Auto Insurance
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THE partisan bickering that passes for communication among members of the State Legislature reaches its zenith when the subject is automobile insurance, and during last week’s heat wave tempers were more frayed than usual.
THE partisan bickering that passes for communication among members of the State Legislature reaches its zenith when the subject is automobile insurance, and during last week’s heat wave tempers were more frayed than usual.
To compound matters, an unidentified woman telephoned two false bomb threats on Monday. The first sent the State Police through the Assembly chambers while the 80-member house was in recess during the afternoon, and the second forced the evacuation of the chamber and nearby offices for about 20 minutes at about 6 P.M. - the time the caller said the bomb would go off.
But the incidents went virtually unnoticed as the Democrats and Republicans argued for hours over passage of an insurance bill that neither side likes. The Republicans eventually passed it, by providing the minimum 41 votes needed, without any Democratic help.
The Republicans don’t really support the bill. The idea is to send it to Governor Kean so he and his staff can rewrite it through something called a conditional veto and send it back to the Democratic-controlled Senate with a request that the lawmakers concur in the changes.
For those who have been watching what several lawmakers are calling ‘’Ping-Pong'’ with insurance revision, this has a familiar ring. It didn’t work when it was tried last year, and it’s uncertain the move will fare better this time around.
Even though the bill was passed by the Senate, all the Democrats in the Assembly opposed it. They called it flawed, saying it would increase insurance premiums instead of lowering them, and said the Republican majority was trying to ‘’ram'’ the bill ‘’down our throats.'’
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Keep the Auto Insurance Business Competitive; Cost of Litigation
Jay Angoff and Bob Hunter complain (Op-Ed, March 29) that the cost of auto insurance is high in Philadelphia and Los Angeles. But they ignore that auto insurance premiums reflect the cost of claims in a given area.
In Philadelphia, 362 lawsuits claiming bodily injury are filed for every 10,000 drivers. That’s in contrast to only 83 lawsuits per 10,000 drivers in Pittsburgh. As litigation increases, claim costs go up because of the expenses involved in paying the plaintiff’s lawyer, the defense counsel and court fees.
Lawsuits are behind the high cost of auto insurance in Los Angeles also. In California, the number of auto-related lawsuits increased by 13.2 percent each year between 1982 and 1986. The average size of bodily injury claims in California is 44 percent higher than in other states with similar auto liability systems.
The bases for these higher rates in Los Angeles and Philadelphia were recognized in recent statements by the state officials who regulate the insurance business in those states.
Mr. Angoff and Mr. Hunter are inaccurate when they say approximately 35 percent of the average auto insurance bill goes to pay expenses. The true figure is 23 percent. That’s lower than industries with similar products or distribution systems. For commercial banks, expenses are 24 percent. They also say that insurer expenses are higher now than they were 10 years ago. Again, wrong. Expenses of auto insurers are slightly lower than they were 10 years ago.
They are wrong too when they suggest that there is little competition for the auto insurance consumer’s dollar. Hundreds of insurance companies compete in the personal auto insurance market. Consumers can buy insurance from insurance agencies and brokerages, through the mail or as a member of a group, through organizations such as employers and credit unions.
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Jerseyans Are Fighting Back on Rising Auto Insurance Costs
Joseph A. Tomeo is at 3,400 and counting. His goal is to obtain 500,000 signatures on petitions calling for the recall of the New Jersey Senate for what he says is its failure to deal with the state’s rising automobile insurance costs.
Joseph A. Tomeo is at 3,400 and counting. His goal is to obtain 500,000 signatures on petitions calling for the recall of the New Jersey Senate for what he says is its failure to deal with the state’s rising automobile insurance costs.
‘’There is a crisis of confidence in the members of the Legislature because of their inability to work together,'’ said Mr. Tomeo, who has been collecting the signatures since June.
Mr. Tomeo, a maintenance worker at the Du Pont plant in Pennsville, realizes the State Constitution does not specifically mention a recall, but he is hoping for a liberal interpretation of its First Article that states ‘’all political power is inherent in the people.'’
‘’At any rate, the petition drive is a conduit for people’s anger,'’ he said. ‘’It gives them an opportunity to show how they feel.'’ Legislature at Loggerheads
Many New Jerseyans have grown angry as the Democratic-controlled Senate and Republican-controlled Assembly have been at loggerheads over how to control insurance costs in the state with the most people and most cars per square mile. The Senate’s approach is to blame insurance company greed and the position of the Assembly - and Governor Kean - is that trial lawyers are to blame for inspiring expensive lawsuits.
