Maryland Automobile Insurance Fund - Fund Producer Commission Rate
Summary
HB1387 revises the compensation rules for the Maryland Automobile Insurance Fund (MAIF) by changing the minimum commission structure paid to fund producers for private passenger auto insurance. Under current law, MAIF must pay a commission of at least 10% and no more than 15% of premium for private passenger auto policies; the bill repeals the minimum floor, leaving MAIF discretion to set the rate anywhere up to 15%. For other MAIF-issued insurance, the bill leaves the existing cap of 10% unchanged.
The bill also adds a new prohibition on paying any commission for policies written directly by MAIF without the involvement of a fund producer. It retains existing limits that bar commissions on fully earned policies, ineligible applicants, or dishonored initial payments, and it continues to require refunding unearned commissions if a policy is canceled. The act takes effect October 1, 2026.
Impact
HB1387 amends Section 20-512 of the Insurance Article, affecting the Maryland Automobile Insurance Fund’s commission payments to producers. The practical effect is to give MAIF more flexibility to reduce or eliminate the minimum commission on private passenger auto policies and to prevent commission payments on direct-written policies, which may affect producer compensation, MAIF administrative practices, and how policies are placed and serviced. It does not change the commission cap for private passenger auto insurance or the cap for other MAIF insurance products.
Sentiment
The bill appears to have been broadly supported and moved through the legislature with little opposition. It passed the House 123-3 and the Senate 46-0, and the available record shows no committee transcript debate or recorded controversy. The favorable committee report and overwhelming floor votes suggest general agreement that the commission rules should be updated to give MAIF more flexibility.
Contention
The main policy issue is the reduction of the guaranteed minimum commission for fund producers on private passenger auto insurance, which could concern insurance producers who rely on a floor to protect compensation. Another point is the new prohibition on commissions for policies written directly by MAIF, which clarifies that producer commissions are tied to producer involvement and may limit compensation in direct-placement situations. No other significant objections or competing viewpoints are reflected in the available record.