Jane Dotson
Insurance costs in Maryland are rising, and consumers are suffering as a result. In 2025, the average cost of car insurance in Maryland was $2,923 for full coverage and $1,041 for minimum coverage. Monthly car insurance in Maryland averages about $244 for full coverage and $87 for minimum coverage. Maryland insurance companies are seeking a 17% hike in state marketplace premiums, citing \wild uncertainty\ at the federal level as the primary driver for the need to increase rates. In addition, auto insurance claims and expenses have spiked, with repair costs rising due to the increasing sophistication of vehicle technology and riskier driving behavior. Maryland is a file and use state, which means insurers can set rates without prior approval from the Maryland Insurance Administration (MIA). However, the MIA reviews rates to ensure they are not unfairly discriminatory, actuarially sound, and not excessive. The rising insurance costs in Maryland have prompted calls for consumer protection and the appointment of a pro-consumer Insurance Commissioner to reduce insurance costs and address unfair discrimination.
| Characteristics | Values |
|---|---|
| Reason for rate hikes | Wild uncertainty at the federal level, rising costs of covering people as they live longer, inflation, and rising repair costs |
| Affected insurance types | Auto, homeowners, life, and health insurance |
| Affected plans | Individual plans, small group plans |
| Average rate increase for small group plans | 5.5% |
| Range of rate increases for small group plans | 3.3% to 12.2% |
| Average rate increase for individual plans | 17% |
| Range of rate increases for individual plans | 8.1% to 18.7% |
| Number of people affected by individual plan increases | Nearly 300,000 Marylanders |
| Previous rate increase | 6.6% in 2023 |
| Maryland Insurance Commissioner's role | To ensure insurance is reasonably priced and accessible, prevent unfair discrimination, and protect consumers from company insolvencies and market failures |
| Maryland Insurance Commissioner's stance on rate hikes | Maryland Insurance Commissioner Kathleen Birrane stated that there is a lot of competition in the insurance space, and rate hikes are due to rising costs outside the control of insurance companies |
| Maryland's status | "File and Use" state, meaning insurers can use rates without prior approval from the MIA |
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What You'll Learn
Rising inflation and vehicle repair costs
Insurance costs are rising in Maryland, and consumers are suffering. This is true of both health insurance and auto insurance.
Auto insurance is getting more expensive nationwide, including in Maryland. A driver in Maryland saw their premium increase by over 33%, despite having a clean record. The cost of doing business is increasing, including the cost of parts and supplies, and this is driving up insurance costs.
Maryland Insurance Commissioner Kathleen Birrane, who heads the state agency that oversees and regulates insurers in the state, said:
> "Our job is to review them and to make sure that they meet certain standards, that is they're not unfairly discriminatory, that they are actuarially sound, that they are not excessive."
However, Birrane does not believe that requiring prior approval before insurers can change their rates would make a difference.
Health insurance premiums in Maryland are also increasing. Insurers are asking the state to raise premiums between 8.1% and 18.7% for individual plans offered under the Affordable Care Act for 2026. This increase would affect nearly 300,000 Marylanders who buy their health insurance through the state marketplace. Insurers say these rate increases are needed to account for the impending expiration of federal insurance premium tax credits.
Additionally, Americans are engaging in riskier driving behaviour, such as speeding, distracted driving, and impaired driving, which increases injury and collision claims costs. This compounds the effects of inflation and further drives up insurance rates.
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Riskier driving behaviour
Maryland insurance companies are seeking to raise their rates due to several factors, one of which is riskier driving behaviour among Americans. This includes speeding, distracted driving, and impaired driving, which leads to more collisions and injury claims. These behaviours compound the effects of inflation, as the cost of repairing vehicles has also increased due to the sophistication of technology in modern cars. Vehicles with advanced technology, such as cameras and sensors, require more parts to be replaced, higher labour costs, and additional operations for scanning and calibration. As a result, repair costs have seen their largest year-over-year increase, and these complex and expensive repairs lead to higher rental vehicle costs.
