Md. Sedan Owners: Latest Insurance Hike Causing Industry Crisis

Already reeling from one insurance rate increase still under appeal, independent sedan transportation operators in Maryland have been told rates will be going up again.

The Maryland Automobile Insurance Fund, a quasi-government pool that supplies insurance to motorists turned down by at least two private insurers, sent notice of a 32 percent rate increase effective with the next renewals, according to Connie Galiani, co-owner of Towson Sedan Inc.

An increase of 52.8 percent was approved in September, something sedan owners have been fighting ever since.

Sedans differ from taxi cabs in that taxis are allowed to pick up impromptu fares on the street while sedans must be summoned by a telephone call to a dispatcher.

Steep insurance hikes have caused a crisis in the industry, according to Ira Cooke, executive director of Sedan Transportation Association of Maryland Inc., an umbrella group that represents smaller sedan companies, including Galiani’s.

Galiani’s 11-car company pays $4,000 a year insurance on each car. The latest increase would push the tab to about $5,300.

Fleets have been reduced by two-thirds since the last rate increase went into effect, Galiani said.

“Our drivers aren’t making a lot right now and many of our customers are of moderate income, so the decisions were considering are going to hurt people who can least afford to be hurt,” Galiani said.

“The industry is clearly in crisis,” Cooke said. “Unlicensed, unregulated gypsy hacks” are moving in to meet customer demand, he said.

His message to the Maryland Insurance Administration, the state government insurance industry regulator, Cooke said, is “Help! We’re drowning!”

Sedan owners were to present their grievances this week in Baltimore to the insurance administration. The meeting will be presided over by P. Randi Johnson, associate commissioner of property and casualty.

Karen Barrow, the insurance administration’s assistant director of communications, declined comment, saying it would be premature to speak before the hearing.

The root of the problem is that the fund, commonly known as MAIF, sets rates based on the histories of a sedan company’s cars, not its drivers, Cooke said.

“That’s not done in any other area of insurance,” he said.

Insurance rates for independent sedan operators have tripled in the last five years, Cooke said.

Independent sedan owners would like to “self-insure” in the same way taxi and “corporate” sedan companies do, Cooke said. The independents have sought advice from the insurance administration about how to do this.

Current law presents obstacles, Cooke said. The issue is something that Clay Opara, the sedan association’s lobbyist, may raise with legislators when the General Assembly reconvenes in January, Cooke said.

“That is, if there’s still an industry left come January,” he added.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Topics Maryland