Schaefer takes no position on insurance rates

December 20, 1990|By Marina Sarrisand Ross Hetrick | Marina Sarrisand Ross Hetrick,Evening Sun Staff

The governor took no position on Baltimore City car insurance rates during a meeting with City Council President Mary Pat Clarke last night, Clarke said.

Clarke is angry at Insurance Commissioner John A. Donaho's decision that territorial rating, the practice that allows insurance companies to base rates on where a driver lives, is legal. Under that system, drivers living in urban areas such as Baltimore pay higher rates than suburban and rural residents.

Gov. William Donald Schaefer, who maintains a home in Baltimore, "was very sympathetic. Basically, he pays about as much as I do for auto insurance," Clarke said after the meeting.

Maryland Attorney General J. Joseph Curran Tuesday confirmed that his office had advised the Insurance Division that territorial rating is legal under Maryland law. But he also said the Insurance Commissioner has some discretion on how the territories are determined.

In a letter to Clarke, Curran said that for 13 years the Insurance Code "has been interpreted to authorize insurers to make geographic distinctions, provided that the distinctions are based on data about losses and expenses that the Insurance Commissioner finds to be sufficient."

Curran's interpretation of the law became an issue on Monday after a ruling by Donaho that territorial rating by insurance companies is legal and is done on an actuarial sound basis. Clarke questioned Donaho's statement that the Attorney General's office had reaffirmed previous opinions that territorial rating is legal.

While saying the practice is legal, Curran also said Donaho does have some power to change territories.

"He would be acting equally within the scope of his discretion under the law were he to insist upon more exacting data that might result in geographic line drawing that departs from the traditional," Curran said. "But that is his judgment to make, not mine."

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