Erie Insurance Appeals Maryland’s Finding that it Engaged in Discriminatory Practices

Erie Insurance Co. is taking its tiff with the Maryland insurance commissioner over the handling of discriminatory practices findings to federal appeals court.

The insurer maintains that the Maryland Insurance Administration has not afforded it adequate opportunity to respond to complaints of racial and geographic discrimination by four Baltimore independent agencies. The insurer also claims that MIA has wrongly disclosed confidential business information from market conduct exams and its determination letters on the discrimination allegations. Erie sued over the matter in June.

Four days after Erie sued, Judge Julie Rebecca Rubin in federal district court in Baltimore paused the lawsuit and gave the insurer and the MIA 60 days to settle their differences but they failed to agree on terms by that deadline.

In August, the judge dismissed Erie’s lawsuit against MIA.

Erie now wants the 4^th Circuit Court of Appeals to take up the matter and address what it considers numerous errors by the district court including its failing to address whether MIA has the right to use the business information as it is doing and whether Erie will be “irreparably harmed” if the market conduct materials are disclosed to the public and the agencies during any administrative hearing held at the MIA.

In total, Erie has raised 21 issues questioning the district court’s dismissal of its case.

The insurer expresses concern that more trade secrets could be disclosed if MIA is permitted to continue on its current administrative path.

Agencies’ Complaints

The dispute involves the handling of four administrative complaints filed with MIA alleging Erie engaged in discriminatory practices against low-income and minority communities in the Baltimore area. The complaints were filed by Baltimore Insurance Network, Burley Insurance & Financial Services, Ross Insurance Agency and Welsch Insurance Group

In their complaints, the agencies said that they were restricted from offering Erie’s policies to residents of primarily Black communities. They alleged that Erie threatened and penalized them for challenging what they maintain are Erie’s discriminatory redlining policies. The agencies claim the retaliatory actions hurt their business.

MIA opened two separate investigations into the complaints: a broad market conduct examination and a licensing investigation.

Erie provided written answers to five questions MIA gave it. According to Erie, shortly thereafter MIA told it the licensing investigation was being put on hold so that the department could first complete the market conduct exam. The insurer said it expected that there would be further discussions with MIA once the regulator resumed the licensing investigation but it never received any follow-up regarding the agents’ complaints.

Determination Letters

Then, Erie maintains, without any notice, in May, 2023, MIA acted “arbitrarily, capriciously and unlawfully” in issuing what are known as determination letters against Erie in relation to the redlining complaints.

MIA concluded that Erie used improper underwriting standards and imposed penalties on agents in order to get them to reject eligible urban and minority risks it considered unprofitable, rather than adjusting its filed underwriting and rates to meet the risks. MIA explained that an insurer cannot legally refuse to issue a policy to someone who meets the guidelines and rates it has filed with the state.

Erie said it was surprised at the release of the letters since it had been told the licensing probe had been put on hold. It then became further concerned when it discovered that the four letters — and soon media reports — contained “highly damaging, and unfounded determinations” that Erie violated laws in its treatment of the four agents that were “based entirely on the confidential, privileged and protected documents” it had provided for the market conduct exam.