"Insurance wars heating up!"
So reads the headline in the current issue of a newsletter published by the Maryland Citizen Action Coalition, and that headline pretty well sums up the accelerating momentum this week in the drive to reform Maryland's mandatory automobile insurance system in a way that will provide meaningful relief for Baltimore city drivers.
On Wednesday Mayor Schmoke and the City Council approved a $26,000 grant to determine the feasibility of establishing a public, non-profit insurance company to provide low-cost coverage for Baltimore motorists. The seed money for the study represents a victory for the Citywide Insurance Council, an advocacy group led by indefatigable local activist Robert Kaufman, who believes his approach could save city auto owners several hundred dollars a year on insurance bills.
In approving the feasibility study, no doubt Schmoke had an eye on industry-backed legislation to be introduced in the General Assembly next year that would allow commercial insurers to offer reduced rates for "no-fault" policies. Under "no-fault" arrangements, drivers would be compensated by their insurance companies for medical bills within 30 days after an accident occurred, no matter who was at fault. In return consumers would give up the right to sue for pain and suffering.
On the day after the city feasibility study was authorized, Baltimore city Sen. John Pica turned up the heat by announcing that if relief for city drivers were not forthcoming soon, he would introduce legislation making the state insurance commissioner an elective position. The commissioner presently is answerable to the governor.
Pica's move may have had its desired effect of prodding Insurance Commissioner John A. Donaho to announce that, following a year-long study, he would soon release his own report to determine whether city auto owners were being illegally charged higher rates than those in other parts of the state. Donaho indicated that his report will be accompanied by an order to insurance companies, although he would not say what that order contains.
At this point City Council President Mary Pat Clarke joined the fray by putting Donaho on notice that she will sue if the order does not provide relief for city auto owners.
All of this frenzied activity may seem confusing, but it is nonetheless good to see such a wide range of options percolating to the surface -- the industry option of "no-fault" insurance, the Kaufman option of a public non-profit company, the Pica option of placing insurance regulation into the hands of an elected official, the possible Donaho option of regulatory relief, or the Clarke option of court-ordered relief.
In the end it all boils down to this: When liability insurance is required by the state as a condition for driving, it is not just another business transaction but rather more in the nature of a tax. It would be clearly illegal and intolerable for the state to charge Baltimore city residents, let us say, twice or three times the sales tax it charges all other residents of the state. It is equally intolerable to mandate insurance rates which amount to the same thing.