Professional Insurance Agents of New Jersey President David J. Madara, CPCU, AAI, took issue with certain aspects of the agreement between New Jersey’s Governor, the Department of Banking and Insurance (DOBI) and State Farm, which keeps the state’s largest auto insurer writing business, for at least the next three years. (See IJ Website June 26)
In an open “letter to the editor” Madara questioned the the DOBI’s assertion that the agreement is a move toward “bringing competition back to the market for the ultimate benefit of consumers.” He wrote that,” This announcement, brought on by State Farm’s original threat to leave the state (and nearly 730,000 drivers) by year-end, is not stabilization or competition.”
“True stabilization and competition will be accomplished only when two issues are addressed. First, new carriers must be encouraged to enter the marketplace and fill the void State Farm will inevitably leave,” Madara continued.
“Secondly, meaningful, long-term regulatory reforms, as proposed by the Coalition for Auto Insurance Competition must be enacted. These key reforms include: the elimination of take all comers to allow insurance companies to truly underwrite risks, the loosening up of the rate approval process to de-politicize rate setting and in combination with rate process changes, modifications to the excess profits law that will motivate new carriers to enter New Jersey’s marketplace,” Madara wrote.
He went on to warn that there weren’t enough companies doing business in the NJ auto market to take over for State Farm and cautioned its customers to maintain their policies, and await official notification before seeking alternative, and possibly more expensive, coverage.
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