[{"_1":2,"_76":-5,"_77":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},"mediaId",6373678,"mediaKeyId","2145640-3335df6086a0493d3b013d7022c32d43","parentId",2145640,"title","Maryland Auto fund: regulator order to phase out affordability index could raise premiums in low‑income ZIP codes","audioSeconds",2408,"startMs",117000,"endMs",2525000,"viewUrl","/Search/View?dp=1&key=2145640-3335df6086a0493d3b013d7022c32d43&start=117&end=2525","thumbnailUrl","https://assets.pipeline.soar.com/2145640-3335df6086a0493d3b013d7022c32d43/thumbnail_117000.jpg","articleUrl","/articles/6373678/Maryland/Maryland-Auto-fund-regulator-order-to-phase-out-affordability-index-could-raise-premiums-in-lowincome-ZIP-codes","mediaUrl","https://secure.pipeline.soar.com/6373678-a86b240c674f05cad63d58bb7185e951/orig.mp4?Expires=1773575353&Signature=n~YWvkHEAJ75HHAYNcOAQ9hc2XVS4-jZZUzV2k8C~uaqReCvnHXh-wf0qRakx88QpcsHM2YF2G2s25JN9a8BvNUmmPN3eUUqNCuRibEUDq7vh7zUAgnh66vmpnweTSLejKCU7gNh9lMAbq2MCggQUgX~~4Ze~lQcOyKpjQaN5qHGmcg-JuNYR2VFsURqW3uKUXmqtEZBZiyeXYtm-o9RR9n0MF9qKYoQIO5PMgxG85nd-nruUGO4qH-dYaf4LBcJ6TXQQ88bwNAiNhYRRhHgbUWRJzqO1sYsnVTON5N8ogeUshx0xA-jMKaKDM0XNKWHX0L57B0WlfTnoKj-T65dCw__&Key-Pair-Id=KUT5TJCACFTXG","author","Maryland General Assembly - Finance","date","2025-01-23T00:00:00Z","article","Maryland Auto Insurance Fund officials told the state Finance Committee that a Maryland Insurance Administration order to phase out the fund’s long‑standing “affordability index” by the end of 2026 could sharply raise premiums for drivers in low‑income ZIP codes.

The Fund’s director said the assessment the board will certify in March 2025 — currently projected at roughly $20 million based on preliminary 2024 results — helps keep premiums lower for people who cannot obtain coverage in the standard market. The director also said the Fund will implement a 13% rate increase later in the week.

The fund, created by the General Assembly about 50 years ago, provides a backstop market for drivers who cannot obtain coverage through standard insurers. “Maryland Auto was created by the General Assembly 50 years ago in an effort to reduce the number of uninsured drivers,” the director told the committee. He explained the Fund’s dual mission: reduce uninsured driving and provide an option for drivers excluded from the regular market.

Fund officials described the typical policyholder as younger, lower income, and often purchasing only minimum liability coverage. The director said about 71% of the Fund’s policyholders have liability‑only policies and that almost all policyholders buy only the minimum statutory limits. He added that roughly half of Fund policies cancel before year‑end.

The Fund’s affordability index adjusts minimum‑limit premiums by ZIP code so that, in each ZIP code, the Fund’s minimum liability premium for a representative policy remains near 3.3% of median income for that ZIP code. Officials said that without the index, rates in affected low‑income areas would be 20%–40% higher.

The Maryland Insurance Administration (MIA) told the Fund in a recent order that the agency will not accept the Fund’s current ZIP‑code affordability method and directed the Fund to eliminate that mechanism by the end of 2026. “The Insurance Administration does not like the affordability index because they believe it’s discriminatory,” the director told the committee, summarizing the regulator’s position that a ZIP‑code‑based adjustment can give benefits to higher‑income people living in a low‑income ZIP code while excluding low‑income people who live in higher‑income ZIP codes.

Fund officials told lawmakers the board expects to certify an assessment in March based on audited 2024 results. The director said the board had been projecting a $21,000,000 assessment after closing books in November but that December figures make it “hopeful that it’s going to be less than that, maybe even a little bit less than $20,000,000.” He illustrated the assessment’s scale by saying a $21 million assessment would equal about $3 for every $1,000 of premium — about $6 on a $2,000 annual policy if a carrier passed the cost through in rates.

Committee members pressed Fund staff on how rates are set by territory. Senator Washington asked why premiums can differ sharply between contiguous ZIP codes; the director attributed differences to varying accident and congestion rates inside ZIP boundaries and to insurers’ choice of territory definitions. The director also said the MIA receives accident and loss data used in rate reviews but that the data are not publicly released.

Senators also asked whether the Fund uses telematics (vehicle tracking) to price individual risk; Fund staff said they had considered it but found it too costly to implement at scale. On the question of how carriers will handle a certified assessment, Fund staff described options — carriers could absorb the cost, build it into their operating expenses and rates, or handle it in other ways — and noted that practices and rules about recoupment vary by state and by carrier.

Fund staff said the affordability index currently applies to about 50 ZIP codes out of 477 statewide, concentrated primarily in and around Baltimore City. Officials also noted that the Fund’s general and administrative expenses are about 10% of premium and that the Fund has roughly 200 employees.

No formal committee action or vote occurred during the briefing. Committee staff told members that several bills relating to the Maryland Auto Insurance Fund are expected in upcoming hearings, giving lawmakers further opportunity to question the Fund and consider changes.

The Fund’s presentation and the committee’s questions underscored a policy tension: regulators’ concerns about geographic methodologies that could be treated as discriminatory, and the Fund’s view that ZIP‑code adjustments have kept premiums more affordable for low‑income communities that otherwise would face much higher rates.","mediaType","Video","parentTitle","FIN Committee Session, 1/23/2025 #1","oneSentenceSummary","At a Finance Committee briefing, Maryland Auto Insurance Fund officials said a Maryland Insurance Administration order to phase out their affordability index by the end of 2026 could push rates 20%–40% higher in low‑income ZIP codes and that the fund expects to certify an assessment near $20 million in March based on 2024 results.","taxTitle","Finance Committee, SENATE, SENATE, Committees, Legislative, Maryland","taxId",15094,"location","Maryland","headline","","shortSummary","actionData","errors"]

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Maryland Auto fund: regulator order to phase out affordability index could raise premiums in low‑income ZIP codes