Chair Bridal seeks new formula for Maryland Auto Insurance Fund affordability after reserve shortfall
Get AI-powered insights, summaries, and transcripts
Sign Up Free
Summary
Chair Bridal introduced a bill asking MAIF to replace a zip‑code affordability index with a phased, regulator‑approved method after regulators found the current geographic approach may conflict with statute and strained MAIF reserves.
Senate Bill 697, introduced by Chair (Bridal), responds to what witnesses described as a disconnect between zip‑code‑based affordability adjustments MAIF currently uses and the fund’s reserve health and assessments to private carriers.
Lede: The Maryland Insurance Administration (MIA) issued an order earlier this year questioning MAIF’s use of a geographic “affordability index.” MIA asked MAIF to phase out the index over two years and to propose an alternative approach. Senate bill 697 would authorize MAIF to adopt a new affordability method subject to MIA review and require MAIF to file a plan for a pilot or phased approach.
Why it matters: MAIF provides mandatory auto insurance for residents who cannot obtain private coverage. Testimony showed MAIF is carrying reserve shortfalls and recently required an assessment on private carriers (witnesses cited a forthcoming assessment under $20 million). MAIF officials said a zip‑code rule (which treats every household in a low‑income zip code the same) can create parity problems — for example, the same subsidy applying to mixed‑income zip codes — and they proposed a pilot to use better income verification or other criteria modeled on health‑exchange methods.
MIA position and proposals: MIA said it supports addressing affordability but flagged legal and statutory language issues; the regulator asked for a formal plan MAIF can implement and suggested an amendment to require a MAIF plan for how to calculate affordability and avoid unsustainable reserve drains.
MAIF proposal and amendment request: MAIF executives proposed a three‑year pilot process and asked the committee to allow time for MAIF and MIA to agree a workable verification and subsidy method; MAIF stressed it must balance the statutory mandate to provide affordable minimum‑limit coverage with the fund’s actuarial adequacy.
Stakeholder concerns: Short lines and the Canton Railroad (state‑owned) warned about the fiscal note’s potential for sum impacts and urged careful drafting to avoid unexpected costs for the Transportation Trust Fund or other assessments. Insurance trade groups signaled willingness to work but flagged uncertainties.
Ending: Sponsors and MIA said they will negotiate statutory language and MAIF will file a phased plan. Committee members asked for follow‑up language and data to be submitted to the committee before further action.