Maryland’s insurance regulator has reached a settlement with Erie Insurance Group, ending a long-standing dispute over the company’s practices in urban areas, especially in Baltimore City. The Maryland Insurance Administration (MIA) conducted a market conduct examination that began in 2021 and revealed unlawful practices by Erie, which affected the number of policies written and renewed in urban ZIP codes.
The MIA’s investigation found that Erie encouraged its agents to engage in "front line underwriting." This practice led agents to reject qualified applicants who they believed might not be profitable for the company. Under Maryland law, insurers must issue policies to anyone who meets their established guidelines and rates. The investigation also uncovered that agents were penalized based on their loss ratios, which disproportionately affected those serving urban areas.
Despite the findings, Erie strongly disagrees with the report, stating that it does not discriminate and that the claims against it are unfounded. The company argues that encouraging agents to be profitable does not violate any laws.
After the MIA issued public determination letters in 2023, Erie filed complaints in federal court, which were ultimately unsuccessful. Following this, the MIA and Erie entered settlement discussions, resulting in a consent order that outlines corrective actions Erie must take.
As part of the settlement, Erie has agreed to stop all unlawful practices, including front line underwriting. The company must also submit a corrective action plan for approval, provide a list of agent terminations and commission reductions, and pay a $400,000 administrative penalty. If Erie complies with the order, $200,000 of the penalty will be waived.
The original complaints that sparked the investigation came from four insurance agencies, which alleged that Erie discriminated against low-income and minority communities in Baltimore. These agencies claimed they were restricted from offering Erie’s policies to residents in predominantly Black neighborhoods and faced retaliation for challenging the company’s practices.
While Erie has agreed to the terms of the settlement, it maintains that the process has been unfair and that the findings are incorrect. The company has expressed its commitment to addressing the issues raised and focusing on serving its policyholders in Maryland.
The MIA emphasized its role in ensuring that all residents have equal access to insurance. Acting Maryland Insurance Commissioner Marie Grant stated that accountability for insurers is crucial, particularly for urban communities.