Gale Warning

Insurance Relief Ahead?

by Daryl Gale

If you own a car in Philadelphia, no one has to tell you about oppressive auto-insurance rates. Often referred to as the "second wage tax,’ the cost of insuring a vehicle here is easily the highest in the state and among the nation’s priciest. As chairman of Mayor Street’s Auto Insurance Reduction Task Force, Fifth District Councilman Darrell Clarke hears cries for relief from folks who, because of those insurance woes, are near revolt.

"I get calls every day from people all over the city screaming about their auto-insurance premiums," Clarke told me Tuesday morning, "and they're right. It really is ridiculous. The actuarial system is biased against poor people owning a car, and even if you have a decent income, paying insurance on one or two cars can send a family right back below the poverty line."

Apparently, even Council members are not immune. Clarke tells the story of buying a car for his daughter as a gift on the occasion of her recent graduation from Penn State.

"The insurance company wanted $5,000 for insurance for her. I asked them, 'What, for life?' They said, 'No, for one year,'" says Clarke, laughing mirthlessly. "People are being sent to the poorhouse for the privilege of driving, and that's not what insurance is for. But relief is at hand."

Clarke says he spent three hours last August in negotiations with Pennsylvania Insurance Department Commissioner M. Diane Koken and the representatives of every auto insurance carrier in Philadelphia and was pleased with the results.

He says he thinks Koken, a Republican appointee retained by Governor Rendell, warmed up to the plight of overcharged Philadelphians during that meeting. Now, after a year of sifting through mountains of paperwork and conducting delicate negotiations, he thinks the commissioner is getting ready to act.

"Insurance companies have been telling us that the actuarial information is proprietary," Clarke said, "and were giving us the same song and dance about 'cost drivers,' those factors that keep our rates so high. We answered their objections point-by-point, and I think that resonated with the commissioner. We have a very, very strong case."

When those insurance-company objections to a rate decrease in Philadelphia -- specifically, the high incidence of auto theft and unregistered and uninsured vehicles -- were shot down by Clarke, the other side still had one card left to play.

"Auto theft is down 50 percent since '96 and Live Stop took 25,000 unregistered cars off the streets. We showed them the numbers and after all that, at the end of the day, they told us that the real culprit was the high number of bodily-injury claims. Well, we were ready for that," Clarke says. "The city of Philadelphia has seen a 38-percent reduction in bodily-injury claims resulting from auto accidents, compared to a 4-percent reduction statewide. The bottom line is that the insurance companies can no longer justify the outrageous rates they charge us. They've been proven to be using vastly inflated numbers. They know it. We know it. And now the state insurance commissioner knows it."

Sensing defeat, Clarke said the insurance companies offered a pitiful compromise that would result in miniscule reductions across the board, but the task force rejected that and went for the big score.

"We're demanding 15- to 25-percent cuts across the board, and we're going to get that and maybe more," Clarke says cagily.

He wouldn't go into details because the deal is being finalized as we speak, but Clarke insists Philadelphians have already won. He predicts residents could see significant rate reductions within a matter of weeks.

"We made our case and I honestly believe, based on everything I know, that the insurance commissioner will force a freeze or rate rollback," he boldly predicts.

Despite Clarke's optimism, State Insurance Department spokesperson Melissa Fox said Tuesday that her boss is still working on it. ("Discussions are ongoing," Fox said, "but I'm not aware of any decision at this point. I can tell you that it's on the front burner.")

Clarke says he's aware that the auto-insurance mess has already become a mayoral campaign issue. His mentor and former boss John Street stands accused by Sam Katz's people of just getting around to making noise about insurance rates because he's in a tight re-election race. Clarke says he knows, but doesn't care.

"The task force has been working on this issue night and day for two years," Clarke said. "I can't tell you how much of my time it's taken up. It's anything but an '11th-hour' move. This is not an election-year issue, but of course everything is an issue in an election year."

So, it's just coincidental timing, Clarke insists, that the long-awaited reductions in auto insurance his constituents have been clamoring for just so happen to come to fruition at a time when they can be used to Street's political advantage. "I know we'll be criticized for the timing, but if Philadelphians get a dramatically-lower insurance bill, we'll take the criticism," he says.

Left unsaid of course, is Clarke's certainty that folks will gladly take the lower rates and forgive the political expediency. What the hell? You know he's right.

Daryl Gale’s weekly radio show, Dialogues, with co-hosts Rotan Lee and Bill Miller, is burning up the airwaves Fridays 7-10 a.m. on WURD (900 AM) in Philadelphia.