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OAIN: Maryland Debate Shows Contention Around Forced Insurance Bundling

Industry experts and Maryland state officials jockeyed over the necessity of legislation to bar forced bundling.

Baltimore, MD, April 02, 2012 --( Debate in a Maryland Senate committee hearing Thursday highlighted continuing contention over “forced bundling,” a practice in which a company issues this ultimatum to a policyholder: hold both auto and homeowner’s coverage with us or neither, reports Online Auto Insurance News.

Industry experts and state officials jockeyed over issues including the increasing prominence of insurers dropping customers who refuse to buy several types of coverage from them, whether the practice is justified, whether customers it affects would have nowhere to turn and the effectiveness of the legislation, HB 1105, meant to “head off the threat.”

Stances presented during the committee hearing answer auto insurance questions surrounding the difference between carriers offering discounts to bundle and carriers telling consumers to bundle before removing those who don’t.

Bundling is common for carriers emphasizing a familiar base of customers who hold multiline policies within their company, according to Jack Andryszak, an industry advocate with the American Insurance Association.

“Companies love to write multiple policies, and we’ll offer you discounts because we want your business,” Andryszak said at the hearing.

Opponents of forced bundling said large-scale insurers resort to the practice to prioritize needs and focus profits at the cost of consumer interests. Andryszak countered that the market still holds options for policyholders expelled by insurers through the practice.

“The market is good,” Andryszak said. “We don’t have any evidence of a problem here.”

Supporters of HB 1105, which would ban forced bundling, cited cases reported late last year in North Carolina and Arkansas where tens of thousands of Allstate consumers were dropped because they did not purchase multi-line policies. Legislation in Maryland is needed to “head off the threat” that is “apparently headed this way,” said Delegate Tom Hucker (D-Montgomery County).

Andryszak also took issue with Hucker’s view that there is an impending risk of such practices in Maryland. The Maryland Insurance Administration (MIA) received a filing from Florida-based Merastar Insurance to begin forced bundling in the state, but the filing had since been withdrawn, according to the Baltimore Sun.

During the hearing, MIA spokeswoman Tinna Quigley confirmed the withdrawal. Andryszak cited it as a reason the proposed law is premature. Other industry experts said that North Carolina state officials are reviewing its cases and that passing HB 1105 would be a hasty reaction to an unclear issue.


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Online Auto Insurance
Charles Nguyen

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