Maryland regulators point to repair, reinsurance and underwriting shifts as drivers of rising auto and homeowners premiums

The Maryland Insurance Administration told members of the Economic Matters Committee that rising repair costs, higher reinsurance prices and shifts in underwriting are the main drivers behind recent increases in private passenger auto and homeowners insurance premiums.

Marie Grant, acting insurance commissioner, opened the briefing and said the agency plans to use its existing authority to scrutinize filings and study affordability across Maryland. "We do have authority in this space," Grant said, adding the agency has a new actuary on its property-and-casualty team to ask "harder questions" about rate filings.

The agency's deputy insurance commissioner, Joy Hatchett, explained how rates are set and why consumers see different premiums. "Premiums are based on future projections," Hatchett said, describing how insurers use actuarial models that factor in past losses, expected repair costs, operating expenses, producer commissions, taxes and the cost of reinsurance. She added that insurers typically file a proposed rate and then may begin charging it under Maryland's file-and-use framework while regulators review it.

Why it matters: Committee members pressed regulators on what they can do for consumers facing steep increases and on how national events — such as the homeowners market disruption in California — can affect Maryland policyholders. Grant said the MIA will take a deeper look at affordability and consider whether additional authority or different review practices are needed.

Key facts and data: The MIA told the committee that 126 private passenger auto carriers and 116 homeowners carriers submitted Market Conduct Annual Statement (MCAS) data for 2023. Excluding the Maryland Automobile Insurance Fund (the state "payer of last resort"), 142 companies reported positive premium in 2023 and collectively wrote almost $6,500,000,000 in premium. Those carriers accounted for roughly 2.9 million policies insuring more than 4.4 million vehicles; the Maryland Automobile Insurance Fund represented about 1.56% of the market by premium.

The MIA reported an increased share of nonstandard auto business — policies written for higher‑risk drivers — from about 26% of carriers' business in 2021 to roughly 34% in 2023. The MCAS data also show an increase in claims opened of slightly under 5% over the period cited by the agency. The MIA said inflation in parts and labor, increased vehicle technology complexity, and continuing distracted‑driving trends are contributing to higher loss costs.

Regulatory limits and practices: The commissioners reiterated that Maryland uses a "file-and-use" rate filing system: insurers may begin charging a filed rate once it is filed with the MIA, and the regulator subsequently reviews the filing to determine whether it is actuarially justified and not unduly discriminatory. Hatchett said some other states require a waiting period or a special review threshold (for example, for filings above a given percent) before a filed rate goes into effect. Grant said the MIA is conducting a deeper review of filings and has added actuarial capacity to press more detailed questions.

Consumer issues and market hardening: The agency highlighted homeowners market shifts the committee has already noticed: insurers increasingly rely on roof age limits, raise or add multiple deductibles (for wind, roof, etc.), move from replacement‑cost valuation to actual cash value for older roofs, and conduct property inspections that can lead to nonrenewal if a property does not meet underwriting guidelines. The MIA noted that nonrenewals rose in the most recent period; it said specific reasons for each nonrenewal are company‑level underwriting decisions and often are not available in the aggregate data.

On grace periods, the MIA clarified a key consumer protection difference across lines: for most property and casualty policies there is no statutory grace period that obliges an insurer to keep a policy in force if a premium payment is missed. In response to a committee question, Hatchett said, "That sadly, that is correct," when asked whether a single missed payment can lead to a homeowner losing coverage for a subsequent loss under the terms of many P&C policies. She said the agency would provide the committee the statutory citation for the life/health grace‑period law cited during the hearing.

Questions from committee members touched on advertising claims about mileage discounts, the interaction between commercial warranties (for example, roofing warranties) and insurance underwriting, the limited availability of coverage in certain waterfront and coastal areas (including concerns raised about Ocean City and mobile homes), and how emerging technologies such as telematics and assisted driving programs can affect rates. Hatchett noted telematics programs can change driving behavior and that some carriers offer pay‑per‑mile or usage‑based discounts; she said the MIA is monitoring self‑driving technology but that reliable long‑term risk models are not yet available.

What’s next: Grant said the MIA will perform a statewide affordability review, continue market conduct oversight using its new actuarial staff, and watch developments in other states (including California's market experience) that could affect reinsurance costs and national insurers' pricing. The agency provided contact information to committee members and said it will follow up with statutory citations and additional material.

Ending: The briefing closed after roughly an hour of presentation and committee questions. Members urged clearer, consumer‑facing explanations of why rates rise; the MIA said disclosures exist in policy contracts and notices but acknowledged consumers often do not read or fully understand them and that the agency will pursue improved public education alongside regulatory review.