The extensive over-regulation of automobile insurance rates in some states shines a spotlight on the potential benefits of a market-driven approach to oversight, Independent Insurance Agents of America (IIAA) President-Elect Thomas B. Ahart recently testified at an Oversight and Investigations Subcommittee of the Financial Services Committee hearing. According to the IIAA, auto insurance rates are regulated in 49 states. Of those, 31 have a prior approval system requiring carriers to file rates for approval with the state commissioner before using them in the marketplace. In the remaining states, insurers can change prices without prior approval, but usually must file the rates with the insurance commissioner who can subsequently disapprove them. Only Illinois does not allow disapproval. Citing problems with the rate regulation systems in New Jersey and Massachusetts, Ahart said the regulatory approach of these states “is motivated by the political desire to minimize insurance rates.” Ahart testified that for more than 20 years, New Jersey drivers have paid the highest auto insurance premiums in the U.S. Ahart stressed that the enactment of the 1998 reforms has, unfortunately, led to the departure of carriers that had insured over 25 percent of all New Jersey drivers.
Topics Auto Legislation New Jersey
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