A study by John D. Worrall, professor and chair of economics at Rutgers University – Camden, concludes that “New Jersey’s auto insurance laws are fundamentally flawed, guaranteeing an inefficient and unstable market that neither serves the state’s motorists nor individual auto insurers.”
Worrall’s conclusions would seem to support the complaints from New Jersey’s auto insurers, many of whom are seeking to cease doing business in the State. His Study “A Roadmap to Market Stability for the New Jersey Private Passenger Automobile Insurance Market”, released through the American Insurance Association, finds that “breach of implicit contracts and laws that deny flexibility in the face of changing conditions have led to a loss of insurers – over twenty in the past twelve years – while discouraging the entry of new firms.”
“While we have struggled for nearly 30 years with one ‘fix’ after another, our system is still dysfunctional,” Dr. Worrall stated. “Too much regulation has stifled competition and restricted consumer choice.” he feels that the regulations have actually ended up harming consumers.
The study concludes that stopgap measures, introduced over the years were never effectively enforced, leaving in place harmful practices, and failing to carry out necessary reforms. It contrasts the approach taken in other jurisdictions, notably, South Carolina, Illinois and the District of Columbia, “which carefully phased in competitive practices, restoring consumer choice, widening the market, and doubling the number of firms selling insurance.”
Worrall’s recommendations include: “immediately implementing previously enacted reforms, eliminating the ‘Take-All-Comers’ and non-cancellation rules, and lifting the 6 percent cap on auto insurer profits.”
“It has been very clear for a long time that the state’s regulation of auto insurance is helping no one; not the state’s drivers and not the insurance industry,” Dr. Worrall concluded. “New Jersey needs to instill more competition among insurers and provide drivers more choices. Lawmakers need only to look at South Carolina, Washington, D.C. and Illinois to see that real reform that benefits everyone can be achieved.”
Topics Auto Legislation New Jersey
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