Auto Insurance
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Whitman Vows to Cut Car Insurance Rates by Curbing Suits
Gov. Christine Todd Whitman said today that New Jersey drivers have for too long paid the nation’s highest automobile insurance rates and proposed legislation that would allow insurers to offer limited coverage for lower premiums.
In her third annual address to the State Legislature, Governor Whitman praised her administration for a range of accomplishments from cutting income taxes to imposing statewide school curriculum standards, but she acknowledged that bringing down auto insurance rates remained one of her biggest challenges.
By vowing to lower auto insurance premiums, Mrs. Whitman sought to address a problem that her Democratic opponents promised to make a campaign issue in this year’s gubernatorial race. In her 50-minute speech, the Governor also struck several other themes to appeal to voters, from the environment to education to crime.
The auto insurance proposal would require insurers to offer four options to drivers, all of which would continue to provide them with $250,000 of coverage for medical expenses and some lost wages. To varying degrees under the plans, drivers would be able to reduce their premiums by abandoning or restricting their ability to seek damages in court for pain and suffering.
Mrs. Whitman said she would also seek to eliminate surcharges that insurance companies impose on bad drivers and on new drivers. And she said she would eliminate automatic annual rate increases now given insurance companies by the state.
In the most recent survey of auto insurance rates, in 1994, the average premium in New Jersey was $964 – $314 above the national average, according to the National Association of Insurance Commissioners. In New York, the average premium was $870, the fifth highest in the country, while Connecticut’s $863 was the sixth highest.
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INSURANCE LEADER SEES CRITICAL ISSUE; State or Private Handling of Compulsory Coverage of Employes Cited by Kemper Auto Insurance Up 22.5 Per Cent Premium Income a Record
Whether compulsory employe insurance will be administered by state or private insurers is a critical issue for the future of free enterprise, James S. Kemper, chairman of the Lumbermen’s Mutual Casualty Company, informed policyholders yesterday.
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Auto Insurers in Massachusetts Raise Rates, Sue and Flee as Claims Rise
Massachusetts drivers, who file more property damage and theft claims than drivers anywhere else in the country, are facing double digit rate increases and a growing reluctance by insurers to continue writing policies in the state.
Massachusetts drivers, who file more property damage and theft claims than drivers anywhere else in the country, are facing double digit rate increases and a growing reluctance by insurers to continue writing policies in the state.
Since June, nearly a dozen companies, including The Travelers Companies and The Hartford, have issued court challenges to the state’s insurance regulatory system.
Another, Fireman’s Fund Insurance, sued the state this week after failing to reach an agreement on obligations the state says it must satisfy before it can stop writing auto insurance policies here. Fireman’s, which has written 235,000 automobile policies, petitioned to witdraw from Massachusetts in July, citing operating losses. Reform Proposal Defeated
Two other companies, Peerless Insurance Company and Shelby Mutual of Ohio, stopped underwriting auto insurance policies here last year. The state has found other insurers willing to pick up the policies of drivers abandoned by the exiting companies, but state regulators recognize there are grave problems.
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Politics; Auto Insurance Takes On A New Political Life
THE State Senate guaranteed last week that automobile insurance would be a major issue in the fall elections. It amended legislation that would have limited an injured motorist’s right to sue in return for some savings in premiums.
THE State Senate guaranteed last week that automobile insurance would be a major issue in the fall elections. It amended legislation that would have limited an injured motorist’s right to sue in return for some savings in premiums.
The bill was changed to make the proposed new limit on lawsuits optional instead of mandatory.
Governor Kean has been calling for a limit on so-called nuisance suits ever since he took office. With both the Senate President, John F. Russo, Democrat of the 10th District (part of Ocean County), and the Assembly Speaker, Chuck Hardwick, Republican of the 21st District (part of Union County), supporting the change, he appeared to be on the way to getting his wish.
However, Senator Russo was unable to get his bill passed intact last Monday. Opponents succeeded in POLITICS pushing through an amendment that takes the teeth out of the change.
Before it was amended, the legislation contained what the Governor wanted - the limit on lawsuits - and something Mr. Russo has long supported: a mandatory reduction in insurance premiums.
Since the measure no longer contains the limit on suits, the Governor said, it no longer can guarantee the reduction in premiums; he would conditionally veto it if it arrived on his desk in its present form, he said, and send it back to the lawmakers for revision.
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Politics; Insurance: New Fight Shaping Up
FOR the third time in 18 months, the Republican majority in the Assembly has passed a bill calling for a change in New Jersey’s automobile insurance law. The measure aims at limiting suits arising from accidents, and for the third time the Democratic-controlled Senate appears ready to reject it.
