Pub. 14 2015-2016 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E N O . 2 , 2 0 1 5 20 new jersey auto retailer BY ROGER BEERY It seems like almost every day there is another headline about improved insurer profits, increased insurance capacity and record broker profits. What does this mean for the dealer? If this keeps up, it will result in more competition and lower premiums. Now don’t misunderstand me—you shouldn’t expect a big drop in your premiums next time around but it looks like better days may be just around the corner. Premiums have certainly begun to moderate in most of the country. However, as of this writing, New Jersey is not reaping the same benefits as many neighboring states. Generally speaking, insurance companies are really just finan- cial cash machines. They take in your premiums, hold onto the money, and then pay out in terms of claims and expenses. The investment returns for the period they hold the money can have a dramatic effect on premiums and the overall competitiveness of the insurance marketplace. With the rebound in both stock and real estate markets, insurers are poised to become more competitive. While it may seem counter-intuitive, during these times of robust investments, many insurers will drop premiums in order to increase market share by acquiring more business. This is referred to in insurance lingo as a “soft market.” While most of the U.S. is experiencing a slightly softer market, it is by no means a “soft market.” Even though the memories of Sandy and Irene are fading from loss runs, these storms continue to impact the New Jersey insurance market. The new FEMA Flood Zone maps have put dealerships in f lood zones that were not categorized as f lood prone before. The result has been higher coastal property de- ductibles and increased auto inventory premiums along with more liberal applications of flood exclusions on auto inventory. New Jersey Dealership Insurance Outlook for 2015 Light Is That a at the End of the Tunnel?