At first glance, the statistics revealed in a state-by-state analysis of auto insurance costs make Pennsylvania look pretty good.
"Report praised Pennsylvania car insurance model," celebrated a headline in The Pittsburgh Post-Gazette, referring to Tuesday's release of a 75-page "Review of Auto Insurance Rate Regulation in America" by the Consumer Federation of America.
Pennsylvania's increase in rates from 1989 to 2010, the report said, was 25.7 percent, which was bettered only by California and four other states. California was the only state to see a reduction, thanks to extensive restrictions imposed on the insurance industry by a 1988 ballot initiative, Proposition 103. Since then, that state's auto insurance costs dropped 0.3 percent.
Unfortunately, a closer look at the actual numbers in the report, combined with consideration of what happened in Harrisburg back in the 1970s, dampens the Pennsylvania celebration quite a bit.
First, the numbers reveal that while Pennsylvania did well on a percentage basis, we had higher auto insurance costs to begin with. In fact, we had higher rates than any of the states with the lowest increases — California, Hawaii and New Hampshire.
For example, the average annual cost of auto insurance premiums in Pennsylvania, the CFA report said, is $812. In New Hampshire, it's $706. New Hampshire could have had a 33 percent increase and still have less expensive insurance than we.
The state with the worst increase was Nebraska, where rates more than doubled. Even at that, however, auto insurance in that state is still hundreds of dollars a year cheaper than in Pennsylvania.
The state with the lowest cost is South Dakota. Those of us who have driven in Nebraska and South Dakota must admit that cheap insurance may have something to do with the fact that there are fewer things to run into out on the boring plains.
A better comparison is New Hampshire, the only state where auto insurance is optional. That reflects New Hampshire's ferocious devotion to libertarian freedoms. Its state motto is "Live Free or Die" and the people there really mean it. Seat belts in cars are not compulsory, nor are helmets on motorcycles for anybody (they're required in Pennsylvania for some riders).
To put New Hampshire's less expensive auto insurance in perspective, I must go back to 1974, when I worked for The Associated Press and was being transferred from Philadelphia to Harrisburg, where there was a huge fuss over a plan to bring "no-fault" auto insurance to the state.
The insurance industry invested millions in "political campaign contributions" and succeeded in having the legislation make auto insurance, at least liability insurance, compulsory for every motorist for the first time. That was accompanied by promises that the measures would reduce rates.
The people at the current state Insurance Department did not respond to my request for facts and figures, but it is my recollection that as soon as the state's insurance industry had compulsory auto insurance, the cost of premiums for consumers nearly doubled.
I talked about that when I reached J. Robert Hunter, the Consumer Federation's director of insurance. (He's also the former head of the Texas Insurance Department and the former federal insurance administrator under Presidents Ford and Carter.)
"I don't know if they doubled," he said of what happened to Pennsylvania's rates after car insurance became compulsory, "but they went up, and a lot of people were very disappointed."
(That made me think of what happened more recently, with Obamacare, and the initial promise that once health insurance was compulsory for everybody, rates would go down. I think it's safe to say people are disappointed in that situation, too.)
"Compulsory auto insurance has some negative effects," Hunter said, noting that in some urban areas, "it's more than $1,000 just for liability." (When people can't afford insurance, what do they do? Stop driving? Not on your life.)
"In California, the same thing happened," Hunter said of the time auto insurance became compulsory there. "Rates skyrocketed" and the insurance industry "really gouged people." That resulted in the upheaval with Prop 103 in 1988.
The new California law resulting from Prop 103 established tough oversight of the insurance industry, forcing it to justify rate increases and, according to Hunter's CFA report, it "curtailed some of the most anti-consumer practices" of that industry.
Prop 103 prohibited the industry from setting discriminatory rates based on one's credit scores, type of job or area of residence. Rates must be based mainly on a person's driving record, the number of miles driven and years of driving experience. It also required a rate rollback and put insurance companies under the aegis of antitrust laws, making price fixing difficult.
I generally have misgivings about enacting laws through ballot initiatives. Bad things can happen, as occurred with California's unrealistic energy initiatives.
Some of the Prop 103 lessons, however, could be valuable for Pennsylvania and other states. You cannot argue with the success of a measure that resulted in California rates going down while those in every other state went up.
Paul Carpenter's commentary appears Sundays, Wednesdays and Fridays.