<section article="gin" article_name="Insurance" number="25-101" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Board of directors” or “board” means the governing body of a risk retention group elected by the shareholders or members of the risk retention group to establish policy, elect or appoint officers and committees, and make other governing decisions.</text> </level> <level label="c"> <level label="1"> <text>“Completed operations liability” means liability arising out of the installation, maintenance, or repair of a product at a site that is not owned or controlled by:</text> <level label="i"> <text>a person that performs that work; or</text> </level> <level label="ii"> <text>a person that hires an independent contractor to perform that work.</text> </level> </level> <level label="2"> <text>“Completed operations liability” includes liability for activities that are completed or abandoned before the date of the occurrence giving rise to the liability.</text> </level> </level> <level label="d"> <text>“Director” means an individual designated in the articles of incorporation of a risk retention group, or designated, elected, or appointed by any other manner, name, or title to act as a director of the risk retention group.</text> </level> <level label="e"> <text>“Domicile” means, for the purpose of determining the state in which a purchasing group has its domicile:</text> <level label="1"> <text>the state of incorporation of a purchasing group that is a corporation; or</text> </level> <level label="2"> <text>the state of the principal place of business of a purchasing group that is an unincorporated entity.</text> </level> </level> <level label="f"> <text>“Hazardous financial condition” means the condition of a risk retention group in which, based on its present or reasonably anticipated financial condition, the risk retention group:</text> <level label="1"> <text>is not yet financially impaired or insolvent; but</text> </level> <level label="2"> <text>is unlikely to be able to:</text> <level label="i"> <text>meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or</text> </level> <level label="ii"> <text>pay other obligations in the normal course of business.</text> </level> </level> </level> <level label="g"> <text>“Immediate family member” means an individual’s:</text> <level label="1"> <text>spouse;</text> </level> <level label="2"> <text>child;</text> </level> <level label="3"> <text>child’s spouse;</text> </level> <level label="4"> <text>parent;</text> </level> <level label="5"> <text>spouse’s parent;</text> </level> <level label="6"> <text>sibling; or</text> </level> <level label="7"> <text>sibling’s spouse.</text> </level> </level> <level label="h"> <text>“Insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk that is determined to be insurance under the laws of the State.</text> </level> <level label="i"> <level label="1"> <text>“Liability” means legal liability for damages, including costs of defense, legal costs and fees, and other claims expenses, because of injuries to persons, damage to their property, or other damage or loss to those persons, resulting from or arising out of:</text> <level label="i"> <text>a business, whether profit or nonprofit, trade, products, services, including professional services, premises, or operations; or</text> </level> <level label="ii"> <text>an activity of a state or local government, or an agency or political subdivision of a state or local government.</text> </level> </level> <level label="2"> <text>“Liability” does not include:</text> <level label="i"> <text>personal risk liability, which is liability for damages because of injury to a person, damage to property, or other damage or loss resulting from personal, familial, or household responsibilities or activities; or</text> </level> <level label="ii"> <text>the liability of an employer with respect to its employees other than legal liability under the federal Employers’ Liability Act.</text> </level> </level> </level> <level label="j"> <text>“Plan of operation or feasibility study” means an analysis that presents the expected activities and results of a risk retention group including, at a minimum:</text> <level label="1"> <text>information sufficient to verify that the members of the risk retention group are engaged in businesses or activities that are similar or related with respect to the liability to which the members are exposed by virtue of related, similar, or common business, trade, products, services, premises, or operations;</text> </level> <level label="2"> <text>for each state in which the risk retention group intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance that the risk retention group intends to offer;</text> </level> <level label="3"> <text>historical and expected loss experience of the proposed members and national experience of similar exposures, to the extent this experience is reasonably available;</text> </level> <level label="4"> <text>pro forma financial statements and projections;</text> </level> <level label="5"> <text>appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to begin operations and to prevent a hazardous financial condition;</text> </level> <level label="6"> <text>identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies, and reinsurance agreements;</text> </level> <level label="7"> <text>identification of each state in which the risk retention group has obtained or sought to obtain a charter and license, and a description of its status in each state identified; and</text> </level> <level label="8"> <text>any other matters required by the commissioner of the state in which the risk retention group is chartered for liability insurance companies authorized by the insurance laws of that state.</text> </level> </level> <level label="k"> <level label="1"> <text>“Product liability” means liability for damages because of personal injury, death, emotional harm, consequential economic damage, or property damage, including damages resulting from the loss of use of the property, arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product.</text> </level> <level label="2"> <text>“Product liability” does not include the liability of a person for damages if the product involved was in the possession of the person when the incident giving rise to the claim occurred.</text> </level> </level> <level label="l"> <text>“Purchasing group” means a group that:</text> <level label="1"> <text>has as a purpose the purchase of liability insurance on a group basis;</text> </level> <level label="2"> <text>purchases liability insurance only for its group members and only to cover the similar or related liability exposure of the group members;</text> </level> <level label="3"> <text>is composed of members engaged in businesses or activities that are similar or related with respect to the liability to which the members are exposed by virtue of related, similar, or common business, trade, products, services, premises, or operations; and</text> </level> <level label="4"> <text>has its domicile in a state.