What this really tells us is that insurance companies are making very substantial profits on NJ auto insurance, at least Personal Auto, or Nationwide would never have filed to sell the product in NJ. No question, insurance companies are entitled to, and should be, making a profit on their sales – no one should legitimately dispute that. The questions really are how much of a profit is enough? And, how much profit is too much? Nationwide’s request to come back into the market directly is a clear indicator that company profits are too high.
I hope that Mark’s decision is correct. Nationwide withdrew from the NJ auto insurance market for solid business reasons, the totally dysfunctional regulatory environment in the state and the fact that, even with investment income, Nationwide lost money over the prior years it was in NJ.
As someone who was very much involved in NJ personal auto insurance, and its regulations, during the 1970’s through the 1990’s I would suggest that if a carrier lost money – over and above premiums and investment income – its accountants and actuaries are extremely imaginative, and/or management made huge mistakes. I am not saying that they made really excessive profits in past years – such as they are now making – but they were ahead of the Wall Street averages.
How do you explain that Nationwide was just one of many auto insurers who left the state? Nationwide was one of the last of the bigs to leave. No imaginary accounting tricks, poor regulatory atmosphere in the past.
Regulators are to ensure that rates are neither excessive, inadequate or unfairly discriminatory. That is their job. In NJ, the history was the rates were inadequate and national insurers were having their policyholders from other states subsidize the drivers in NJ. If they were stand alone companies, they would have gone bankrupt.
Here today, gone tomorrow, here again today, gone again tomorrow. These guys pulled out of NJ when the going got tough. Same with Geico and the others.
Give your business to a company that stayed in New Jersey even during the worst times.
What this really tells us is that insurance companies are making very substantial profits on NJ auto insurance, at least Personal Auto, or Nationwide would never have filed to sell the product in NJ. No question, insurance companies are entitled to, and should be, making a profit on their sales – no one should legitimately dispute that. The questions really are how much of a profit is enough? And, how much profit is too much? Nationwide’s request to come back into the market directly is a clear indicator that company profits are too high.
I hope that Mark’s decision is correct. Nationwide withdrew from the NJ auto insurance market for solid business reasons, the totally dysfunctional regulatory environment in the state and the fact that, even with investment income, Nationwide lost money over the prior years it was in NJ.
As someone who was very much involved in NJ personal auto insurance, and its regulations, during the 1970’s through the 1990’s I would suggest that if a carrier lost money – over and above premiums and investment income – its accountants and actuaries are extremely imaginative, and/or management made huge mistakes. I am not saying that they made really excessive profits in past years – such as they are now making – but they were ahead of the Wall Street averages.
How do you explain that Nationwide was just one of many auto insurers who left the state? Nationwide was one of the last of the bigs to leave. No imaginary accounting tricks, poor regulatory atmosphere in the past.
Regulators are to ensure that rates are neither excessive, inadequate or unfairly discriminatory. That is their job. In NJ, the history was the rates were inadequate and national insurers were having their policyholders from other states subsidize the drivers in NJ. If they were stand alone companies, they would have gone bankrupt.
Here today, gone tomorrow, here again today, gone again tomorrow. These guys pulled out of NJ when the going got tough. Same with Geico and the others.
Give your business to a company that stayed in New Jersey even during the worst times.
Hear, hear!