Saying the state was confusing equal rates with equal rights, the chief judge of the Baltimore Circuit Court ruled unconstitutional yesterday a state agency's ban on the practice of charging men and women different premiums for the same health and life policies.
Judge Robert I. H. Hammerman said the state Insurance Division was legally out of bounds when it ruled last July that the state's Equal Rights Amendment prohibits insurers from using policyholders' gender to determine their premiums.
"The state Insurance Division was out of line when it passed its decision . . . Only a court of law can take the action that agency did," Judge Hammerman said, winding up a case that was before his court for more than four months.
He said the differences in rates between the sexes, as long as they remain actuarially correct, are fair, according to the law.
Judge Hammerman's decision was the most recent development in a 17-year legal battle between the Equitable Life Assurance Society of the United States -- the nation's third largest life insurer -- and the National Organization for Women and the Maryland Commission on Human Relations.
"This certainly is a setback," said Sally L. Swann, counsel for the Human Relations Commission.
Martha Davis, the head of NOW's legal defense and education fund, said Judge Hammerman's decision "was a significant undermining of the Equal Rights Amendment."
Both attorneys said they will appeal the decision to the Maryland Court of Appeals, the state's highest court, a step that would take from six months to a year, Ms. Swann said.
Last July, the Insurance Division released a ruling that said the practice of charging men and women different rates for insurance coverage "is unlawful discrimination just as it would be unlawful discrimination to charge different rates for blacks, whites, Italians or Jews."
Equitable appealed, claiming in court papers that a reversal of the time-honored gender determination practice would cost the company an estimated $30 million in losses in premiums in Maryland annually.
Currently, life and health insurance rates in Maryland and throughout most of the nation are determined by sex. Insurers prefer sex-distinct health and life policies because they are a validated means of predicting risk and, therefore, fair pricing.
Those industry studies show that men, who live shorter lives, pay higher premiums for life insurance and women less. Men also are involved in more auto accidents and, consequently, pay a higher premium for automobile insurance.
Women -- because they live longer -- pay higher premiums for health insurance.
Judge Hammerman said that in making his ruling, he also considered Equitable's projected annual loss and the general solvency of insurance companies in Maryland.
"To have a stable financial marketplace is a legitimate state interest," Judge Hammerman said.
Meg Rosthal, assistant attorney general assigned to the state Insurance Division, said she would also be at the trial table if the case goes before the Court of Appeals in Annapolis.
Women's rights groups contend unisex pricing would have saved women substantial money on their health insurance premiums.
But, industry representatives say, a continuation of the insurance division's ban might have driven Marylanders to purchase automobile insurance in other states with lower rates, causing local insurers losses and forcing them to raise rates.
David Snyder, an attorney for the American Insurance Association, said Judge Hammerman's ruling temporarily "averted a huge rate increase," pending the outcome of the next appeal.