Report from MIA Hearings
On December 13-14, 2011, the Maryland Insurance Administration held hearings concerning the availability and affordability of coverage in Maryland’s coastal regions. The Administration invited any interested groups or individuals to provide testimony. Accordingly, the hearings attracted a great deal of interest from industry groups and carriers. Those who testified were nearly unanimous in the belief that there is no coverage availability crisis in Maryland’s coastal region. Indeed, the vast majority of witnesses testified that there is a vibrant and strong free market, in which numerous admitted and surplus lines carriers compete for business. The general consensus was that, while rates tended to be a bit higher in coastal regions than elsewhere, this is due to the enhanced risk associated with coastal properties and businesses, and is not out of line with other similarly situated states.
The witnesses expressed a near-unanimous belief that increased regulation, the introduction of alternative market mechanisms, or enhanced control of the surplus lines market would be detrimental to the current market, and would result in reduced competition, increased cost, and the loss of currently-available coverage options. In general, those who testified expressed the belief that consumer concerns can be addressed by taking steps to educate buyers as to the realities of insuring coastal properties, and the scope of coverage provided by the available products.
Throughout the hearings, however, the Administration vigorously questioned the true size of the current market, and the composition of that market as it relates to admitted and surplus lines carriers. The Administration also expressed significant interest in the potential need to establish a catastrophic loss fund, or to implement regulations to control costs and increase payouts to insureds. Based on the questions posed, the Administration seemed to be leaning toward proposing some type of enhanced regulatory scheme, though it did not telegraph precisely what it may pursue.
The Administration is continuing to accept written testimony regarding these matters. We will continue to monitor any developments.