Insurance industry crusader Eric Poe isn’t known for burying the lede.
As soon as you let him, Poe will pile on commentary on the sector that he himself is in. And he’ll weigh in immediately when lawmakers change the minimum coverage required for standard car insurance policies (spoiler: he’s no fan).
There’s always something to talk about in the insurance world. So, he might be forgiven for not mentioning right away that his company was the last domino to fall over, finally accepting the sorts of practices he’d rather the industry be rid of.
Two years after Poe, chief operating officer of the not-for-profit CURE Auto Insurance, stated his case to ROI-NJ … and the many years after he stated his case to New Jersey policymakers … Poe had to admit that even his company is opening up to allowing people to secure discounts with credit scores.
“We can’t afford to have an operation to continue to be left out of the most favorable risk in terms of profitability,” he said.
Critics such as Poe have argued that the use of credit scores, occupation and other factors in the auto insurance sector unfairly penalizes disadvantaged communities in New Jersey. And, now, those critics say the state is also mandating that those same communities pay more for their policies.
Under a bill signed into law at the start of August by Gov. Phil Murphy, the minimum amounts of liability and uninsured or underinsured motorist coverage that car insurance policies must have is increasing. The new minimum liability coverage is at least $25,000, up from $15,000.
“Accordingly, 1.1 million drivers, one out of almost four drivers — notably, the working class and lower-income people — will see their rates go up,” Poe said.
The industry’s own compiled insurance data puts the average rate increase at 36%, Poe added.
The law goes into effect the first day of 2023, with renewal notices going out just over a month before that.
“So, around Thanksgiving time, when everyone is getting ready to buy presents for Christmas, the bottom quarter of income earners in New Jersey are going to be notified that their rates are going to go up significantly,” Poe said. “A large body of individuals are going to get sticker shock.”
Expect there to be a wide variance in the rate increases expected in New Jersey, he added. Because New Jersey policymakers never heeded advocates’ calls to remove the insurance sector’s use of income proxies in determining auto insurance rates, Poe said those with low credit scores, those from urban communities and those without college degrees will pay much more.
Even as he’s having to embrace the use of these factors himself, Poe still holds hope that this issue will be taken up again by the New Jersey Legislature.
“All I hear is rumors and conjecture on that right now,” he said.
It’s still a hot button issue in other states, with Washington just earlier this year introducing a rule prohibiting insurers from using credit scores to establish rates for several types of insurance. That rule was later challenged by insurer groups and eventually overturned in the courts.
“My biggest challenge is this: I do believe in a capitalist society; and that people should be entitled to make money,” Poe said. “But you shouldn’t have a landscape in which you mandate people to buy insurance by law and then turn a blind eye to how they allow people to be charged for it.”