</text> </level> </level> <level label="m"> <text>“Risk retention group” means a corporation or other limited liability association:</text> <level label="1"> <text>that is formed under the laws of a state, Bermuda, or the Cayman Islands;</text> </level> <level label="2"> <text>the primary activity of which consists of assuming and spreading all or part of the liability exposure of its group members;</text> </level> <level label="3"> <text>that is organized for the primary purpose of conducting the activity described in item (2) of this subsection;</text> </level> <level label="4"> <text>that:</text> <level label="i"> <text>is chartered and licensed as a liability insurance company and authorized to engage in the insurance business under the laws of a state; or</text> </level> <level label="ii"> <level label="1"> <text>on or before December 31, 1984, was chartered or licensed and authorized to engage in the insurance business under the laws of Bermuda or the Cayman Islands and, on or before December 31, 1984, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of that state; and</text> </level> <level label="2"> <text>has been engaged in business continuously since January 1, 1985 and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability;</text> </level> </level> </level> <level label="5"> <text>that does not exclude a person from membership in the group solely to provide for members of the group a competitive advantage over that person;</text> </level> <level label="6"> <text>that:</text> <level label="i"> <text>has as its members only persons that have an ownership interest in the group and has as its owners only persons that are members of the group and are provided insurance by the group; or</text> </level> <level label="ii"> <text>has as its sole owner an organization that:</text> <level label="1"> <text>has as its members only persons that are members of the group; and</text> </level> <level label="2"> <text>has as its owners only persons that are members of the group and are provided insurance by the group;</text> </level> </level> </level> <level label="7"> <text>the members of which are engaged in businesses or activities that are similar or related with respect to the liability to which the members are exposed by virtue of related, similar, or common business, trade, products, services, premises, or operations;</text> </level> <level label="8"> <text>the activities of which do not include the provision of insurance other than:</text> <level label="i"> <text>liability insurance for assuming and spreading all or part of the liability of its group members; and</text> </level> <level label="ii"> <text>reinsurance with respect to the liability of another risk retention group, or a member of the other risk retention group, that is engaged in businesses or activities so that the risk retention group or member meets the requirement of item (7) of this subsection of membership in the risk retention group that provides the reinsurance; and</text> </level> </level> <level label="9"> <text>the name of which includes the phrase “risk retention group”.</text> </level> </level> <level label="n"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, “state” means a state of the United States or the District of Columbia.</text> </level> <level label="2"> <text>When capitalized, “State” means Maryland.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-102" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <level label="a"> <text>A risk retention group that seeks to be chartered in the State:</text> <level label="1"> <text>shall be chartered and licensed as a liability insurance company in conformance with all insurance laws and regulations of the State; and</text> </level> <level label="2"> <text>except as otherwise provided in this subtitle, shall comply with:</text> <level label="i"> <text>all the laws, regulations, and requirements applicable to insurers chartered and licensed in the State; and</text> </level> <level label="ii"> <text>the requirements of § 25–103 of this subtitle, to the extent that those requirements are not a limitation on the laws, regulations, or requirements of the State.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>Before a risk retention group may offer insurance in a state, the risk retention group shall submit a plan of operation or feasibility study to the Commissioner for approval.</text> </level> <level label="2"> <text>Within 10 days after a change to an item of the plan of operation or feasibility study, the risk retention group shall submit to the Commissioner an appropriate revision of the plan of operation or feasibility study.</text> </level> <level label="3"> <text>A risk retention group may not offer additional lines of liability insurance in this State or in another state until a revision of the plan of operation or feasibility study is approved by the Commissioner.</text> </level> </level> <level label="c"> <text>When a risk retention group files an application for charter, the risk retention group shall provide to the Commissioner the following information:</text> <level label="1"> <text>the name of the risk retention group;</text> </level> <level label="2"> <text>the identity of the initial members of the risk retention group;</text> </level> <level label="3"> <text>the identity of the individuals who organized the risk retention group, or who will provide administrative services or otherwise influence or control the activities of the risk retention group;</text> </level> <level label="4"> <text>the amount and nature of initial capitalization;</text> </level> <level label="5"> <text>the coverages to be afforded; and</text> </level> <level label="6"> <text>the states in which the risk retention group intends to operate.</text> </level> </level> <level label="d"> <level label="1"> <text>On receipt of the information required by subsection (c) of this section, the Commissioner shall forward the information to the National Association of Insurance Commissioners.</text> </level> <level label="2"> <text>Providing notification to the National Association of Insurance Commissioners is in addition to and may not be sufficient to satisfy the other requirements of this subtitle.</text> </level> </level> <level label="e"> <level label="1"> <text>The board of directors of the risk retention group shall have a majority of independent directors.</text> </level> <level label="2"> <text>If the risk retention group is a reciprocal:</text> <level label="i"> <text>the attorney–in–fact shall be required to adhere to the same standards regarding independence of operation and governance that are imposed on the risk retention group’s board of directors or subscribers advisory committee; and</text> </level> <level label="ii"> <text>to the extent permissible under State law, service providers of a reciprocal risk retention group:</text> <level label="1"> <text>shall contract with the risk retention group; and</text> </level> <level label="2"> <text>may not contract with the attorney–in–fact.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>A director qualifies as independent when the board of directors affirmatively determines that the director has no material relationship with the risk retention group.</text> </level> <level label="ii"> <text>A person that is a direct or indirect owner of or subscriber in the risk retention group, as contemplated by 15 U.S.C. § 3901(a)(4)(e)(ii), the federal Liability Risk Retention Act, or that is an officer, a director, or an employee of the owner or insured, is considered to be independent unless some other position of the officer, director, or employee constitutes a material relationship.