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Backlash Looming On Auto Insurance
THE Senate passed a compromise automobile insurance bill last week that its designers say will curb rising insurance premiums and sent the measure, and the political problem it represents, to the Assembly.
THE Senate passed a compromise automobile insurance bill last week that its designers say will curb rising insurance premiums and sent the measure, and the political problem it represents, to the Assembly.
No one believes that the bill is the definitive answer to the state’s deficit-ridden insurance system, but the Kean administration and the lawmakers who have supported the measure thus far hope that it will help control costs, and at least convince an angry public that something is being done. New Jersey motorists spend $3 billion annually on automobile insurance, according to the state’s Insurance Department.
The legislators’ mail, their telephone calls and the letters to the editorial pages of the state’s newspapers all reflect broad public dissatisfaction with the present system and a growing impatience with the state government’s apparent inability to deal effectively with the problem.
The first opportunity the public will have to vent its anger will be in next year’s legislative election, when all 80 seats in the Assembly will be on the ballot.
‘’It’s a no-win situation,'’ said Assemblyman, Willie B. Brown of Newark, the minority leader. ‘’If we don’t pass this bill, we’ll be blamed for doing nothing, and if we pass it and it doesn’t lower insurance rates, we’ll be blamed for that.'’
There is broad disagreement and still some confusion over just how this hybrid bill, which was worked out by the staffs of the two houses and the Governor’s office, will affect insurance premiums.
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Going on the Attack on the Auto Insurance Issue
THE SCRIPT – Announcer: ‘’Democratic State Senator Jim McGreevey knows auto insurance. After all, McGreevey helped write the laws that created New Jersey’s auto insurance mess. He’s pretty much the brains behind the present system, with surcharges, automatic rate increases and all the rest. But oddly enough, until he began his campaign for governor, Jim McGreevey wasn’t even paying for any auto insurance. You see Jim has two political jobs, mayor and state senator. As a mayor, Jim McGreevey charged his auto insurance to, well, to you, the taxpayers. By contrast, Governor Whitman and her husband pay auto insurance bills just like we do. Which is why Christie Whitman is working hard to make your insurance cost less.'’ Governor Whitman: ‘’This is Christie Whitman. Enough politics. I want to reform the system Jim McGreevey voted to create. Let’s cut the cost of auto insurance by up to 25 percent with my plan to get tough on trial lawyers and insurance companies. We can pass my plan in one day if the Democrats will put politics aside, and put New Jersey drivers first.'’
ACCURACY – It is inaccurate to suggest that Mr. McGreevey was ‘’the brains'’ behind changes to the auto insurance system in 1990. However, he did vote for the changes that ended an automatic $222 surcharge on all drivers and imposed surcharges on drivers with poor driving records. Automatic rate increases for insurance companies began during the Kean administration, before Mr. McGreevey was elected to the Legislature. It is accurate that Woodbridge Township, where Mr. McGreevey is mayor, pays for his car and insurance. But he insists that he pays auto insurance on a car leased for his campaign. It is true that Governor Whitman is trying to reduce rates up to 25 percent. Her plan would give consumers the option to reduce their coverage. However, it was the Republican-controlled Legislature, not Democratic lawmakers, that blocked approval of her plan earlier this year.
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Competition Can Make Auto Insurance Affordable
Your editorial ‘’The Only Real Fix for Auto Insurance'’ (Nov. 18), about California’s Proposition 103, raises several concerns. You say ‘’the only way to lower costs is to create a ‘no-fault’ compensation system,'’ but good no-fault does not lower auto insurance costs.
As Federal Insurance Administrator, I encouraged two Presidents to support national no-fault auto insurance, but the reason was equity: under the tort system, people with small economic damages tend to receive several times their damages while seriously injured people get substantially less than their costs. We still support no-fault laws, but not as a cost-control mechanism.
You say there has been ‘’a competitive California insurance market.'’ This is belied by the fact that in California, as in all states:
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Cost of Auto Insurance Increases in California
Three days after Californians voted for a sweeping rollback in insurance rates, insurance agents and state officials say people are paying higher premiums for automobile coverage than before, at least for the time being.
Three days after Californians voted for a sweeping rollback in insurance rates, insurance agents and state officials say people are paying higher premiums for automobile coverage than before, at least for the time being.
