Grant approved to study insurer for city drivers

December 13, 1990|By Martin C. Evans

The Board of Estimates approved yesterday a $26,000 grant to determine the feasibility of establishing a non-profit company to provide low-cost auto insurance for Baltimore motorists, who generally pay more than drivers living in the surrounding counties.

"It seems like the insurance industry wants to penalize people for living in the city," the Rev. Sidney Daniels, president of the Interdenominational Ministerial Alliance, told the board yesterday. "We're going to fight it."

Baltimore residents typically pay far higher insurance premiums for the same coverage than do motorists who live in the suburbs.

For example, a 45-year-old married man living in Baltimore would have to pay $784 to get the same Allstate Insurance Co. policy that would cost a man of the same age living in Baltimore County only $442, according to figures provided by the Maryland Department of Licensing and Regulation.

Insurance companies have defended the disparity by saying Baltimore drivers cost them more because of the higher number of claims and lawsuits in the city.

In a related action, Mary Pat Clarke, City Council president and Board of Estimates member, announced yesterday that Baltimore F.A.I.R. has filed a notice of appeal in Baltimore Circuit Court to block the approval of Allstate's rate increase.

The appeal would compel John A. Donaho, the Maryland insurance commissioner, to hold new hearings on the Allstate rates. A study by F.A.I.R. (Fair Auto Insurance Rates), a citizen-action group, said the rate increase is biased against African-Americans and urban dwellers.

"Maryland law prohibits rates which are unfairly discriminatory, and the commissioner has approved a rate which is unfairly discriminatory," Mrs. Clarke said.

Last year, Mayor Kurt L. Schmoke promised the Interdenominational Ministerial Alliance and the Citywide Insurance Coalition, a coalition of neighborhood organizations, that he would pay half the cost of a feasibility study if the groups could raise private donations to cover the other half.

Mr. Schmoke said that although the organizations have collected TTC only about $16,000, he would release the city's share now to spur private donations. The study is to be completed within six months.

"This mayor is committed and this board is committed to working with you to reduce auto rates in the city," Mr. Schmoke said. "We've got to find some way of reducing these insurance rates, whether it's through litigation or by creating another company."

R&B Unlimited Inc., a local consulting business that will be conducting the study in conjunction with the Institute for Urban Study at Morgan State University, agreed to begin the study before all of the operating funds are collected.

Avis L. Ransom, president of R&B, said the wide disparity in insurance rates is not justified by accident rates.

"If people were charged based on who had the accidents, the costs wouldn't fall so heavily on people living in the city," she said.

Although there are no private, non-profit auto-insurance companies in the United States, said Leslie L. Ransom, an R&B consultant, a similar non-profit company provides insurance in British Columbia.

"There are differences in the tort laws, but the basic concepts can be imported," Mr. Ransom said.

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