The Interview Issue: Mitch Livingston, CEO, NJM Insurance Group

Here are two things you may not expect to hear about New Jersey:

• No matter how many cars you feel like you’re seeing on the road, we still are leading the region in working from home;
• No matter how much you think you’re paying for auto insurance, we have had the smallest increase in rates in the region since the end of the pandemic — far below others.

These fun facts came from a recent sit-down with Mitch Livingston, the CEO of NJM Insurance Group. Livingston, in a wide-ranging discussion, talked about NJM’s future in the state and the region — and the value it places on its mission to be an organization that is driven by what is best for policyholders, while serving as a leader for the state. (Yes, we talked about the TV ads, too.)

Of course, the most important thing for most people is auto insurance rates. That created our bullet-point items. We’ll break down each one.

Livingston said he can tell that New Jersey is still a leader in working from home based on the number of accidents in the state.

“Across the country, the frequency of driving has come back almost to 2019 levels — even surpassing 2019 levels,” he said. “We know this, because the number of accidents is directly related to the number of miles people are driving. It’s a one-to-one correlation.

“So, by following these numbers, we can tell that New Jersey is the leading state on working from home. We can see it in the numbers. In New Jersey, the frequency of accidents this year is about 20% less than it was in 2019.”

Many states have seen annual increases of 10% or more to account for the rising costs of autos and auto repairs, spurred by supply-chain issues. In New Jersey, NJM customers have absorbed those costs into their regular rates, because fewer miles driven means fewer accidents and fewer claims. That said, inflationary pressures and supply chain issues regarding parts remain a concern across the nation.

“We are loath to increase rates on auto insurance policyholders unless we absolutely have to,” Livingston said. “In fact, we’re usually late to the game. In New Jersey, because driving is down, we’re able to balance the increases that would have come from inflation and supply chain.”

Livingston said this could and should hold true in 2023.

“Unless things change regarding how people feel about working from home, New Jersey should be able to do a little better cost-wise than the rest of the nation on auto insurance,” he said.

Here’s a look at more of the conversation, edited for space and clarity.

ROI-NJ: It’s been a few years since NJM expanded into Pennsylvania. Now it sells in Delaware, Maryland, Ohio and Connecticut, too. Talk about the growth of the company in recent years — and the growth that may happen in the coming years?

Mitch Livingston: Let’s start with the mission of the company. NJM was formed 109 years ago by a small group of manufacturers seeking to provide cost-effective, safety-conscious and financially secure workers’ compensation insurance for themselves. They were basically self-insuring.

We were formed by policyholders for policyholders, and that has been our mission from Day One. We became the largest workers’ comp carrier in the state and the largest property-casualty insurer in the state. That led to loyalty of customers and to growth in the company. The mission, when we expand, is no different.

We always have written workers’ comp business for existing policyholders, but we want to be their total insurance solution. We wanted to be able to serve our existing policyholders as they became successful and expanded beyond the state of New Jersey.

In the past, we would have said, ‘We’ll write your workers’ comp in New Jersey, but go to someone else to write your other lines of business. And if you’re outside of New Jersey, we can’t help you.’ Now, NJM can be that total insurance solution for all of their needs.

ROI: NJM is now serving customers in seven states. That could be 50; is that the ultimate goal?

ML: That’s a question I get quite a bit around here. I’ll say this: The goal was to get a playing field to where we could expand and grow and make sure that what we’re doing, we continue to do well. The policyholder focus is the main thing.

We have award-winning customer service, year over year, and we want to stay focused on that. We want to make sure that, when policyholders need something, we can respond appropriately. That is hugely important to NJM and our reputation and our future.

We now have a region to write, and we’re equipped to do that. We have a lot of people we want to talk to, and we have a lot of growth opportunities in those areas. We want to do it right — and we want to make sure we’re equipped to do it. So, for now, that’s all we need.

ROI: Let’s talk about what you’re writing. We all know personal auto insurance, but the workers’ comp and the commercial lines are just as important. We have a business audience; talk about the insurance you have for them?

