A Maryland independent insurance agency endured what it described as several years’ discriminatory treatment from one of its carriers based on the race of the owner and its clients. After the carrier terminated the agency’s contracts, the agency sued it in federal court.
The agency, owned by an African-American woman, was contracted with the carrier from September 1998 until August 2020. The majority of its clients were in “majority-Black communities” in the city of Baltimore and a nearby county. During the period of the agency’s contract, it grew a book of business to more than 2,600 accounts and almost $4 million.
According to the agency principal, the carrier began taking racially discriminatory actions against the agency in April 2002. The allegations included:
- Sending the agency leads with names that sounded African American or Hispanic and diverting from it names that sounded European or European American.
- Requiring the agency (and others serving minority communities) to check potential insureds’ criminal histories and denying appropriate coverage to applicants and current insureds.
- Arbitrarily reducing the agency’s commission rates between 2003 and 2021.
- Requiring the agency to subject its clients and applicants to background checks and “improper” site visits, requirements not imposed on non-African-American agencies.
The agency specifically accused the current and former local branch managers of discrimination in underwriting with a bias against writing policies in urban areas, imposing loss ratio requirements that did not reflect differences between territories, and taking “progressive disciplinary measures” against agencies serving minority communities.
In addition, the agency claimed that, between 2012 and 2020, the carrier reduced commission levels for eight agencies serving minority communities but left their White counterparts’ commissions unchanged. The carrier terminated 12 agencies serving minority communities between 2016 and 2020 but did not terminate agents in majority-White communities with comparable loss ratios. The carrier also allegedly criticized the agency for not “matching” its culture. The carrier eventually sent the agency a termination notice in May 2020, effective the following August.
In 2023, the Maryland Insurance Administration (MIA) issued a report that largely confirmed the agency’s allegations. The MIA ordered the carrier to reinstate the agencies’ contracts and reimburse them for the reduced commissions. However, the carrier disputed the report’s conclusions and did not comply.
The agency originally sued the carrier in 2022, but the court dismissed the suit in 2023 because the agency had not exhausted its administrative remedies with the MIA. After the MIA issued its report, the agency filed a new lawsuit in August 2024 and amended it in April 2025, charging the carrier and its branch manager with violations of the federal Civil Rights Act of 1866.
In February 2026, a federal trial court judge ruled that the agency filed its suit too late. “In this case,” he reasoned, “Plaintiffs allege that they were informed of the allegedly discriminatory termination of their agency agreements on May 14, 2020, when Defendants issued the Termination Letter. Accordingly, their … claim premised on alleged discriminatory termination accrued on May 14, 2020, even though the termination did not take effect until August 21, 2020. … Under the four-year limitations period applicable to (these) claims, therefore, Plaintiffs had to file their claim based on wrongful termination on or before May 14, 2024. They did not file this action until August 20, 2024.”
It appears that this agency may not have been well-served by its legal team. The initial MIA report was issued in 2023, giving the agency time to file its lawsuit before May 2024. The suit was not filed until August under the apparent belief that the four-year statute of limitations period did not expire until then. The judge’s ruling shows that this belief was incorrect.
It is unfortunate that a legal error prevented an agency from being compensated by an insurer for its poor behavior. Agencies in similar situations should take care to act with urgency.
