is a permanent injury, he said.

Mr. Friedman said he thinks coalition efforts to achieve an end to "an excessive regulatory burden" that has "choked" the marketplace, have a good chance of passing because, unlike past industry efforts, it is staying away from changes in the no-fault system "and thresholds and all of the things involving the reparations system."

The coalition supported, measure, A2625, The New Jersey Automobile Insurance Competition and Choice, Act has bipartisan sponsorship. Under its provisions, Mr. Friedman explained, the regulatory system would initially change to a file-and-use process that would allow a company to implement a rate increase 60 days after a filing, unless the commissioner objects and is prepared to go to a hearing.

After the file-and-use phase, the bill calls for New Jersey to go to a system of open competition by Jan. 1, 2006. Ultimately it would remove mandates for insurers to take all comers. It also calls for development of a process that would give insurers ability to exit the market.

Mr. Friedman said there has generally been an acknowledgement by legislators that "business rules for insurers have to be changed so we can end the retreat of capital from the state's marketplace."

The group hopes for action on the bill this Fall, he said. If legislative change doesn't come now "never? When? It's reached a point where the industry has voted with its feet and four out of the top six [auto insurers] don't do business here."

When State Farm completes a plan to eliminate customers "it will be five-out-of-six. Where will New Jersey find insurers for its consumers?" he asked.