Maryland lawmakers address auto insurance affordability and regulatory oversight updates

The Economic Matters Committee of the Maryland General Assembly convened on February 19, 2025, to discuss critical issues surrounding the Maryland Auto Insurance Fund (MAEF) and the rising costs of auto insurance in the state. The session focused on a proposed bill aimed at addressing affordability and financial stability within the auto insurance market.

The meeting began with an overview of the bill, which seeks to define affordability for MAEF and includes a study to better understand the factors contributing to skyrocketing auto insurance rates. Committee members expressed concerns about the increasing costs associated with newer vehicles, particularly the expensive technology that complicates repairs, such as advanced camera systems in windshields.

Key provisions of the bill include a requirement for MAEF to maintain a financial surplus and a shift from a "file and use" system to a prior approval process for rate changes. This change aims to enhance oversight and ensure that rates are more closely monitored, potentially preventing future assessments that could impact all policyholders in Maryland.

Marie Grant, the acting insurance commissioner, supported the bill, highlighting its three main objectives: establishing a surplus requirement for MAEF, enabling prior approval for rates when the surplus falls below a certain threshold, and conducting a comprehensive study on affordability in the auto insurance market. Grant noted that the bill would provide the Maryland Insurance Administration with greater regulatory authority to monitor MAEF's financial health.

Committee members raised questions about the necessity of the bill, given that MAEF has been operational for nearly 50 years without significant assessments. They discussed the implications of the affordability index currently used by MAEF, which caps premiums based on median income in specific ZIP codes, and how this impacts low-income drivers who often rely on MAEF as their insurer of last resort.

The discussion also touched on the historical context of MAEF's financial situation, noting that changes in legislation since 2017 have limited oversight of rate filings, leading to a decline in surplus. Members emphasized the importance of addressing the affordability crisis faced by consumers, as many residents are feeling the burden of rising insurance costs.

The meeting concluded with a commitment to continue discussions and refine the bill with input from stakeholders. The committee plans to further explore the implications of the proposed changes and their potential impact on Maryland's auto insurance landscape.