Insurance increases on sedan services limited State fears transportation in inner city would suffer

September 25, 1997|By Melody Simmons | Melody Simmons,SUN STAFF

To avoid curbing transportation in many Baltimore neighborhoods, a state agency yesterday limited insurance rate increases on some accident-prone sedan services.

The Maryland Insurance Administration rejected rate increases by the Maryland Automobile Insurance Fund, which found that insurance claims from sedan services had drained more than $2 million from the fund since 1994. MAIF underwrites 350 sedans, which are similar to taxis but must pick up passengers by appointment only.

In an order, MIA Deputy Commissioner Thomas P. Raimondi denied increases that would have totaled 203 percent and instead authorized rate boosts with a limit of 75 percent.

"We are definitely pleased," said Ali Asgari, owner of Sedan Service Inc. in Overlea, who said the larger increase might have put him out of business. "It's not bad. It's a lot better than what we expected."

Charles Phillips, president of the Independent Sedan Association of Maryland Inc., called the order a "wonderful victory." He added, "We stood up against the adversaries from the self-insured taxi industry who wanted to put us out of business -- and they failed."

Some sedan services in Maryland are privately insured.

MAIF Executive Director David C. Trageser testified during a July hearing that in 1994, the fund insured 53 sedans, and payments on the policies exceeded premiums by $213,666. The next year, 125 sedans were insured, and losses totaled $856,105; in 1996, the number of insured sedans increased to 264, and losses hit $1.2 million, he said.

Officials at MAIF, the state's insurer of last resort, had said the rate increases were designed to avert such losses.

But Raimondi said that if the rate increases put some sedan services out of business, transportation for inner-city residents could be severely limited. Sedans, which charge $1 a mile, have become a popular alternative to taxis in many areas.

Raimondi also noted that a state law, which takes effect Wednesday, requires the Public Service Commission to conduct criminal and background investigations on sedan drivers.

Officials of the insurance commission say the PSC's involvement in monitoring drivers will help reduce high liability claims.

"This will compel the owners of sedan service vehicles to closely monitor drivers and future driver applications," Raimondi's order said. "This monitoring should be beneficial to the sedan operators as future losses incurred by sedan operators may decrease and thus reduce the necessity of future MAIF increases in premium rates."

MAIF officials declined to comment on Raimondi's ruling, saying they had not reviewed it.

"We haven't had an opportunity to analyze its impact," said Linda Chiesa, MAIF deputy executive director. "We expect to review it in the next several days."

The regulatory changes -- mandated by the General Assembly -- come amid growing competition between Maryland's taxi and sedan companies.

In April, two sedan accidents left three people dead, and records showed that one of the drivers had been convicted of drug possession.

Mark L. Joseph, president of the Maryland Cab Association, a group of taxi owners who supported MAIF's rate increases, was pleased with the 75 percent boost.

Joseph said the order would make sedan services insured by MAIF more accountable.

"It represents a major step in the right direction," he said. It will send a strong message. The next step is strong enforcement to make sure they will comply. "

The sedan services were given a vote of confidence by state Sen. Nathaniel J. McFadden, a Baltimore Democrat, who wrote in a July 9 letter to Raimondi:

"Those individuals who drive sedans provide a valuable service to inner-city residents. It is common knowledge in the inner city the regular cab drivers will not go into certain areas, especially at night. Sedans provide much-needed service -- all the time."

Pub Date: 9/25/97

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