State Farm Indemnity Company and the Department of Banking and Insurance have reached an agreement allowing for the insurer’s re-entry into the New Jersey auto insurance market.
Effective Jan. 1, 2005, State farm will once again write new auto insurance business, but will do so on a gradual basis as it phases back into the market.
Also effective Jan. 1, 2005, State Farm Indemnity will implement a voluntary 3.8 percent average rate reduction for private passenger auto insurance customers. This rate reduction will be the fourth in 18 months and will mean that Indemnity has reduced rates by an average of 15 percent since July 2003.
Indemnity — State Farm’s auto-only New Jersey subsidiary — committed to the department to review its withdrawal decision by the end of 2005, but did so ahead of schedule. “In light of the positive changes we’ve seen in the New Jersey insurance regulatory environment, we made our decision earlier than planned,” said Brian Boyden, president of Indemnity.
Indemnity officials said the insurer has regained its financial footing; however, they also point out that recommitting to the New Jersey auto insurance market will involve a significant investment and will take time. “This is why we will proceed in step-by-step fashion, writing business only on a limited basis for now,” said Boyden.
Vince Trosino, president, vice chairman and chief operations officer of State Farm Mutual, Indemnity’s parent company, voiced appreciation for the efforts of government officials and Indemnity associates in attaining this reversal. “We appreciate the leadership of the administration, the bi-partisan efforts of the state legislature, and the work of Commissioner Holly Bakke and her department. These positive results also reflect the efforts of our employees, agents and our many policyholders in working toward meaningful insurance regulatory reform,” said Trosino.
He also cited the need to keep a watchful eye on insurance reform into the future. “Full implementation of the auto insurance reforms is critical to maintaining a more competitive market and ultimately, more affordable products,” Trosino said.
s of Sept. 30, 2004, State Farm Indemnity insures 569,673 autos; serving policyholders from its zone office in Parsippany, its seven claims service offices around the state, and through 822 employees and 151 licensed agents.
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