3366

VETOES

claimants left without protection when an insurer becomes
insolvent to apply to MIGA for payment must substantially
delay final resolution of their claims. MIGA operates with
full-time staff of eight or nine; suggestions that its staff
be significantly increased as a result of this new law are
untenable as insurance insolvencies occur infrequently and
unexpectedly. A major insolvency would overwhelm MIGA's
limited manpower, with long settlement periods the obvious
consequence.

Farming claims out to independent adjustors would also
unnecessarily hamper prompt reparation to the insured.
Claims files, initially prepared by MIGA, must be turned
over to the adjustors who only then could begin their
investigation of the claim. Additional information would
presumably be funneled through MIGA, the claimant's insurer
- resulting in additional delay. Finally, the claimant
would be required to await MIGA's final review of the
adjustors' settlement or recommendations before he could
expect final resolution of the claim.

Against these time-consuming methods for settling
covered claims, the procedure presently followed by insureds
with such claims is appreciably less ponderous and
circuitous. By looking directly to the uninsured motorist
coverage carrier, the claimant is the immediate beneficiary
of the liability insurer's claims adjusting infrastructure.
The time which would be wasted under the new law while MIGA
struggles under an overwhelming work load or awaits the
independent adjustors' determinations, could be used
profitably by the uninsured motorist coverage carrier in
promptly processing the claim.

All motor vehicle liability insurance policies written
in Maryland must include an uninsured motorist endorsement.
Obviously, a portion of the insurance premium paid by the
insured is consideration for the insurer's acceptance of the
risk of a claim against that uninsured motorist coverage.
If the Bill is allowed to pass into law, the insurer's risk
under the uninsured motorist endorsement would be
gratuitously delivered to MIGA. The insurer has, in effect,
collected premiums while undertaking no risk. This absurd
result is compounded when the insurance consumer pays again
for protection against insolvent insurers when casualty
insurers recoup the pro rata MIGA assessments that will
follow any payment of claims by MIGA through premium rate
hikes permitted under Md. Code Ann., Article 48A, Section
516.

In addition to these statutory and practical failings
of the Bill, we believe that it includes several serious
constitutional infirmities. Section 481A as amended alters
the insured's uninsured motorist coverage by reducing it to
excess insurance after MIGA handles the claim, thereby
retroactively impairing the contractual rights and