Maryland's Insurance Commissioner has launched a major investigation of possible insurance redlining in Prince George's County, after complaints that some insurers are denying home and auto coverage to residents of more than a dozen communities there.

The communities all are inside the Beltway; their residents generally are poor or lower middle-class and they tend to be neighborhoods that either are changing racially or moving downward on the socio-economic ladder, according to officials in the commissioner's office.

The office has received complaints from agents who say they are not permitted to write insurance policies in these areas or individuals who say they cannot get insurance because of their homes's location, Commissioner Edward J. Birrane Jr. said yesterday.

Birrane also disclosed that he had imposed a fine of $150,000 against the American Mutual Insurance Company of Boston for denying auto and homeowners' coverage to most applicants from Baltimore's inner city.

A lawyer for American Mutual yesterday denied that the company had "violated either the spirit or the letter" of Maryland's anti-redlining laws. He said the firm will "most likely" appeal Birrane's ruling in state courts.

Birrane said the fine - the highest ever imposed by the state against an insurance company - should serve as a warning to all companies that redlining will not be tolerated in Maryland.

When insurers decline to write or renew coverage of property simply because of its location, the deterioration of a community usually accelerates; and without insurance, mortgage money dries up, according to a recent report on redlining by the U.S. Department of Housing and Urban Development.

The HUD report concluded that "insurance availability and insurance affordability in urban areas are crises of monstrous proportions."

The problem has been recognized as a national one, and Birrane said yesterday that there has been a growing number of complaints about lack of availability of insurance in poorer areas all over Maryland.

In Prince George's County, Birrane said the investigation has been sparked by complaints from Bladensburg, Capitol Heights, District Heights, Glenarden, Kentland, Suitland, Palmer Park, Seat Pleasant, Temple Hills, Hillcrest Heights, Fairmount Heights, Colmar Manor, Boulevard Heights and Cottage City.

Birrane's office has received complaints both about companies refusing to write policies and also about companies imposing special restrictions on policies written in certain communities, according to Gene Graham, of the commissioner's office.

In two instances, the commissioner's office received allegations that insurance companies insisted that policies be written with unusually high $500 or $250 deductible clauses, according to Graham.

Graham said insurers generally take the following criteria into account when deciding if a property is a good or bad insurance risk: the age of the dwelling, the type of construction, the availability of fire protection, the density of residences in the area and the property's general condition.

Today, in urban areas, Graham said two other points are also taken into account: whether the neighborhood is changing economically or racially and whether the property values are going up, going down or remaining the same.

"You can consider these [points], but if you use them as an excuse not to write a policy regardless of the condition of a particular home, that would be discrimination," he said.

Graham said applicants seldom are told bluntly that they will not get insurance. Instead they may be told coverage is not available because they just moved to the neighborhood or the company already has too much business in the neighborhood, he noted.

Though most of the allegations coming from Prince George's County involve homeowners' insurance, some deal with alleged denial of auto insurance, Graham said.

The Prince George's communities within five miles of the District of Columbia already have higher auto insurance rates than most of the state's other areas, Birrane said.

For instance, complete auto coverage from the Travelers Group that would cost a driver more than 30 years old $318 annually if he lives in Montgomery County within five miles of the District of Columbia, would cost that same driver $403 annually if he lived in Prince George's County within five miles of the District of Columbia, Graham said.

The higher rates are set to allow the companies to write insurance in areas where they say they assume greater risks, Birrane said.

"I will not tolerate this cruel procedure whereby an insurer asks for high rates in an area, and then carves out certain pices of that area as 'undersirable' anyhow," the commissioner asserted.