N.j. Lawmakers On The Road To Lower Car Insurance Rates A Bipartisan Effort Is Under Way To Forge A Bill That Could Change Nearly Every Aspect Of The System.

Posted: March 22, 1998

No matter what New Jersey lawmakers do this week to reform auto insurance after a year of pressure and debate, the battle already has become a personal and public milestone for a young secretary named Leslie Hyatt.

The unassuming 27-year-old from East Brunswick started a petition drive for lower rates a year ago and then helped make the issue number one on the campaign trail. Now legislators, declaring the time ripe for serious reform, are hashing out a plan to force down rates by at least 15 percent.

People said ``I'm going to look back and say, `Wow, look what I

did,' '' Hyatt said last week. ``I haven't come to that yet, because this was the right thing to do for me, to make people's lives better.''

Tomorrow, 12 top lawmakers from both parties on the Joint Committee on Automobile Insurance Reform will resume their deliberations in a hearing room open to the public. Their aim is forging a bill by Thursday that could change almost every aspect of the car insurance system, short of rebuilding it entirely. With luck, the full Senate and Assembly will vote in April, just past the March 30 deadline Gov. Whitman originally set.

A new law would be the fifth comprehensive reform attempt since 1972. Although few expect the insurance problem to go away for good, hopes are high that the law would make a serious dent in average premiums.

New Jersey's average rates have been rising steadily for years, and they have been the country's highest for at least nine of the last 10. They have turned the complex problem into what some call ``the truck bomb'' of New Jersey politics: it could blow up any time, anywhere, on any incumbent.

This past year, largely because of the election, the finger-pointing and fist-pounding over insurance have been among the most emotional in nearly three decades of politicized debate on the subject. While some pundits attributed its prominence to a dearth of bigger complaints in an economic boom time, the issue nonetheless caught fire.

``I think we're closer to real reforms than we've been for 25 years,'' Whitman said last week, referring to a bipartisan effort to overcome the divide-and-conquer effect of special interest groups. ``The legislature and the executive are ready, and the public expects it.''

The legislation to be hammered out this week would require insurers to lower premiums by perhaps 15 percent on average, meaning individual cuts would be bigger or smaller depending on each driver's policy. Based on the latest year available, 1996, the rollback on the statewide average of $1,099 would be $164, potentially dropping the average to its lowest point in a decade.

Most of the legislative leaders, as well as Whitman, agree on the goal. But how to make the rollback legally and financially palatable to insurers is the thorny question. The legislators are debating whether to:

* Lower the minimum medical coverage every driver must carry - known as Personal Injury Protection (PIP) - from $250,000 to just $15,000 or $10,000 with an exception for catastrophic injuries. The trade-off would be between cheaper premiums and less coverage. New Jersey's $250,000 is the second-highest PIP in the country, after Michigan's unlimited amount.

The committee debated this possibility Thursday with no resolution. The Whitman administration has not expressed a preference.

* Reduce the number and size of lawsuits for ``pain and suffering'' by eliminating a category of ``soft tissue'' injuries, which can be anything from a backache to stiff knee. The new definition would apply to the current ``verbal threshold'' policy, held by about 88 percent of drivers.

The potential savings are huge in this proposal, but the pressure from personal injury lawyers to keep the current rules is intense. Some legislators are expected to weigh this option against the lower PIP proposal above, and Whitman is expected to favor the one that takes aim at big lawsuit awards.

* Check the cost of claims through professional arbitration, or medical peer review, or both. Motorists who dispute the insurer's payment could demand a review by independent arbitrators, who would issue written opinions like a court. Insurers could seek a second opinion about injuries from physicians through a peer-review process controlled by the state.

Of these suggestions, peer review has been vehemently opposed by trial lawyers but demanded by insurers. Some legislative leaders, notably Senate President Donald T. DiFrancesco (R., Union) have expressed support for arbitration, and the Whitman administration favors a hybrid of both.

One or a combination of the three proposals might add up to enough savings to justify a mandatory rate rollback, Whitman's condition for signing it. But deciding which one to put up for a vote will mean testing the strength of the legislative leaders and the special interest groups.

``This [bipartisan] process is unprecedented,'' said Gregg Edwards, executive director of the Senate Republican Majority Office. ``Will it work? I don't know. . . . I'm still optimistic, mostly because the Democrats have continued to work with us.''

The four Democrats on the committee so far have been more unified than the eight Republicans. But that may not continue. One of them, Sen. John H. Adler (D., 6th), has proposed his own sweeping reform bill that aims to make each segment of the system - lawyers, doctors, insurers - give up a little. Hanging over all politicians is the risk that the lobbies will express their anger during the next campaign by withholding donations.

``There are a lot of legislators who are going to be torn between voting for their special interests and voting for mandated rate reductions,'' Adler said of the rate rollback plan.

Other parts of the reform to be debated this week would:

* Let insurers sell ``basic policies'' with the lower PIP, barebones collision insurance and no coverage if sued for another party's medical bills. It would cost $300 to $500 and would be targeted mostly to low-income drivers and the 400,000 or so with no insurance at all.

* Appoint a special prosecutor for insurance fraud and criminalize certain acts of fraud that now may only be punishable through civil statutes.

* Let drivers, when they buy insurance, sign a protocol outlining the medically accepted treatments, with the aim of keeping them from getting extravagant treatment in the event of an accident.

* Redraw ``territorial rate caps'' that limit the difference of premiums between cities, suburbs and rural areas to 35 percent. The measure may not affect statewide average rates, but could shift some costs to suburban areas, which have gained population in recent years.

If the committee forges a bill with a rate rollback that passes the legislature and wins Whitman's signature, 1998 may go down as a year of major reform. And maybe Hyatt's petition drive will have helped.

``It might not have made [drivers] say, `Wow, thanks for Leslie Hyatt' when they go to bed at night,'' she said.

``But maybe now they won't be behind on the rent or on feeding a baby because of car insurance. Hopefully it will have turned out the best for everyone, and maybe people will have trust in their politicians again.''

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