</text> </level> <level label="iii"> <text>The risk retention group annually shall disclose the board’s determinations to the Commissioner.</text> </level> </level> <level label="4"> <level label="i"> <text>For purposes of this section, a person is deemed to have a material relationship with a risk retention group if any of the following receive, in any one 12–month period, compensation, payment, or any other item of value greater than or equal to the threshold value described in subparagraph (ii) of this paragraph:</text> <level label="1"> <text>the person;</text> </level> <level label="2"> <text>a member of the person’s immediate family;</text> </level> <level label="3"> <text>any business with which the person is affiliated from the risk retention group; or</text> </level> <level label="4"> <text>a consultant or service provider to the risk retention group.</text> </level> </level> <level label="ii"> <text>The threshold value for determining whether receipt of compensation, payment, or any other item of value under subparagraph (i) of this paragraph demonstrates a material relationship is the greater of:</text> <level label="1"> <text>5% of the risk retention group’s gross written premium for the 12–month period; or</text> </level> <level label="2"> <text>2% of its surplus, as measured at the end of any fiscal quarter falling in the 12–month period.</text> </level> </level> <level label="iii"> <text>In addition to the standard set under subparagraph (i) of this paragraph, the board of directors may determine that any other relationship of the person to the risk retention group is a material relationship.</text> </level> <level label="iv"> <text>The person or immediate family member of the person is not independent until 1 year after the compensation, payment, or other item of value described in subparagraph (ii) of this paragraph received from the risk retention group falls below the applicable threshold.</text> </level> <level label="v"> <text>A director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not considered independent until 1 year after the end of the affiliation, employment, or auditing relationship.</text> </level> <level label="vi"> <text>A director or an immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group’s present executives serve on the board of directors is not considered independent until 1 year after the end of the service or the employment relationship.</text> </level> </level> </level> <level label="f"> <level label="1"> <text>In this subsection, “service provider” includes:</text> <level label="i"> <text>a captive manager;</text> </level> <level label="ii"> <text>an auditor;</text> </level> <level label="iii"> <text>an accountant;</text> </level> <level label="iv"> <text>an actuary;</text> </level> <level label="v"> <text>an investment advisor;</text> </level> <level label="vi"> <text>a lawyer other than defense counsel that the risk retention group retains to defend claims, unless the amount of fees paid to the lawyer is material under subsection (e)(4) of this section; and</text> </level> <level label="vii"> <text>a managing general underwriter or other party responsible for underwriting, determining rates, collecting premium, adjusting and settling claims, or preparing financial statements.</text> </level> </level> <level label="2"> <text>A material service provider contract with the risk retention group:</text> <level label="i"> <text>may not have a term exceeding 5 years;</text> </level> <level label="ii"> <text>shall require the issuance and renewal of the contract to be approved by a majority of the risk retention group’s independent directors;</text> </level> <level label="iii"> <text>shall provide that the risk retention group’s board of directors shall have the right to terminate any service provider contract, audit contract, or actuarial contract at any time for cause after providing adequate notice as defined in the contract; and</text> </level> <level label="iv"> <text>shall be deemed material if the amount to be paid for the contract is greater than or equal to the greater of:</text> <level label="1"> <text>5% of the risk retention group’s annual gross written premium; or</text> </level> <level label="2"> <text>2% of its surplus.</text> </level> </level> </level> <level label="3"> <text>A risk retention group may not enter into a service provider contract that involves a relationship that is material under subsection (e)(4) of this section unless:</text> <level label="i"> <text>the risk retention group notifies the Commissioner in writing of its intention to enter into the transaction at least 30 days before the transaction; and</text> </level> <level label="ii"> <text>the Commissioner has not disapproved the transaction within that period.</text> </level> </level> </level> <level label="g"> <text>The risk retention group’s board of directors shall adopt a written policy in the plan of operation approved by the board that requires the board to:</text> <level label="1"> <text>assure that all owners and insureds of the risk retention group receive evidence of ownership interest;</text> </level> <level label="2"> <text>develop a set of governance standards applicable to the risk retention group;</text> </level> <level label="3"> <text>oversee the evaluation of the risk retention group’s management, including the performance of the captive manager, managing general underwriter, or other party or parties responsible for underwriting, determining rates, collecting premium, adjusting or settling claims, or preparing financial statements;</text> </level> <level label="4"> <text>review and approve the amount to be paid for all material service providers; and</text> </level> <level label="5"> <text>review and approve, at least annually:</text> <level label="i"> <text>the risk retention group’s goals and objectives relevant to the compensation of officers and service providers;</text> </level> <level label="ii"> <text>the officers’ and service providers’ performance in light of those goals and objectives; and</text> </level> <level label="iii"> <text>the continued engagement of the officers and material service providers.</text> </level> </level> </level> <level label="h"> <level label="1"> <text>The risk retention group shall have an audit committee.</text> </level> <level label="2"> <text>The audit committee shall be composed of at least three board members who have been determined to be independent under subsection (e) of this section.