The Maryland Insurance Administration (MIA) has taken corrective actions against certain insurers of the Erie Insurance Group after a market conduct examination uncovered unlawful practices resulting in fewer Erie policies written and renewed in urban ZIP codes, particularly in Baltimore City.
The examination resulted in a Market Conduct Examination Report. As stated in the report, the examination found that Pennsylvania-based Erie encouraged insurance agents affiliated with its companies to engage in a practice they called “front line underwriting," in which the agents were encouraged to reject otherwise qualified applicants who they deemed might be unprofitable for the company. Once an insurer establishes its underwriting eligibility guidelines and rates and files those rates with the MIA, it cannot under Maryland insurance law refuse to issue a policy to anyone who meets those guidelines.
The MIA's examination also found that Erie agents were penalized if their books of business resulted in a certain loss ratio, regardless of whether their customers qualified for Erie coverage. The penalties included reduced commissions and termination. The MIA found that this reliance on loss ratio primarily impacted insurance agents serving urban areas such as Baltimore.
As part of the Market Conduct Examination Report, the MIA and Erie agreed to a consent order with corrective actions. Under the order, Erie must:
- Cease and desist from all unlawful practices, including front line underwriting and direct or indirect use of adverse loss ratios, except as permitted by law.
- Submit a corrective action plan for review and approval to the MIA.
- Submit a list of all agent terminations and commission reductions, with an explanation of the actions, and prepare an efficient process for resolving any adverse findings concerning the proprietary of those actions.
- Pay an administrative penalty of $400,000, due within one year of the order. If the MIA finds that the company is in continued compliance with the order, $200,000 of the penalty will be waived.
The investigations began in 2021, based on complaints from four insurance agencies about Erie's practices. In 2023, the MIA issued four public determination letters stating that Erie had violated Maryland state insurance law.
Before the Market Conduct Examination Report was released, Erie filed due process complaints in U.S. District Court. The MIA prevailed in that case, and Erie appealed to the U.S. Fourth Circuit, which ruled in favor of the MIA in June 2024. The MIA then entered into settlement discussions with Erie, resulting in the consent order. Erie maintains that it did not violate the Insurance Article but agreed to the directives and corrective actions in the report.
Read the March 13, 2025 MIA article.
Date: Saturday, March 29, 2025
Time: 12:00 p.m. – 3:00 p.m.
Location: Tawes Ballroom, Coppin State University
