Study touts cheaper insurance Non-profit firm could cut costs 21%, study says.

September 10, 1991|By Ross Hetrick | Ross Hetrick,Evening Sun Staff

A study has concluded that a non-profit automobile insurance company can reduce rates for Baltimore drivers. But it will cost $9.5 million to test the findings.

That is the cost of establishing the insurance operation, according to a $52,000 study released yesterday. If it is created, the new company could offer rates 21 percent below the average insurance premiums, the study said.

Les Ranson, one of the authors of the report, said most of the expected savings would come from more efficient handling of claims. This would be done by encouraging arbitration rather than litigation, and referring claimants to specific doctors and repair facilities.

Supporters emphasized that city pension funds will not be involved. in any funding plan.

"I think $9.5 million is a very small sum to pay for the savings," City Councilman Lawrence Bell, D-4th, said at a news conference yesterday.

Bell and other City Council members are planning to introduce a bill later this month that would establish a board to take the first tentative steps toward creating the non-profit organization.

While city officials praised the proposal, an insurance group warned that the proposed organization could turn out to be another drain on taxpayers.

"Given the appalling claims statistics for Baltimore, it is unlikely that most insurers would mind giving up some share of that market to a newcomer," the Insurance Information Institute Inc., a national group representing insurance companies, said in a statement.

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