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FOR IMMEDIATE RELEASE:

3/13/2025

FOR INFORMATION, CONTACT:
Craig Ey, 410-468-2488 (O)
443-604-9599 (C)

Maryland Insurance Administration takes action against Erie Insurance for discriminatory business practices

BALTIMORE – The Maryland Insurance Administration is taking 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, which is being made available for publication today. 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 Insurance Administration, it cannot under Maryland insurance law refuse to issue a policy to anyone who meets those guidelines.

The Insurance Administration'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 Administration found that this reliance on loss ratio primarily impacted insurance agents serving urban areas such as Baltimore.

“A critical role of the Maryland Insurance Administration is to hold insurers accountable for actions that impact access to quality insurance products," said Acting Maryland Insurance Commissioner Marie Grant. “The intent of these actions is to ensure that Erie and other licensed Maryland insurance companies follow the law going forward. It is essential that residents of Maryland's urban areas have full and equal access to insurance."

As part of the Market Conduct Examination Report, the Insurance Administration 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 Insurance Administration.
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 Insurance Administration finds that the company is in continued compliance with the order, $200,000 of the penalty will be waived.

The Maryland Insurance Administration investigations began in 2021, based on complaints from four insurance agencies about Erie's practices. In 2023, the Administration 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 Insurance Administration prevailed in that case, and Erie appealed to the U.S. Fourth Circuit, which ruled in favor of the Administration in June 2024. The Administration 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.

About the Maryland Insurance Administration

The Maryland Insurance Administration is an independent State agency charged with regulating Maryland's $49 billion insurance industry. For more information about the Insurance Administration, please visit www.insurance.maryland.gov or follow us on Facebook at www.facebook.com/MDInsuranceAdmin, X at @MD_Insurance, LinkedIn at linkedin.com/company/maryland-insurance-administration or Instagram at @marylandinsuranceadmin.