The Coalition for Auto Insurance Competition (CAIC) has called upon the Administration of Governor McGreevey to “quickly address the likelihood that auto insurance will become more difficult for New Jersey drivers to purchase.”
The CAIC’s immediate concern is the scheduled withdrawal by State Farm, the state’s largest auto insurer, which will result in decreasing competition even further.
“New Jersey urgently needs a regulatory system that promotes competition, encourages companies to sell auto insurance in our state, and creates a stable market that offers more choices for consumers,” stated John Friedman, CAIC chairman. “Lawmakers need to get beyond general statements and offer specific proposals that will prevent a further shortage in auto insurance availability.”
While the state’s Department of Banking and Insurance has been studying the problem, and looking for ways to reform NJ’s regulations to attract more insurers to do business in the state, it has not focused “on the dire conditions in the auto insurance marketplace that lead to a lack of choice and competition,” according to the CAIC.
“With comparatively few auto insurers remaining in New Jersey, the loss of the state’s largest will create significant pressure on companies’ capital reserves, straining their capacity to take on more policyholders,” Friedman stated.”Having to operate under the state’s restrictive and difficult regulatory regime where insurers are told what products to sell, to whom they must sell to and how much to charge, companies will lack an incentive to remain and invest in New Jersey,” he continued.
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