Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, March 13, 1990 TAG: 9003133419
SECTION: NATIONAL/INTERNATIONAL PAGE: A4 EDITION: EVENING
SOURCE: Associated Press
DATELINE: TRENTON, N.J. LENGTH: Medium
"This will strike a blow for the working people who have been oppressed by this unfair tax we call auto insurance," the governor said Monday.
Florio promised that the auto insurance reform package, which moved through the Legislature and back to his desk within 45 days of its unveiling by the new governor, will save motorists $222 a car by next March.
Florio's bill cuts auto insurance bills by eliminating the Joint Underwriting Association, a state-operated pool for high-risk drivers that has piled up a $3.1 billion debt. A $222-per-car annual fee charged every motorist to keep the pool from bankruptcy will be dropped.
The law requires the insurance industry to pay $1.4 billion of the debt. Florio said that insurance companies, which at one point had assigned more than half of New Jersey drivers to the association, bilked the poorly operated pool and must now pay the money back. The law bars insurers from charging higher premiums to make up the cost of paying off the debt.
Insurers said, however, they are not to blame for the state-created pool and promise to block the measure in court within a month.
"We believe the bill is unconstitutional," Allstate Vice President Edward Young said. "It takes our stockholders' assets to pay for a deficit we didn't create."
At an average of $1,000 per car, insurance rates in New Jersey are second-highest in the nation, behind Massachusetts, according to a survey by A.M. Best Co., which rates the stability of insurance companies.
Young said Allstate will consider pulling out of New Jersey because of the new law. ITT Hartford Insurance Group, which has a small part of the New Jersey market, also said it would stop selling auto insurance for independent agents and brokers.
Florio said New Jersey will "adapt" if insurers leave.
"This is a fair system for all, including the industry," he said. "For some of the companies to literally say they're going to pick up their bat and ball and go play somewhere else is by definition childish."
Under the law, the underwriting association will be replaced by a much smaller assigned-risk plan, motorists will pay higher registration fees and professions that benefit from auto accidents - doctors, lawyers and body shops - will pay $100 license fees to help pay the debt.
The insurance industry challenged, with some success, reforms in California, where voters in 1988 passed an initiative rolling back auto premiums 20 percent.
Last week, California's insurance commissioner announced premiums will be cut more than 20 percent in Los Angeles County, where a third of Californians live, but will be raised in all but two other counties.
by CNB