FOR the third time in 18 months, the Republican majority in the Assembly has passed a bill calling for a change in New Jersey’s automobile insurance law. The measure aims at limiting suits arising from accidents, and for the third time the Democratic-controlled Senate appears ready to reject it.
The Senate President, John F. Russo, Democrat of Toms River, was the sponsor of the bill during its last test in the Senate, when it attracted only 18 votes (21 are needed for passage). He said he did not see any reason to try again ‘’just because the Assembly keeps passing it every other week.'’
The measure would limit suits for ‘’pain and suffering'’ to instances where a victim sustained a serious injury, such as the loss of a limb, or was disfigured or killed.
Under New Jersey’s no-fault insurance system, all medical bills are paid anyway, so the change is aimed at eliminating so-called nuisance suits and allowing only the more seriously injured to collect damages in addition to medical costs.
The change is supported by Governor Kean, who said similar laws had helped reduce the number of suits in other states, thereby lowering costs to insurance companies, which, in turn, had lowered premiums.
And although the change is also supported by the state’s Insurance Department, which predicts some motorists could see a $90 annual saving in premiums, some legislators said during the floor debate that the saving was closer to $30.
One thing that has crystallized, at least in the Assembly, is that the Republicans support the theory advanced by Mr. Kean that trial lawyers bear some responsibility for a constantly growing number of suits that raise insur-ance costs. On the other hand, the Democrats - led by the minority leader, Alan J. Karcher, Democrat of Sayreville, - argue that insurance companies are reaping huge profits while trying to take away the public’s right to sue.
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Kemper Offers State Auto Plan
The Kemper Insurance Company, faced with $37.1 million in losses this year from its auto insurance policies in Massachusetts, proposed a plan today to take itself out of the state’s troubled auto insurance market by creating a replacement company, to which it would contribute $100 million.
The Kemper Insurance Company, faced with $37.1 million in losses this year from its auto insurance policies in Massachusetts, proposed a plan today to take itself out of the state’s troubled auto insurance market by creating a replacement company, to which it would contribute $100 million.
In announcing the move, Kemper attributed its Massachusetts losses to low insurance rates set by the state, and unusually high accident and auto theft rates. The proposal comes four months after the Fireman’s Fund Insurance Company, then the state’s sixth-largest insurer, announced that it would stop doing business in Massachusetts and agreed to pay the state $45 million to shut down quickly.
Under the Kemper plan, Kemper would establish a nonprofit mutual company called Arbella Mutual Insurance that would take over all 250,000 Kemper policies in the state by June 30. The plan, which is unprecedented in the state, is designed to insulate the national company from its disproportionate losses in Massachusetts. Special Clearance Needed
For the plan to succeed, Kemper would need special clearance, because state law prohibits companies that do not offer auto insurance from selling any other kind of insurance. The company sells most kinds of personal and commercial insurance and is the third-largest writer of auto insurance in Massachusetts.
In 1986, Kemper lost $31.4 million from its auto insurance policies in Massachusetts. At a news conference today, Gerald L. Maatman, president of Kemper’s National Property and Casualty Insurance companies, said that Massachusetts led the country in its auto theft rate and the number of accident claims were twice the national average. ‘’The only state coming anywhere near having Massachusetts’s problem is New Jersey,'’ he added.
Roger Singer, the state’s Insurance Commissioner, said he was studying Kemper’s proposal. He added that ‘’my concern is to make sure consumers are protected and that the market is stabilized.'’ Willing to Modify Plan
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Auto Insurer Plans to Quit New Jersey
The State Farm Indemnity Company, New Jersey’s largest insurer of motorists, said today that it planned to withdraw from the auto insurance business in the state. The company cited persistent losses and accused state officials of dragging their feet on an eight-month-old request for a rate increase and on long-promised reforms.
State officials countered that bad business decisions had caused State Farm’s losses, which reached $128 million last year, and suggested that the company was merely posturing weeks before a scheduled administrative hearing on its rate increase application. The company is seeking a 16.8 percent increase.
The move by State Farm, which insures about 850,000 vehicles in New Jersey, or 17.5 percent of the market, would not immediately affect any of the company’s policyholders. The process of withdrawal from New Jersey is so drawn out – itself a sore point for insurers – that it could take years.
But the announcement came as a sharp rebuke to both former Gov. Christie Whitman and her successor, Acting Gov. Donald T. DiFrancesco. The last time an auto insurer made such a threat was in 1991, when Allstate said it would leave New Jersey in protest over sweeping revisions of the insurance law by Jim Florio, then the governor. Allstate, then the largest auto insurer in the state, ultimately settled a lengthy court fight by agreeing to remain in New Jersey in exchange for a rate increase.
