Annapolis--Toni Francfort, who lives on East Baltimore Street, is fed up. Her driving record is excellent, same as her husband's; neither has had an accident or a moving violation since the 1950s, said the 65-year-old Butcher's Hill resident, and she drives less than 10,000 miles a year.
The punchline? "I pay $1,168 annually [in automobile insurance] for an '87 Dodge Aries, and that does not include collision" coverage, Ms. Francfort said.
Only it's no joke, and it's a problem common to thousands of drivers in Baltimore and around the state: painfully high auto insurance rates.
Ms. Francfort came to Annapolis last week to urge lawmakers to pass bills that would prevent insurers from setting rates according to where drivers live, rather than how well they drive. These so-called "territorial rating" bills would lower rates in Baltimore and other densely populated areas but drive up rates in the less urban sections of the state.
That's if the bills pass, which is unlikely. The Senate Finance Committee killed a package of "territorial rating" bills Wednesday. And veteran members of the House Economic Matters Committee listened to the testimony of Ms. Francfort and others with a sense of tired resignation. "Some of us have been sitting here for 16 years trying to find ways to reduce the cost, or trying to slow down the cost of auto insurance," said Delegate Casper R. Taylor Jr., D-Allegany, the committee chairman.
Every year bills aimed at the problem of high auto rates appear before the Finance and Economic Matters panels. And practically every year one or the other kills the bills.
That's partly because in the past the two panels have not communicated with or even trusted one another very much. It's also, according to observers on all sides of the insurance issues, because the two are subject to the lobbying influence of two powerful groups. The plaintiffs attorneys have found more sympathy for their cause in Senate Finance, while the insurance industry has had more luck with Economic Matters.
Meanwhile, Maryland residents are saddled with auto insurance rates that are among the highest in the nation.
In 1989, Maryland was the ninth-most-expensive state for auto insurance, according to the National Association of Insurance Commissioners, with a statewide average of $646.18, almost $100 dollars more than the national average. But because of a combination of powerful lobbying, bad blood among lawmakers and simple disagreement about the best solution, the General Assembly seems unable to do anything to solve the problem.
The political impasse, according to Mr. Taylor, stems in part from the "polarization of those groups of people who are trying to protect the tort system . . . as it exists and those groups of people who are trying to reform the system."
In the past, members of Economic Matters have been more open to tort reform, including limits on the number of lawsuits and the size of awards. They have eschewed the idea of using regulation to lower rates. "We spent the better part of 10 years arguing and fighting over the regulatory systems, as though somehow you could regulate lower rates, and that's a myth -- an absolute myth," Mr. Taylor says.
About five years ago, the General Assembly agreed to abandon the prior-approval regulatory system that required insurers to receive approval for new rates from the insurance commissioner before the rates could be applied. Last year, Maryland dropped the new system, called competitive rating, and went back to prior approval, "and rates have not come down," Mr. Taylor points out.
"It's clear as a bell to me there are basically two areas where you can actually reduce the costs, rather than shift costs" from one jurisdiction to another, as the prohibition on territorial rating would do. The answers, Mr. Taylor says, are getting rid of fraud committed against insurers, a problem that the industry says wastes billions of dollars a year, and putting a limit on lawsuits through some type of no-fault system.
Under the concept of no-fault an auto accident victim would be paid by his own insurance company, and would be prohibited from suing the other driver. Proponents claim that removing the costs of litigation would lead to lower insurance premiums.
The no-fault approach doesn't fly in Senate Finance. "The insuranceindustry would tell you that the premiums are as low as they can get and still settle the claims," says committee Chairman Thomas P. O'Reilly, D-Prince George's.
"What they would like to do is settle the claims for less than value, and with a wink they'll promise you that they'll probably lower premiums. Ergo no-fault.
"The other side of the coin," Mr. O'Reilly continues, "is that the insurance industry through various accounting procedures and through complex gimmickry are able to essentially hide their profits and continue to charge high premiums."
If the companies were not able to share pricing information, a practice allowed by an antitrust exemption, and if the state regulator, the Insurance Division, had enough funds to regulate properly and to hire a consumer advocate, Mr. O'Reilly says, prices would go down.
Those efforts at regulatory reform have failed, and are doomed to continued failure, because the insurance industry is such a powerful lobbying force in Annapolis, its adversaries say. "The insurance companies have a not-insignificant bit of influence on the legislative process," says Dennis McCoy, who represents the Maryland Trial Lawyers Association, a group of 1,800 plaintiffs lawyers.
Industry opponents charge that Economic Matters, and especially its chairman, is "in the pocket" of the insurance industry, because of campaign contributions and personal friendships with lobbyists. Mr. Taylor has heard the allegation before, and he dismisses it with disgust.
By the same token, some legislators and insurance representatives point to the money Mr. McCoy's group has spent on political campaigns and lobbying.
The Maryland Trial Lawyers Association, vehemently opposed to no-fault, last year raised more than $1 million from its members, and spent more than $200,000 of it to help the campaigns of successfulGeneral Assembly candidates.
The impasse has driven some toward their own solutions.
"I have always felt that the General Assembly was not willing to pass legislation to support consumer interests in auto insurance -- I don't know why," says Baltimore City Council President Mary Pat Clarke, a leader of Fair Auto Insurance Rates, a group that wants the courts to decide the issue of territorial rating.
Robert Kaufman, a Baltimore activist and president of the Citywide Insurance Coalition, is trying to set up an alternative auto insurer for city residents, one not driven by profit motives or hampered by high salaries or overhead. His group has commissioned an actuarial feasibility study and is raising money for legal and marketing studies.
"You can't beat these bastards at their own game," Mr. Kaufman says. "Their game is the legislatures and the courts." He wants to set up an alternative auto insurer for city residents. "We're not gonna fight 'em, we're gonna join 'em," he says.
In Annapolis, the stalemate continues, although there are signs of hope. The freeze between the two committees is beginning to thaw. Both pairs of committee chairmen and their vice chairmen now meet with each other once a week, something that never happened before Senator O'Reilly became chairman of the Finance Committee this year.
And bills that would begin to attack the problem of fraud, submitted at the request of Gov. William Donald Schaefer, have passed both panels and are well on their way to passing the General Assembly.
But even though both committees have new members and their leaders now are communicating, the larger dichotomy -- regulation vs. tort reform -- is no closer to being resolved than ever before, most participants in the process agree.
Absent any change in the way lobbying is conducted, neither side of the issue will give up its fight for its own economic interests, the legislators say. "Until the people at large get themselves educated sufficiently on the basic issues that drive the debate," Mr. Taylor says, "then there is not going to be any reason for either side of the special interest groups to eliminate the polarization."