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Hopefuls differ on insurance overhaul
Originally appeared in the Press Plus on October 15, 2001
In New Jersey, automobile insurance may be "The Terminator" of political issues. Every time it seemingly has been addressed, it comes back, like an unbreakable cyborg, to haunt another crop of political candidates.
State consumers complain that they continue to pay more for auto insurance than any other drivers in the country. The companies that still write policies for state drivers say the costs make it almost impossible for them to do business here. And more than one political leader has seen a career jeopardized by anger from both motorists and the industry.
Like late-afternoon traffic jams on the New Jersey Turnpike, New Jersey's political odyssey with auto insurance has produced more emotion than forward motion. More than 70 percent of state residents still consider it a very important issue, according to a recent poll, and both major-party candidates for governor say they have a plan to address it.
But the plans of Democrat Jim McGreevey and Republican Bret Schundler differ in scope and ideological approach. Schundler proposes a market-based solution involving consumer choice and decreased regulation that would radically alter the industry. McGreevey prefers working within the system, to deal with fraud and uninsured drivers by working within the current framework.
Each has accused his opponent of being beholden to a special interest on the issue - McGreevey accusing Schundler of ties to the insurance industry, Schundler linking McGreevey to trial lawyers.
The state has had the highest average auto-insurance premiums in the United States for the past seven years, according to the National Association of Insurance Commissioners. It also has seen insurance groups withdraw from the state, and six of the top 10 auto insurers in the country don't offer policies in the state.
McGreevey spokesman Richard McGrath said insurance companies deserve a fair profit for the coverage they provide, but motorists also deserve fair rates.
"The current system tilts towards the industry and Mr. Schundler's proposal completely topples over on behalf of the insurance companies," McGrath said.
During the last election, McGreevey ran primarily on two issues: auto insurance and property taxes. Perhaps in response to the way her opponent tapped into the issue, then-Gov. Christie Whitman implemented reforms that required a 15 percent rate reduction coupled with policies to reduce fraud, and other reforms.
This time, with rates still highest in the country, McGreevey says he would "stabilize" rates by cracking down on uninsured drivers, requiring windshield stickers to indicate insurance status and creating a database at the Department of Motor Vehicles with current information on motorists' insurance status.
McGreevey also would reinstate the office of Public Advocate, which would review every potential auto-insurance rate hike.
In turn, Schundler accuses McGreevey of being unwilling to consider corporate reform.
"If we allow people to waive the right to sue for pain and suffering, we could immediately have a 20 to 30 percent premium savings," Schundler said.
Schundler says having the ability to waive coverage for pain and suffering puts the policyholder in charge.
"Jim McGreevey says that if we have a political appointee in charge, they'll keep rates down - and that hasn't worked," Schundler said. "Give me a break. I mean, I would rather have the power in my own hands (as a citizen) to get lower rates than to have to count on any of Jim McGreevey's political appointees."
Schundler spokesman Bill Guhl said that less regulation is key.
"If we could cut down on some of that regulation and make it easier for companies to do business, then you would have more business coming in and that would drive rates down," Guhl said.
McGreevey disagrees with Schundler's plan.
"Mr. Schundler's asking middle-class New Jerseyans to give up their full coverage as a way of reducing rates," McGreevey said.
Guhl dismissed McGreevey's criticism.
The auto-insurance problem has taken on added significance with State Farm Indemnity Co.'s announcement this summer that it no longer will offer auto-insurance policies in the state.
The company said the state has not addressed the cost issues that keep rates high and administrative delays or roadblocks have prevented recently enacted laws from changing the system for the better.
State Farm spokesman Chris Neal said the company was forced to leave New Jersey because of the state's high level of regulations and costs.
"In New Jersey, not only do they tell you that you have to insure everyone, they also tell you what you have to charge," Neal said.
Neal said that no matter which candidate wins, the governor alone won't be able to make the changes.
"It's going to be a very difficult job to reform the system," Neal said. "It takes a lot of consensus on the part of the Legislature."
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