The Skylands Insurance Group, a subsidiary of OneBeacon Insurance, has formed two new companies to sell auto insurance in New Jersey.

The lead company is New Jersey Skylands Insurance Association (NJSIA), a nonprofit, policyholder-owned company that is exempt from the state's "take all comers" law. Most auto insurers in New Jersey are not allowed to refuse coverage to drivers even if their driving and claims records are horrendous.

NJSIA is a "reciprocal exchange," a group of individuals, corporations, or entities that, as members, agree to exchange contracts of insurance and share the risks among themselves. The members (policyholders) of a reciprocal exchange appoint an attorney to manage the affairs of the exchange. (USAA, for example, which offers auto, home, and life insurance, as well as other financial services to the military and their families, is a reciprocal exchange.)

NJSIA — which will begin selling new auto policies in the fall of 2002 — will target the state's better drivers and offer them preferred rates. NJSIA will actively target the state's municipal employees through a payroll-deduction program. NJSIA plans to grow its customer base from 6 million policyholders to more than 35 million.

The second company is New Jersey Skylands Insurance Group (NJSIG), formerly known as Camden Fire & Casualty. Current OneBeacon auto policyholders will be automatically transferred to the NJSIG by the end of August 2002. This new group will retain policyholders accepted under the state's "take all comers" law and will not be offered preferred premium rates.

The New Jersey Department of Insurance and Banking says it is pleased that the Skylands Group will soon begin selling new auto policies to New Jersey consumers, who have seen their premiums soar as nine auto insurers (including State Farm) recently decided to stop selling new auto policies in the state.