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For Immediate Release: NJAR® CONCERNED ABOUT AVAILABILITY OF HOMEOWNER'S INSURANCERecent trend to discontinue homeowner's insurance may impact real estate marketplaceEDISON, N.J. - Since the destruction of Hurricane Katrina, when insurance companies in the Gulf Coast experienced a surge in the number and size of property casualty claims, a growing number of insurance companies have become increasingly concerned with the impact a catastrophic disaster could have on their business, especially in coastal states, such as New Jersey. As a result, some insurance companies are cutting back on services, while others have stopped writing new policies all together for homes, condominiums and mobile homes. The New Jersey Association of REALTORS® (NJAR®), an advocate for the real estate industry and private property rights, is concerned that the recent trend of insurance companies discontinuing homeowner's insurance to New Jersey residents could have a detrimental impact on the availability and affordability of homeowner's policies, which could negatively affect the housing market. "NJAR® understands that insurance companies are trying to protect themselves in the event of a catastrophe, therefore we are calling upon the Legislature to address this issue before it becomes a crisis," said NJAR® Vice President of Government Affairs Jarrod Grasso. "If insurance companies are not adequately protected, taxpayers could be forced to pay for millions of dollars worth of damages. The Legislature must take action to keep insurance companies in our state, entice new ones to join our market, increase competition and keep costs down for homeowners." According to the New Jersey Department of Banking and Insurance, nearly 67 percent of homeowner's insurance coverage in New Jersey was sold by the top ten insurers in 2005. Recent downgrades in homeowner's insurance services offered by top providers will force some homeowners to find another carrier in a market with fewer options. Without sufficient competition among insurance providers, the cost of homeowner's insurance will rise, which may contribute to a drop in the housing market. "Homeowner's insurance is a necessary component in securing a mortgage and buying and selling a home," said Grasso. "Rising insurance costs could derail home purchases, delay transactions and make homeownership increasingly costly, especially for young families and first-time buyers. This could have serious repercussions on the real estate marketplace in our state." NJAR® supports a bill to establish a New Jersey Catastrophe Fund to help pay covered residential property damage insurance claims in the event of a catastrophe that would affect New Jersey homeowners and their property insurers. Under the bill, insurance companies in the state would pay annual fees into the Fund. If damages from a catastrophic disaster exceed $2 billion, insurers could dip into the fund after they deplete their normal reserves. In addition to providing security for the insurance market, such a bill would help fund efforts of emergency responders, improve preparedness and establish comprehensive mitigation, education and prevention programs, all of which would help speed up a costly recovery from a major disaster, and save lives. "NJAR® looks forward to working with the Legislature and the sponsor of this bill to make sure our insurance and housing markets are safeguarded in the event of a natural disaster," added Grasso. For more information, please contact Danielle Wyckoff at (732) 494-4730 or dwyckoff@njar.com. The New Jersey Association of REALTORS® is a non-profit organization serving the professional needs of approximately 57,000 REALTOR® and REALTOR-ASSOCIATE® members in the state. REALTOR® is a registered collective membership mark which may be used only by real estate professionals who subscribe to the REALTOR® organization's strict Code of Ethics and are members of the national, state and local REALTOR® organizations. For more information, please visit www.njar.com. ###
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