</text> </level> <level label="3"> <text>The audit committee shall have a written charter that defines the committee’s purposes, including, at a minimum, to:</text> <level label="i"> <text>assist board oversight of:</text> <level label="1"> <text>the integrity of the financial statements;</text> </level> <level label="2"> <text>the compliance with legal and regulatory requirements; and</text> </level> <level label="3"> <text>the qualifications, independence, and performance of the independent auditor and actuary;</text> </level> </level> <level label="ii"> <text>discuss the annual audited financial statements and quarterly financial statements with management;</text> </level> <level label="iii"> <text>discuss the annual audited financial statements with its independent auditor and, if advisable, discuss its quarterly financial statements with its independent auditor;</text> </level> <level label="iv"> <text>discuss policies with respect to risk assessment and risk management;</text> </level> <level label="v"> <text>meet separately and periodically, either directly or through a designated representative of the committee, with management and independent auditors;</text> </level> <level label="vi"> <text>review with the independent auditor any audit problems or difficulties and management’s response;</text> </level> <level label="vii"> <text>set clear hiring policies of the risk retention group as to the hiring of employees or former employees of the independent auditor;</text> </level> <level label="viii"> <text>require the external auditor to rotate the lead or coordinating audit partner having primary responsibility for the risk retention group’s audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for more than 5 consecutive fiscal years; and</text> </level> <level label="ix"> <text>report regularly to the board of directors.</text> </level> </level> <level label="4"> <text>A nonindependent board member may participate in the activities of the audit committee if invited by the members of the audit committee but may not be a member of the audit committee.</text> </level> <level label="5"> <text>Notwithstanding paragraph (1) of this subsection, the Commissioner may waive the requirement to establish an audit committee composed of independent board members if the risk retention group is able to demonstrate to the Commissioner that:</text> <level label="i"> <text>it is impracticable to do so; and</text> </level> <level label="ii"> <text>the risk retention group’s board of directors itself is otherwise able to accomplish the purposes of an audit committee as described in paragraph (3) of this subsection.</text> </level> </level> </level> <level label="i"> <level label="1"> <text>The board of directors shall adopt governance standards.</text> </level> <level label="2"> <text>The governance standards shall include:</text> <level label="i"> <text>a process by which the directors are elected by the owners or insureds;</text> </level> <level label="ii"> <text>director qualification standards;</text> </level> <level label="iii"> <text>director responsibilities;</text> </level> <level label="iv"> <text>director access to management and, as necessary and appropriate, independent advisors;</text> </level> <level label="v"> <text>director compensation;</text> </level> <level label="vi"> <text>director orientation and continuing education;</text> </level> <level label="vii"> <text>the policies and procedures that are followed for management succession; and</text> </level> <level label="viii"> <text>the policies and procedures that are followed for annual performance evaluation of the board.</text> </level> </level> <level label="3"> <text>The board of directors shall disclose the governance standards:</text> <level label="i"> <text>by electronic means, which may include posting on the risk retention group’s website, or other reasonable means; and</text> </level> <level label="ii"> <text>on the request of members and insureds.</text> </level> </level> </level> <level label="j"> <level label="1"> <text>The board of directors shall adopt a code of business conduct and ethics for directors, officers, and employees.</text> </level> <level label="2"> <text>The code of business conduct and ethics shall include provisions that address:</text> <level label="i"> <text>conflicts of interest;</text> </level> <level label="ii"> <text>matters covered under the corporate opportunities doctrine;</text> </level> <level label="iii"> <text>confidentiality;</text> </level> <level label="iv"> <text>fair dealing;</text> </level> <level label="v"> <text>protection and proper use of risk retention group assets;</text> </level> <level label="vi"> <text>compliance with all applicable laws, rules, and regulations; and</text> </level> <level label="vii"> <text>the reporting of any illegal or unethical behavior that affects the operation of the risk retention group.</text> </level> </level> <level label="3"> <text>The board of directors shall disclose the code of business conduct and ethics:</text> <level label="i"> <text>by electronic means, which may include posting on the risk retention group’s website, or other reasonable means; and</text> </level> <level label="ii"> <text>on the request of members and insureds.</text> </level> </level> <level label="4"> <text>Any waiver of the code of business conduct and ethics for any director or executive officer shall promptly be disclosed to the board of directors.</text> </level> </level> <level label="k"> <text>The captive manager and the president or chief executive officer of the risk retention group shall promptly notify the Commissioner in writing if either becomes aware of any material noncompliance with any of the governance standards required under subsections (e) through (j) of this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-103" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <level label="a"> <text>A risk retention group that is chartered and licensed in a state other than this State and that seeks to do business as a risk retention group in this State shall comply with the requirements of this section.</text> </level> <level label="b"> <level label="1"> <text>Before a risk retention group offers insurance in this State, the risk retention group shall submit to the Commissioner:</text> <level label="i"> <text>a statement that identifies:</text> <level label="1"> <text>the state or states in which the risk retention group is chartered and licensed as a liability insurance company;</text> </level> <level label="2"> <text>the date of chartering and licensing;</text> </level> <level label="3"> <text>the principal place of business of the risk retention group; and</text> </level> <level label="4"> <text>any other information, including information on membership of the risk retention group, that the Commissioner requires to verify that the risk retention group qualifies as a risk retention group, as defined in § 25–101 of this subtitle;</text> </level> </level> <level label="ii"> <text>subject to paragraphs (2) and (3) of this subsection, a copy of the plan of operation or feasibility study of the risk retention group and any revisions of the plan of operation or feasibility study submitted to the state in which the risk retention group is chartered and licensed;</text> </level> <level label="iii"> <text>a statement of registration that designates the Commissioner as its agent for service of legal process;</text> </level> <level label="iv"> <text>a copy of the financial statement of the risk retention group that:</text> <level label="1"> <text>was submitted to the state in which the risk retention group is chartered and licensed;</text> </level> <level label="2"> <text>is certified by an independent certified public accountant; and</text> </level> <level label="3"> <text>contains a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist;</text> </level> </level> <level label="v"> <text>a copy of each examination of the risk retention group that is certified by the Commissioner or other public official that conducts the examination;</text> </level> <level label="vi"> <text>on request of the Commissioner, a copy of any information or document that relates to an outside audit performed with respect to the risk retention group; and</text> </level> <level label="vii"> <text>any other information that the Commissioner requires in order to verify the continuing qualification of the risk retention group as a risk retention group, as defined in § 25–101 of this subtitle.