Maryland General Assembly Enacts Historic Insurance Reform

in 1972 to provide for $20,000 coverage per individual and $40,000 coverage per incident. At that time average income was $11,800, the average cost of a  doctor’s visit was $5, hospitals charged $350 for delivery of a baby, the average cost of a new car was $3,853, the average new home cost was $27,550, average rent was $147 per month, and a gallon of gasoline cost 50 cents.  Over the past 38 years since 1972 until today, Maryland had never adjusted minimum insurance requirements to account for the devastating effects of inflation. A full inflation adjustment would require raising minimum insurance to $103,000 per person and $206,000 per incident. Assuming the Governor’s signature, enactment of the measure will NOT cause insurance premiums to rise for over 90% of Maryland drivers (i.e. those who already purchase $30,000 or more of liability insurance).

Insurance companies opposed to the bill assert that the remaining less than 10% of drivers will see a premium increase; however, that claim is doubtful and disputed. Historically, the insurance industry has always opposed insurance reform by claiming rates will rise as a result (for example, in opposing repeal of parent-child immunity, in opposing a bill to bar the “family exclusion” and in opposing a bill allowing insureds to sue insurance companies for lack of good faith in settling claims). In each instance, subsequent history did not bear out the insurance industry’s assertion. Interestingly, this bill marked the first time that the Maryland Hospital Association (MHA) and the Maryland Association for Justice (MAJ) worked together for insurance reform. MAJ hopes to work with the MHA and others in the future to tackle abusive insurance practices.

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