ML: On the commercial line side, we sell what is known as BOP, or business owners’ policies, for small business. BOP, along with our commercial auto and workers’ comp policies, enable us to be a one-stop shop for everything they might need. We sell each of those policies through a select group of preferred agents, but if you’re small enough — seven employees or less — you can actually buy them direct from us.

The other product is the CPP, or commercial package policy, which has property and some of the other larger liability issues that larger businesses need. We made that available midyear last year. CPP is sold through an agent, who can talk about other risk management issues.

ROI: Speaking of the cost of doing business, insurance fraud is an issue for every insurer in every state. Talk about how NJM takes this on?

ML: We are fortunate to have a great group of long-term New Jersey policyholders. That probably helps us a little bit with that, as opposed to some of the national carriers that are turning business over a little quicker.

But insurance fraud is a constant issue. We are very vigilant on both the personal and commercial line side because, frankly, if we have a commercial lines policyholder that commits fraud, it raises the rates on everybody else on the commercial line side.

We have an SIU, or special investigation unit, that looks for fraud and makes sure we’re proactive on it. The SIU has changed a lot in the past 25 years. It used to be sitting in a van with binoculars and seeing what somebody was doing. Now, it’s data driven. We’re hiring statisticians, we’re hiring accountants — we have a software system that looks for abnormalities in claims. We can zero in on what may be happening. And, when we find something, we are very quick to take action.

ROI: These actions keep costs down — which is huge in New Jersey. How often do conversations in New Jersey turn to the cost of doing business in New Jersey, a state that comes with a lot of benefits, but also a high cost of doing business?

ML: Affordability comes up in every conversation. I think New Jersey is more competitive now than it was a few years back because of some of the opportunities that have been created. But, it is something the state needs to constantly review, to figure out how NJM and New Jersey can be more competitive.

This isn’t a Democrat or Republican issue. I think state government, over the last 10 years, has become more attuned to that and more aware of the need to be more responsive to the cost of doing business. I think that needs to continue to evolve in order to make New Jersey more competitive.

ROI: Let’s talk about those efforts. While NJM has prided itself on serving its policyholders over the years, it also has been quick to help the state and the business community. Talk about taking on the mission of being an anchor institution?

ML: We think it is an obligation. One of our core values is to support the communities we’re privileged to service — a message we give over and over again to our employees. We support many philanthropic causes and take reasoned policy positions, whether it directly benefits us or not.

The best example of that was the auto insurance reform in 2003. Prior to the auto insurance reform, NJM was basically one of the few carriers in the nation that wanted to write in New Jersey. The auto insurance reform brought competition in New Jersey, which was great for the citizens of the state of New Jersey, but not necessarily in the personal interest of NJM as a corporation. We advocated for it, because it was in the interest of our policyholders and in the interests of the state of New Jersey and for the public at large. That’s how we approach everything.

But, we’re not afraid to speak up. We write a lot of business in New Jersey. We have 425,000 auto policyholders. So, if there’s legislation that’s being proposed that’s not in their interest, we’re going to talk about it. We’ll be down in Trenton, and we’ll have conversations. If there’s something beneficial that is trying to be accomplished, we’re willing to talk about different ways you might do that, but we’re going to let you know if the way you’re thinking about it is not in our policyholders’ interest.

ROI: Policyholders. They are the lifeblood of any insurance company — and the subject of an endless battle among insurers. NJM has joined into the commercial game in an attempt to win them. And it’s doing it with humor in a ‘No Jingles or Mascots’ campaign. Talk about the TV efforts?

ML: Historically, NJM didn’t have to market, word of mouth sold our product. And then, when we decided we wanted to get our brand out, we started in the advertising space with serious commercials talking about the values of the company. They are meaningful, and I think they are important, but they were not resonating as well.

That’s when we added the comedy side — our ‘No Jingles or Mascots’ campaign. We wanted to make it memorable. At the end of the day, someone doesn’t watch a commercial and buy an auto insurance policy; someone watches a commercial and remembers the company or doesn’t.

And, the next time they shop, that company is either in their mind or it isn’t.

What we’ve found over time is that it’s working. Those commercials are actually achieving their purpose. When people shop for insurance, it may be six months, it may be a year, they remember us. That puts us in the game with national carriers, which is important as we expand into our new markets.