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Insurance on the Road to Recovery

Jun 10, 2007

By Elise Young, The Record, Hackensack, N.J.

Jun. 11--TRENTON -- New Jersey motorists are seeing steady auto-insurance rates and lodging fewer complaints against underwriters -- more signs that the four-year-old reform law has taken hold, experts say.

"As a whole, the companies have probably exceeded expectations," said Jim Gardner, a spokesman for the New Jersey Department of Banking and Insurance. He compiled the figures in late May.

The average driver paid slightly less than $1,100 for coverage in 2006, the figures show. That's about $70 less than the six-year high, in 2004.

From 2004 to 2006, the number of complaints dropped nearly 60 percent, to 2,465 from 6,100.

Four years have passed since the Legislature enacted reforms to combat the country's highest auto rates and attract underwriters to a state made unprofitable by intensive regulation and a high number of policyholder claims. HERE'S HOW THE NUMBERS LOOK TODAY:

--A little less hurt: New Jersey has the highest auto rates in the country: In 2004, state regulators put the average rate at $1,167, while the National Association of Insurance Commissioners said the national average was $838.

The 2006 New Jersey figure remains high, at $1,099. But the state's previously climbing rates are heading back down:

--2001: $1,003

--2002: $1,090

--2003: $1,152

--2004: $1,167

--2005: $1,102

"It's still a lot of money, but it's a lot better than it was," said Bill Abbott, of the Abbott Insurance Agency in Lyndhurst and Bloomfield. "Are [customers] coming in smiling and really happy? No. But there's a competitive marketplace. Economics is working properly."

--Payback time: Since 2003, the insurance industry has reported nearly $1 billion in rate reductions and dividends for New Jerseyans. Last year's payback, $320 million, was the biggest yet -- and more than double the $154 million paid in 2005.

--The worst drivers: Motorists with drunken-driving convictions or other bad driving records are forced to buy policies on the "last-resort" residual market, where the high rates correspond to high risk. In 2004, 143,516 drivers had such coverage. In 2006, the figure was 61,016.

"Companies are very, very lenient -- they're taking on people with points in excess," said Ray Lavender, of the Nelson-Patterson Insurance Agency in New Milford. "The standards are now accepting of all these people, and that's exactly what the state wanted."

--Gripe meter: On a Department of Banking and Insurance list of 29 of the 69 auto insurers doing business in New Jersey, nine had no so-called "valid" complaints -- in which the insurer violates state regulations -- in 2006.

"We're especially thrilled that we had zero complaints for our company. We're the largest auto insurer on that list, so it's much more of an achievement," said Patrick Breslin, a spokesman for New Jersey Manufacturers Group, with 790,209 vehicles.

Gardner, the Banking and Insurance spokesman, said that the largest number of complaints historically has come from high-risk drivers who could not buy policies on the open market.

"As a result of the reforms and increased competition, we've certainly resolved the availability issue," Gardner said.

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Copyright (c) 2007, The Record, Hackensack, N.J.

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