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Insurance

Automobile Insurance Competition and Choice Act
New Jersey residents face an auto insurance availability crisis of unprecedented proportion. During the last decade, unworkable laws and regulations have forced over 20 auto insurers to leave New Jersey-seven companies leaving just last year. As we speak, over 4,000 motorists each month receive notice that their insurer is withdrawing from the state, leaving them to scramble for coverage. Over one million drivers could ultimately be impacted if reforms are delayed or not enacted.

The letters to the editor in all of our state newspapers reflect the growing frustration many New Jersey drivers feel when they seek auto insurance or when they open their current auto insurance bills. The writers often call for courage in fixing the system and providing stability to the industry. I agree that it will take some courageous steps to rectify the problems plaguing the state's auto insurance system.

An editorial on November 4, 2002 asked for creative solutions to the auto insurance crisis. It said the crisis is growing worse and that the Legislature must prioritize this issue before we all have to ride horses or bikes to work or simply drive uninsured.

I agree that creativity is a vital component to opening the auto insurance market to competition, thereby helping to stabilize the market and ultimately reduce premiums. I am the sponsor of bipartisan legislation, A-2625 that is unlike anything ever attempted before in New Jersey. The "New Jersey Auto Insurance Competition and Choice Act" would encourage competition in the market, attract new companies to the state, and give current companies the confidence to remain here; making doing business in New Jersey a viable option. The state's auto insurance market is admittedly overregulated. My bill would weed out regulations that bog the system down and, at the same time, make it profitable for companies to do business in New Jersey.

During the transition period, the measure would establish a 13-member Commission for the Advancement of Insurance Competition to assist the Department of Banking and Insurance. The commission would identify barriers to automobile insurers doing business in the state, develop activities necessary to encourage competition among insurers and recommend ways to facilitate competition and inform consumers. This Commission will serve as a checks and balances system to make sure that the steps provided in the legislation are taken and that the auto insurance industry in New Jersey becomes competitive and remains competitive.

The measure would revise the excess profits law, allowing auto insurers greater freedom with their earnings. My bill will allow them to keep a greater portion of their earnings to help reduce rates. Currently, auto insurance companies make little or no profit in the State of New Jersey forcing many to leave the state or charge higher rates. By allowing auto insurers to keep more of their profits, insurance rates for the residents of our state will stabilize, and possibly decrease in the future.

For more than a year, I have met with my fellow legislators, Democrat and Republican, in an effort to demonstrate how improvements to the marketplace will benefit consumers and companies. We are grateful for the leadership demonstrated by both parties in proposing a solution that will attempt to reverse decades of problems with the auto insurance marketplace. I am pleased to report that, including myself; thirteen Democrats and five Republicans have joined as cosponsors to A-2625. Most recently, my legislation unanimously passed the Assembly Banking and Insurance Committee under Chairman Neil Cohen. It was passed unanimously, yet again on May 15, 2003, by the entire New Jersey General Assembly.

I am very pleased that the Governor has made auto insurance reform, specifically A-2625, a central theme is his State of the State address and that almost every single daily newspaper has editorialized in support of the types of reforms contained in A-2625. Further, nearly 40 New Jersey municipalities have approved official resolutions calling for the passage of A-2625. I am proud to say that this bill passed the Senate with a vote of 28 to 5. Most recently, it passed the General Assembly unanimously by a vote of 77 to 0.

There is no doubt in my mind that the system, as it stands now, does not function efficiently. We are moving forward with courage and determination. I believe my legislation will make New Jersey attractive to our nation's largest insurers who offer discounted auto insurance policies. Currently, because of overregulation, these companies choose not to write policies in New Jersey.

As the most densely populated state in the nation, New Jersey may always have high rates. But consumers need a choice of companies actively competing for their business. They need competition driving down rates while offering the best coverage available and stabilizing the market. As legislators, we must never compromise the protection of motorists in an effort to reduce premiums. My bill will ensure the integrity of the system, open the market up to new business; increase profits for the companies currently writing policies, and of the utmost importance to consumers, drive down rates.

The Assembly has focused on A-2625, with the Governor's suggestions and bipartisan support, and approved A-2625, giving us the opportunity to begin the journey toward a competitive auto insurance market.

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