City wants auto insurance rates to stop hitting its citizens just where they live

February 17, 1993|By Marina Sarris | Marina Sarris,Staff Writer

Baltimore residents are again asking the state legislature to lower their car insurance rates, but this time they have TC compromise in mind.

Mayor Kurt L. Schmoke urged a House committee yesterday to approve a bill that would require insurance companies to charge rates based only partly on where the driver lives, thereby granting city dwellers some relief.

"The people of Baltimore have been burdened for too long with a rate standard that is unfair and a burden on the economy," the mayor said. The high cost of obtaining car insurance has been one of the reasons that middle-class city residents have moved to the suburbs, he complained.

He also told the Economic Matters Committee that high insurance rates have made it difficult for low-income Baltimore residents and minorities to afford to own a car in which to travel to jobs outside the city.

Automobile insurance premiums in Baltimore average about $1,300 a car -- about double the rates paid by suburban drivers -- according to the City Wide Insurance Coalition, a group working to lower city rates.

Baltimore residents have tried for five years in Annapolis to abolish so-called geographical ratings.

Those measures failed mainly because suburban and rural residents would have been called on to pay higher rates in order to lower the insurance payments of city dwellers.

Supporters of this year's bill said it is similar to a Michigan plan that limits the difference in rates between neighboring territories.

Insurance premiums would be based primarily on driving records and less on territorial rating, which results in unusually high insurance costs for city residents.

But J. Frank Nayden, an associate insurance commissioner for Maryland, said the Michigan plan has not worked in that state.

Several lobbyists for car insurance companies said the bill favored by Mr. Schmoke does nothing to address the heart of the city's problem with insurance claims.

They said that city residents are more likely than rural dwellers to be involved in car accidents and to hire lawyers to represent them, thereby driving up legal expenses.

"I'm not picking on trial lawyers when I say this," said Committee Chairman Casper R. Taylor Jr., D-Allegany. "But several years ago I remember a statistic about the percentage of claims cases represented by attorneys in the city being the highest percentage of any major city in country."

Leslie L. Ransom, president of R & B Unlimited Inc., a research company that worked with city officials on insurance rates, said Baltimore actually ranks third or fourth.

Those statistics, however, do not take into account drivers who live outside the city who nonetheless file suit in city courts, witnesses said.

Martha C. Roach, executive director of the Maryland Automobile Insurance Fund, which insures high-risk drivers, said her agency receives more claims from Baltimore City even though it does the most business in Prince George's County.

If MAIF gets 100 claims for auto accident injuries in Prince George's, she said, the agency will receive 168 claims from Baltimore.

Marta Harting, an attorney for State Farm Insurance Companies, said State Farm opposes the bill because people who live in areas with fewer insurance claims would end up subsidizing those people who live in areas with a high number of claims.

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