Proposed Legislation to Allow PG co. Residents to Choose Automobile Insurance Rates
DELEGATE MARVIN HOLMES PROPOSES LEGISLATION TO GIVE PRINCE GEORGE'S COUNTY RESIDENTS A CHOICE ON AUTOMOBILE INSURANCE RATES
(February 16, 2006) - Prince George's County Delegate Marvin Holmes recently introduced House Bill 1505, legislation that would benefit Maryland residents who purchase insurance through Maryland Automobile Insurance Fund (MAIF). Prince George's County has the largest number of MAIF policyholders at 28%. If approved, the proposed legislation would give MAIF policyholders, the option of paying premiums through installments, rather than in advance. MAIF is the only insurance company in Maryland that cannot accept installment payments from its policyholders.
Currently, state law prohibits MAIF from allowing its customers to pay their premiums through installment billing. Without money to pay an entire premium in advance, these customers must borrow from high cost finance companies, adding hundreds of dollars in interest and hidden fees to the cost. In many cases, these Premium Finance Companies (PFC's) will charge APR's of 26% and higher to the policyholder. And unlike credit cards, when a MAIF insured cannot make the PFC payment, the PFC will cancel the insurance policy. Many of these policyholders will then choose to forgo insurance and drive without coverage. Approximately 96% of all MAIF policies are financed through PFC's and over 60% of MAIF cancellations are at the request of PFC's.
Delegate Holmes said, "I look forward to passage of this legislation and to lower car insurance rates for the nearly 30,000 MAIF customers in Prince Georges County". "The issue of MAIF accepting installment payments from its customers has always been an issue of choice," said M. Kent Krabbe, MAIF's Executive Director. "We have the capability and knowledge at MAIF to bring this option to our customers. Direct billing at MAIF is the moral and sensible thing to do. My sincere thanks to Delegate Holmes for giving a voice to our policyholders in Prince George's County and throughout Maryland."
The Maryland Automobile Insurance Fund is a quasi-state agency that provides automobile insurance to eligible Maryland residents that have been turned down by two private carriers or cancelled by one. MAIF receives no General Funds or taxpayer money from the State of Maryland. Its operating funds are comprised of insurance premiums written and from MAIF's investment income.
# # #
