The Consumer Federation of America released a study in November 2013 that tracked auto insurance expenditure trends across the country from 1989 to 2010. It found that average auto insurance expenditure in the state of Maryland went up by from $646.18 to $947.70, on average, during this period. The 2010 average represents a rise of 46.7 percent over the 21 years. The corresponding countrywide averages went up from $551.95 to $791.22, a rise of 43.3 percent. Maryland is one of 38 states where auto insurance costs went up by more than the countrywide increase.
One of the main conclusions of the study was that states that had implemented stringent auto insurance regulation had been successful in keeping rates from rising too fast. The study credits the Prior Approval (PA) system, in which insurers have to file rates changes and obtain approval before implementing them in the marketplace, with helping keep rates’ rise in check. The PA system is one of the most stringent forms of insurance rate regulation. The study shows that rates went up an average 48 percent in states that employed a PA system. In contrast, rates went up an average 70.1 percent in deregulated states.
Another important finding of the study was that stringent regulation resulted in savings for consumers without affecting the profitability of the insurers. All in all, the study shows that auto insurance regulation when stringent, will lead to savings for the consumer.
Currently, Maryland has in place a File and Use (F&U) system which requires insurers to file rates changes before use. However, there is no requirement for approval whatsoever. As per the study, if Maryland were to implement stringent auto insurance which includes a PA system, consumers would reap the benefits of it without any damage being done to the profitability of the insurers - a classic example of a win-win situation.