Like many states, Maryland faces a multi-billion dollar budget shortfall for the current fiscal year, but legislators don’t appear to be closing that gap in the same manner as their counterparts in Connecticut.

As part of a new budget, Connecticut officials doubled the majority of the fees levied by the department of insurance on agents and brokers licensed to operate in that state as a way to help eliminate an $8.5 billion deficit.

Agents’ groups in the region say it doesn’t appear this approach will come to Maryland.

Kathleen Glattly

“We have not heard any rumblings,” Kathleen Glattly, chairwoman of the Insurance Agents & Brokers Group said. The group serves Maryland, Delaware and Pennsylvania.

Glattly said with clients “in dire straits in terms of revenue,” an increase in licensing fees “would be quite a hardship and have a ripple effect.”

“The economy is of course hitting each state hard and agencies just as hard with unemployment rates rising, for example,” she said. “We are hearing from our agencies a decrease in revenues from last year and not hearing a lot of people growing their business.”

Dennis Yocom, executive vice president of the Professional Insurance Agents of Virginia and D.C., told IFAwebnews.com his group has not heard of a similar fee hike in their area either and if there was one, his group would “aggressively oppose” it.

“The impact of an agent fee increase during this deep and continuing recession would be more strain on agency revenues which we hear are generally down by 12% again this year,” he said.

‘One of those hard pills to swallow’

Among the increased fees affecting agents and brokers licensed in Connecticut are licenses or renewals for insurance producers ($80; up from $40), public adjusters ($250; up from $125) and surplus lines brokers ($625; up from $500). Fees for other services such as exams, copies of licenses and filings for appointments also doubled.

Warren Ruppar, president of the Independent Insurance Agents of Connecticut, told IFAwebnews.com his members were aware that insurance fees would be increased by state legislators, but did not know the extent until the budget was finalized.

“Unfortunately, it is one of those hard pills to swallow, but you know as a businessperson you are going to see it,” Ruppar said.

Ruppar said given the current economy, the insurance industry was already experiencing lower premiums and agencies going out of business in the state and now come the increased fees.

“You have to pay the fees to stay in business,” he said. “The difficulty of the increases, for an agent, is that you can’t pass the increase onto you customer. You need to absorb it. You throw that [on top of the difficulties from the economy] into one big pot and it’s difficult.”

This story originally appeared in the November 2009 print edition of Insurance & Financial Advisor.