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Maryland Auto projects lower 2025 assessment as policy count shifts; insured division posting multi-year losses
Summary
Maryland Automobile Insurance Fund officials told the subcommittee that calendar 2025 operating spending will increase to $40.3 million, that insured-division net losses persisted in recent years, and that an assessment to shore up surplus is expected but smaller than earlier estimates.
The Maryland Automobile Insurance Fund (Maryland Auto) told the Transportation and the Environment Subcommittee that its calendar 2025 budget will rise to $40.3 million and that the fund expects an assessment on the industry to shore up reserves, though staff said the likely assessment for 2025 may be lower than earlier estimates.
Scott Benson, the legislative analyst, summarized DLS findings. Benson said the calendar 2025 budget increases by $2.7 million (7.3%) to $40.3 million, driven largely by personnel costs across the insured and uninsured divisions. He described recent insured-division net losses and said a prior-year assessment expected to bring roughly $22 million will affect the ending surplus.
Al Redmer, director of Maryland Auto (joining by livestream), said market dynamics since the pandemic — including other carriers tightening underwriting and later raising premiums — reshaped the Fund’s policy counts. "We cannot go out and generate additional policies; we only get what comes to us, that is not wanted by the standard market," Redmer said, describing how liberalized underwriting in 2021–22 and later retrenchment pushed more policyholders into Maryland Auto.
Key financial figures presented to the subcommittee: the insured division recorded a net loss of about $14.6 million in 2023 and about $21.0 million in 2024, with a projected improvement to a $13.7 million net loss in 2025 (DLS presentation). Maryland Auto said a planned assessment tied to prior-year results was expected to bring roughly $22 million but that December 2024 figures suggest the assessment may be below $20 million and that staff now estimate it could be near $15 million.
Redmer and the fund’s COO, David Pfeiffer, and controller, Amy Nell, told lawmakers the fund holds an investment portfolio of about $152 million. Fund officials explained that statutory accounting and required reserves (including incurred-but-not-reported, or IBNR, claims and unearned premiums) mean available cash and investments cannot simply be used to avoid an assessment under the existing statutory framework. "The calculation is in law," Redmer said. "If our surplus is below a certain threshold, we have to do an assessment."
Committee members asked how an assessment would translate to consumer impact. Maryland Auto staff said an assessment of roughly $21 million translates to about $3 for every $1,000 of premium (annual), which for a $2,500 auto policy would be approximately $6–$8 annually; staff said they expect the final assessed amount to be lower than earlier projections.
DLS and Maryland Auto staff outlined drivers of recent losses: increased claim frequency and severity since the pandemic, supply-chain delays that raised repair costs and rental-car days, higher vehicle thefts in certain areas, and a large share of Maryland Auto policyholders holding older vehicles and minimal coverage. Mary land Auto reported that its statewide rate inadequacy peaked in 2022 and declined in 2024 after rate increases; the insured division’s rate inadequacy was substantially reduced by rate filings that took effect in January 2025, and another rate change was planned for July.
On the uninsured-coverage side, the fund projected a near-term negative surplus for calendar 2025 (a modest deficit on the order of $191,000 by the fund’s projection), but officials said actuarial conservatism and increased statutory fine allocations make them confident the uninsured division will be in surplus by the end of 2025.
Officials also discussed affordability metrics and possible refinements to how affordability is measured and targeted. Redmer said the fund is exploring more-surgical, per-policy approaches and possible use of administrative data (for example, from the comptroller) to better target affordability measures, though implementing such approaches may require technology investment.
The subcommittee thanked Maryland Auto staff for the briefing and asked for additional detail and follow-up on IBNR and reserve components; fund staff agreed to provide requested actuarial and accounting breakdowns.
Less critical details: DLS recommended narrative language (not specified in testimony) and the fund signaled projections that policy counts may decline by about 20% in 2025 if standard-market carriers resume advertising and liberalize underwriting.
