Miles to Go…



Councilwoman Marian Tasco

Councilwoman Marian Tasco is a Philadelphian who pays car insurance, which is all it takes these days to be hopping mad. "I have a 1988 Nissan, and it costs me $800 a year for that car — and that’s just for liability [insurance]," she says. Unlike most citizens, however, Tasco can affect law. This past week she introduced a resolution calling for hearings on the mile-based insurance system, a potential option that would revolutionize the way people insure their vehicles and save lots of people lots of money, if it turns out it can work.

Officials in Texas say buying insurance coverage by the mile can work. Last December, the Texas Department of Insurance recommended just such a plan, which was authorized by that state’s legislature. State regulators created rules that would allow companies to sell mile-based policies for the first time.

The concept is simple: Drivers, who are grouped largely according to the characteristics used for traditional insurance rates (type of vehicle, its use, the person’s driving record), are assigned a per-mile rate. Individuals purchase coverage for a certain number of miles, and when their vehicles reach those preset limits, their policies lapse and must be renewed. Auto insurance everywhere in the U.S. is now time-based, with drivers paying premiums for coverage over time, typically six months.

One big question concerns the best way to keep track of the miles covered. One approach involves company representatives taking odometer readings; there has also been discussion of installing computer chips in cars, which would be monitored by tracking devices.

Among the drivers who might save money under a mile-based program are people who use their cars infrequently, such as many senior citizens, families with more than one car, people who carpool and people who prefer to use public transportation during the work week.

Some proponents say that mile-based rates would encourage less driving and therefore reduce gridlock and pollution. This, in turn, would improve the quality of city life as well as keep more money in the pockets of citizens.

Pedro Rodriguez, executive director of the Action Alliance of Senior Citizens, says, "The whole concept is a novel idea. Anything that might bring some relief to Philadelphians should be taken seriously. I commend Councilwoman Tasco for taking the lead on this issue. Insurance companies have Philadelphia by the throat."

Tim Knapp, the deputy insurance commissioner of the Pennsylvania Insurance Department, expressed some doubt in the concept when reached at his office this past Monday. "We haven’t seen data to support that there is a relationship between driver distance and accident exposure," he says.

Though Knapp concedes that the less one is in a car, the less likely the person will be involved in an accident, he says insurance companies as well as state officials looking at the issue need "empirical data that would allow us to do a rate review." Knapp also expressed concern that odometer tampering and lapsed policies would be a problem with no easy or reliable solution.

"You know what I’d like to hear?" Tasco asks when told of Knapp’s response. "‘I think it’s an exciting idea. There are issues that need to be discussed. Let’s start the discussion.’ What we want is for our government to think outside of the box."

Automobile insurance in Philadelphia is an issue moving to the front of the rosters of several politicians and community leaders. In November, Councilman James Kenney called for hearings to discuss the findings of the Mayor’s Automobile Insurance Rate Reduction Task Force, created by former Mayor Ed Rendell. Street had not made any moves since the task force had given him recommendations last summer; Kenney demanded that those findings be made public.

Kenney canceled the hearings after Street made a statement in December embracing recommendations, such as the appointment of a public advocate to lobby Harrisburg on behalf of car owners in Philadelphia. So far, neither the task force nor Street has hired an advocate. In December, just a few days after making the statement, Street opted not to renew the contract of Susan Schulman, executive director of the task force. Schulman, an attorney, had immersed herself in car-insurance issues over the course of her appointment. Street has since appointed Councilmen Darrell Clarke and Rick Mariano co-chairs of the force.

Christian Marrone, a legislative assistant to task-force member and state Sen. Vincent Fumo, says that Schulman, for all intents and purposes, was fired. "The mayor fired her because she went out and did her duty and talked to members of City Council [about the insurance problem], especially Jim Kenney. He replaced her with Councilmen Clarke and Mariano, two councilmen without any car-insurance knowledge or expertise who don’t know the first thing about the way rates are filed."

Frank Keel, spokesman for Street, says, "It would be unfair to characterize it as a firing. Mrs. Schulman’s contract was not renewed. It was not a reflection on her past performance."

Why Mariano and Clarke? Keel says, "It felt like it was time to get some mayoral appointees on the force, some fresh blood. … He looked at their past stance on the issue."

Schulman declined to comment.

Clarke seems committed to changing rates for Philadelphians, and he says he plans to hold public hearings for some time in April. He says he intends to "elicit the powers of the city’s law office" to subpoena auto-insurance companies for records of their rate systems. He’s ready to sue.

"We are anticipating various degrees of response from insurance companies. We fully anticipate having to litigate," Clarke says.

Of Tasco’s resolution, Clarke says, "We need to look at all types of initiatives, and obviously that’s an interesting one."

Council members would do well to support the mile-based initiative: Due to their use of city cars during the day, insurance on their own cars, such as Tasco’s Nissan, would go way down.