EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb1098*
HOUSE BILL 1098
C4 5lr1544
By: Delegates Fraser–Hidalgo and Wilson
Introduced and read first time: February 5, 2025
Assigned to: Economic Matters
A BILL ENTITLED
AN ACT concerning 1
Insurance – Automobile Insurance – Maryland Automobile Insurance Fund and 2
Affordability Study 3
FOR the purpose of requiring the Maryland Automobile Insurance Fund to calculate and 4
report its risk based capital level in accordance with certain provisions of insurance 5
law and maintain total adjusted capital in a certain amount; requiring the Maryland 6
Insurance Commissioner to review and determine the adequacy of an RBC plan filed 7
by the Fund; establishing that certain provisions of insurance law regarding prior 8
approval rate making apply to the Fund during a certain time period and under 9
certain circumstances; requiring Maryland Insurance Administration to establish a 10
workgroup to study automobile insurance affordability and submit a report to the 11
Governor and the General Assembly on or before a certain date; and generally 12
relating to automobile insurance. 13
BY adding to 14
Article – Insurance 15
Section 20–306 16
Annotated Code of Maryland 17
(2017 Replacement Volume and 2024 Supplement) 18
BY repealing and reenacting, with amendments, 19
Article – Insurance 20
Section 20–507 21
Annotated Code of Maryland 22
(2017 Replacement Volume and 2024 Supplement) 23
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 24
That the Laws of Maryland read as follows: 25
Article – Insurance 26
2 HOUSE BILL 1098
20–306. 1
(A) IN THIS SECTION, “COMPANY ACTION LEVEL RBC” HAS THE MEANING 2
STATED IN § 4–301(N)(1) OF THIS ARTICLE. 3
(B) THE FUND SHALL CALCULATE AND REPORT ITS RBC LEVEL IN 4
ACCORDANCE WITH TITLE 4, SUBTITLE 3 OF THIS ARTICLE. 5
(C) (1) BEGINNING DECEMBER 31, 2026, THE FUND SHALL MAINTAIN 6
TOTAL ADJUSTED CAPIT AL, AS DEFINED IN § 4–301(R) OF THIS ARTICLE , IN AN 7
AMOUNT THAT IS GREATER THAN OR EQUAL TO ITS COMP ANY ACTION LEVEL RBC. 8
(2) THE FUND SHALL PREPARE AN D SUBMIT AN RBC PLAN IN 9
ACCORDANCE WITH § 4–305(B) OF THIS ARTICLE IF A N RBC REPORT FILED BY THE 10
FUND UNDER SUBSECTION (B) OF THIS SECTION SHOW S THAT THE FUND’S TOTAL 11
ADJUSTED CAPITAL : 12
(I) IS LESS THAN THE FUND’S COMPANY ACTION LEVEL RBC; 13
OR 14
(II) 1. IS LESS THAN THE PRO DUCT OF 3.0 AND THE FUND’S 15
AUTHORIZED CONTROL L EVEL RBC, AS DEFINED IN § 4–301(N)(3) OF THIS ARTICLE; 16
AND 17
2. TRIGGERS THE TREND T EST CALCULATION INCL UDED 18
IN THE PROPERTY AND CASUALTY RBC INSTRUCTIONS . 19
(D) IN ACCORDANCE WITH § 4–305(D) OF THIS ARTICLE , THE 20
COMMISSIONER SHALL RE VIEW AND DETERMINE T HE ADEQUACY OF AN RBC PLAN 21
FILED BY THE FUND AS REQUIRED UNDE R THIS SECTION. 22
20–507. 23
(a) Subject to the authority of the Commissioner to determine whether rates are 24
excessive, inadequate, or unfairly discriminatory, as provided in Title 11, Subtitle 2 OR 25
SUBTITLE 3 of this article, the Executive Director shall determine the premiums to be 26
charged on policies issued by the Fund. 27
(b) (1) Except as provided in [subsection] SUBSECTIONS (c) AND (D) of this 28
section, the provisions of Title 11, Subtitle 3 of this article apply to the determination of 29
premiums by the Executive Director and the filing of rates with the Commissioner. 30
HOUSE BILL 1098 3
(2) Notwithstanding Title 11, Subtitle 2 OR SUBTITLE 3 of this article or 1
any other provision of this title, the Executive Director may base premiums on one or both 2
of the following items: 3
(i) the number of points accumulated by an insured or applicant for 4
insurance under the point system provided for in Title 16, Subtitle 4 of the Transportation 5
Article; or 6
(ii) the prior claims experience of an insured or applicant for 7
insurance. 8
(C) THE PROVISIONS OF TITLE 11, SUBTITLE 2 OF THIS ARTICLE APPL Y TO 9
THE DETERMINATION OF PREMIUMS BY THE EXECUTIVE DIRECTOR AND THE FILING 10
OF RATES WITH THE COMMISSIONER : 11
(1) BETWEEN JULY 1, 2025, AND DECEMBER 31, 2025, BOTH 12
INCLUSIVE; AND 13
(2) BEGINNING JANUARY 1, 2026, IF THE RBC REPORT MOST 14
RECENTLY FILED BY TH E FUND SHOWS THAT THE FUND’S TOTAL ADJUSTED 15
CAPITAL IS LESS THAN THE AMOUNT REQUIRED UNDER § 20–306(C)(1) OF THIS 16
TITLE. 17
[(c)] (D) (1) Premiums for all commercial coverage shall be determined in 18
accordance with this section and § 20–508 of this subtitle. 19
(2) Notwithstanding paragraph (1) of this subsection, the rating principles 20
under subsection [(d)] (E) of this section may not be used to determine the premium for 21
commercial coverage. 22
[(d)] (E) In reviewing rates filed by the Fund, the Commissioner shall consider 23
not only the rating principles under Title 11, Subtitle 2 OR SUBTITLE 3 of this article but 24
also the statutory purpose of the Fund under § 20–301 of this title. 25
[(e)] (F) (1) The Motor Vehicle Administration and Executive Director may 26
arrange for the Motor Vehicle Administration to collect premiums on policies issued by the 27
Fund when the Motor Vehicle Administration issues a driver’s license or certificate of 28
registration. 29
(2) A premium collected under this subsection shall be paid to the State 30
Treasurer for the account of the Fund. 31
[(f)] (G) (1) The Fund may not provide directly or indirectly for the financing 32
of premiums. 33
