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.