Personal Injury Protection (PIP) and Rating Rules

Bulletin 11-16 Date: July 25, 2011 To: All Property & Casualty Insurers Re: Personal Injury Protection (PIP) and Rating Rules The purpose of this Bulletin is to remind all Property & Casualty insurers that a PIP surcharge is prohibited under § 19-507(c) of the Insurance Article. An insurer that issues a policy that contains Personal Injury Protection coverage may not impose a surcharge or retier the policy for a claim or payment made under that coverage and, at the time the policy is issued, shall notify the policyholder in writing that a surcharge may not be imposed and the policy may not be retiered for a claim or payment made under PIP coverage when reviewing proposed rating rules the Maryland Insurance Administration (“Administration”) verifies compliance with §19-507(c) of the Insurance Article. The Administration provides examples below to assist Property & Casualty insurers document compliance with this statutory requirement. In pertinent part, §19-507(c) of the Insurance Article states: “An insurer that issues a policy that contains the coverage described in § 19-505 of this subtitle may not impose a surcharge or retier the policy for a claim or payment made under that coverage ...” Common examples of rating rules submitted to the Administration include: 1. The rating factors for accidents, DUI violations, major violations, speeding violations and minor violations do not consider payments made under PIP coverage. 2. Points assigned do not consider payments made under PIP coverage. 3. An accident shall not be chargeable if the operator(s) received payment only under PIP. The first two examples indicate compliance with §19-507(c) of the Insurance Article. In the third example compliance is not clear because the rating rule suggests the Property & Casualty insurer may impose a surcharge if a PIP claim has been paid with another claim. Property & Casualty insurers filing rating plans identical or similar to the third example must provide additional documentation that no surcharge or retier will occur because of a PIP claim. THERESE M. GOLDSMITH Commissioner BETH SAMMIS KAREN STAKEM HORNIG Deputy Commissioners MARTIN O’MALLEY Governor ANTHONY G. BROWN Lt. Governor 200 St. Paul Place, Suite 2700 Baltimore, Maryland 21202 Direct Dial: 410-468-2029 Fax: 410-468-2430 Email: jhatchette@mdinsurance.state.md.us 1-800-492-6116 TTY: 1-800-735-2258 If you have any questions regarding this Bulletin, please contact Joy Hatchette, Associate Commissioner, Consumer Education and Advocacy by telephone at (410) 468-2029 or by e-mail at jhatchette@mdinsurance.state.md.us. Therese M. Goldsmith Commissioner By: Signature on file with original Joy Hatchette, Associate Commissioner Consumer Education & Advocacy