New Jersey Department
|For Immediate Release: September 30, 2004||
For Further Information:: Mary Cozzolino - (609) 292-5064
Auto Insurance Marketplace:
Policyholders Benefit in 2004
TRENTON - Banking and Insurance Commissioner Holly C. Bakke today announced that the auto insurance premium information for 2002 that the National Association of Insurance Commissioners (NAIC) released this week reflects 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.
When Governor James E. McGreevey took office in 2002, he found an auto insurance marketplace in turmoil. Forty carriers had abandoned the state and other major carriers were threatening to pull out, leaving consumers with limited options. Challenged by a marketplace that suffered from a 30-year history of over-regulation, Governor McGreevey was determined to bring an end to the market's dysfunction and give drivers the choices and competition they deserved.
"According to the NAIC report, New Jersey's average premium in 2002 was $1,112.86," Commissioner Bakke said. "This was one of many factors that prompted Governor McGreevey's focus on building a consumer-driven, competitive marketplace that put downward pressure on rates."
That was then.
This is now.
Two national carriers have joined the marketplace and existing companies are expanding their investments in New Jersey by competing for drivers, appointing new agents and opening additional offices. Insurance carriers are covering policyholders within one week, as opposed to months. Some carriers are providing immediate coverage.
Commissioner Bakke pointed out 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.
Despite New Jersey's problematic demographics, the auto insurance marketplace has become more competitive, and carriers have developed ways to reward, retain and recruit policyholders. 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," Commissioner Bakke said. "We are developing a system that gives back to policyholders in several ways, whether it's dollars in their pockets, breaks in their premiums or confidence that all drivers are paying their fair share into the system."
The Department's aggressive effort to reduce the number of uninsured drivers has resulted in more than $55 million contributed to the auto insurance system, which benefits all New Jersey motorists. The Department implemented several programs to reduce the number of people illegally driving without insurance. In 2002, Governor McGreevey launched the Last Chance Program to give uninsured drivers an opportunity to get insurance. Later, the Department developed the Dollar-a-Day policy, which offers qualifying drivers the chance to purchase affordable auto insurance. The Department also executed a campaign to inform drivers about the low-cost Basic Policy.
Throughout the past two years, the Department has also stressed the need for consumers to take an active role when shopping for auto insurance. The Governor's reforms included the adoption of a series of protection regulations designed to empower consumers with the information they need to take advantage of the competitive marketplace.
"Developing a competitive marketplace is only half the story for consumers. Improvements have been made to the auto insurance marketplace to ensure that policyholders are well prepared to take advantage of the newly added choices and options available to them," Commissioner Bakke said. "The Department has designed a modern system where consumers can determine the exact coverages they need, how much they want to pay and what company works best for them."
The improved auto insurance marketplace has made the road smoother for New Jersey policyholders. The Department anticipates continued downward pressure on rates as the reforms continue to materialize in the years to come.