Car insurance companies are fighting an attempt to keep them from using ZIP codes to set rates when the postal district crosses city or county lines.
The bill by Del. Emmett Burns, D-Baltimore County, primarily is designed to help county residents in neighborhoods on the Baltimore City line that share a ZIP code with the city, and are required to pay the higher insurance rates for city drivers.
Burns said that residents of his district who live in Woodlawn and Lochearn have higher rates than those in Randallstown, which he also represents, because they share a ZIP code with the city.
Marta Harting, counsel for State Farm Insurance, said territory as defined by ZIP code “is one of the most predictive factors” for the amount of car insurance claims owners can file.
She and other lobbyists for the industry said that under a law passed last year, the car insurance companies have to file a report with the insurance commissioner to show how the rates are “actuarially justified.” That means showing that vehicles garaged in a certain ZIP code incur a level of insurance claims that justify higher or lower rates.
Minor Carter, representing the mutual insurance companies, said that years ago insurance companies used territories that were “arbitrary and capricious.”
But now with ZIP codes, “everybody competes for the same territories,” Carter said. “It?s good for the consumers, it?s good for the regulators.”
“Statistics are readily available by ZIP code,” said Robert Enten, lobbyist for the Property Casualty Insurance Association.
“I know a Band-Aid when I see one,” said Burns, referring to last year?s bill.
The only thing that legislation really does is require a report, he said. It doesn?t require the companies or the insurance commissioner to change the rates.
