DRPA continues to rearrange its insurance business

The Delaware River Port Authority on Wednesday continued to shift its insurance business away from two firms involved in a controversial commission-splitting deal.

The move will save the DRPA about $500,000 a year, officials said.

The agency's board on Wednesday hired Gallagher Benefit Services Inc. of Itasca, Ill., for $125,000 a year to administer the DRPA's health-benefits program. Gallagher will replace the Willis Group of Morristown, N.J., which last year was paid $298,000.

A DRPA committee on Wednesday recommended hiring Aon Risk Solutions of Chicago for $129,000 a year to provide property and casualty insurance, $45,600 less than the agency had been paying Willis and the Graham Co. of Philadelphia.

Early last month, the DRPA moved its owner-controlled insurance program to Turner Surety Insurance Brokerage of Woodcliff Lake, N.J., which it will pay $100,000 a year, about $269,000 less than Graham received.

Willis and Graham had divided much of the DRPA's insurance business under an arrangement created by the agency in 2002 to split its insurance business between brokers in New Jersey (Willis) and Pennsylvania (Graham).

The deal required the brokers to share their payments regardless of work performed. That required Graham to give Willis more than $500,000 over six years.

That "true-up" arrangement was sharply criticized this year in a report by New Jersey Comptroller Matthew Boxer. The DRPA, as part of a series of management changes, has ended the practice and has begun to hire insurance brokers through an open-bidding, fee-based process.

The new brokers will save the agency $487,435 a year, DRPA chief executive John Matheussen said Wednesday.

In other business, agency officials said operating expenses were about $8 million, or 10 percent under budget this year, largely because 43 staff positions have been kept vacant. That's about 5 percent of the jobs at the DRPA.

Traffic on the DRPA's four toll bridges continues to decline, said chief financial officer John Hanson. It is down about 2 percent this year, though toll revenue is up 23 percent due to a toll increase in July 2011.

Traffic in 2012 is on pace to be the lightest in 17 years. On the Ben Franklin, Walt Whitman, Commodore Barry, and Betsy Ross Bridges, it is down about 13 percent from its peak in 2007.

Steep toll increases have apparently played a role. Tolls have risen 67 percent on the spans since September 2008, from $3 to the current $5 for autos. Traffic has declined every year since.

DRPA officials also blame a sluggish economy, high gasoline prices, and continuing bridge construction.

Federal investigators said in July that they were examining toll increases on those bridges and on bridges and tunnels that link North Jersey and New York City, following a request from U.S. Sen. Frank Lautenberg (D., N.J.).

The Government Accountability Office, Congress' investigative arm, said it wanted to know how toll increases were determined and why.

Lautenberg wrote the GAO in March, asking it to examine the hikes, use of toll revenue, and "the transparency and accountability of the funding and management decisions" at interstate tolling authorities.