Auto Insurance Looms as Premium Issue in New Jersey

If misery really does love company, then Californians upset about high auto insurance rates (and who doesn’t fit in that category?) might consider finding a friend in New Jersey.

For years, New Jersey has had the dubious distinction of having the highest premiums in the country--on average, 20% higher than rates in California, where officials hope a rating plan announced earlier this month may drop costs for many drivers. In a state sharply divided over most issues--how to pay for schools, what to do about development, whether to root for ballclubs based in New York or Pennsylvania--anger over high insurance rates is a rare unifier.

“It’s horrendous,” said 61-year-old Marge Koren as she waited by the commuter rail station here on a recent afternoon. “It’s horrible,” echoed Richard Szczepaniak, 38. “I pay $2,600 for two cars. It’s too expensive.” “A mess,” declared Elizabeth James.

That sort of sentiment can be a serious problem for an officeholder, and so it has become for Republican Gov. Christine Todd Whitman, a nationally known figure for her combination of tax-cutting zeal and liberal stances on abortion rights and other social issues.

Whitman is seeking reelection this fall, and many of her supporters had hoped for the kind of thumping victory that might improve her standing, and the fortunes of her brand of Republicanism, nationwide.

But her opponent, a 40-year-old Democrat named James McGreevey, who is the mayor and a state senator from the town of Woodbridge, in New York’s outer suburbs, has made anger over the state’s high insurance rates a central issue in his campaign. He is pushing a proposal that closely mirrors California’s Proposition 103, the 1988 state ballot initiative to roll back insurance rates.

Now, despite a prosperous state economy, a 30% cut in income tax rates and a boatload of favorable national attention, Whitman finds herself in a tight race.

“We’re going to win it,” asserted her strategist, Mike Murphy, who spent last year advising Bob Dole’s presidential campaign. But, he conceded, “it’s a race. It’s close.”

Insurance is not the only problem Whitman faces. Her prominent support of abortion rights and advocacy of gay rights has angered many conservatives. Others object to some risky fiscal maneuvers involving the state pension fund that she performed in order to cover the income tax cut that was the centerpiece of her campaign four years ago.

As a result, Murphy said, “we have a problem with our base.” In polls, he notes, Whitman “is only getting 75% of our [Republican] vote.” In a state where Democrats have the edge in voter registration, Whitman needs a strong Republican turnout.

McGreevey, for his part, is cut from the mold of many young Democratic officeholders in the Clinton period. Earnest and boyish-looking, with pictures of Robert F. Kennedy on his office walls, he points with pride to a photograph of a health clinic that he helped build in a Dominican Republic town that Woodbridge has adopted as a sister city.

A former prosecutor, he came to office on the heels of a municipal corruption scandal and boasts of his ability to balance his town’s books and improve its administration without raising taxes. But he is little known outside of his home county.

McGreevey backers hope his fiscal conservatism will prove attractive to disgruntled Republicans. Other analysts believe that an unusually strong campaign being waged by a Libertarian candidate, Murray Sabrin, could siphon away some of the votes Whitman will need.

For now, Whitman remains the favorite, but her aides are well aware that, at this time four years ago, she was still 13 points behind then-Gov. Jim Florio in the polls. For now, the race has garnered national attention, both for Whitman’s prominence and because it exemplifies a renewed attention among policymakers to the problems of auto insurance.

Already on the federal level, a bipartisan group of senators and representatives has begun pushing a measure that in essence would allow drivers anywhere in the country to sidestep their state’s insurance system. Under the proposed bill, drivers would have the choice of staying within their existing insurance system or receiving reduced premiums--and getting protection from lawsuits--if they give up some of their own rights to sue in case of an accident.

Whitman proposed a similar plan for her own state in January, but her proposal was eviscerated in the Legislature.

McGreevey’s proposal would impose a 10% rollback in insurance premiums, coupled with an elected insurance commissioner and a state audit of insurance company books. “The governor ignored this issue for four years,” he said. “Citizens are legitimately frustrated.”

McGreevey and his supporters argue that such a rollback has succeeded in reducing insurance rates in California. But his critics also point to California, noting that some aspects of Proposition 103 remain tied up in court even now. A rollback is nothing but a source of endless litigation, they say.

Insurance industry spokesmen have already vowed to sue if his plan is adopted. The rollback plan “ignores the fact that there are certain costs involved in delivering the product,” said John Tiene, who heads a statewide public relations effort for the insurance industry. The real reason behind high insurance rates in the state, he insists, is a legal system that allows too many people to file too many lawsuits over relatively minor accidents.

As in California, representatives for consumer groups and their allies among trial lawyers heap scorn on that argument. “The insurance industry is reaping tremendous profits,” asserted Peter Guzzo, a chief spokesman for the other side in the state’s insurance wars. “It’s time for the companies to tighten their belts.”

Whitman, having put the insurance issue on the agenda with her proposal in January, has now tried her best to change the subject, preferring to talk about the state’s growing economy.

Her best bet on the issue may well be that a large share of the state’s voters has stopped believing that any elected official can do much about insurance bills, pollsters say.

Voters in New Jersey put insurance at the top of their lists of concerns. But when asked who is to blame for high rates, they tend to focus not on the talking points of the contending parties, but on things like the state’s high degree of congestion, said Janice Ballou, director of the Center for Public Interest Polling at Rutgers University’s Eagleton Institute of Politics.

“There’s a realism about it,” Ballou said. “You wonder if they’re expecting much of either of these candidates in terms of solving this problem.”