City Insurance Blues


"Off with his head!" cries the president of the Baltimore City Council. "Let a thousand consumer advocates bloom!" shouts the state senator from Northeast Baltimore.

It is great political theater. But the sound and fury emanating from Council President Mary Pat Clarke and Sen. John A. Pica Jr. signify nothing more than pent-up frustration over the high cost of auto insurance in Baltimore City.

They are furious with state Insurance Commissioner John Donaho for not ending "territorial rating," which lets insurers base premiums on the number of accidents in a given area. Thus, a married 45-year-old driver pays $576 a year in the city compared with $208 on the Eastern Shore.

Mr. Donaho ruled that territorial rating not only is legal but has a sound statistical basis. City insurance rates are sky-high because there are three times as many injury claims as in rural FTC Maryland; injury payments are 2.5 times greater than elsewhere in Maryland; auto thefts are twice as high, and Baltimore leads U.S. cities in frequency of injury claims and lawyer involvement.

Ms. Clarke and Mr. Pica have a simple remedy: Fire Mr. Donaho. In his place, they want a fire-breathing populist who would abolish territorial rating and dramatically lower city car-insurance rates. Of course, that might not be legal -- or even desirable, because it would send rates soaring for drivers everywhere else in Maryland.

Mr. Pica would go even further. He wants an elected commissioner, a consumer advocate to fight rate hikes, a board to approve rate requests and an end to the industry's anti-trust exemption.

These are politically popular demands. Mrs. Clarke is running for reelection; the insurance issue is an ideal campaign plank. Mr. Pica is trying to establish credibility after barely winning reelection. Their motives are suspect.

Mr. Donaho deserves better. He gets high marks for straightening out the insurance division and restoring its credibility. He let opponents present their case. But he could not ignore the stark statistical evidence that makes Baltimore City so costly for insurers and for those they insure.

There is one promising avenue, though: the industry's no-fault insurance bill. In exchange for giving up the right to sue for "pain and suffering," drivers would gain prompt payment of claims -- and a 20 percent cut in premiums. It is a good deal for everyone except trial lawyers. Ms. Clarke and Mr. Pica would be better off fighting the uphill battle for a no-fault insurance bill than blaming Mr. Donaho for the city's car-insurance woes.

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