New Jersey Regulator: State’s Marketplace Is Strong, Vibrant

New Jersey’s insurance marketplace is strong and continues to grow, with new market entrants bringing more competition and products for the benefit of consumers, the state’s top regulator said.

Richard J. Badolato, acting commissioner for the New Jersey Department of Banking and Insurance, recently shared his views before the state Assembly Budget Committee.

During his testimony, Badolato assured lawmakers that New Jersey’s homeowners market is strong and vibrant.

Following Superstorm Sandy, there was concern that homeowners rates would skyrocket, carriers would flee coastal areas and consumers would be saddled with higher prices and fewer choices.

Fortunately, he said, this concern did not materialize, “because we provided a strong, clear and consistent regulatory presence that encouraged insurers to remain dedicated, and, in many instances, to even expand their financial commitment to the state.”

Badolato said his department has not seen any widespread non-renewals or any major carriers pulling out of the market.

In fact, he said, “we have seen significant growth in the number of admitted carriers writing homeowners insurance here, both overall and specifically in coastal areas.”

He noted that since 2008, 21 new companies have begun offering homeowners insurance in New Jersey, with some focusing exclusively on coastal areas. Overall, there are 121 active insurers writing homeowners policies in New Jersey, with all nine of the top national companies doing business.

Further, New Jersey’s homeowners market is being supplemented by an expanding surplus lines market. There are currently 200 companies eligible to write surplus lines insurance in New Jersey, up from 151 in 2012.

Badolato cited the National Association of Insurance Commissioners (NAIC) data showing that New Jersey continues to be at or below the national average in homeowners premiums — despite being a coastal state with relatively high-value homes.

He also emphasized that the number of insureds in the FAIR plan, the state’s residual homeowners market, is at an all-time low — at just a fraction of 1 percent.

Commenting on auto insurance, Badolato noted that during Gov. Chris Christie’s administration, two major insurers — Farmers and Nationwide — have entered the New Jersey auto market, and now, nine of the nation’s top 10 auto insurers are writing business in the state.

Badolato said New Jersey’s auto insurance market was in crisis for many years until regulatory reforms in 2003. Now, he added, the auto market is strong, with a total of 80 companies writing auto insurance, up from 66 in 2011.

“We completed another piece of auto reform in 2013 with improvements to the Personal Injury Protection (PIP) system,” Badolato said. “Those changes are working and exerting downward pressure on auto insurance rates.”

The Garden State is also seeing its captive industry grow. In 2011, New Jersey enacted its captives law allowing the formation of captive insurers. Since then, the department has licensed 22 captives and there are more on the way.

“This law is doing what we hoped,” Badolato said, “permitting New Jersey businesses to insure their New Jersey risks in New Jersey.”

Topics Carriers Auto Legislation Homeowners New Jersey