N.J. WINS BACK STATE FARM:

A flurry of special dividends and a series of rate reductions from auto insurers, along with increased competition and new regulations adopted by the New Jersey insurance department, are helping to reshape the state’s long-plagued auto insurance market, according to the industry. The latest sign of success occurred when State Farm announced it was dropping earlier plans to withdraw from the state’s auto insurance market. State Farm had indicated in June 2001 that it wanted to leave the market because it was losing money and saw little hope of improvement. Other signs of an improving marketplace occurred this summer when Liberty Mutual and Allstate both decided to return nearly $15 million each through special dividends and rate reductions to more than 400,000 total policyholders. “A marketplace in which competition is the primary regulator of insurance rates best serves consumers, regulators and insurers. State Farm’s decision to continue doing business in New Jersey is a testament to the legislature’s effort to pass landmark auto insurance regulatory reform legislation in June 2003. Because of this legislation, insurers are now able to operate more efficiently and write more policies. It’s a ‘win-win’ situation for companies and consumers,” claimed Richard Stokes, regional manager for the Property Casualty Insurers Association of America (PCI). New Jersey’s Department of Insurance also has proposed 19 regulations to implement the landmark auto insurance regulatory reform. To date, 18 of those regulations have been adopted. The PCI representative praised state officials for their work in fostering the improved insurance environment. “The department’s responsiveness also is largely responsible for the gains the state’s automobile market is experiencing,” Stokes said. “These improvements are a radical departure from the 30 years of mismanagement that New Jersey’s auto market suffered. Consumers are experiencing more options and a downward pressure on rates.”

Topics Auto Legislation New Jersey