Wednesday June 13
State Farm Leaving NewJersey Auto Market
NEWARK, N.J. -- State Farm Indemnity Co., the state's largest auto insurer, has announced it intends to withdraw from New Jersey, citing continuing losses and "unique burdens posed by the state's auto insurance regulatory system."
The process, overseen by the state Department of Banking and Insurance, could take years to complete, so no drivers were in immediate danger of losing coverage.
With about 818,000 policies, State Farm covers nearly one in five New Jersey drivers, according to the Insurance Council of New Jersey.
"We are deeply disappointed that we have to take this step and are greatly concerned about the impact it will have on our policyholders, agents and employees," said Brian Boyden, president of the indemnity company. The Wayne-based company is part of the State Farm Insurance Companies, of Bloomington, Ill.
"The indemnity company has worked diligently and persistently for the past year and a half to address the company's financial concerns, but the state has been slow in responding and has not allowed us to take the steps necessary to permit the company to operate on a sound business footing," Boyden said.
There was no immediate comment from the Insurance Department.
State Farm collected approximately $79 million in profits in 1997 and 1998 in New Jersey. But in 1999, the company went after high-risk drivers by offering them "preferred" rates and discounts up to 35 percent.
The company stopped the practice in January, but not before racking up losses totaling more than $128 million last year.
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