While some observers fear recent actions by the state's Supreme Court might unravel 2003 reforms to fix New Jersey's auto insurance system, a consumer group said it does not believe these actions will upset rates.
Early last week, in a 6-0 decision, the court ruled that when the legislature placed restrictions on the types of suits auto accident victims could file, it failed to define those suits as limited to injuries with a serious impact on the plaintiff's life.
"I can't say that anyone is consciously undermining the auto reform effort, but they are not paying attention to the consequences of their decisions," said Magdalena Padilla, president of the Insurance Council of New Jersey based in Ewing, N.J. "They are jeopardizing the advantages that have been made in the area of auto reform. It is not good for consumers."
The decision drew immediate criticism from insurers and insurance groups who said the result would be an increase in litigation, which will spell increased premiums for auto policyholders.
John D. Worrall, chairman of the Rutgers University Economics Department in Camden, N.J., said he expects the number of suits filed to increase "rapidly, and with the increase will come higher costs and rates."
In an e-mail response to questions, Mr. Worrall said, "With respect to the insurance law and reforms being under siege, of course they are–have been and will be. It is a huge market…governed by self interest."
John A. Latimer, president of the Professional Insurance Agents of New Jersey, and president of the independent agency Barclay Group in Riverton, N.J., said the court's decision reversed the progress made in the state, calling it very unfortunate.
"This can destabilize the auto market," he said.
Jeanne Heisler, government affairs representative for the Independent Insurance Agents & Brokers of New Jersey, said it is time to look to the state legislature to fix the language, as one of the justices indicated needed to be done. However, with an election year, and work first coming on the state budget, when that might be done is a question.
"This is unfortunate," she said. "This may be a big bump in the road for reform. We hope the legislature has an answer to this."
One group, the New Jersey Public Interest Research Group, saw the court's decision differently. Abigail Caplovitz, with NJPIRG, noted the court's decision clarifies the meaning of the law and is pro-consumer.
"We hope it does not increase rates," she said. "We support the reductions in premiums, but we are not sure how higher premiums will follow this decision. This decision creates clarity and understanding in which companies can operate. We will have to see what will happen over time."
As for any legislative action, Ms. Caplovitz said NJPIRG does not see a need for action because the body spelled out its intent in the original piece of legislation.
On the administration's side, a New Jersey Banking & Insurance spokesman said the department is reviewing the court's decision and could not comment further. He added that it was too early to know what impact the decision would have on the marketplace.
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