Several lawmakers again will resist a proposal requiring the state-operated auto insurance fund to accept installment payments despite high-profile backing including Gov. Martin O?Malley.
Advocates said legislation requiring the Maryland Automobile Insurance Fund ? a fallback insurer for many low-income motorists ? to accept payment installments like private companies, can save the average customer as much as $300. Many MAIF customers can?t afford to pay their premium upfront and have to turn to finance companies, which charge 20 percent or more in interest and fees, supporters said.
“This is an issue of fundamental fairness,” said Steve Silverman, chief of the State?s Attorney General?s Consumer Protection Division.
The legislature established MAIF as a fallback for high-risk drivers in 1972 when it made auto insurance mandatory for all drivers and required drivers pay the full premium upfront. Advocates said the proposal unfairly target?s MAIF?s customers ? mostly low-income, minority residents concentrated in Baltimore City and Prince George?s County who can?t get insured within the regular market.
Lawmakers have unsuccessfully considered authorizing payment installments for the past three years. The proposal this year has the backing of O?Malley, Senate President Mike Miller and the administrations of Baltimore Mayor Sheila Dixon and Prince George?s County Executive Jack Johnson.
But several lawmakers said MAIF?s 76,000 customers are also risky creditors and drivers, justifying finance companies? higher interest rates. Rich or poor, many customers just don?t pay their bills on time, lawmakers said.
“It?s easy to want to help poor people, and I understand that,” said Carolyn Krysiak, a Baltimore City Democrat. “I just don?t think, to characterize them as having to go to MAIF because they arepoor is fair.”
Finance company executives said the proposal could run them out of business. Estimated savings per customer would be $50 to $100 with in-house installment payments, they said.
Eddie Miller, a Queen Anne?s County electrician said he turned to MAIF and a finance company when he and his wife first married, both juggling several jobs and night school.
After renewing their policy for a second year, that company never notified the couple of the increased premium, Miller said. The company collected their fees, but never paid the premium, he said, as they drove on uninsured tags for months.
“We could have spent our hard-earned money on items that would have spurred growth in our local economy,” Miller said.
