You’ve likely read about the upcoming auto insurance plan reform in Massachusetts. Now you may wonder what, if anything, is going to change? And most of all, why is it so hard to get auto insurance in MA? A simple answer to this question is, legislation. Since MA has already been covered here, I wanted to show how reform has benefited another state.
New Jersey had something in common with Massachusetts up until a few years ago, the state had control over auto insurance companies and their ability to set rates.
Before 2003 most companies had written off New Jersey. It was too expensive to operate there and make a profit under then current insurance laws. Consumers were getting the worst end of the deal (not unlike those living in Massachusetts right now) and finding simple coverage was near impossible. Under the new reform, companies started pouring into this old market and suddenly people were finding not only competition but lower premiums.
Let’s take a look at a few New Jersey auto insurance highlights since enacting the new reform.
- USAA lowered auto insurance rates for 139,000 New Jersey residents for an average savings of $56 per vehicle.
- State Farm decided to quit dropping 4,000 policy holders, and an average 40,000 vehicles each month.
- State Farm dropped rates in 2004 by 4.1%, saving policyholders up to $70 and rate reductions amount to $38m
- Mercury Insurance moved into New jersey and started selling policies.
- Allstate hiring more agents to write 20,000 new policies.
Auto insurance companies are reducing premium rates in New Jersey on a yearly basis. This is what competition and fair practice allows. Consumer advocates will always argue that ultimately the consumer still loses when insurance companies are allowed to use “discrimination” in setting rates, and they have a great point – but when it comes to a mandatory product, getting fair insurance rates and increasing the competition is the only way to really help consumers and it’s easy to see that New Jersey has transformed itself completely in little over 4 years.
This new competition has allowed insurance companies operating in New Jersey to set their own rates based on their own criteria. While it’s still expensive to insure a vehicle in New Jersey, at least you can! Hopefully Massachusetts will take a long look at New Jersey and see that it’s a slow rebuilding process, but reform needs to happen in order to create a fair and open insurance market. Remember, it’s about the consumers, and if the insurance companies can’t make money they can’t sell policies.
New Jersey Auto Insurance Resources:
- New Jersey Auto Insurance Reform Website
- New Jersey Status of the Auto Insurance Market