Maryland Auto says pandemic market shifts, not mismanagement, drive membership declines and affordability debate
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Summary
Maryland Auto and DLS told the subcommittee that policy counts fell after pandemic market shifts and competitors' underwriting changes; the insurer defended using an affordability index and warned large rate hikes in low‑income areas could push drivers uninsured.
Lawmakers questioned the sustainability and affordability of the Maryland Automobile Insurance Fund during a DLS briefing and company testimony that traced policy declines to market behavior after the COVID‑19 pandemic.
Kelly Norton, the DLS analyst, presented Maryland Auto’s calendar 2026 projections and highlighted falling policy counts, increases in average claim costs, and a projected net loss for the insured division. Norton said gross written policies declined by about 26% and policies in force declined by 29% in calendar 2025.
Mr. Redmer, representing Maryland Auto, framed the insurer as the "insurer of last resort" created by the General Assembly and described how pandemic conditions and competitors' responses changed market dynamics. He explained that some carriers used accumulated capital to capture market share and loosen underwriting, which reduced Maryland Auto’s pool. "When I arrived in May 2020...if you're not driving, you're not hitting things," Redmer said, describing how claim patterns shifted with reopening.
Redmer told senators the assessment triggered in 2025 equaled about "$3 per every $1,000 of premium." He also discussed affordability trade‑offs, saying Maryland Auto’s geographic affordability index helps keep some low‑income communities covered but has drawn regulatory critique from the Maryland Insurance Administration. He cautioned that raising rates 30%–53% in low‑income areas to reach solvency would likely drive many drivers uninsured.
Senators pressed on the size of the uninsured population and policy options. Redmer said the MVA‑generated list identified roughly 60,000 newly uninsured drivers last year (a ~20% increase), and described work group recommendations under consideration, including a possible six‑month policy term pilot and studying low‑cost plans that may require legislation.
DLS recommended that Maryland Auto provide updated financial statements and additional monitoring to allow the General Assembly to evaluate conditions and any need for statutory or administrative changes.