Business Notes Insurance

Already plagued by the highest automobile insurance rates in the U.S., New Jersey drivers were stunned last week by the defection of their No. 1 insurance company. In the largest withdrawal of an insurer from a state market, Allstate said it was dropping out of the property-and-casualty business in New Jersey. The insurer argued that excessive regulation had held down premiums despite the rising cost of paying claims. As a result, Allstate said, it lost $72 million on New Jersey auto policies last year.

The final crack-up came last spring when the New Jersey Supreme Court upheld a law that required insurers to give coverage to high-risk drivers. Allstate must now find companies to provide auto insurance and other types of policies for its nearly 500,000 New Jersey customers; that could take as long as five years.

The pullout may hasten a trend in which dozens of insurers have left New Jersey, Massachusetts, California and other states in disputes over rates. Most notably, Allstate's move could set the stage for a major showdown in California, where regulators plan to implement Proposition 103. That measure, which mandates a 20% rollback of auto and other insurance premiums, has been bottled up by legal challenges since voters approved it in 1988.

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CREDIT: [TMFONT 1 d #666666 d {Source: Insurance Information Institute.}]CAPTION: The 10 most expensive states to insure your car