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GENERAL ASSEMBLY UNANIMOUSLY APPROVES AUTO INSURANCE - INSURANCE

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GENERAL ASSEMBLY UNANIMOUSLY APPROVES AUTO INSURANCE - INSURANCE Powered By Docstoc
					                    INSURANCE COUNCIL OF NEW JERSEY
                                820 Bear Tavern Road, Suite 303
                                    Ewing, New Jersey 08628
                               (609) 882-4400  Fax: (609) 538-1849


FOR IMMEDIATE RELEASE                                       CONTACT: Rachael Moore
May 15, 2003                                                         (609) 538-8548

           GENERAL ASSEMBLY UNANIMOUSLYAPPROVES
              AUTO INSURANCE REFORM MEASURE
                               Next stop: the Governor’s desk

TRENTON, NJ – Today, the New Jersey General Assembly approved Senate Bill
S63/Assembly Bill A2625, the New Jersey Automobile Insurance Competition and Choice Act.
The legislation, developed through the leadership of Governor James E. McGreevey, is intended
to curb the state’s growing auto insurance availability crisis and spur market competition. The
measure received unanimous bi-partisan support today in a vote of 77 to 0. The bill now moves
to the Governor’s desk for his signature before it begins the arduous implementation process.

       The bi-partisan leadership demonstrated in passage in the Legislature of the New Jersey
Automobile Insurance Competition and Choice Act sends a strong and positive message that
responsible reform is on the way for the state’s troubled auto insurance market, says the
Insurance Council of New Jersey (ICNJ).

       “New Jersey is on the threshold of meaningful auto insurance reform that will begin to
untangle decades of complicated and burdensome regulations, give consumers more choice, and
encourage competition,” said John K. Tiene, President of the Insurance Council of New Jersey.
“Enactment of this law is the foundation upon which a competitive market can be built.”

        The Coalition for Auto Insurance Competition (CAIC) began calling for reform early last
year. Governor McGreevey outlined his proposal to streamline the regulatory process and foster
competition in his January State-of-the-State address. It is expected that the Governor will move
swiftly to sign the legislation into law.

       “The legislation tackles in a meaningful way the barriers to effective competition that
have created the current insurance availability crisis,” continued Tiene. “This measure is a well-
balanced foundation on which to build a vibrant, competitive automobile insurance market.”

        ICNJ also praised the efforts of Assemblymen Lou Greenwald (D-Camden) and Kip
Bateman (R-Somerset) for their leadership in securing bi-partisan support and passage of the
legislation. In the Senate, Senators Ron Rice (D-Essex), Ray Lesniak (D-Union), Gerald
Cardinale (R-Bergen) and Joe Kyrillos (R-Monmouth) were instrumental in that house’s bi-
partisan vote on the legislation.

                                            - More -
Insurance Council of New Jersey
May 15, 2003
Page 2 of 3


       The measures contained in Senate Bill 63/Assembly Bill 2625 offer a constructive
framework for building a reasoned and rational regulatory system and moves New Jersey toward
a competitive market. The bill presents positive steps intended to address the State’s growing
automobile insurance problems; including: creating a predictable but limited rate adjustment
process; abolishing the State’s antiquated “take-all-comers” requirement which has perpetuated
the dysfunction that allows good drivers to subsidize bad drivers, and implementing strong anti-
fraud measures and new consumer information guidelines.

        “New Jersey has long needed to modernize its regulatory approach to auto insurance,
gain the confidence of market participants, and look to attract desperately needed capital from
insurers. Passage of this legislation will put New Jersey on the road to stability and
competition,” concluded Tiene.

HISTORY OF LEGISLATION

February 2002         Coalition for Auto Insurance Competition (CAIC) makes initial call for
                      reform.

June 28, 2002         A2625, the New Jersey Automobile Insurance Competition and Choice
                      Act, is introduced by Assemblymen Lou Greenwald (D-Camden) and Kip
                      Bateman (R-Somerset). It is referred to the Assembly Banking &
                      Insurance Committee.

January 14, 2003      Governor McGreevey calls for swift action on auto insurance market
                      reforms.

February/March 2003 Assembly Banking & Insurance Committee holds hearings to gather
                    information on auto insurance issue.

March 17, 2003        Senate Commerce Committee releases Committee Substitute for S63 that
                      incorporates bi-partisan reform measures.

March 20, 2003        The Senate approves S63 in a 28 to 5 vote.

May 5, 2003           S63 received in the Assembly and referred to the Assembly Banking &
                      Insurance Committee for consideration.

                      S63 released by Assembly Banking & Insurance Committee and a
                      Committee Substitute for A2625 is approved to conform it and make it
                      identical to S63.

May 15, 2003          The Assembly approves S63/A2625 in a bi-partisan vote of 77 to 0.
Insurance Council of New Jersey
May 15, 2003
Page 3 of 3



FACTS RELATING TO THIS STORY:

   Today, five of the six largest auto insurance companies in the nation do not write auto
    insurance in New Jersey.

   In the last 12 months, four auto insurance companies have agreed to pay a combined $71
    million to other insurance companies to assume their business so that they could exit the
    state’s critically ailing private passenger automobile insurance market. These companies
    insured over 130,000 vehicles in New Jersey.

   In December 2002, two auto insurers announced that they were withdrawing from New
    Jersey (Central Mutual and Merchants Insurance).

   More than 26 auto insurers have left New Jersey in the last ten years, six in just the last 11
    months.

   State Farm Indemnity, the state’s largest auto insurer, is approved to withdraw and began
    non-renewing 4,000 insured vehicles a month in September 2002 for the next 24 months or
    96,000 insured vehicles. This action is in addition to the voluntary run-off of the auto
    insurance business of The Robert Plan Companies, that non-renewed 20,000 insured vehicles
    between September and December 2002.

   When the withdrawal of State Farm and others are completed, more than 1.7 million insured
    cars will have had to seek coverage because of insurance company withdrawals since 1994.

   According to the New Jersey Department of Banking & Insurance, 19 auto insurance
    companies writing 28 percent of all auto insurance policies are in such detrimental financial
    conditions that they require monitoring by state regulators.

   ICNJ estimates that over 740,000 vehicles will need new automobile insurance coverage this
    year and consumers will experience increasing difficulty finding new coverage. State Farm
    Indemnity will non-renew approximately 50,000 vehicles this year and the state’s number of
    registered private passenger vehicles is expected to have net growth of about 120,000. In
    addition, ICNJ forecasts that approximately 570,000 vehicles will not renew their current
    coverage and seek new coverage in 2003.

                                                ###

The Insurance Council of New Jersey (ICNJ) is a nonprofit, insurance research, information and
advocacy organization sponsored by 31 New Jersey licensed property/casualty insurance
companies. Collectively, ICNJ member companies underwrite 96 percent of automobile
insurance policies, 72 percent of homeowners’ insurance policies, 55 percent of the commercial
insurance and more than 56 percent of workers compensation policies in New Jersey.

				
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