</text> </level> </level> <level label="2"> <text>Subsection (b)(1)(ii) of this section does not apply to a line or classification of liability insurance that:</text> <level label="i"> <text>was defined in the Product Liability Risk Retention Act of 1981 on or before October 26, 1986; and</text> </level> <level label="ii"> <text>was offered on or before October 26, 1986 by a risk retention group that had been chartered and operating for not less than 3 years on or before October 26, 1986.</text> </level> </level> <level label="3"> <text>The risk retention group shall submit a copy of any material revision to its plan of operation or feasibility study equivalent to that required by § 25–102 of this subtitle within 30 days after the date of the approval of the revision by the commissioner of its chartering state or, if that approval is not required, within 30 days after filing.</text> </level> <level label="4"> <text>The Commissioner shall determine the filing fee for the statement of registration required by subsection (b)(1)(iii) of this section.</text> </level> </level> <level label="c"> <level label="1"> <text>All premiums paid in this State to risk retention groups chartered in another state for coverages are subject to taxation at the same rate and are subject to the same interest, fines, and penalties for nonpayment as are foreign admitted insurers.</text> </level> <level label="2"> <text>Each risk retention group subject to this subsection is liable for the payment of premium taxes and taxes on premiums of direct business for risks resident or located in the State.</text> </level> <level label="3"> <text>On or before March 1 of each year, each risk retention group shall report all premiums paid to it for risks resident or located in the State.</text> </level> <level label="4"> <text>If the risk retention group fails to pay the specified taxes, the taxes shall be paid by each of the risk retention group’s members whose risks are resident or located in the State.</text> </level> </level> <level label="d"> <text>Each risk retention group, and each agent or representative of a risk retention group, shall comply with Title 27, Subtitle 3 of this article.</text> </level> <level label="e"> <level label="1"> <text>Each risk retention group, and each agent or representative of a risk retention group, shall comply with all applicable insurance laws of the State regarding deceptive, false, or fraudulent acts or practices.</text> </level> <level label="2"> <text>The Commissioner may seek from a court an injunction regarding deceptive, false, or fraudulent acts or practices.</text> </level> </level> <level label="f"> <level label="1"> <text>A risk retention group shall submit to an examination by the Commissioner to determine its financial condition if the insurance commissioner of the jurisdiction in which the risk retention group is chartered and licensed has not initiated an examination or does not initiate an examination within 60 days after a request by the Commissioner.</text> </level> <level label="2"> <text>Each examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the National Association of Insurance Commissioners’ Examiner Handbook.</text> </level> </level> <level label="g"> <text>Each application form for insurance from a risk retention group and each policy issued by a risk retention group for or on behalf of a resident of the State shall contain, in 10 point type on the front page and the declaration page, the following notice:</text> <text>“Notice</text> <text>This policy is issued by your risk retention group. Your risk retention group may not be subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty funds are not available for your risk retention group.”</text> </level> <level label="h"> <level label="1"> <text>A risk retention group may not solicit or sell insurance to a person that is not eligible for membership in the risk retention group.</text> </level> <level label="2"> <text>A risk retention group that is in a hazardous financial condition or is financially impaired may not solicit or sell insurance, or operate as a risk retention group.</text> </level> </level> <level label="i"> <text>Unless a risk retention group is comprised entirely of insurance companies, the risk retention group may not conduct business in this State if an insurance company is directly or indirectly a member or owner of the risk retention group.</text> </level> <level label="j"> <text>A risk retention group may not offer coverage that is prohibited by this article or declared unlawful by the Supreme Court of Maryland.</text> </level> <level label="k"> <text>If there has been a finding of financial impairment after an examination under subsection (f) of this section, a risk retention group that is not chartered in the State and that is doing business in the State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a delinquency proceeding commenced by an insurance commissioner of a state.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-104" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <level label="a"> <level label="1"> <text>A risk retention group may not join or contribute financially to an insurance insolvency guaranty fund or similar mechanism in the State.</text> </level> <level label="2"> <text>A risk retention group and its insureds may not receive a benefit from an insurance insolvency guaranty fund or similar mechanism for claims arising out of the operations of the risk retention group.</text> </level> </level> <level label="b"> <level label="1"> <text>When a purchasing group obtains insurance that covers the risks of its members from an unauthorized insurer or from a risk retention group, the risks, whether resident or located, may not be covered by an insurance insolvency guaranty fund or similar mechanism in the State.</text> </level> <level label="2"> <text>When a purchasing group obtains insurance that covers the risks of its members from an authorized insurer, only risks resident or located in the State shall be covered by the Property and Casualty Insurance Guaranty Corporation under Title 9, Subtitle 3 of this article.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-105" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <text>A policy issued to a risk retention group or a member of that risk retention group may not be required to be countersigned.</text> </section> <section article="gin" article_name="Insurance" number="25-106" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <level label="a"> <level label="1"> <text>Except as otherwise provided in paragraphs (2) and (3) of this subsection, a purchasing group is subject to all applicable laws of the State.