MD's independent sedan transportation operators face another

Daily Record, The (Baltimore), Jul 26, 2005 by James Mosher

Already reeling from one insurance rate increase still under appeal, independent sedan transportation operators 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.

Steep 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. Cooke estimates there's been a 20 percent decrease in the number of licensed sedans operating in Baltimore City and Baltimore County since July 1.

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 we're 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!

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.

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. Cooke also differentiated between larger corporate sedan companies and independent firms. Insurance rates for independent operators have tripled in the last five years, he said.

Sedan owners will be presenting grievances twice this week. They have meetings with the Public Service Commission today and the insurance administration tomorrow. The meeting with the PSC, which regulates sedan companies, deals with streamlining procedures aimed at getting drivers licensed more quickly. Cooke called licensing a significant economic issue, yet the insurance matter far outweighs it, sedan industry people say.

If we don't get the insurance thing straightened out, nothing else matters, Galiani said.

Tomorrow's hearing, which will be presided over by P. Randi Johnson, associate commissioner of property and casualty, begins at 9:30 a.m. at the administration's fraud division on East Baltimore Street in Baltimore City. The meeting is open to the public.

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

Galiani had mixed reviews on Commissioner Alfred W. Redmer Jr.'s handling of the matter.

The problem has been there for a long time, she said. We're not blaming him [Redmer] or his administration for the problem. He was very attentive when he met with us. Yet we were hoping for a more rapid resolution.

MAIF officials have declined to speak with sedan owners, equating the pending appeal with litigation and citing a policy of not engaging in talks amid litigation, Galiani 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.