NJ DOBI Plans Action on Auto Working Group Proposals

June 5, 2002

Holly C. Bakke, Commissioner of New Jersey’s Department of Banking and Insurance (DOBI), announced plans to take immediate action to protect consumers by implementing six reforms raised by the Auto Working Group, which convened this spring to address the problems in New Jersey’s auto insurance market.

Group members represent the insurance industry, attorneys, medical providers and an advocate for injury victims. Their recommendations follow three panels that examined the Existing System, ways to create a Competitive Marketplace, and what a New System would look like. “Not surprisingly, five of the six items that will get immediate attention were issues raised by the Existing System panel,” said the announcement.

The new measures will undertake to:
–Ensure good patient care by certifying medical networks that auto carriers use to treat accident victims. Setting standards will ensure that those injured receive quality care. The Department will also require carriers to give policyholders more information and seek their approval for networks.
–Revisit the fee schedule for medical providers promulgated under the Auto Insurance Cost Reduction Act of 1998.
— Reduce treatment delays for accident victims by revamping care paths, which regulate treatment and require “decision points” for certain common spinal injuries.
— Reduce arbitration time and costs, in part by enforcing prompt-pay standards by auto insurers.
— Boost scrutiny of insurers to make sure they are catching fraud in the underwriting process, and develop tests for fraud prevention in the Department’s Market Conduct Exams (this recommendation was forwarded previously to the Consumer Protection Services unit).

The sixth undertaking will be a comprehensive study that will compare the cost of New Jersey’s current no-fault system to a fault-based system in an effort to learn whether to retain it, or replace it with a fault- based system. It will be conducted by the Insurance Service Organization, and will provide much-needed objective data to guide the debate.

Rolando Torres Jr., Special Deputy Commissioner for Auto Insurance stressed that, “Our concern is whether consumers pay more or less. Change is about making choices, and you can’t make choices without information. We want to provide the best possible information to guide the debate.”

Commissioner Bakke expressed her appreciation for the progress the Auto Working Group has produced to date.” Many, many issues have been raised. While we are taking quick action on some items, the real value of today’s ‘issue identification’ papers will be seen in the dialogue that follows.”

“Both Commissioner Bakke and Special Commissioner Torres know the work ahead will be difficult,” the bulletin concluded. “You can’t touch one part of the system without affecting every piece,” Torres explained. “To do our job well, we must take an integrated approach. That’s why we will continue to seek feedback on any regulatory changes.”

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