Any possibility that Mr. DiFrancesco and State Farm officials could reach a similar compromise seemed remote today, however, especially in a year with elections for the governor’s office and all 120 legislative posts, and attacks on the Whitman and DiFrancesco records by Democrats and Republicans alike. Auto insurance rates in New Jersey have long been the nation’s highest and are a perennial issue in state politics rivaled only by property taxes.
‘’It makes no sense for us to make a deal,'’ said Chris Neal, a spokesman for State Farm Indemnity, a unit of the State Farm Insurance Companies of Bloomington, Ill. ‘’I know some of our competitors have used the threat of withdrawal as a negotiating tool. That’s not what this is about. This is an admission that we can’t do business here.'’
Mr. Neal also said that State Farm was prepared to abandon its other lines of insurance in the state if New Jersey officials required that step as a condition of getting out of the automotive market here. The company is also the top provider of homeowners’ insurance in the state.
State Farm’s dispute with New Jersey is rooted in a 1998 law signed by Mrs. Whitman that reduced car insurance rates by 15 percent. The company said in a statement that the rate cut came with assurances that revisions would be made to reduce costs for insurers, but that some of those had been delayed or had not yet been carried out. State Farm representatives pointed to long-awaited changes that were to have reduced expenses for unnecessary medical care for injured drivers. They lamented that the state had not yet set up, as promised, a faster approval procedure for modest rate increases.
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New Jersey Opinion; Insurance: Last Hope Is Expiring
THE last hope of New Jersey drivers for automobile-insurance relief - a Senate bill that guarantees an average rate cut of $98 for motorists who choose a verbal threshold - is now gathering dust on the desk of the Assembly Clerk.
THE last hope of New Jersey drivers for automobile-insurance relief - a Senate bill that guarantees an average rate cut of $98 for motorists who choose a verbal threshold - is now gathering dust on the desk of the Assembly Clerk.
The legislation, part of a comprehensive package designed to address all components of the auto-insurance problem, represents the Senate’s fourth attempt in a year to compromise with the Assembly on this issue. So far, the Assembly leadership has steadfastly refused to even give its members the chance to vote on an optional verbal threshold.
It is time for Assembly leaders to stop playing political games and give the drivers of this state a chance to save some money.
The Senate tried to break the logjam over auto insurance last May by voting on legislation I sponsored that would have established the mandatory verbal threshold favored by the Assembly leadership. But the bill fell three votes short of passage, with nine Democrats and nine Republicans voting for it.
The optional verbal threshold, which recently passed the Senate with overwhelming bipartisan support, is a fair compromise that is obviously better than nothing. It will save those drivers willing to restrict their right to sue an average $98, and guarantee that saving by law for a minimum of two years.
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McGreevey Pledges to Roll Back Auto Rates 10%
With auto insurance emerging as the biggest issue in the New Jersey gubernatorial race, State Senator James E. McGreevey promised to lower rates today as he outlined his first detailed plan aimed at voters unhappy with Gov. Christine Todd Whitman for not doing more to lower their auto insurance bills.
In recent weeks, polls have shown that a majority of New Jersey voters are frustrated with their auto insurance premiums, the nation’s highest, and with Governor Whitman’s handling of the issue. Both candidates have talked of little else in the last month. Governor Whitman revived her auto insurance proposal and she released a hard-hitting radio commercial last week, blaming Mr. McGreevey and his fellow Democrats for the state’s present auto insurance system.
Mr. McGreevey promised that if elected governor, his first act would be to sign an order mandating a 10 percent rollback in rates for all policyholders while allowing consumers to keep the same coverage. He said that he would cover the cost of the reduction and further reduce rates by cracking down on fraud and abuse and subjecting the insurance industry to more public scrutiny. Mr. McGreevey sought to emphasize the differences between his proposal and the one outlined last month by Governor Whitman, pointing out that policyholders would not have to give up coverage for reduced rates.
Governor Whitman’s plan would guarantee a rate reduction of up to 25 percent by offering consumers the option of giving up or limiting their right to sue for pain and suffering from injuries suffered in a car crash. All policyholders, however, would still be able to recover medical expenses, lost wages and some other costs under the Governor’s plan. Mr. McGreevey, who criticized the Governor and her administration for approving 11 rate increases and for not taking more aggressive steps to curb fraud in the system, said his proposal would do more to keep the state on the side of policyholders, not insurance companies.
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