New Jersey Policyholders
(Tempe, AZ 06/25/2001) - Last August, State Farm executives began pushing Karen Suter, New Jersey's Banking and Insurance Commissioner, for a 20% increase in their auto insurance rates. Over the next 10 months Karen Suter exercised due diligence in considering State Farm's requests. Independent audits were ordered and on April 6th, State Farm was granted a waiver from New Jersey's take-all-comers law. That waiver provided State Farm with relief from the hemorrhaging they complained about while still protecting the rates of State Farm's existing policyholders.
. . . Up for Adoption !
The compromise was just beginning to have the desired stabilizing effect when, on June 12th, State Farm delivered 200,000 letters to the post office advising their policyholders of their intent to withdraw from New Jersey. Within a week, AIG followed in lock-step and announced their intention to also withdraw from New Jersey. It is not our intent here to parrot what is already available from the mainstream media. They tell the story. We'll be looking at some of the rest of the story. We suggest our readers get up to speed on these stories by going online to . . .
I-Can Insight . . .
Charles Bryant has been an Auto Insurance Consumer Advocate in New Jersey for more years than he cares to admit and an I-Can affiliate since 1998. We asked Mr. Bryant for his assistance in compiling the rest of this press release.
Deja-Vu . . .
This is not the first time New Jersey has had to deal with a major insurance company crying wolf. Back in the early 1990's Allstate made the same power play. Their announced exit from the auto insurance market, and their finger pointing at regulators made the front pages of newspapers throughout the state. They even went so far as to set up severance programs for their employees. Everything was going as planned until New Jersey told Allstate that it would take them 5 years to make their exit and they would have to also take their HomeOwner Insurance business with them. Allstate stayed in New Jersey and has remained on sound financial ground to this day.
Corporate Welfare . . .
In the above example, Allstate eventually got what they wanted. They got their rate increase. That's all their power play was about then and that's all this power play is about now. Neither State Farm nor AIG is going anywhere. They each will eventually get what they want and things will go back to business as usual. Collecting the highest auto insurance premiums in the country is not enough for some companies. They still want even more. This is a classic example of enforcement of the corporate Golden Rule . . . "Those with the Gold make the Rules".
Consumer Options . . .
New Jersey Consumers, currently insured with either State Farm or AIG, need not be unduly concerned about their family's financial security or the prospect of run-away auto insurance premiums. I-Can has polled our contacts in New Jersey and identified four Better and one Best insurance company to whom New Jersey Consumers can turn for replacement coverage.
The following insurance companies are submitted for your consideration . . .
New Jersey Manufacturers www.njm.com 609-883-1300
Amica www.amica.com 800-238-6225
Chubb www.chubb.com 800-252-4670
Palisades www.palisades.com 201-420-8700
Selective www.selective.com 973-948-3000
New Jersey Manufacturers (NJM) heads the above list for a reason. Our contacts tell us their premium rates are comparable to State Farm, they pay their claims fully and promptly, and as a mutual company, have a consistent history of declaring premium refund dividends. NJM may not be the best option for all Consumers in all situations. That is why I-Can encourages consumers to do some comparison shopping. The above list is provided simply as a starting point for your comparison shopping efforts.
First, the HomeOwners Insurance . . .
Since Allstate's power play debacle back in the early 1990's, some insurance companies have taken an interesting legal maneuver. They have created separate "Indemnity" companies to issue auto insurance. This was done to avoid the prospect of having to take their HomeOwner Insurance business with them in the event they would again threaten to abandon their Auto Insurance customers. If you'll notice, the published stories refer to State Farm Indemnity.
The idea would be to withdraw one company, offering one line of insurance (auto), rather than having to withdraw one parent company offering multiple lines of insurance (auto and homeowner). That way they could abandon a marginal book of business (auto) without having to give up their more profitable book of business (homeowner).
State Farm and AIG policyholders, who are dis-appointed in your insurance company's conduct and would like to express your dis-appointment, are invited to consider moving only your HomeOwners Insurance (the profit maker) to another insurance company first. Let State Farm or AIG keep your auto insurance coverage until such time as it becomes financially advantageous for you to move your auto insurance business as well.
Let the Games Begin . . .
The events of the past 10 days are only the beginning of what will certainly be a major public relations campaign, fostered by the Godfathers of the auto insurance industry and directed at the legislators and insurance regulators in New Jersey. The political heat in Karen Suter's fifth-floor Trenton office suite is about to be cranked up to unprecedented proportions. Karen Suter is in the un-enviable position of having to stand between the Insurance Consumers of New Jersey and those who would abuse those Consumers. I-Can encourages the Consumers of New Jersey to let your voices be heard.
The links below are provided for those who would like to express your feelings via E-mail or Phone . . .
AIG Insurance Company www.aigdirect.com 212-770-7000
State Farm Indemnity Company www.statefarm.com 309-766-2311
New Jersey Department of Insurance www.njdobi.org 609-292-5363
The Insurance Consumer Advocate Network is an InterNet based consumer advocacy effort designed to Increase Consumer Awareness as to Insurance Related Issues, Encourage Consumer Involvement with Insurance Related Efforts and Facilitate Consumer Contact with Pro-Consumer Entities.
The InterNet web site for the Insurance Consumer Advocate Network is www.iCan2000.com.