Another Auto Insurer for NJ drivers

By CHARLES STILE and ELISE YOUNG

TRENTON BUREAU







The nation's third-largest auto insurer announced Tuesday that it will once again sell policies in New Jersey, a move officials hope will put pressure on competitors to offer better deals and cheaper rates.



Progressive Auto Insurance Co. is the latest to return to the state since former Gov. James McGreevey and the Legislature enacted pro-industry reforms in 2003 aimed at stabilizing the state's marketplace.





Nine other companies have returned to the sate, canceled plans to leave or expanded their product lines since then.



Progressive's return after a 22-year absence could save New Jersey residents money on their car insurance, officials say. That insurance historically is among the highest in the nation.



The Ohio-based company took in $11.6 billion in personal auto insurance premiums last year, or 7.2 percent of all premiums sold in the United States, according to the Auto Insurance Industry News, a weekly newsletter.



That gives the company the size and depth to compete against other national giants, such as State Farm, Allstate, and two newcomers to New Jersey, GEICO and Mercury Insurance. That competition, officials predict, could translate into lower rates.



It is also among the nation's fastest-growing insurers, said Brian Sullivan, publisher of the California-based newsletter.



It had been eyeing New Jersey as a place for potential growth for more than a decade, but was discouraged by its regulatory climate, he said.



The reforms were critical to its reentry because they allow it some leeway in setting rates.



The company uses "sophisticated underwriting factors," and New Jersey would not let it do so in the past, Sullivan said.



"I would suggest that this is the final endorsement by the [auto insurance] market of New Jersey's reforms," he said.



The changes may not drive down the average cost of a policy, experts said, but consumers are getting more options with each new insurer that starts writing policies.



"You're going to get customers who are going to have more choices," said David Snyder vice president of the American Insurance Association, an industry group. "Over time, the market is the best regulator of prices."



Persuading Progressive to return to New Jersey had been one of McGreevey's goals, and his immediate successor, acting Governor Codey declared Monday that the company's return was further evidence the reforms were working.



"We created an insurance market that is stable and competitive," Codey said in a State House news conference. "What a difference two years can make. Companies have stopped fleeing this state."



The company will have two brands in New Jersey: Drive Insurance, sold by independent agents, and Progressive Direct, available online. Progressive Direct also will be available via a toll-free number in 2006. The company now employs 70 people at claims offices in Mount Laurel and Iselin, said Mike Esposito, a Progressive product manager.



New Jersey's auto insurance marketplace was in turmoil when the company left in 1983 and remained that way for most of the next two decades.



By the end of the 1990s, other companies began announcing plans to withdraw or slowly phase out operations. With thousands of drivers seeking insurance and fewer companies offering it, many motorists went months without coverage.



The reforms sped up the rate-approval process and allowed companies to hold a larger share of their surplus before redistributing their gains to drivers as rate reductions or dividends. State also adopted other pro-industry steps, such as "credit scoring,'' which allowed companies to assess a customer's credit rating as a factor in determining the price of its policies.



Esposito said the reforms - particularly the change in rate-filing requirements - drew the company back.