N.J. Insurers Not Happy With Advocate Bill

Insurers would also have to contact customers, either by letter or e-mail, when an increase is requested.

The Insurance Council of New Jersey raised objections to the measure, saying that such a practice would be a burden to insurers and substantially increase their operational costs.

"Insurers are fleeing New Jersey because of its frustrating and burdensome regulatory environment," said John K. Tiene, president of the Ewing, N.J.-based association. "With tens of thousands of drivers frustrated by the difficulty of finding insurance, this measure is counterproductive. There is a reason no other state in the nation has such a requirement."

The cost, Mr. Tiene said, would eventually end up being paid by consumers.

"We have never heard of such a thing," said Lynn Knauf, policy manager with the Downers Grove, Ill.-based Alliance of American Insurers. "I think it's absurd."

She said such a provision would be enormously confusing to consumers since increases do not affect each consumer the same way because of the differing underwriting standards. Some may see less of an increase, others more. She added that states do require customers to be informed after an increase is approved so they know what is coming, but never before on the front end."

Representatives from the National Association of Independent Insurers in Des Plaines, Ill., said they too had never heard of such a measure and thought it would be a burden to carriers.

Richard Stokes, assistant manager and counsel for the AAI in Trenton, said the Assembly's bill was more reasonable because it would have allowed for a 7 percent expedited rate increase before the Rate Advocate became involved. However, when the bill arrived in the Senate, the figure was changed back to 3 percent, which the current law allows.

Mr. Stokes argued before a Senate Appropriations Committee on Thursday that "the Assembly provision would provide immeasurable relief to the industry and send a strong message that New Jersey supports a stable, predictable and viable insurance marketplace."

However, the company representatives did not hold out much hope that legislators would amend the bill any further. Mr. Teine said he expected passage of the bill by the end of the year, and Mr. Stokes said the governor would probably sign it into law by the first of the year.

Senate approval was expected today, with the bill returning to the Assembly for final passage.

Mr. Tiene said he held out hope that Democratic Gov. Jim McGreevey's promise to institute reforms for the state's automobile insurance system would deal with what he termed "this onerous measure."

A request for comment from the governor's office was not returned. The Public Advocate's Office was dismantled under the tenure of Mr. McGreevey's predecessor, Republican Christie Whitman.

Last week it was revealed that the Department of Banking and Insurance in November had quietly approved rate increases for five auto insurers who provide coverage for more than 1 million drivers in the state.

The rate boosts will range from 2.4 percent for Liberty Mutual Fire Insurance Company to 14 percent for Amica Mutual Insurance Company.

McGreevey Administration officials defended the increases, saying they were necessary to keep New Jersey insurers in the state and keep them competitive.

Banking and Insurance Commissioner Holly Bakke was quoted as telling the Associated Press, "We have to be aggressive because our role is to make sure rates are adequate, the company is solvent, and that they will be there for the policyholder."