More N.J. Auto Insurers Get Increases
By Mark E. Ruquet
NU Online News Service, Jan. 18, 3:38 p.m. EST? In the latest move to help the state's auto insurance sector, New Jersey's Department of Banking and Insurance has given approval for rate increases by seven companies in the troubled market.
Acting Commissioner Donald Bryan, shortly before he was replaced by the new administration of Gov. Jim McGreevy, approved a 7.8 percent rate increase for Farm Family Casualty Insurance Co., headquartered in Glenmont, N.Y. and a tier rating change for Founders Insurance Company, of Lawrenceville, N.J., which would result in an average 11.4 percent increase for more than 68 percent of its customers.
He also gave the nod to a 3 percent increase for New Jersey Re-Insurance Co., a subsidiary of Trenton-based New Jersey Manufacturers. The increase affects new customers who obtain policies after April 1. The company insures high-risk customers.
New Jersey Manufacturers received a 4.6 percent increase on liability coverage, but agreed to a 9.2 percent decrease on physical damage coverage, effective April 1.
Additional companies granted increases were: CGU Insurance Company of New Jersey, headquartered in Boston, Mass., approved for a change in its tier rating, moving 61 percent of its 103,000 drivers into paying higher premiums of between 11 to 15 percent.
Parkway Insurance of Bridgewater, N.J., received a 2.8 percent increase, and National General Insurance Company based in St. Louis, Mo., received a 3.7 percent increase.
Last year, State Farm, based in Bloomington, Ill., announced it would be leaving the state because it is losing money in the price-regulated environment. The company insures more than 800,000 personal vehicles in the state. Despite receiving an increase, State Farm said it intends to leave the state by 2003.
In the face of other companies threatening to leave the market, the department began granting increases. New Jersey auto rates are amongst the highest in the nation.
Mr. McGreevey assumed office Jan. 15. He appointed Holly Bakke to be the new insurance commissioner (see NU Hot News "Bakke Picked for N.J. Regulator's Post," Jan. 10).
The company rate approvals by Mr. Bryan, sources said, were in the pipeline and might have been granted sooner, but were slowed by the departure of Mr. Bryan's predecessor, Karen Sutor, who left the commissioner's post to assume a judgeship.
Before the department began granting increases, companies had not been able to change rates since July of 1996and then in March of 1999 an insurance reform measure required them to roll back rates by 15 percent. The new legislation also included provisions to contain insurance company costs, but their implementation was delayed for nearly a year.
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