</text> </level> <level label="2"> <text>A purchasing group that meets the criteria established under the federal Liability Risk Retention Amendments of 1986 is exempt from any law of the State that relates to the creation of groups for the purchase of insurance, prohibition of group purchasing, or any law that would discriminate against a purchasing group or its members.</text> </level> <level label="3"> <text>An insurer is exempt from any law of the State that prohibits providing or offering to provide to a purchasing group or its members advantages based on their loss and expense experience that are not afforded to other persons with respect to rates, policy forms, coverages, or other matters.</text> </level> </level> <level label="b"> <level label="1"> <text>Before doing business in the State, a purchasing group shall furnish notice to the Commissioner.</text> </level> <level label="2"> <text>The notice shall include:</text> <level label="i"> <text>the state in which the purchasing group has its domicile;</text> </level> <level label="ii"> <text>the lines and classifications of liability insurance that the purchasing group intends to purchase;</text> </level> <level label="iii"> <text>the identity of all states in which the purchasing group intends to do business;</text> </level> <level label="iv"> <text>the insurance company from which the purchasing group intends to purchase liability insurance and the domicile of that company;</text> </level> <level label="v"> <text>the method by which and any person through whom liability insurance will be offered to purchasing group members whose risks are resident or located in the State;</text> </level> <level label="vi"> <text>the principal place of business of the purchasing group; and</text> </level> <level label="vii"> <text>any other information that the Commissioner requires to verify that the purchasing group qualifies as a purchasing group, as defined in § 25-101 of this subtitle.</text> </level> </level> <level label="3"> <text>Within 10 days of a change in an item set forth in paragraph (2) of this subsection, the purchasing group shall notify the Commissioner of the change in writing.</text> </level> </level> <level label="c"> <level label="1"> <text>A purchasing group shall provide to the Commissioner a statement of registration that designates the Commissioner as its agent for service of legal process.</text> </level> <level label="2"> <text>The Commissioner shall determine the filing fee for the statement of registration required by paragraph (1) of this subsection.</text> </level> <level label="3"> <text>The requirements of paragraph (1) of this subsection do not apply to a purchasing group that:</text> <level label="i"> <level label="1"> <text>had its domicile on or before March 31, 1986 in a state; and</text> </level> <level label="2"> <text>has its domicile on or after October 27, 1986 in a state;</text> </level> </level> <level label="ii"> <level label="1"> <text>on or before October 26, 1986, purchased insurance from an insurer licensed in a state; and</text> </level> <level label="2"> <text>on or after October 27, 1986, purchased insurance from an insurer licensed in a state;</text> </level> </level> <level label="iii"> <text>was a purchasing group under the requirements of the Product Liability Risk Retention Act of 1981 on or before October 26, 1986; and</text> </level> <level label="iv"> <text>only purchases insurance that was authorized under the Product Liability Risk Retention Act of 1981, as in effect on or before October 26, 1986.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>Unless the purchase is effected through a licensed insurance producer acting under the surplus lines insurance laws and regulations of a state, a purchasing group may not purchase insurance from a risk retention group that is not chartered in that state or from an insurer not authorized in the state in which the purchasing group is located.</text> </level> <level label="2"> <text>A purchasing group that obtains liability insurance from an unauthorized insurer or from a risk retention group shall inform each member of the purchasing group that has a risk resident or located in this State that:</text> <level label="i"> <text>the risk is not protected by the Property and Casualty Insurance Guaranty Corporation; and</text> </level> <level label="ii"> <text>the risk retention group or unauthorized insurer may not be subject to all insurance laws and regulations of the State.</text> </level> </level> <level label="3"> <level label="i"> <text>A purchasing group may not purchase insurance coverage that provides for a deductible or self-insured retention applicable to the purchasing group as a whole.</text> </level> <level label="ii"> <text>Notwithstanding subparagraph (i) of this paragraph, a purchasing group may purchase insurance coverage that provides for a deductible or self-insured retention applicable to individual members.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>Taxes on premiums paid for coverage of risks resident or located in the State by a purchasing group or member of the purchasing group shall be imposed in accordance with Title 6 of this article.</text> </level> <level label="2"> <text>If the taxes imposed by Title 6 of this article are not paid by the insurer, then the taxes shall be paid by the purchasing group.</text> </level> <level label="3"> <text>If the purchasing group fails to pay the specified taxes, the taxes shall be paid by each of the purchasing group’s members whose risks are resident or located in the State.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-107" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <level label="a"> <text>A person must obtain a license from the Commissioner before the person acts or offers to act as an insurance producer for a risk retention group or purchasing group that solicits members, sells insurance coverage, purchases coverage for its members that are located in the State, or otherwise does business in the State.</text> </level> <level label="b"> <level label="1"> <text>Each insurance producer acting on behalf of a risk retention group or purchasing group shall keep a complete and separate record of all policies procured from or on behalf of the risk retention group or purchasing group.</text> </level> <level label="2"> <text>The records required by paragraph (1) of this subsection shall be open to inspection by the Commissioner in accordance with § 2-206 of this article.</text> </level> <level label="3"> <text>The records required by paragraph (1) of this subsection shall include:</text> <level label="i"> <text>the limits of liability;</text> </level> <level label="ii"> <text>the policy period;</text> </level> <level label="iii"> <text>the effective date of the policy;</text> </level> <level label="iv"> <text>the name of the insurer that issued the policy;</text> </level> <level label="v"> <text>the gross premium charged;</text> </level> <level label="vi"> <text>the name of the purchasing group that purchased the policy, if applicable; and</text> </level> <level label="vii"> <text>the amount of any return premiums.