NJ REGULATOR BLASTS LACK OF COMPETITION AMONG AUTO INSURERS

NJ REGULATOR BLASTS LACK OF COMPETITION AMONG AUTO INSURERS

New Jersey's insurance comissioner said last week the state's auto insurance companies have a shared monopoly that costs customers an average of $735 a year.

Commissioner Kenneth Merin said carriers operating in the Garden State barely compete with each other, preferring to share a profitable market than to help control rates.The insurance industry is not competing in New Jersey. The more insurance companies say they compete, the less they do, Mr. Merin told a House subcommittee investigating high auto insurance costs.

Rep. James Florio, D-N.J., who is conducting the investigation, said New Jersey has the highest average car insurance rates in the nation.

Rep. Florio, who heads the House Consumer Protection Subcommittee, said he and other lawmakers are attempting to understand the ever-rising costs.

Auto insurance is not some black box that no one can understand. It is a business, and we should be able to determine why the costs of doing business are so high, he said.

Drivers are angry and progress is slow, Rep. Florio added.

Mr. Merin said repeated attempts to reform New Jersey's insurance system have failed.

He blamed a 20-year war of wills between the insurance industry and state officials.

Both sides play a chess game, he said. When state officials suggest reforms, the insurance companies respond by refusing to do business under the new rules, the commissioner said.

He complained that the New Jersey Department of Insurance, which he heads, has been historically weak. The department lacks adequate money or staff to monitor auto insurance, let alone life, health and liability coverage, he said.

The state has the richest no-fault system in the nation, allowing drivers to sue each other after only $200 in accident-related medical costs, Mr. Merin said.

Today, that threshold has been eroded by inflation to the point where it is irrelevant, he said.