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Schmoke to provide city funding for broader auto insurance study


Mayor Kurt L. Schmoke has decided that Baltimore should fund an actuarial and marketing study that could lay the groundwork for a non-profit automobile insurance company intended to offer lower premiums to good city drivers.

The mayor previously had said he would not commit city money to the effort. He reversed himself this week after meeting with members of the City-Wide Insurance Coalition, who provided new details about the purpose of the study.

Coalition members said that they would use its results not just to assess the possibility of starting a non-profit company to write insurance for city drivers -- an idea Mr. Schmoke regards as not feasible -- but to explore another option as well.

Under the second scenario, the coalition would create an agency that would act as a "third-party administrator" for automobile insurance policies.

The idea is for community groups to serve almost as insurance brokers by gathering names of potential policyholders citywide. The policies would then be grouped together by the "third-party administrator" and bid out in a block to existing insurance companies.

The agency also could do some administrative work normally handled by insurance companies, possibly lowering costs even further.

Mr. Schmoke finds this second concept more realistic than setting up a non-profit company.

"Hopefully, that would lead to lower premiums," he said yesterday.

"This is a very different concept than was discussed initially," he said. "I'm now willing to assist the study."

The insurance coalition, whose membership includes 158 community groups, estimates that the actuarial study -- which would examine potential risks posed by city drivers -- would cost as much as $150,00. Mr. Schmoke has not committed the city to funding the full amount but said it would cover "the lion's share" of the cost.

The mayor's decision heartened supporters of the insurance coalition, which earlier this week won City Council support for a resolution urging Mr. Schmoke to fund the actuarial study.

Councilman Melvin L. Stukes, D-6th, who supports the coalition, said that the study could have many benefits.

It could buttress city efforts to get the state legislature to outlaw territorial rating, in which automobile insurance rates are based largely on where a driver lives rather than on his driving record.

Ultimately, Mr. Stukes said, the study could still lay the groundwork for the eventual formation of a non-profit company that would actually insure city drivers.

"Nobody is putting all their eggs in one basket," Mr. Stukes said.

Council President Mary Pat Clarke, who is involved in another citizens group interested in lowering city insurance rates, added that the study could provide ammunition for a possible lawsuit to attempt to overturn the practice of territorial rating.

Currently, city automobile insurance premiums average about $1,300 a car -- about double the rates paid by suburban drivers, according to the insurance coalition.

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