State Farm Insurance Companies, the largest insurer of automobiles in Maryland, wants to do something unusual -- cut auto insurance rates in most of Baltimore.
In a filing with the state Insurance Division, State Farm is proposing to cut the average automobile insurance rate for most of its city policyholders by 1.4 percent. The average rate includes liability, collision and comprehensive coverage.
Rates would rise in a small part of north and northeast Baltimore.
The Bloomington, Ill.-based insurer said its proposal is based on experience in Baltimore that indicates overall costs have declined relative to other parts of the state.
Leo R. Bakel, an actuary for State Farm, said the reduced rate reflects lower repair and theft costs. However, bodily injury costs in the city remain about the same, he said.
Even if the change is approved, city policyholders would still pay some of the highest rates in the state. An unmarried 20-year-old man would pay $2,102 a year and an unmarried 20-year-old woman would pay $1,191.20 for the minimum coverage required by law. A married 45-year-old man would pay $666.80, according to State Farm officials.
The rate cut for many Baltimore drivers is part of a proposal for an average statewide increase of 2.8 percent for the State Farm Mutual Automobile Insurance Co. and a 9.4 percent increase for the State Farm Fire and Casualty Co, the latter a subsidiary that covers high-risk customers.
Insurance Commissioner John Donaho heard the request yesterday. The commission must approve all rate changes in Maryland.
State Farm has 604,225 automobile insurance customers in Maryland, including about 84,000 covered by the high-risk subsidiary. State Farm insures about 36,000 vehicles in Baltimore.
State Farm last raised rates in Maryland on Oct. 1, 1989, when the average rates went up 2.2 percent.
Even though the company's costs in Maryland could justify an average 14.6 percent increase, the company decided to request 2.8 percent because of competitive reasons and a desire to keep rates affordable, according to Greg Hayward, a State Farm actuary representing the company at the hearing.
Even though many Baltimore motorists would pay somewhat less, City Council President Mary Pat Clarke opposed the request because it recognizes the territorial rating system. The system allows insurance companies to charge different rates based on where drivers live.
"We say rate by individual driving record," Clarke told the hearing. She is head of the group Baltimore Fair Auto Insurance Rates, which is fighting use of territorial rating because city drivers usually pay higher rates than suburban and rural customers.