Post Date April 9, 2012 According to a report from the Insurance Research Council, market reforms introduced have led to significant improvements in delivery of auto insurance rates to customers in three states. The report focused on South Carolina, New Jersey, and Massachusetts, which have all carried out major auto insurance reforms in the past fifteen years. South Carolina restructured its auto insurance rate system in 1999, New Jersey in 2004 and Massachusetts was the most recent in 2008. Car Insurance service reforms have resulted in better rates, underwriting results and expanded coverage for policyholders in all three three states.
Findings from the report reveal that regulatory changes in the car insurance price sectors of the three states have had positive effects on local residents. There have not been any cases of car insurance rate hikes or reduction in quality of service delivery, since the introduction of reform measures. The report is based on a study conducted by IRC, a non-profit research body funded by Property and Casualty Insurers of the US. Some of the changes that have come about because of the regulatory reforms include:
- Overall car & Truck insurance rate reductions and downward trends in insurance expenses, contrary to skyrocketing costs witnessed before.
- Overall decrease in the number of claims by insured clients.
- Improved underwriting results by car insurance carriers in the states.
- High levels of insurance coverage per capita compared to other states.
Nevertheless, it has taken sometime for the situation to return to normalcy after enactment of the insurance reforms. For instance, the mean insurance expenses in New Jersey and Massachusetts skyrocketed immediately they introduced reform measures. Auto Insurance Companies in the garden state experienced roughly 25 percent increase in average expenditure, immediately after ratifying insurance reforms. This phenomenon lasted until 2004, when things finally began to fall into place. In the last five years, the mean insurance expenditure in the state has dropped by about 12 percent. Prior to the 2008 insurance reforms, insurers in the Bay State had average expenditure rises annually from 1997 to 2004. These costs have reduced significantly since the introduction of reforms, with current expenses equaling 2001 levels.
Managed competition, an inherent feature of New Jersey car insurance rates, is among the factors that have helped to lower average costs in the state. Before its introduction, state car insurance regulators strictly controlled insurance coverage and rates, limiting competition among providers. However, introduction of managed competition has seen the entrance of new players between 2009 and 2012. These include Geico Auto Insurance, Progressive Auto Insurance, Allstate Auto Insurance, and many others. This has saved drivers almost $270 million in premium discounts according to the report.
Michael E. Dortch
President & Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania 19446
(800) 807-0762 ext. 602