The Star-Ledger

Automobile Insurance Still Hurts, But Less So

Report shows rates dip, but still highest in nation

The Star-Ledger — Tuesday, September 25, 2007

Star-Ledger Staff

A national report on auto insurance rates has a dose of good news and bad news for Jersey drivers.

The good: Spurred by a new law that forced more competition, average rates in New Jersey went down in 2005.

The bad: New Jersey was still the most expensive state in the nation for auto insurance.

The report, released yesterday by the National Association of Insurance Commissioners, shows the average motorist shelled out $1,184 per vehicle in 2005. That's a 3 percent decline from 2004, when the state reported an all-time high of $1,221. The last time the average bill went down was in 2000.

New Jersey's rates were 43 percent higher than the national average bill of $829, and Garden State motorists have been socked with the highest bills in America for all but two years since 1987.

But this time, New Jersey barely made it to the unwanted top spot as motorists in the District of Columbia paid only $2 less per vehicle, the report showed.

"It's a sign of what's to come as competition continues to take hold," said Assemblyman Louis Greenwald (D-Camden), chief sponsor of a 2003 overhaul of auto insurance laws that has helped attract companies like Geico, Progressive and Mercury General into the state. "I think people are on the road to cheaper rates."

Greenwald said the changes have led to more competition and lower prices for most drivers, and have made it easier for drivers to get coverage. He said statewide complaints are down since the law took effect, and he mainly hears comments from constituents that their bills are dropping.

Jaimee Gilmartin, a spokeswoman for the Department of Banking and Insurance, said the decline in average bills parallels the department's data and shows "forward progress."

"We're not surprised that the average premium went down because that's the direct result of opening up the market to national insurers and making the New Jersey auto insurance marketplace more like the rest of the country," she said.

Gilmartin said rates in the state will never be cheap because New Jersey has the nation's densest population, and lots of commuters who rely heavily on their cars. New Jersey motorists also have higher coverage levels because they have more expensive vehicles than drivers in most states.

John Dyke, chairman of the New Jersey Auto Agents Alliance, said another factor for lower rates may be the healthy profits auto insurers have enjoyed nationwide in recent years.

"Remember, insurance usually goes in cycles. Right now, times are good," Dyke said. "That cycle will eventually change both nationwide and here in New Jersey."

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, said her group is pleased there are more agents in the state since the 2003 legislative overhaul and more policies to choose from. But, she added, "We still have the highest rates" and lower-income drivers feel that burden the most.

"Higher educated, white collar people who have good credit reports are paying less," Salowe-Kaye said.

As New Jersey's rates declined 3 percent, the national average went down about 1 percent, according to the report.

Only twice in the past 20 years has New Jersey dropped to No. 2 on the list: In 2000, after Gov. Christie Whitman ordered a 15 percent temporary reduction in rates and the District of Columbia grabbed the top spot; and in 1992, when Hawaii slipped ahead after Gov. Jim Florio enacted a rollback.

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