Passing in the Slow Lane

A number of years ago, very good friends of mine rallied their neighbors in an effort to improve their elementary school. With two young children of their own, they had a vested interest in a better school. But they and the other parents cared about all the kids in town, not just their own. Months of meetings, leafleting, polling, phoning and public speaking turned into years. Eventually the new school was built. But by that time, their own children had long since moved on to high school, where the parents encountered another set of problems. They knew that if they regrouped to tackle the administration over these latest issues, their own kids would be graduated by the time anything got fixed.

I am reminded of their efforts whenever I hear talk about reforming insurance systems, particularly in Massachusetts, where the subject comes up quite frequently. Bureaucrats may embrace change but usually on their own terms, slowly and over a long time. They can wear down the best of reformers, who have other lives to live, places to go and things to do.

When New Jersey Gov. James McGreevey took office just two and one-half years ago, the state’s auto insurance market suffered from an availability crisis and complaints about high costs and rampant fraud. Even the best drivers had trouble finding policies as in course of the last 10 years, more than 40 insurers left the market.

McGreevey prioritized the issue. He went to work with regulators and lawmakers and by June 9, 2003, he signed comprehensive auto insurance legislation into law. The reforms promised to end 30 years of market dysfunction and to bring New Jersey drivers the choices and competition that motorists in other states enjoy. The results thus far have been impressive since the reforms were put into law a little more than a year ago. The first new national auto insurer in seven years entered the state. Policyholders have received more than $130 million in premium breaks. There are 1,200 more agents. Also, more than 40,000 previously uninsured drivers have become insured and are contributing more than $55 million to the system.

Comparisons are often made to the situation in Massachusetts, where the state closely regulates auto insurance and the number of insurers willing to write has fallen to 19. Of course, the situations are not identical. It is simply too easy to assume that the problems are the same and the reforms that have worked in New Jersey will work in the Bay State.

In Massachusetts, Gov. Mitt Romney, Commissioner Julianne Bowler and lawmakers are taking a slow and careful approach to reforming the Massachusetts auto system. Some say it is the only way to make progress. Once again, Massachusetts is not New Jersey.

But a deliberate approach is not without risk, especially if the process drags on for years. The risk is that by the time all the pieces are ready, more companies, along with Romney and his commissioner, will have graduated, leaving it up to others to finish the job, provided they haven’t all moved to New Jersey by then.