TITLE

New Jersey Automobile No-Fault Study: Analysis of the Cost Effects of AB 3531 and SB 2533

AUTHOR(S)
Boison, LeRoy A.; Lehmann, Steven G.
PUB. DATE
September 2004
SOURCE
Journal of Insurance Regulation;Fall2004, Vol. 23 Issue 1, p43
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Pinnacle Actuarial Resources, Inc. (Pinnacle) was retained by the Save Choices for New Jersey Drivers group, an ad-hoc coalition of insurance companies, agents, trade associations and business organizations to conduct an independent actuarial study to determine the cost implications of the passage of New Jersey Assembly Bill 3531 and Senate Bill 2533 for New Jersey drivers. The passage of AB 3531 and SB 2533 would eliminate the current judicial requirement that permanent injuries which do not meet the other eligibility criteria for making a tort claim in no fault cases must have a serious impact on the claimant's life. Pinnacle has evaluated the impact of eliminating this requirement and has determined that the implementation of the law would significantly increase the amount of claim losses that would be eligible for tort recovery and hence Bodily Injury (BI) Liability and Uninsured/Underinsured Motorist Coverage (UM/UIM) costs and premiums for drivers electing the verbal threshold in New Jersey. Drivers selecting the verbal no-fault threshold constitute approximately 92 percent 1 of all New Jersey auto insurance policyholders. Pinnacle determined the potential effect of the proposed legislation based upon a Closed Claims survey conducted by Pinnacle for the purpose of evaluating the impact of this proposed law change. The survey was based on claims closed during the period May 1 through June 30, 2003 as this data would represent the current judicial and insurance environment and be most reflective of the anticipated change. The survey was designed by Pinnacle and conducted by insurers representing 60 percent of the New Jersey personal auto market. Pinnacle processed and edited the data from the survey, tabulated the results, and conducted independent verification of the overall results. Based upon the survey, the estimated effect of this proposed legislation is a 57 percent increase in BI and UM/UIM costs for those insureds selecting the verbal no fault thres...
ACCESSION #
15764937

 

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