City drivers could pay 21 percent less for auto insurance if a non-profit company were created to serve Baltimore residents, according to findings from a new study prepared by consumer groups seeking to create the insurer.
The much-awaited results, submitted to city officials last week, stem from a report commissioned to test the feasibility of an alternative insurer, which supporters see as a sure-fire method of cutting the highest auto premiums in Maryland. Baltimore residents pay nearly twice as much on average as residents statewide, according to an insurance industry trade group.
Supporters have said the new company could charge lower rates by keeping overhead low, obtaining tax-exempt status, foregoing a profit and more accurately assessing the risks of owning a car in the city.
The recent study, spearheaded by the City Wide Insurance Coalition was funded jointly by the city and consumer groups. Although the full report has yet to be prepared, the study's eight-page executive summary, obtained by The Sun yesterday, outlines much of the proposal.
According to the summary, the company would require $9.5 million to reach capital and surplus levels needed to conduct the amount of business it expects to attract in its first year. The study did not specify a source for the initial funding, but a bond offering by the city has been raised as a possible option by some city officials.
The study estimated 7 percent of city drivers would be insured by the company in its first year, resulting in annual revenues of $11 million, and predicted an annual growth rate of about 8 percent.
To gain tax-exempt status, the company would need to be chartered as an agency of the city government, the study said. But it remains unclear whether that would be allowed under the City Charter.
A. Robert Kaufman, president of the consumer group leading the effort, said that he would comment on the study at an expected news conference by Mayor Kurt L. Schmoke.
However, a Schmoke spokesman said that the mayor had not yet seen the study.