Maryland Auto forecasts shrinking surplus; officials outline surcharges, fees and rate steps to avoid assessments

Department of Legislative Services analysts told the subcommittee that the Maryland Automobile Insurance Fund — the state’s insurer of last resort — faces a falling surplus that could trigger industry assessments unless lawmakers or other policy measures are adopted.

Samantha Tapia, the DLS analyst, said the agency projected operational expenditures would rise about 15.3% to $35.7 million for calendar 2024 and that calendar 2023 produced an estimated net loss of roughly $12 million. DLS estimated the closeout surplus was near $20.9 million for 2023 — close to assessment thresholds — and said projections for 2024 could reduce the surplus to approximately $3.5 million absent further action.

Tapia told the committee DLS had asked Maryland Auto to comment on two topics: the effect of high policy cancellations on financial projections and the agency’s rate-setting model, including regional rate adequacy.

A Maryland Auto representative thanked DLS for its work and said the agency expects its audited fiscal statements in March. He told senators he was optimistic the agency would avoid triggering an assessment for 2024 but warned a 2025 assessment remains possible. He described industry forces that have increased claims costs — including higher repair costs, supply-chain delays and higher claim frequency and severity — and said Maryland Auto’s policy count doubled in roughly 18 months because private carriers tightened underwriting.

Agency leaders summarized options discussed with DLS and lawmakers: increasing Maryland Auto’s share of uninsured motorist fine revenue, assessing a $4 surcharge per insurer that could generate more than $20 million annually, or creating a $1–$5 per-vehicle registration fee that could raise between $5 million and $26 million depending on the rate. DLS recommended the committee ask Maryland Auto to provide quarterly financial statements through fiscal 2025.

The hearing included discussion of the Uninsured Division’s finances (funded by a share of uninsured-motorist fine revenue), where DLS noted claims inflation has outpaced the consumer price index used to adjust the allocation. No formal action or vote occurred in the subcommittee; lawmakers asked Maryland Auto to supply further documentation and the audited statements when available.