Maryland Insurance Administration increases spending for IT and staff as complaint and fraud metrics lag

Samantha Tapia, presenting the Department of Legislative Services review, said the Maryland Insurance Administration's fiscal 2025 operating allowance increases by about $7,400,000 (17.7%) to roughly $49,100,000, driven by personnel costs (about 71% of the budget) and IT investments.

Why it matters: MIA regulates an insurance market the administration described as roughly $46 billion; changes to MIA staffing and systems affect consumers' access to complaint resolution and the state's ability to detect and prosecute insurance fraud.

"Fiscal 2025 includes 15 new regular positions and additional contractual positions to address growing complaints and appeals," Tapia told the subcommittee, and she highlighted the ITS project to replace a legacy case-management system after a vendor default in March 2022.

The insurer regulator said the ITS vendor default prompted a revised approach: MIA worked with the Department of Information Technology and the state's master contract to restart design work using a Carousel contract. The Commissioner (name not specified on the record) said design work is concluding and implementation is expected to begin in late February or early March if DBM approves a requested budget amendment for start-up costs.

On fraud and complaints, MIA acknowledged declines in some performance measures compared with pre-pandemic levels. "We made an error when we submitted the information on our MFR. We transposed a number and we reported a 35 that should have been a 53," the Commissioner said, describing a reporting mistake that affected the fraud-closure metrics. The Commissioner added that recent hires, cross-training and new investigative training should improve throughput and referred questions about criminal fraud to the Attorney General's office, which supports the criminal fraud unit.

Senators pressed for transparency and additional data: members asked for the number of investigators in the fraud unit, turnover rates, and more granular tracking of referred cases that did not proceed to full fraud investigations. The Commissioner agreed to supply more detailed metrics next year and said the agency is examining how case triage and reporting can better show the universe of referrals, civil investigative work and producer-enforcement cases.

Next steps: DLS recommended committee narrative requesting ITS project updates in FY25; MIA agreed to return with further details on ITS implementation timelines, fraud caseloads and complaint-resolution performance.