Its always a pleasure talking to New Jersey brokers and agents. Not only are the conversations fun, but these phone calls are also educational. Ive received permission to use all of the following questions and answers.

Return Commissions

Broker: New Hampshire Insurance Companys CAIP billing department is asking for a lot of return commissions. Whats up with that?

JKD: Are any of those CAIP policies cancelled for non-payment of premium?

Broker: Most of them are.

JKD: If a CAIP policy is cancelled for nonpayment, then you can keep the full annual commission. Just read the NJCAIP rules, Article 18, paragraph C. Thats the Tom Guerra rule. Toms an old time insurance broker that lobbied for that many decades ago and made fully earned commissions happen.

Broker: Liberty Mutual Assigned Risk just sent me a letter that I may be reported to the big shots because I did not pay an unearned commission. That letter is only two weeks from their first statement. We usually pay our statements every 30 days.

JKD: Only two weeks from your first notice? Just tell them they should issue policies, endorsements, and settle first party claims in that same timeframe.

GEICO Bleeds

Agent: I heard that GEICO isnt doing too well in New Jersey. What do you know?

JKD: In 2004, the gecko ran a 96.6 percent loss ratio in our Garden State. And 2005 showed the green reptile at 84.5 percent. Those numbers are based on data from the NAIC. Obviously, when GEICOs gecko bleeds in New Jersey, it bleeds red ink.

Agent: Well, theyve written almost half-a-million policies in New Jerseyhow can they do that with bad losses?

JKD: Ah, theres the rub! Understand that GEICO is the driving force behind our New Jersey auto insurance marketplace. And should GEICO fail, then were in trouble. Compare those losses with New York State, which came in at only 52.8 percent.

Agent: Whats the average auto insurance loss ratio in New Jersey?

JKD: For 2005, its 60.6 percent. So, GEICOs about 24 points higher than our statewide average. The folks at Berkshire-Hathaway are no dummies, so Im sure they have a plan.

Agent: Did you know that GEICO sent a letter to all of its New Jersey customers praising the efforts of former Governor Jim McGreevey, Senators Lesniak and Rice, and Assemblymen Greenwald and Bateman? GEICO said these folks pushed reforms that brought GEICO back to New Jersey.

JKD: Just remind those Senators and Assemblymen that $560 million dollars of car insurance premiums go to support another states economy. Those monies would be more beneficial back here in New Jersey. I do not like seeing jobs and big bucks going out of state.

Drive Insurance Company

Agent: Did you know that Drive Insurance Company (a division of Progressive) does not send all referral quotes to their agents?

JKD: Drive is the agency division of Progressive in New Jersey. Tell me more.

Agent: A potential customer can quote himself on driveinsurance.com, save the quote, but does not have to send it to an agent.

JKD: He can also go to Progressive.com and you are out of the loop.