01/13/11 Maryland Auto Insurance Fund
The Maryland General Assembly has 90-days to close a $1.6 billion budget gap. It has skated by in the past by relying on federal bailouts and gimmicks. Furloughing state workers is a gimmick. It’s a one-time fix for a current budget cycle that doesn’t resolve the long term problem of the state overspending.
Maryland should focus on core responsibilities such as maintaining highways, managing public infrastructure, ensuring public safety and funding education. That sort of thing.
It should get-out of the business of everything else. Such as: the Maryland Automobile Insurance Fund, or MAIF. ItÃ¢Â€Â™s the state agency where really bad drivers get auto insurance. ItÃ¢Â€Â™s the only one of its kind. The other 49 states and the District of Columbia have private industry fulfill this role.
MAIF hasnÃ¢Â€Â™t been very responsible. In 2008, it lost nearly $21 million. But still gave nearly $1.4 million in bonuses to about 425 of its 525 employees.
In all fairness, shortfalls are made-up by increasing the cost of premiums. The state treasury has no obligation. Yet, selling bad driver insurance shouldn’t be a state function. Now the real cost to the taxpayers is that MAIF’s employees are state workers who retire on the Maryland Pension System. Which is grossly underfunded.
The General Assembly should privatize the Maryland Automobile Insurance Fund. And the state will be one-small step closer to getting its financial house in order.