The country's seventh-largest auto insurer wants to re-enter New Jersey's beleaguered market, a state insurance department official says.

Progressive Insurance Co. has submitted an application that could be approved before year's end, and the new competition could help residents by holding down rates and making it easier to get coverage, department spokeswoman Kathleen Bird said."The more players there are in the marketplace, the better for consumers," she said. "If everything goes the way everybody wants, they'll be writing (policies) starting Dec. 1."

"This is by no means a done deal," Ms. Bird cautioned. "We are very happy that Progressive wants to come, but there are things that have to be worked out, and if the company seeks a rating structure that the department cannot approve, then the company may have to rethink whether they want to come here."

Ms. Bird said Progressive, with headquarters in the Cleveland suburb of Mayfield Village, sent the insurance department a "feasibility study" several months ago. That is the first step in the complex approval process. Department staff and the company are discussing the rate structure Progressive has submitted, and after additional reviews the department could give Progressive approval.

Leslie Heinrich, Progressive spokeswoman, said the company, which stopped selling private passenger auto insurance in the Garden State in 1983 because of unfavorable state regulations, is "in a hold pattern waiting for the state to approve rates."

Progressive, which only sells auto insurance, still handles a small amount of commercial vehicle insurance in New Jersey. It would create a subsidiary called Progressive New Jersey Insurance Co. to re-enter the passenger vehicle market here, Ms. Heinrich said.

Progressive has been moving more and more into the standard, or lower-risk, market, Ms. Heinrich said. It sells private passenger auto insurance in 44 states and has about 2.4 million policyholders nationwide.

With that size, the company could have "a significant impact" on competition among insurers, Ms. Bird said. Even though there are 85 insurance groups - some with multiple subsidiaries - operating in New Jersey now, most of the business is split among five companies. Those are Allstate, Liberty Mutual, New Jersey Manufacturers, Prudential and State Farm, according to Ms. Bird.

Ms. Heinrich and Ms. Bird said Progressive was partially attracted to New Jersey because of regulatory changes under Gov. Christie Whitman's administration that make the market more favorable to companies.

The $1.326 billion deficit of the defunct Market Transition Facility, the state's second failed pool for high-risk drivers, will be paid off through a combination of charges to insurance companies and a $700 million state bond.