Regulation Fails:
The New Jersey Experience

New Jersey's experience with auto insurance shows that prior approval rate regulation can stifle competition and limit consumer choice.

"New Jersey is always going to have higher rates than average insurance rates, because its roads are more crowded than any other state's... But after three decades of trying to regulate its way to lower prices, and with the whole system about to crash, maybe it's time for a change in strategy. The state could always try good old American competition instead of discredited command-and-control."
- Wall Street Journal Editorial, April 2, 2002

"What needs to be done to keep companies in New Jersey and attract new companies to New Jersey? We need to have an insurance market dictated by competitive forces."
- "New Jersey Laws Tied up Car Insurance," Courier Post, February 1, 2002

"Regulation becomes a real problem when it goes from protecting consumers to harming consumers. The role of officials in Trenton should be to promote a climate in which consumers can choose from a number of companies at a competitive price. The various attempts during the past 30 years to regulate car insurance have not worked. It's time to stop coming up with political solutions to an economic problem."
- Home News Tribune Editorial (East Brunswick, New Jersey), October 1, 2001

"When it comes to auto insurance, New Jerseyans have the worst of both worlds. They pay the highest premiums in the nation, yet more and more insurers want to leave the state …. Auto insurance has become so highly politicized and regulated as to be one huge headache for nearly everybody involved."
"Here we go again"
- The Record (Bergen, New Jersey), June 9, 2002

"In New Jersey, five of the nation’s top ten auto insurers do not do business in the State. The net result is that regulation deprives consumers of choice."
- Robert E. Litan, Vice President and Director, Economic Studies, Brookings Institution

"The law and its administration have subjected drivers and insurers to unnecessary costs and burdened them with needless administration. It has limited choices …. Prior approval rate regulation should be dismantled in New Jersey."
- Private Passenger Auto Insurance in New Jersey: A Three Decade Advertisement for Reform, John D. Worrall, professor of economics, Rutgers University

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