New Jersey Banking and Insurance Commissioner Holly C. Bakke wasted little time in putting the latest numbers showing the state with the highest average auto insurance premium — $1,113 — in perspective.
Those numbers from the national Association of Insurance Commissioners (NAIC), Bakke reminded the public yesterday, are based on premiums charged in 2002, before the state began its reforms of the auto insurance market.
The NAIC’s numbers from 2002 reflect “the auto insurance system New Jersey consumers suffered for the past 30 years, not the current marketplace that has put policyholders in the driver’s seat,” Bakke said.
In fact it was in part because of numbers like the one NAIC released this week that Gov. James McGreevey and lawmakers moved to change the system to a more consumer-driven, competitive marketplace, she added.
When Gov. James E. McGreevey took office in 2002, some 40 carriers had abandoned the state and other major carriers were threatening to pull out, leaving consumers with limited options.
Since then, two national carriers — Geico and Mercury — have joined the marketplace and several existing companies are appointing new agents and opening additional offices.
Bakke maintained that New Jersey, along with Connecticut, the District of Columbia, Massachusetts and New York, are regularly among the top five states with regard to auto insurance costs because Northeastern states are the most expensive and congested states to live in, and their auto insurance premiums reflect that. In 2002, New Jersey drivers traveled more than 68 billion miles and reported more than 300,000 accidents, which far outpaces the national average of 131,400 accidents per state.
The state also has the second highest Personal Injury Protection (PIP) coverage in the nation, at $250,000, per person, per accident.
She said that since the reforms were enacted in June 2003, more than $225 million has been returned to more than 1.5 million New Jersey policyholders.
“Never before have New Jersey drivers seen so many companies reduce auto insurance premiums to keep their policyholders,” Bakke said.
The insurance industry also came to the defense of the state’s reform efforts.
The American Insurance Association (AIA) praised New Jersey for actively combating some of the factors which have resulted in the state ranking number one on the NAIC annual auto insurance premium survey.
The latest NAIC report uses data obtained from 2001 and 2002 and illustrates the problems that have plagued New Jersey for years prior to the enactment of Gov. McGreevey’s reform bill last year and the introduction of regulations to implement that legislative package, according to the AIA.
“After decades of New Jersey being at the top of the list of least affordable states for auto insurance, the governor, the legislature and the Department of Banking and Insurance have made great strides in enacting measures that will allow the state’s drivers to see lower costs,” explained David Snyder, AIA vice president and assistant general counsel.
“Due to the costs associated with the urban-type driving conditions in New Jersey, it will never have the lowest auto insurance premiums in the country,” explained Snyder. “However, with the state continuing to battle over-regulation and actively promoting competition, New Jersey drivers have a much better chance to pay lower rates.”
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