Greenwald: Drivers Continue to Benefit from Auto Insurance Reforms

GREENWALD: DRIVERS CONTINUE TO SEE BENEFITS
FROM 2003 AUTO INSURANCE REFORM LAW
GEICO's 4.1 Percent Rate Reduction Latest Evidence
Of State's Improving Auto Insurance Market

(TRENTON) - Assemblyman Louis D. Greenwald, who championed the state's sweeping 2003 auto insurance reform law, today cited GEICO's proposed 4.1 percent rate reduction as the latest evidence of how increased market competition is delivering good news for New Jersey motorists.

Greenwald (D-Camden) said auto insurance rates in the state have now declined for two consecutive years - from a high of $1,167 in 2004 to $1,099 last year.

"We've reversed the historic trend of rising auto insurance rates," said Greenwald. "The turnaround has been so significant that auto insurance hardly registers anymore as an issue in this state. We've not only stabilized the market, but many drivers are now realizing modest cost reductions."

Greenwald said GEICO is not the only company reducing rates. According to the state Department of Banking and Insurance, State Farm Indemnity cut rates 2.9 percent in April, Founds Insurance dropped its rates 2.9 percent in May and Hanover Insurance plans to drop its premiums 5 percent in September.

Greenwald said the positive outcomes of the 2003 reform also go far beyond just rates:

• There are more insurance companies offering auto coverage in New Jersey - the state now has 70 companies offering motor vehicle insurance.

• A Web-base insurance publication - Insurance.com - now ranks New Jersey as having the nation's third-highest rates - behind Louisiana and Washington, D.C. In fact, the Web site reports New Jersey as having the largest percentage drop in premiums in the nation between 2005-06.

• The recently released 2006 Auto Insurance Consumer Information Report shows a 50-percent drop in complaints about New Jersey's motor vehicle insurance system - from more than 6,000 complaints in 2003 to around 3,035 complaints in 2006.

• The state pool designed to insure the worst drivers - unable to obtain insurance anywhere else - has dropped from 140,000 motorists in 2003 to 61,000 in 2006.

• Regulators last year reported New Jersey drivers saved more than $500 million since the auto insurance reforms took effect.

"Four years ago, many New Jersey drivers could not purchase auto insurance at any price and state insurance regulators were receiving an average of two dozen consumer complaints a day," said Greenwald. "Now the auto insurance marketplace has completely changed. Consumer satisfaction is up, more insurance companies have come into the state, and prices have actually gone down for some drivers."

The New Jersey Automobile Insurance Competition and Choice Act was one of the centerpiece reforms enacted by the Democratic-controlled Legislature in 2003. The reform measure streamlined a regulatory system that had become burdensome and counterproductive.

In the decade prior to the June 2003 enactment of the reform legislation, over 40 automobile insurance carriers had left the state, with even more threatening to leave, citing prohibitive government regulation of the industry.

Under the reform act, New Jersey drivers were given the keys to a new auto insurance regulatory system that imposed the toughest penalties in the nation for insurance fraud, expanded consumer protections, and initiated innovative methods for reducing the ranks of the uninsured.

Under the new rules, two of the most competitive national auto insurance firms, Progressive Insurance and GEICO have begun selling insurance in the state. Since 2003, 17 new auto insurance companies – including companies like Mercury General, Esurance, and American Express – have entered New Jersey's insurance market.

"We have put a decisive end to three decades of insurance underwriting companies fleeing the state, and we are actually seeing new companies vying to do business in New Jersey," said Greenwald. "This coupled with reduced rates for New Jersey motorists, signals that our state's insurance market is fully recovered and back on a competitive track."

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