The Alliance of American Insurers on Thursday told members of the New Jersey Senate Commerce Committee that proposed legislation dealing with verbal thresholds in auto injury cases could deal a serious setback to recent reforms made in the state’s auto insurance market.
Testifying before the committee, Alliance Northeast Regional Manager Richard Stokes warned of problems if S-2533/A-3531 is approved.
“This legislation would seriously jeopardize the recent automobile insurance reform efforts of the State Legislature,” said Stokes. “In fact, many of the recent positive changes we are seeing in the marketplace are a result of the changes made by the Legislature this summer. These changes include premium reductions by some insurance carriers, carriers writing more business, and the attraction and interest of new carriers to New Jersey.
“We believe this legislation will open up the floodgates for litigation and increase costs. One study points to an expected increase in costs of $98 to $163 per car per year because of this legislation. For two-car families, this could be an increase of over $300 a year for the household. Also, the verbal threshold option would be rendered meaningless because it will be too costly for consumers.”
Stokes said the bill would erode the current no-fault law’s verbal threshold, which determines how serious an injury must be before the claimant is allowed to bring suit.
“We recognize the value of a stable and predictable auto insurance marketplace. That was the goal of the reform legislation and was one of the reasons why Governor McGreevey signed the auto reform bill. This legislation would have the opposite effect and could cause a ricochet impact on other insurance lines.
“For example, we believe that some insurers in the homeowners or commercial insurance marketplace would look to place their additional resources and capital in other states because of increased predictability and stability not found in New Jersey. Insurers need increased capital and resources to continue to grow our business to provide coverage to all consumers.”
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