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-108" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <level label="a"> <text>The Commissioner may exercise any powers granted by this article to enforce the laws of the State if the powers are not specifically preempted by the federal Product Liability Risk Retention Act of 1981 as amended by the risk retention amendments of 1986.</text> </level> <level label="b"> <text>The Commissioner may adopt regulations relating to risk retention groups to carry out this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-109" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <text>On a finding that a risk retention group is in a hazardous financial condition or is financially impaired, an order issued by a District Court of the United States that enjoins the risk retention group from soliciting or selling insurance or operating in a state, in all states, or in a territory or possession of the United States is enforceable in the courts of this State.</text> </section> <section article="gin" article_name="Insurance" number="25-110" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <text>A risk retention group that violates any provision of this subtitle is subject to fines and penalties applicable to licensed insurers generally, including revocation of its license and the right to do business in the State.</text> </section> <section article="gin" article_name="Insurance" number="25-111" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="1" subtitle_name="Maryland Risk Retention Act"> <text>This subtitle is the Maryland Risk Retention Act.</text> </section> <section article="gin" article_name="Insurance" number="25-201" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="2" subtitle_name="Agricultural Group Policies"> <text>The purpose of this subtitle is to allow employees of small farms to be entitled to protection under the Maryland Workers’ Compensation Act.</text> </section> <section article="gin" article_name="Insurance" number="25-202" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="2" subtitle_name="Agricultural Group Policies"> <text>This subtitle applies to the following employers of agricultural labor, some or all of whom may not be required to carry workers’ compensation insurance:</text> <level label="1"> <text>members of a nonprofit agricultural association; and</text> </level> <level label="2"> <text>members of or stockholders in a nonprofit cooperative agricultural marketing association of producers.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-203" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="2" subtitle_name="Agricultural Group Policies"> <text>Employers subject to this subtitle may be insured under a group workers’ compensation insurance policy under the conditions that the Commissioner sets.</text> </section> <section article="gin" article_name="Insurance" number="25-204" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="2" subtitle_name="Agricultural Group Policies"> <text>The nonprofit agricultural association or nonprofit cooperative agricultural marketing association of producers shall guarantee premium payment by its members that are covered under the group workers’ compensation policy.</text> </section> <section article="gin" article_name="Insurance" number="25-301" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Administrator” means a person engaged by a workers’ compensation self-insurance group to carry out the policies established by the self-insurance group and to provide management of the self-insurance group.</text> </level> <level label="c"> <text>“Insolvent self-insurance group” means a self-insurance group in which each individual member of the group is unable to meet the member’s debts as they mature in the ordinary course of business, as determined by the Commissioner.</text> </level> <level label="d"> <text>“Self-insurance agreement” means the partnership arrangement between the members of a self-insurance group that defines the rights, obligations, and liabilities of the members of the self-insurance group.</text> </level> <level label="e"> <level label="1"> <text>“Self-insurance group” means two or more employers organized in accordance with this subtitle.</text> </level> <level label="2"> <text>“Self-insurance group” does not include a governmental self-insurance group organized under § 9-404 of the Labor and Employment Article.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-302" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <text>An employer may satisfy the requirements of § 9-402 of the Labor and Employment Article by participating in a self-insurance group that meets the requirements of this subtitle.</text> </section> <section article="gin" article_name="Insurance" number="25-303" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <level label="a"> <text>In this section, “service company” means a person that provides services that are not provided by the administrator, including:</text> <level label="1"> <text>claims adjustment;</text> </level> <level label="2"> <text>safety engineering;</text> </level> <level label="3"> <text>compilation of statistics and the preparation of premium, loss, and tax reports;</text> </level> <level label="4"> <text>preparation of other required self-insurance reports;</text> </level> <level label="5"> <text>development of members’ assessments and fees; and</text> </level> <level label="6"> <text>administration of a claim fund.</text> </level> </level> <level label="b"> <text>The Commissioner shall adopt regulations to carry out this subtitle.</text> </level> <level label="c"> <text>The regulations shall include:</text> <level label="1"> <text>classifications of businesses and industries, based on the type of activity conducted by the business or industry, within which employers may join together in self-insurance groups;</text> </level> <level label="2"> <text>for each classification:</text> <level label="i"> <text>a minimum level of contribution of at least $250,000 in premiums collected from or pledged by members of a self-insurance group to a fund from which workers’ compensation claims will be paid;</text> </level> <level label="ii"> <text>a minimum level of excess insurance coverage that must be obtained by each self-insurance group;</text> </level> <level label="iii"> <text>a requirement that the minimum levels of excess insurance adopted under this subtitle may be satisfied by placing, in a depository that the Commissioner designates, securities in a form and amount that the Commissioner requires; and</text> </level> <level label="iv"> <text>a surety bond of at least $100,000 that must be obtained by each self-insurance group;</text> </level> </level> <level label="3"> <text>conditions under which contributions by members of a self-insurance group may be rebated or temporarily suspended;</text> </level> <level label="4"> <text>for each administrator or service company, a bond that the Commissioner may require in addition to any other required bond; and</text> </level> <level label="5"> <text>a requirement that the governance of the group be under the control of its members.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-304" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <level label="a"> <text>Before a self-insurance group may operate, the self-insurance group must obtain the approval of the Commissioner, including approval of its self-insurance agreement.