State Farm Wins Unilateral Premium Increase Case

The Maryland Court of Special Appeals sided with State Farm over the Maryland Insurance Administration this morning in Washington v. State Farm.

The appeal rose from a consumer complaint who alleged to the Maryland Insurance Administration that State Farm failed to notify the consumer of an increase in his premium. The MIA found that State Farm did just that, violating Maryland insurance law.courtroom7

The MIA’s position was unambiguous: State Farm unilaterally increased the consumer’s premium with no advance notice, violating Sections 12-106 and 27-614 of the Maryland Insurance Article. In its brief to the Court of Special Appeals, the MIA did not mince words, saying that State Farm engaged in “bait and switch” tactics to try to lock the consumer in at a price higher than he had already agreed to pay and that State Farm was trying to “distort this new [2006] statutory scheme.” Harsh words for State Farm. I like it.


But, alas, an Administrative Law Judge reversed MIA and Baltimore City Judge Audrey J.S. Carrion and the Court of Special Appeals unanimously agreed in an opinion written by Judge Michele D. Hotten.

For whatever reasons, Safeco Insurance felt compelled to file an amicus brief. I wonder why. GEICO, Allstate, Nationwide, Progressive, Erie, MAIF – all companies with much higher market share in Maryland than 9th place Safeco/Liberty Mutual – couldn’t be bothered but Safeco felt compelled to offer its two cents. I don’t begrudge this insurer for doing this. I just think it is weird. And I want to know more background facts. I wonder whose idea it was to file a brief in the first place, someone at Safeco or their Maryland lawyers (Funk & Bolton, which is a good firm).

I’m a personal injury lawyer so I did not bother to come to an opinion on the ultimate question of whether State Farm’s premium increase violated Maryland law. What I took out of this opinion is that the Maryland Insurance Commissioner is willing to stand up to insurance companies on behalf of consumers. There is not a lawyer in Maryland who is taking the consumer’s claim against State Farm in this case. Ultimately, if the MIA does not step up and try to protect consumers in these cases than no one will.

You can find the full opinion here.

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