is being profitable in NJ ever become reality?

[bjwestner]

Hello All,

I wanted to get some input/comments from others in the insurance industry to see what they are seeing in regards to this issue that seems to be getting much worse with no signs of getting better any time soon.....A little background first....I work for an auto/home insurer in claims. I came to the state of NJ in 2005 after de-regulations were put in place which brought many of the major auto players back to the state (i.e. Progressive, Geico, etc.). Many of the companies that came to NJ in 2005/2006 came back only because of the de-regulations. Previously those companies stayed out because they knew that selling auto in NJ was a waste as there was no way to be profitable.

The last few years especially have revealed a disturbing trend of skyrocketing PIP payments that is having a drastic effect on the bottom line. With most drivers having $250k in PIP benefits, many attorneys and doctors are getting patients on the "conveyer belt" of treatment which is racking up huge bills. As a result, many carriers have had to take giant rate increases over the past few years. The issue is that the premiums cannot rise quick enough to match the PIP payouts. In the past where attorneys would make their money on bodily injury claims, many are now teaming up with doctors and making a killing on PIP benefits only. This is more lucrative at the moment for attorneys and doctors and attorneys do not have to battle on third party claims anymore and just are involved in first party PIP claims where benefits are rarely denied.

I know that Florida has/is still working on fixing their own similar problem, however, it seems to have a potential to be even worse in NJ due to the size of the limits. Combine that with a high unemployment rate, innovative tactics by attorneys and doctors to lure clients/patients and the fact that there is little that insurance companies can do to combat this and we have a potentially huge issue not only for insurance companies themselves but also for the people who work for them as well as residents of the state who ultimately will all share in the cost of paying for this via higher premiums.

As an employee for one of the larger auto insurers in the state, this concerns me. Obviously I want my company to do as well as it can so everyone including myself can grow and rise within it. I also have a concern as a resident of the state as everyone's premiums are now increasing. In many cases there are double digit rate increases year after year and it appears that this trend will not stop anytime soon.

From what I've read online the state of NJ is aware of this and already discussing ways to slow/stop this. The problem is that they are meeting fierce resistance from consumer rights groups, attorneys and their lobbying groups as well as many groups from the health care industry that are also profiting from this. What is everyone else seeing regarding this issue? What do you think will end up happening? I'm thinking that eventually at some point something is going to have to happen as this cannot continue on forever, I'm just worried that we are not close to that point where change is implemented to stop this.....