Maryland Auto Insurance Fund forecasts smaller assessment as policy count and claims shift

Maryland Auto Insurance Fund officials told the Transportation and the Environment Subcommittee that the fund's calendar 2025 budget will rise and that ongoing industry shifts could reduce the assessment the fund expects to levy on insurers.

Scott Benson, the committee's legislative analyst, summarized Department of Legislative Services findings that calendar 2025 budgets increase by $2.7 million (7.3%) to $40.3 million, and that the insured division is driving most of the change. Benson noted the insured division has operated at a net loss since 2023 and that an assessment projected for 2025 would help restore surplus levels.

Maryland Auto's government relations manager, Devon Brown, introduced the agency panel and turned the presentation to Director Al Redmer. Redmer told the committee that market behavior following the pandemic first reduced claims and then led to large losses in 2021–2022 as carriers tightened underwriting and stopped writing certain risks. "Beginning in the second half of 22, they stopped writing as much new business, and those folks had no place to go, but to come to us," Redmer said. He said Maryland Auto's policy count more than doubled over the last two years because standard-market carriers reduced new business.

Nut graf: Agency officials said that while calendar 2025 shows continued costs, they now expect the 2025 assessment to be below earlier estimates (Redmer said it may be below $20 million and possibly about $15 million), contingent on evolving industry conditions and policy counts returning toward normal.

Panelists described the insured division's financial picture: Scott Benson and Al Redmer cited prior-year net losses (about $14.6 million in 2023, $21 million in 2024 estimated) and a projected 2025 insured-division net loss of $13.7 million before assessment. Redmer said December 2024 numbers improved the outlook and that an assessment based on 2024 could be "somewhere below $20,000,000" and perhaps nearer to $15,000,000 for the 2025 assessment.

Maryland Auto's COO David Pfeiffer and controller Amy Nell described rate actions taken by the fund: a roughly 6.5% increase in 2023 and a 13.8% increase that took effect in January 2025, with an additional change planned for July. The uninsured division (the victims fund) showed an estimated negative surplus this year but officials said they expect the division to be in surplus by the end of calendar 2025 and described the posted negative surplus as a conservative actuarial result tied to claim reserves.

Committee members asked whether the fund's investment portfolio could be used to avoid an assessment. Agency officials explained that statutory accounting treats reserves and unearned premiums as liabilities; Redmer said the fund holds an investment portfolio (described in testimony at about $152 million) but liabilities for reserves (about $80 million) and unearned premiums constrain how much of the portfolio can be applied to reduce the assessment under current law. "The calculation is is you take, and again, I'll I'll let, as Amy always does, she corrects me when I'm wrong, so she'll do so again this time. So if if we take a $152,000,000 that's cash in the bank," Redmer said, and later the panel described how statutory accounting differs from cash flow.

Officials estimated the per-policy impact of a $21 million assessment at about $3 per $1,000 of premium (roughly $6–$8 per policy in the example provided) and said the expected assessment near $15 million would be smaller. They cautioned that the fund's future assessments depend on market underwriting behavior and the number of policies the standard market writes.

Ending: Committee members thanked agency staff and said they will continue oversight with the Maryland Insurance Administration and the Economic Matters Committee; no formal vote was recorded in the transcript.