In yet another insurance skirmish, Baltimore Fair Auto Insurance Rate has filed an appeal in Baltimore Circuit Court to a decision by Insurance Commissioner John A. Donaho not to hold another hearing on an increase for Allstate Insurance Co.
The appeal, filed yesterday, came the same day that Mayor Kurt L. Schmoke gave $26,000 for a feasibility study into establishing a non-profit insurance firm that may offer lower rates to city drivers.
Baltimore FAIR's appeal was directed against a 3 percent increase granted to Allstate by the state Insurance Division in May.
The Illinois-based Allstate is the second largest automobile insurer in the state with $220 million in coverage for 375,000 cars.
Baltimore FAIR has targeted the practice of territorial rating, which involves insurance companies charging different rates depending on where the policyholder lives. Insurance companies say this practice is necessary because of the difference in accident claims in different areas.
However, Baltimore FAIR has contended that this practice is illegal. In its appeal of the Allstate case, it went even further and said the pattern of rate charges may be unfairly biased against blacks.
"Maryland law prohibits rates which are unfairly discriminatory and the the commissioner has approved a rate which is unfairly discriminatory," said City Council President Mary Pat Clarke, who heads Baltimore FAIR.
The group based its claim on a statistical study done by Dan Friedman, a legislative assistant to Clarke, with help from professors at Johns Hopkins University and the University of North Carolina.
However, the Insurance Division, which had an actuarial review of the report, found the study "definitely lacking," said J. Frank Nayden, assistant commissioner for property and casualty.
He said the group's request for another hearing was turned down by Donaho because it did not show that Allstate violated any state regulations. "They have presented nothing to indicate they [Allstate] are not in compliance," he said.
In fact, he said the Baltimore FAIR study itself showed that insurance losses in different areas accounted for 90 percent of the difference in rates.