Kent Krabbe is executive director of Maryland Automobile Insurance Fund, a quasi-state agency that provides automobile insurance to eligible Maryland residents who have been turned down by two private carriers or canceled by one. Krabbe recently spoke to The Examiner about how an economic slowdown affects the industry and MAIF.
About how many state residents does MAIF assist annually? How is MAIF funded?
Business volume fluctuates from year to year. In the past 10 years, we?ve had as many as 160,000 insureds and as few as 73,000 insureds. Currently we have 90,000. MAIF is funded just like any other carrier. We operate off of the proceeds from sales of policies and the investment of those funds. We?ve never taken a nickel of taxpayer money.
How does an economic downturn affect operations with MAIF?
MAIF?s business is countercyclical to the economy. When the stock market is doing well, the private insurance market is up and MAIF business is down. The reverse is also true ? as the economy slows, it?s probable that MAIF business will increase.
Are more people unable to obtain insurance on their own in this economic environment?
Possibly. As private insurance carriers see profits declining, they are less likely to write new business. Some may find their best recourse is to come to MAIF.
Do rising gas prices have any effect on MAIF operations or consumer behavior with regard to automobile insurance?
It?s possible to drive a car without insurance, but not without gas. When people at the lower end of the economic spectrum encounter high gas prices, they sometimes have to make a choice, and unfortunately the number of uninsured drivers goes up.
