Auto Ins. Reform Producing Results

The Governor’s auto insurance reform continues to help reduce rates for New Jersey drivers just four months after the landmark legislation was signed into law. Today, United Services Automobile Association (USAA) announced it is reducing its rates by five percent, saving the average driver $56 per vehicle. Earlier this month New Jersey saw the first voluntary rate reductions in 15 years.

“This rate reduction shows, once again, that the arrival of competition to New Jersey’s auto insurance market has put consumers in the driver’s seat,” said Governor James E. McGreevey. “This is remarkable when you consider that before June 9th drivers had to wait weeks, if not months, to get coverage at any price.”

This rate reduction will yield an average savings of $56 per car, or $90 per annual policy. The move affects drivers of nearly 139,000 cars with comprehensive and collision coverage. The rate cut takes effect December 1, 2003.

The Governor added that New Jersey motorists are benefiting from a series of recent accomplishments, including Mercury Insurance’s decision to move to New Jersey (the first new auto insurance company to do so in seven years); Allstate’s plans to add 15 to 20 new agents, serving an estimated 20,000 more drivers; State Farm’s voluntary rate reduction, which will save 500,000 drivers an average of $70, and most recently State Farm’s decision to suspend its practice of dropping coverage for 4,000 New Jersey drivers (a move that the company is taking a full year ahead of schedule).

“The stability we are bringing back to New Jersey’s auto insurance market is feeding a number of good faith efforts by the companies themselves,” said McGreevey. “I said we needed to create an environment that encouraged companies to want to do business in New Jersey, and the result is directly benefiting drivers.”

The auto insurance reform package, signed in June, is designed to overhaul a 30-year-old regulatory structure that in recent years has failed to attract new companies and capital. In addition, it features the nation’s toughest provisions to fight insurance fraud, offers new consumer protection and education measures, and takes steps to reduce the ranks of the uninsured.

USAA specifically serves members of our armed forces, including those on Active duty, National Guard and Reserve enlisted personnel, officers and officer candidates, and their families.

USAA is based in San Antonio, Texas, and has been serving members since 1922. As many of the nation’s largest insurers stopped writing auto policies in New Jersey years ago, USAA has continued to write auto insurance for its members here. Nationally, USAA consistently receives the highest scores for customer service from independent authorities such as J.D. Power and Associates. In New Jersey, USAA has one of the lowest complaint ratios among the state’s major insurers.

Governor McGreevey applauded USAA for responding to his market reforms even as the new law is still being implemented. “When a well-known national company like USAA takes a step like this, it sends a signal to the rest of the country that New Jersey is changing, and that we are becoming a good place to provide auto coverage for our drivers.”

Banking and Insurance Commissioner Holly C. Bakke noted that the new law is bringing results faster than expected. “We knew that different companies would respond to reform in different ways. We are encouraged that we have seen so much progress so quickly,” she said.

“In a little over four months, we’ve attracted a major new carrier, Mercury; we have more agents at Allstate, two voluntary rate reductions, and a move by State Farm Indemnity to suspend non-renewals, which shows progress on our efforts to restore that company’s financial health,” Commissioner Bakke said. “Rarely has a Governor’s leadership on such a chronic consumer problem brought so much immediate relief.”

“We’ve made auto insurance easier to find, and now for more than 630,000 drivers, it costs less,” Governor McGreevey said. “Best of all, we know that companies are reaching out to offer better rates to good drivers instead of turning them away.”

Bringing in new carriers and expanding availability to ultimately drive down rates has been a primary goal of the McGreevey Administration.

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Author: Press Release - State of New Jersey