4 HOUSE BILL 1098
(2) A premium may be financed only by a premium finance company 1
registered with the Commissioner in accordance with § 23–201 of this article. 2
(3) If a prospective insured’s initial payment to the Fund, a fund producer, 3
or premium finance company is not honored, a policy or endorsement issued in reliance on 4
that payment is void. 5
[(g)] (H) (1) (i) Subject to the approval of the Commissioner and in 6
accordance with this subsection, the Fund may accept premiums on an installment 7
payment basis. 8
(ii) In approving the Fund’s plan for accepting premiums on an 9
installment payment basis, the Commissioner shall: 10
1. consider as factors: 11
A. the percentage of the initial premium payment in 12
comparison to the total premium under the policy; 13
B. the number of installment premium payments accepted on 14
a policy under the installment payment plan; and 15
C. the overall affordability of the installment payment plan 16
in comparison to other payment options available to the policyholder; and 17
2. ensure that the Fund’s installment payment plan 18
meets the requirements of § 27–216 of this article. 19
(2) The Fund may not discriminate among insureds by charging different 20
premiums to insureds who select, as a payment option, the Fund’s installment payment 21
plan instead of a premium finance agreement. 22
(3) In determining commissions paid to a fund producer, the Fund may not 23
consider whether the fund producer placed an insured in an installment payment plan. 24
(4) (i) In accordance with this paragraph, written and electronic 25
communications, including the Fund’s website, affecting the placement of coverage by the 26
Fund or a fund producer shall include a statement, on a form approved by the 27
Commissioner, advising an applicant or an insured of the payment options available to the 28
applicant or insured. 29
(ii) The statement shall state that the applicant or insured has the 30
following payment options: 31
1. the Fund’s installment payment plan; 32
2. a premium finance agreement; or 33 HOUSE BILL 1098 5
3. payment of the policy in full. 1
(iii) The statement shall be included on written or electronic 2
communications at the time the applicant or insured: 3
1. is issued a new policy; or 4
2. is issued a reissuance, rewrite, or renewal of an existing 5
policy. 6
(iv) The statement shall state that the applicant or insured should 7
consult a fund producer who will fully describe the terms of each payment option. 8
[(h)] (I) (1) If the Fund makes a change to its plan for accepting premiums 9
on an installment payment basis, within 90 days after the change, the Commissioner shall 10
submit a report to the General Assembly providing the reason for the change. 11
(2) The report required under paragraph (1) of this subsection shall: 12
(i) include the effect the change will have on the required factors for 13
consideration under [(g)(1)(ii)1] SUBSECTION (H)(1)(II)1 of this section; and 14
(ii) be submitted in accordance with § 2–1257 of the State 15
Government Article. 16
SECTION 2. AND BE IT FURTHER ENACTED, That: 17
(a) The Maryland Insurance Administration shall establish a workgroup to study: 18
(1) the affordability of private passenger automobile insurance in the 19
State, including factors that contribute to premium rate increases and trends in rate 20
increases; 21
(2) policy options to provide greater transparency regarding automobile 22
insurance premiums and to increase the affordability of automobile insurance in the State; 23
(3) ways in which the term “affordability” has been or may be defined in 24
the context of the establishment of private passenger automobile insurance premium rates; 25
and 26
(4) methodologies by which affordability can be considered in establishing 27
private passenger automobile insurance rates consistent with rate making principles 28
codified in the Insurance Article. 29
(b) The workgroup consists of the following members: 30
6 HOUSE BILL 1098
(1) one member of the Senate of Maryland who is a member of the Finance 1
Committee, appointed by the President of the Senate; 2
(2) one member of the House of Delegates who is a member of the Economic 3
Matters Committee, appointed by the Speaker of the House; 4
(3) the Maryland Insurance Commissioner or the Commissioner’s 5
designee; 6
(4) the Executive Director of the Maryland Automobile Insurance Fund, or 7
the Executive Director’s designee; and 8
(5) the following members, appointed by the chair of the workgroup: 9
(i) one representative of an automobile insurer or automobile 10
insurer trade association; and 11
(ii) one representative of a consumer advocacy group that is active 12
in the area of automobile insurance. 13
(c) The Maryland Insurance Commissioner or the Commissioner’s designee shall 14
chair the workgroup. 15
(d) On or before January 1, 2026, the workgroup shall report its findings and 16
recommendations to the Governor and, in accordance with § 2–1257 of the State 17
Government Article, the General Assembly. 18
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 19
1, 2025. Section 2 of this Act shall remain effective for a period of 1 year and, at the end of 20
June 30, 2026, Section 2 of this Act, with no further action required by the General 21
Assembly, shall be abrogated and of no further force and effect. 22