Little Rate Relief Found First Year After N.J. Auto Reforms

A year after New Jersey enacted auto insurance regulation changes meant to reduce rates, state residents were still paying through the nose, according to the latest survey compiled by the National Association of Insurance Commissioners.

The report found New Jersey drivers had the highest auto insurance bills in the nation in 2004 — the 16th time in 18 years that the Garden State had the dubious distinction.

The high rates came a year after changes to the market touted by then-Gov. James E. McGreevey, who claimed that less regulation would ease the burden on state residents’ wallets.

Average premiums in New Jersey, at $1,221 per vehicle per year, were 46 percent higher than the national average of $838 in 2004, according to the survey.

Still, state Banking and Insurance Commissioner Steven M. Goldman noted that premiums were only 2.3 percent higher than the previous year, about two-thirds less than the 6 percent jump in premiums seen in 2003.

Since the regulation changes, more insurance carriers have also entered the market, Goldman told The Star-Ledger of Newark for Saturday newspapers.

“Today seven new auto insurance carriers have entered the market, driving up competition and placing downward pressure on rates while increasing availability,” he said.

Behind New Jersey in the survey was Washington, D.C., with drivers paying an average $1,185 each year, and New York, where the average was $1,172.

The lowest rates were in North Dakota, where the average was $562, and Iowa, where it was $580.

Before changes to state insurance regulations, the problem for New Jersey drivers wasn’t just high rates, but the lack of insurance carriers as well, with many companies refusing to do business in the state because it cost them too much money.

Changes in 2003 made it easier for insurers to raise rates, and also phased out rules that insurers said created a high cost of doing business in the state.

Since then, major companies such as Geico and Progressive have entered the state, and other companies such as State Farm and Allstate decided to stay. New companies have also opened up.

When it comes to the insurance rates remaining high, one industry representative said the survey didn’t take into account New Jersey’s special geography and demographics.

New Jersey is densely populated, stuck between two major cities, Philadelphia and New York, and it’s population is affluent, said Magdalena Padilla, president of the Insurance Council of New Jersey, which represents companies covering 89 percent of the state’s drivers.

“They drive very nice and expensive cars and want to insure them in a way that is not inexpensive,” Padilla said of New Jersey’s drivers.

Padilla, though, said customers who shop around are able to get lower rates.

“Consumers have choices,” he said.

There was a different take on the situation from John Dyke, chairman of the New Jersey Auto Agents Alliance, which represents 600 agencies. Dyke questioned why insurance companies are advertising savings when the survey showed rates staying high.

Regulation changes in New Jersey were meant “to help out insurance companies and stabilize the marketplace,” Dyke said.

“I know some people said that (premiums would decline),” Dyke said, “but I never believed it.”