N.J. Auto Insurance Market Improves: Report

"We remain cautious, however, in the event that the state legislature decides to attempt to unravel some of the progress that has been made and potentially hinder future reforms."

The report from Gov. James E. McGreevey's office said consumers are benefiting from increased competition among insurers and the opening of capacity as major insurers have said they would hold up plans to leave the state, waiting to see the effect of reforms.

Among some of the most immediate effects of reform that were listed:

? Mercury General Insurance Group became the first new insurer to write auto insurance in seven years. The company is now covering 6,000 vehicles.

? Voluntary rate reductions and special dividends to drivers resulted in $86.6 million returned to drivers.

? The N.J. Office of Insurance Fraud Prosecutor doubled its 2001 count of civil actions in 2002 by 32 percent.

? The state's Last Chance Program, giving the uninsured motorist the opportunity to secure insurance, and its Dollar-a-Day plan have brought more than 37,000 drivers into the ranks of the insured, bringing more than $54 million in premium into the system.

? More than 500 agents have received new appointments. The figure includes the hiring of 30 new exclusive agents by Allstate–the first time in 30 years the company has hired a group of new agents.

? Two insurers, State Farm and AIG, have put off plans to leave the state for now.

Magdalena Padilla, president of the Insurance Council of New Jersey, based in Ewing, N.J., said that the report is generally correct in its evaluation of the state's insurance market. She said both the governor and the insurance department get a lot of credit for successfully achieving the reforms that have taken place.

"We are enthusiastic about the impression that it is a changed market," Ms. Padilla said. "We are supportive of all that the department and the administration have been doing."

One piece of legislation that she said could have lead to "a period of unpredictability" once again in New Jersey would have been changes in the verbal threshold law. The bill, which never made it to the State Senate floor, would ease language restrictions on lawsuits for noneconomic injury, which currently require injuries to have a serious and significant impact.

With a new legislature being inaugurated this January, the bill would have to be reintroduced. Mr. Stokes said the greatest fear is that the bill could come back this session and threaten what reforms have so far accomplished.