In one year, $774 million of auto insurance profits were made in New Jersey. This is according to a recent analysis released by the National Association of Insurance Commissioners (NAIC), a nonpartisan group of regulators from every state. The NAIC, along with a countrywide publication, the Auto Insurance Report compiled and reviewed this data. These numbers are the most honest and accurate available.

During that same year, our Garden State auto insurance industry received $6.2 billion in premiums. That puts our current profit margin at 12.4 percent. The prior years report was very similar, coming at 12.5 percent. And any time you get double-digit profits, thats great. Please think about that. How many of your own investments are doing that well? So, our auto insurance industry remains healthy.

New York Is Number One

Obviously, New Jersey auto insurers are doing better than the national average of 10.1 percent. That makes us the 14th most profitable state in the nation. New York State is now ranked first with an amazing 16.3 percent profit.

Please keep in mind that this profits report is from 2004. It takes the NAIC over a year to gather, review, and publish the final data. So, the most recent numbers come from 2004. And thats also the year our new auto insurance reform laws took hold.

A Wash Out Comparison

In June 2003, Governor James E. McGreevey signed a one inch thick pile of legislative papers reforming the way automobile insurance is handled. It took a few months for these new laws to be coded into workable regulations. Most new regulations were in place by the beginning of 2004. So, a few folks want to do a before and after comparison of 2003 to 2004.

Some New Jersey insurance lobbyists seem to be bragging that all this is evidence that the competitive market is working. However, a 12.5 percent profit from 2003 and a 12.4 percent profit from 2004 really do not say anything like that at all. In the real world, it does say our insurance market was healthy before and after the new reform laws.

To me it looks like a wash. You might as well do a Bill Gates comparison, i.e., Gates has more money than King Midas this year and last year as well. Regardless of political spin, it is still nice to see our auto insurers doing well!