NU Online News Service, Aug. 05, 3:40 p.m. EDT
New Jersey Insurance Commissioner Thomas B. Considine has proposed to repeal a regulation to establish new rating territories in an effort to level out automobile insurance rates throughout the state.
The Department of Banking and Insurance adopted in early 2008 the Territorial Rating Equalization Exchange (TREE). Its purpose was to promote competition in New Jersey and require insurers to make payments to the exchange. The payments would be used to pay subsidies to companies that write auto insurance in urban zones.
The new territorial rating plan was never implemented.
Based on several years of analysis, the insurance department "has determined that the issues to be addressed through the TREE have not materialized," according to the proposal.
"It is unnecessary to continue to maintain rules establishing TREE to address issues that have not yet materialized and may never materialize," the proposal reads.
Richard Stokes, regional manager and counsel for the Property Casualty Insurers Association of America, said industry groups were challenging the new regulation in court.
"TREE was supposed to address an availability and affordability issue that we had not seen, and now the insurance department [has come] to the same conclusion," Mr. Stokes said.
A public comment is to follow before the rating plan is done away with. Comments are due by Sept. 17. The department will review the comments and make the final decision.
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