After months of discussion, and a last minute compromise which assured that State Farm will continue in New Jersey’s automobile insurance market for at least the next three years, Legislators have finally introduced a bill aimed at reforming the state’s auto insurance laws.
The bill, A-2625, sponsored by Assemblyman Louis Greenwald (D-6) and Assemblyman Christopher Bateman (R-16), contains provisions for eliminating the forced insurance of bad drivers, and matching insurance rates with the degree of risk; simplifies the regulations for the withdrawal from the state by an insurer, with safeguards to protect consumers, and adjusts the profit cap law to encourage auto insurance companies to enter the market and those already present to expand their activities.
The Coalition for Auto Insurance Competition immediately expressed approval of the proposed legislation, stating that it would “restore competition to the state’s auto insurance market.”
The Coalition (See IJ Website June 4, May 15) has been leading the effort to restore competition to the NJ auto market, which it claims has been stifled by over regulation. Its announcement pointed out that “New Jersey has 47 percent fewer companies selling insurance than Illinois and more than a third fewer than neighboring states New York and Pennsylvania. New Jersey’s lack of auto insurance companies deprives motorists’ sufficient choice and the benefit of vigorous market competition.”
It also cited the fact that the New Jersey Department of Banking and Insurance has confirmed that 19 of the state’s 67 auto insurance companies – 28 percent of the companies doing business in New Jersey – are in financial conditions that require monitoring by regulators.
John Friedman, the Coalition’s chairman, called the Bill “an important achievement toward modernizing the state’s auto insurance laws and placing New Jersey in the mainstream of state regulation of auto insurance.” He stressed the Coalition’s conviction that, “The state’s auto insurance marketplace is unstable and dysfunctional, requiring immediate reform that instills more company competition and more choices for consumers.”
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