Maryland is a "file and use" state, meaning insurers can file and use rates without prior approval from the Maryland Insurance Administration (MIA). However, the MIA reviews rates to ensure they meet certain standards and are not unfairly discriminatory, actuarially unsound, or excessive. Despite this, insurance costs in Maryland have been rising, and consumers are suffering from unfair discrimination and widespread rate increases.
The state's insurance commissioner plays a crucial role in overseeing and regulating insurers, ensuring reasonable pricing, preventing abuses, and protecting consumers from company insolvencies and market failures. Maryland's insurance commissioner, Kathleen Birrane, has stated that car insurance prices rose by 2.7% unadjusted, with a year-over-year increase of 22.2%.
In 2022, auto insurance claims and expenses spiked to over $1.12 for every $1 in premium. This is due to the cumulative effects of record-high inflation and the increasing cost of repairing and replacing cars. Maryland insurance companies have cited these factors as reasons for their rate hikes, with some drivers experiencing increases of over 33% despite having a clean driving record.
The behaviour of drivers in Maryland and across the US is a significant factor in the rise in insurance costs. The increase in risky behaviour on the roads leads to more accidents and claims, which insurance companies must then cover. This, combined with the rising costs of vehicle repairs and the impact of inflation, has created a perfect storm for insurance rate hikes.
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Lack of federal subsidies
Maryland insurance companies are seeking a 17% hike in state marketplace premiums, which will affect nearly 300,000 Marylanders who have bought individual plans. This is due to the ""wild uncertainty" at the federal level, according to Matthew Celentano, executive director of the League of Life & Health Insurers of Maryland. The loss of federal subsidies is a key factor in the rate increase requests.
The budget reconciliation package passed by the House of Representatives includes massive changes to Medicaid and the ACA. The current bill does not include an extension of the premium tax credit, which is set to expire in December unless the Senate decides to extend it. Insurers say that if the tax credit were extended, they would only be seeking an average rate change of 7.9% for individual plans.
The potential expiration of premium tax credits is just the tip of the iceberg when it comes to the possible impacts on the insurance market from the federal level. Legislators and state officials warn that the loss of subsidies will lead to affordability challenges for Maryland consumers and a reversal of progress made in reducing the number of uninsured Marylanders. The state is trying to protect gains made in reducing the number of uninsured, but federal actions are limiting their ability to do so.
The rate hikes will put health insurance out of reach for many middle-income people, especially when coupled with expected cuts to Medicaid. Exchange officials estimate that up to 70,000 people might have to go without coverage, leading to a sicker population and higher overall health costs for Marylanders.
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Ineffective state insurance commissioners
In Maryland, auto insurance claims and expenses have spiked, with repair costs rising due to the increasing sophistication of vehicle technology. In addition, riskier driving behavior has led to higher collision claims. These factors have contributed to a significant increase in car insurance rates, with one Maryland driver experiencing a 33% hike in their premium despite a clean driving record.
Maryland is a "file and use" state, which means that insurers can set rates without prior approval from the Maryland Insurance Administration (MIA). The MIA's role is to review and ensure that rates are not unfairly discriminatory, actuarially unsound, or excessive. However, the MIA's hands-off approach has led to criticism of its effectiveness in regulating insurance rates. Maryland Insurance Commissioner Kathleen Birrane commented that she does not believe that requiring prior approval, as is done in 12 other states, would make a difference in Maryland.
The ineffectiveness of state insurance commissioners, such as in Maryland, can have significant impacts on consumers. In another instance, Maryland insurers sought a 17% hike in state marketplace premiums due to "wild uncertainty" at the federal level. Nearly 300,000 Maryland residents who purchased individual plans on the Maryland Health Benefit Exchange were at risk of being affected by these proposed premium rate increases. State insurance officials warned that the cost of health insurance coverage could increase by an average of 17% unless federal subsidies were extended.
