Insurance reform on front burner

Wiley A. Hall 3rd

June 13, 1991|By Wiley A. Hall 3rd

Ever since the Citywide Insurance Coalition proposed that Baltimore cut rates for city drivers by establishing its own, non-profit insurance agency, eerie things have been happening.

The coalition was snubbed by several consumer groups it expected to be natural allies.

Bizarre stories misrepresenting the group's goals started circulating.

A bulk mailing advertising an important meeting disappeared after it had been hand-delivered to the post office.

Important segments of the news media virtually ignored the effort.

"It's a conspiracy launched by the major insurance carriers," said a CWIC member, quivering with indignation and fear.

"No it isn't," I said.

"Yes it is," he said.

"No it isn't," I said.

"Yes it is," he said.

OK. So you get the point -- we couldn't agree.

He imagines insurance industry executives, like sinister spiders, pulling strings at the U.S. Post Office, issuing marching orders to the major news organizations, manipulating both politicians and public opinion through thinly veiled threats and sly innuendo.

But such conspiracy theories are too far-fetched for my tastes. I prefer to believe that CWIC is in the grip of malevolent, supernatural powers.

Nevertheless, the group has made impressive progress since its beginning two years ago.

Nearly 150 organizations have signed on, including churches, neighborhood groups and unions.

The City Council will hold its first hearing on the proposal next Wednesday.

And by the end of the month, the independent consultant hired by CWIC and the city expects to determine once and for all whether city drivers would actually save as much as 25 percent from the kind of non-profit, consumer-oriented, semi-private agency that CWIC first envisioned in June 1989.

"I expect the study will show that we're looking at first year, across-the-board savings of from 17 to 20 percent," said the consultant, Leslie L. Ransom Sr. "By the second year, it should be about 20 to 25 percent."

On the face of it, such savings seem paltry compared to the terrible burden Baltimore's drivers bear. The same driver, according to state insurance commission figures, will now pay from 50 to 350 percent more for the same coverage, simply because he lives in the city. Meanwhile, some city drivers with clean accident records and no moving violations are unable to get private insurance coverage at all.

Consumer groups have long charged the insurance industry with unfair practices. They claim that city accident rates are inflated by accidents involving suburban drivers and that companies "redline" certain city neighborhoods through either racial or class discrimination.

Not long ago, the state insurance commissioner rejected consumer complaints, ruling that the disparate rates appear to be justified, but city drivers remain unconvinced.

Ransom said his final report doesn't really address this issue.

"The industry is motivated by profit just like any other industry," he said yesterday. Do they unfairly discriminate against city drivers? "There is some evidence of that, but nothing that would hold up in court. And if you can't prove it, you can't say it."

But he added that he will report that a non-profit insurance company could find considerable savings for 75 percent of all city drivers simply by doing business differently.

Research showed that such a company would meet Maryland legal requirements and would have a good chance of succeeding financially.

And, he added that many city drivers with clean records who currently are forced to obtain high-risk insurance through the Maryland Automobile Insurance Fund would be eligible for standard coverage.

Most importantly, he said, it could force the insurance industry to change the way it does business in Maryland.

"There's never been a serious, sustained effort to reform the insurance industry until the past two years," noted Ransom, "and so, not surprisingly, the industry hasn't reformed.

"CWIC has done two things: it has launched a sustained drive for reform and it proposes to create an entity that will provide serious competition to the industry.

"I expect," he said, "we will begin to see some changes made."

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