The re-entrance of Geico into the New Jersey auto insurance market last week may not significantly affect state residents who already have difficulty getting policies, some consumer advocates contend.
The state agreed to allow Geico to consider consumer credit scores in setting rates, raising concerns that people at the bottom of the economic ladder will not find it any easier to get policies.
“This probably won’t help low-income people with bad credit,” Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, told The Sunday Star-Ledger.
Maryland-based Geico, a unit of Warren Buffett’s Berkshire Hathaway, announced it would sell policies in New Jersey nearly 30 years after leaving the state over regulations that were considered too restrictive.
The move was made possible by legislation signed in 2003 by Gov. James E. McGreevey that overhauled the state’s auto insurance regulations. Among the changes was an easing of the rule that required insurers to provide coverage to anyone who applies.
“New Jersey was one of the most over-regulated states, and when you over-regulate, policyholders lose because they don’t have choices,” said Holly Bakke, the state’s banking and insurance commissioner. “What has happened is that New Jersey has begun to look like the rest of the country.”
Some remain skeptical, however.
‘”Geico will skim the cream,” said Ken Curtis, a trustee of the New Jersey Auto Agents Alliance. “It will go after the most profitable customers and the rest will be left dangling. We’ll have a system of haves and have-nots.”
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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