Allstate Insurance Company
October 8, 2026
Commissioner Marie Grant
Members, Private Passenger Automobile Insurance Affordability Workgroup
Maryland Insurance Administration
200 St. Paul Street, #2700
Baltimore, MD 21202
Re: Allstate Comments on MIA PPA Insurance Affordability Workgroup Meeting 1
Dear Commissioner Grant and Members of the Private Passenger Automobile Insurance Affordability Workgroup:
On behalf of the Allstate enterprise, thank you for the opportunity to submit feedback concerning the work of the Maryland Insurance Administration (MIA) and the Private Passenger Automobile Insurance Affordability Workgroup (hereinafter referred to as the “Workgroup”). Allstate appreciates the opportunity to collaborate with the MIA to improve the affordability of private passenger auto (PPA) insurance in Maryland.
As the Workgroup reconvenes to consider potential approaches to reducing insurance costs, it may be helpful to focus on several features of Maryland’s existing regulatory framework. Some rules intended to protect consumers from higher premiums can have less obvious consequences, including shifting costs among policyholders or affecting insurers’ willingness to cover certain risks.
1. Restrictions on the use of insurance scores in pricing may redistribute premiums among drivers.
Maryland already limits the extent to which insurers may vary premiums based on insurance scores. In practical terms, if the data indicates that two groups present significantly different levels of risk, but an insurer is restricted from fully reflecting that risk difference in its rates, the lower-risk group may pay more than its expected risk would otherwise warrant, while the higherrisk group may pay less. In other words, restrictions on the use of insurance scores in pricing can create cross-subsidization, where some of the cost associated with higher-risk policyholders is spread across lower-risk policyholders..
This dynamic is important when considering proposals that could further restrict rating factors. A restriction may reduce premiums for the consumers directly benefiting from it, but the same restriction may not necessarily eliminate the underlying insurance losses. Instead, some of those costs may be redistributed to other policyholders.
2. Maryland’s filing-review practices may also influence the rates and discounts carriers choose to introduce.
When a rate filing is revised after implementation, the MIA may require insurers to recalculate affected policies retroactively and issue refunds. From an affordability standpoint, this practice may create competing incentives for insurers. An insurer considering the development of a new discount, rating variable, or fully indicated rate change must account for the possibility that a lengthy regulatory review could later lead to the MIA requiring the carrier to adjust policies that have already been issued or renewed. The potential administrative and financial exposure associated with those changes may make insurers more cautious about implementing them. In this sense, the MIA’s existing review process itself may operate as a constraint on the size or pace of rate increases, even in a competitive-rating system.
3. Rules meant to ensure availability can also reduce insurers’ appetite for higher-risk business.
Maryland case law also creates a relationship between an insurer’s rating plan and its ability to reject certain risks. In the well-known Lumbermen’s decision, [1] Maryland's highest court held that an insurer could not justify nonrenewing drivers on the basis that its approved surcharges did not adequately compensate for their higher risk because its filed rating plan specifically contemplated those risk characteristics. The court explained that an insurer seeking additional compensation could request a rate change or could seek to remove that risk classification from its rating plan. As a result of the Lumbermen’s decision, insurers considering whether and how to offer coverage to higher-risk classes must consider both rate adequacy and the potential unintended consequences of including the class within an approved rating plan. If an insurer filing a rate for a particular category of driver or vehicle effectively means it must be willing to insure that risk, insurers may be less likely to offer coverage for drivers or vehicles in that category.
In the alternative, where such action is actuarially justified, an insurer might select a rate toward the higher end of a reasonable range to account for the obligation associated with making coverage available. The broader policy question is therefore not just whether a regulation reduces a particular consumer’s price but whether a regulation could unintentionally affect the availability of insurance, especially for consumers who already have fewer coverage options than average.
4. Insurance affordability, pricing accuracy, and insurance availability are all interconnected.
Public policy proposals that suppress rates for one group may shift those costs to another group; a regulation that restrains pricing increases may also discourage the implementation of new discounts or rating innovations. Rules meant to ensure access to coverage may influence whether insurers choose to even offer coverage of certain risks. Accordingly, the Workgroup may want to consider potential affordability measures by asking not only whether a measure will lower premiums for the targeted consumers but also:
- who ultimately bears any costs being shifted
- whether lower rates for one group could produce higher rates for another
- whether it could discourage insurers from introducing new discounts or novel pricing approaches
- whether it could reduce the willingness of insurers to cover higher-risk drivers or vehicles
- what effect it could have on the overall availability and competitiveness of Maryland’s PPA market
We appreciate the opportunity to provide feedback on the important work being done by the Workgroup and look forward to continuing to collaborate with the MIA on mutually beneficial solutions to address the PPA affordability imperative in Maryland. Thank you for your time and consideration.
Sincerely,
Lauren G. Pachman
Legislative & Regulatory Senior Counsel
Government & Industry Relations
Allstate Insurance Company
3100 Sanders Road
Northbrook, IL 60062
[1] Lumbermen's Mutual Casualty Co. v. Insurance Commissioner, 487 A.2d 271, 302 Md. 248, 1985 Md. LEXIS 537 (Md. 1985).
