State Farm, the country’s largest auto insurer, has been granted permission by the Connecticut Department of Insurance to stop accepting new policyholders in New Jersey. State Farm made the request after losing more than $128 million last year on its New Jersey business.
Currently, State Farm insures over 800,000 cars in the state. Many of them have have been acquired in the last three years. In 1999, the New Jersey unit began targeting high-risk drivers by offering them preferred rates. The practice was stopped in January of this year. The order allowing the moratorium will run through December of this year.
However, State Farm is still pushing for more changes. In a statement released this morning, State Farm officials said that “the need for relief referred to in the order was a direct result of the New Jersey regulatory system that prevents companies from effectively managing their business.
“State Farm Indemnity has worked diligently and persistently to focus the Department’s attention on the company’s problems with excessive growth and inadequate rates. But the Department has been slow to approve steps that would permit the company to operate on a sound business footing.
“A temporary suspension from take-all-comers is just a partial solution. So far the Department has not granted rate flexibility or other measures necessary to protect our policyholders.
“This regulatory inflexibility is the major reason New Jersey consumers have a lot fewer auto insurance companies to choose from than do consumers in other states.”