In this time of reflection based on what the country has been through in the past six months, insurance companies that charge usurious car insurance rates for city residents, 86 percent of whom are minorities, should be confronted.
It is a modern form of redlining, defined by the Merriam-Webster Dictionary as, “the illegal practice of refusing to offer credit or insurance in a particular community on a discriminatory basis.” While insurance companies do not deny car insurance to city drivers, the higher rates they charge puts it out of the economic reach of many Hartford residents.
Based on some basic research, it is probable that approximately $20-$25 million is pulled from the pockets of Hartford residents through these dire rates for city drivers based on an outdated (1977) territorial rating system. In 1978, the State Insurance Commissioner, Joseph Mike, called the practice discriminatory. Back then, Hartford had a much broader ethnic and economic mix. Today, much of the multi-million surcharge falls on minorities, the elderly and the poor.
The reasoning of the insurance companies for the higher rates back in 1977 was that Hartford and similar cities had higher accident rates due primarily to congestion. But that congestion is not caused solely by city drivers. Every day, thousands of motorists from other towns come into the city to work, eat at restaurants, attend events, etc. The congestion is caused by drivers from throughout the region, so it is unfair and discriminatory to charge only Hartford residents for the results of that congestion.
Fortunately, the solution is relatively simple: base the rates not on the city of Hartford but Hartford County as a whole, as is done in many other parts of the country.
Examples of the result of the current unfair system are easy to find. For instance, a retired public defender with a perfect credit rating and a spotless driving record saw his car insurance premium increase by about one third this past year. When he asked the insurance company why, their response was, “Because you live in Hartford.”
A woman who moved ten blocks from West Hartford to Hartford saw her rates double, even though she parked her car in an unprotected spot in West Hartford but had valet parking in a secured garage in Hartford. She also asked her insurance company why. “Because you moved to Hartford,” was the response.
Most people just pay the higher rates, but others try to skirt the law by driving without insurance, registering their car in another town or some other stratagem. Recently, the City of Hartford Tax Assessor’s office identified over 3,500 private vehicles in Hartford as being unregistered, uninsured or otherwise illegal in some way. In discussions with a few people, the overwhelming reason given for cheating was the city’s high car insurance rates.
Many of those driving illegally withdraw from full participation in society out of fear of being caught, which can result in hefty fines, the loss of the vehicle and, possibly, imprisonment. They don’t register to vote, don’t fill out the census, don’t drive outside of Hartford (where the chances of being pulled over are higher), and don’t apply for government and charitable programs that could improve their education and quality of life.
They drop off the grid as much as possible, and society as a whole suffers through such things as unpaid taxes and decreased participation in civic life. And those who are forced to live “under the radar” often suffer greatly as well. For instance, they can rarely get loans, and if they do, their poor credit rating means sky-high interest rates on the loan. In short, having a large segment of society that avoids full participation in that society hurts everyone.
Dropping off the grid does involve a certain lack of personal responsibility. Some people really cannot afford the insurance rates, but others could and instead choose to spend their money on other things. And we shouldn’t forget that most Hartford residents who can’t afford the high cost of maintaining a car in the city simply choose to do without one, relying on public transportation or simply walking to where they have to go, which limits their opportunities for employment, education and many other things.
So, first, let’s level the playing field. Bring Hartford’s car insurance rates into line with those in other towns through county-wide rates. Then those who decide to skirt the law will be doing so out of choice and not economic hardship.
The state legislature should, in the coming January session, ask the State Insurance Department, to suggest proper changes to the territorial rating system. It should also address the advent of self-driving cars. The auto industry has stated that these cars will significantly reduce the number of accidents, which should reduce car insurance rates for all drivers.
Again, in this time of deep reflection, it is primarily up to the insurance companies to get it right and adjust the rates. And it is up to our government leaders, both city and state, and ordinary citizens like you and me to demand that they do so. Once the system is fair, it will also be fair for our government to demand strict compliance with the law.
Mike McGarry was on the Hartford city council from 1993 to 1999.