The National Association of Independent Insurers has issued a bulletin indicating that the recent enactment of auto reform legislation in New Jersey (See IJ Website June 9) “has several important implications for the future of insurance regulation, and is indicative of how states can improve their regulatory system without resorting to federal intervention.”
“The New Jersey auto insurance reform bill reverses three decades of legislative efforts to punish the insurance industry for the state’s market problems with excessive regulation,” stated NAII Assistant VP and general counsel Donald S. Cleasby. The NAII also noted that it had been “instrumental in developing the legislation.”
In a somewhat ironic statement Cleasby pointed out that “The success of this law proves conclusively that if reform can happen in New Jersey, it can happen anywhere.” He indicated that “many issues addressed in the new law reverse the overregulation inflicted on the insurance industry over the years, proving that legislators can recognize competitive market forces and that states are able to improve their own regulatory systems in spite of the call from some quarters for federal regulation of insurance.”
The reform bill’s passage can also “open the door for more personal lines regulatory modernization, a concept NAII has supported for years,” said the announcement. “In key states like New Jersey, Louisiana and Texas, legislators are moving toward modernizing personal lines, which will allow others states or the NAIC to look at the concept in a new light,” Cleasby stressed. “It proves that in spite of conventional wisdom, personal lines regulatory modernization is not politically impossible to achieve.”
For insurers selling auto insurance in New Jersey wondering how the new law will change how they do business, the action taken by the Department of Insurance will be critical, Cleasby noted. “It’s up to the Department to create and enforce the new regulations, so it’s essential that insurers be open to working with regulators to implement the new law,” he stated. “It’s likely to take some time before insurers and consumers see any significant changes in the market.”
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