The role of state insurance commissioners is to safeguard consumers and maintain stable markets. When insurance commissioners are ineffective, insurance companies can implement rate hikes that significantly impact the financial burden on consumers. In the case of Maryland, the state's insurance commissioner has taken a laissez-faire approach, which has led to concerns about the protection offered to consumers.
To address these concerns, state insurance commissioners can implement prior approval requirements for rate changes, as seen in other states. Additionally, organizations like the National Association of Insurance Commissioners (NAIC) support state insurance regulators in serving the public interest. By setting standards, conducting peer reviews, and providing regulatory support, NAIC helps ensure fair and competitive insurance markets across the country.
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Racial bias in insurance pricing
Maryland insurance companies have been seeking large rate hikes of up to 17% in 2025, and 33% in 2024, for health and auto insurance premiums. While these hikes are attributed to rising costs, inflation, and uncertainty at the federal level, racial bias in insurance pricing is also a factor that cannot be ignored.
The insurance industry has a long history of racial discrimination, with practices such as race-based premiums and redlining of minority neighborhoods. Redlining, a term used by the Home Owners' Loan Corporation in the 1930s, involved color-coding maps to denote "undesirable" neighborhoods, which were often predominantly Black or minority areas. Insurance companies would either deny coverage or charge higher rates in these redlined communities. Despite courts ruling that redlining based on race is illegal, disparities in insurance prices between minority and White neighborhoods persist.
A 2018 study by Consumer Reports and ProPublica found that auto insurance prices in minority neighborhoods were significantly higher than in similarly risky non-minority areas, even when controlling for risk factors. Researchers analyzed data from California, Illinois, Missouri, and Texas, and found that nearly every insurer in Illinois showed a disparity at every risk level. In California, Texas, and Missouri, disparities were found in the riskiest zip codes. These higher premiums in minority-majority zip codes can be attributed to factors such as geography, credit scoring, homeownership, and motor vehicle records, which are used in risk algorithms.
The unregulated use of big data and algorithms by insurance companies has raised concerns about unintentional bias and discrimination. Consumer advocate Sonja Larkin-Thorne has testified before Congress on the lack of transparency and potential for bias in the datasets used to underwrite and price insurance products. She advocates for federal and state regulation, as well as increased transparency, to address these issues.
Actuarial groups like the Casualty Actuarial Society (CAS) are also taking steps to identify and address racial bias in insurance rates. CAS has published reports examining methods to detect and measure racial bias in auto and homeowners' insurance pricing. They have identified widely used insurance rating factors that may contribute to bias, such as credit-based insurance scores, geographic location, homeownership, and motor vehicle records. By scrutinizing these factors and complex models, actuaries and regulators aim to promote fairer pricing and reduce the discriminatory effects of higher insurance pricing for Black people and other people of color.
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Frequently asked questions
Insurance companies in Maryland are requesting rate hikes due to the increasing costs of covering repairs and replacements, as well as the rising costs of parts and labour. The increase in the sophistication of vehicle technology, such as cameras and sensors, also contributes to higher repair costs. Additionally, there is a concern about the impending expiration of federal insurance premium tax credits, which creates uncertainty and could impact affordability for consumers.
The rate hikes will impact Maryland residents financially, with the potential for higher insurance premiums and reduced accessibility to affordable insurance. This is especially true for those with poor credit histories or living in ZIP codes with a majority Black population, who already face higher insurance premiums.
Maryland is a \"file and use\" state, which means insurers can implement rate hikes without prior approval from the Maryland Insurance Administration (MIA). However, the MIA reviews the rates to ensure they meet certain standards and are not unfairly discriminatory or excessive. There have been calls for stronger consumer protection and oversight, with advocates urging Governor Wes Moore to appoint a pro-consumer Insurance Commissioner who will prioritize reducing insurance costs and addressing unfair discrimination.
