N.J. Says Reforms Let State Farm Drop Rate

N.J. Says Reforms Let State Farm Drop Rate

NU Online News Service, March 2, 4:04 p.m. EST?New Jersey's regulators are again touting the benefits of their insurance reform legislation after a major auto insurer there dropped rates for the second time in less than six months.[@@]

Banking and Insurance Commissioner Holly C. Bakke said that State Farm Indemnity has filed for a second voluntary rate reduction for its policyholders. The reduction, which would become effective May 1, would result in an overall decrease of 5.1 percent statewide. The reduction would apply an average 4.2 percent accident-free discount to qualified policyholders and a .9 percent decrease for comprehensive coverage.

The department said the reduction would translate into an average savings of about $70 for 544,613 eligible vehicles, or about 96 percent of State Farm Indemnity's covered vehicles.

In October of last year, State Farm sought a reduction that saved $70 for about 500,000 vehicles.

"Today's announcement is more good news for New Jersey drivers," Ms. Bakke said. "State Farm Indemnity's action is yet another signal that the governor's auto insurance reforms are producing premium savings for many good drivers."

The department noted that this is one of many turnarounds for the state's auto insurance system. Prior to passage of insurance reform legislation last year, State Farm and AIG were seeking to leave the state. Both have postponed this decision for the time being.

Since the passage of the reforms, the department said, more than 500 new auto insurance agents have been appointed. Mercury General Insurance Group, a Los Angeles-based insurance company, entered the state and is currently insuring more than 10,000 vehicles. The governor's "Last Chance" program initiated in 2002 resulted in 37,000 previously uninsured drivers contributing more than $54 million to New Jersey's insurance system. The Dollar-a-Day program has enrolled more than 460 drivers since October.