The reason is that some insurance companies have stopped writing automobile policies in California, sharply reducing competition in the confusing aftermath of the vote for the ballot measure.
On Thursday the State Supreme Court stopped the measure from going into effect until it hears industry challenges to its constitutionality.
‘’There is not full competition,'’ said Donald R. Stewart, executive director of the American Agents Alliance, representing 600 independent California agents dealing almost exclusively in auto and personal insurance. ‘’The companies are not writing their best policies; the market is tighter.'’ ‘Choices Will Be Fewer’
The panic over insurance calmed today after the court action, which brought many companies back into the market. But the California Insurance Commissioner, Roxani M. Gillespie, said she anticipated insurance would be harder to obtain until the matter was resolved.
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GAINS IN INSURANCE SET A HIGH RECORD; $16,900,000,000 Business in 1927 Is $500,000,000 Rise Over 1926. ASSETS NOW $14,500,000,000 Cost of Policies Reduced by Participating Life ConcernsRaising Dividends. Cost of Insurance Reduced. Auto Insurance Suffers. Study Cost of Small Risks.
Annual statements now being made public by insurance companies writing every type of risk indicate a general condition of prosperity during 1927, particularly in the life and fire fields. The casualty and surety companies have until March to make their returns, so their showing can be only estimated.
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Jersey Car Insurer Fees ‘Pulled Out of Air’ in ‘84
The fees and commissions that automobile insurance companies were allowed to collect for servicing New Jersey’s Joint Underwriting Association when it began in 1984 were ‘’literally pulled out of the air,'’ a member of a state study panel said today.
The fees and commissions that automobile insurance companies were allowed to collect for servicing New Jersey’s Joint Underwriting Association when it began in 1984 were ‘’literally pulled out of the air,'’ a member of a state study panel said today.
The panelist, William J. Doyle, executive director of the Independent Insurance Agents of New Jersey, said he was also a member of a committee that helped establish the underwriting association in line with a 1983 law. The association was formed to cover high-risk motorists who were unable to buy insurance on the open market, but it has grown to provide insurance for nearly half of New Jersey’s four million drivers.
The fees paid to the servicing carriers were subsequently viewed as too generous and were reduced.
‘’They came down, maybe not enough or quick enough,'’ Mr. Doyle said. ‘’But we made a mistake, no doubt about it.'’ Insurance Rates Rising
Mr. Doyle is now a member of the 16-member Auto Insurance Study Commission, which held a hearing today to review the underwriting association’s operation and the affordability of auto insurance in the state. Motorists have seen their rates rise since the enactment of the 1983 law, even though it was promoted as a way to reduce costs. The study panel includes representatives of the insurance industry, consumer groups, lawyers and state officials.
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Auto Insurance: Another Aspect
Representative Jim Courter’s Aug. 14 Opinion page article, ‘’Auto Insurance: A Better Way,'’ focuses on the Joint Underwriting Association’s mega-buck deficit and argues for fairness for corporate behemoths and a still heavier club of enforcement against the owners of 400,000 uninsured vehicles who disobey the law.
Representative Jim Courter’s Aug. 14 Opinion page article, ‘’Auto Insurance: A Better Way,'’ focuses on the Joint Underwriting Association’s mega-buck deficit and argues for fairness for corporate behemoths and a still heavier club of enforcement against the owners of 400,000 uninsured vehicles who disobey the law.
Mr. Courter and most involved in this debate are ignoring an issue far more grave than any of the above because it involves the integrity of the entire legal process and fundamental rights of a vital class of New Jersey citizens, viz., those who would obey the law but who are affirmatively prevented from doing so by government itself.
Exemplary is a recent case in point that involves an obscure J.U.A. directive (P88-22), discriminatory and punitive on its face and in application. Just one of its contained inequities is the refusal of the J.U.A. to cover cars owned by students who use them while attending out-of-state schools.
On June 28 a young New Jersey resident owned a car that was insured under the J.U.A., registered and inspected. He uses it to go to class at a college in Pennsylvania.
On June 28 he began the process of renewing his compliance with law. He appeared at the office of his carrier who acted for the J.U.A. to obtain a new insurance ID card. Renewal premium had been paid a month before.
He was told his insurance had been cancelled two months before. False. He was told he was not then insured under the J.U.A. False. He was given no insurance ID or other evidence of coverage as required by law when insurance is in effect.
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