</text> </level> <level label="b"> <text>Each self-insurance group must have combined net assets of at least $1,000,000.</text> </level> <level label="c"> <level label="1"> <text>A self-insurance group shall pay all workers’ compensation benefits for which each member incurs liability during its period of membership.</text> </level> <level label="2"> <text>Each member of a self-insurance group is jointly and severally liable for the workers’ compensation obligations of the group and its members that are incurred during its period of membership.</text> </level> <level label="3"> <text>A member who elects to terminate its membership in or is canceled by a group remains jointly and severally liable for workers’ compensation obligations of the group and its members which were incurred during the canceled or terminated member’s period of membership.</text> </level> <level label="4"> <text>The insolvency or bankruptcy of a member does not relieve the self-insurance group or any other member of liability for the payment of workers’ compensation benefits incurred during the insolvent or bankrupt member’s period of membership.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-305" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <level label="a"> <text>A self-insurance group is not liable for payments to the Property and Casualty Insurance Guaranty Corporation.</text> </level> <level label="b"> <text>There is a Self-Insurers’ Guaranty Fund.</text> </level> <level label="c"> <text>The Uninsured Employers’ Fund established under § 10-304 of the Labor and Employment Article shall administer the Self-Insurers’ Guaranty Fund.</text> </level> <level label="d"> <text>Each self-insurance group shall pay an assessment into the Self-Insurers’ Guaranty Fund at the same level assessed against other workers’ compensation insurers by the Property and Casualty Insurance Guaranty Corporation under Title 9, Subtitle 3 of this article.</text> </level> <level label="e"> <level label="1"> <text>The Self-Insurers’ Guaranty Fund shall pay any outstanding obligations of a self-insurance group that becomes insolvent.</text> </level> <level label="2"> <text>If the Self-Insurers’ Guaranty Fund becomes insolvent, any outstanding obligations of an insolvent self-insurance group are a joint and several liability of each member of the self-insurance group.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-306" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <level label="a"> <text>The Commissioner may not grant the request of a self-insurance group to terminate its self-insurance agreement unless the self-insurance group has insured or reinsured all incurred workers’ compensation obligations with an authorized insurer under an agreement filed with and approved in writing by the Commissioner.</text> </level> <level label="b"> <level label="1"> <text>Subject to the approval of the Commissioner, a self-insurance group may merge with another self-insurance group engaged in the same or similar type of business only if the resulting self-insurance group assumes all the obligations of the merging self-insurance groups.</text> </level> <level label="2"> <text>The Commissioner shall hold a hearing on the merger at the request of any party including a member of either self-insurance group.</text> </level> </level> <level label="c"> <text>For purposes of this section, obligations include known claims and associated expenses and claims incurred but not reported and associated expenses.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-307" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <text>The Commissioner may:</text> <level label="1"> <text>require actuarial studies and audits to determine the financial solvency of each self-insurance group as often as the Commissioner desires;</text> </level> <level label="2"> <text>assess each self-insurance group an annual amount of not more than $500 to be used for the actuarial studies and audits; and</text> </level> <level label="3"> <text>require an annual report that may include payroll audit reports, summary loss reports, and quarterly financial statements.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-308" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="3" subtitle_name="Group Self-Insurance for Workers' Compensation"> <level label="a"> <level label="1"> <text>After notice and opportunity for a hearing, the Commissioner may impose a monetary penalty on a person or self–insurance group that the Commissioner finds to be in violation of this subtitle or a regulation adopted under this subtitle.</text> </level> <level label="2"> <text>A monetary penalty imposed under this subsection may not exceed $1,000 for each violation or $10,000 in the aggregate.</text> </level> <level label="3"> <text>A person or self–insurance group that is assessed a monetary penalty under this subsection shall pay the penalty to the Commissioner for the use of the State.</text> </level> </level> <level label="b"> <level label="1"> <text>After written notice and opportunity for a hearing, the Commissioner may issue an order that requires a person or self–insurance group to cease and desist from engaging in an act or practice that the Commissioner finds to be in violation of this subtitle or a regulation adopted under this subtitle.</text> </level> <level label="2"> <text>If the Commissioner finds, after notice and opportunity for a hearing, that a person or self–insurance group has violated an order issued under this subsection, the Commissioner may:</text> <level label="i"> <text>impose a monetary penalty of not more than $10,000 for each violation of the order or $100,000 in the aggregate; and</text> </level> <level label="ii"> <text>suspend or revoke the authority of the self–insurance group to operate.</text> </level> </level> </level> <level label="c"> <text>Notwithstanding any other provision of this subtitle, after notice and opportunity for a hearing, the Commissioner may suspend or revoke the authority of a self–insurance group to operate if the Commissioner determines that the self–insurance group:</text> <level label="1"> <text>is insolvent;</text> </level> <level label="2"> <text>failed to pay the special fund contribution or regulatory fee imposed on the self–insurance group;</text> </level> <level label="3"> <text>failed to comply within the time set with a provision of this subtitle, a regulation adopted under this subtitle, or a lawful order of the Commissioner;</text> </level> <level label="4"> <text>obtained its authority to operate by fraud, including making a material misrepresentation in the application for authority to operate as a self–insurance group;</text> </level> <level label="5"> <text>misappropriated, converted, illegally withheld, or refused to pay on proper demand money that has been entrusted to the self–insurance group or its administrator in its fiduciary capacity and that belongs to a member of the self–insurance group, an employee of a member, or a person entitled to payment; or</text> </level> <level label="6"> <text>for any other reason, must have its authority to operate suspended or revoked to protect the members or insureds of a self–insurance group or the public.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-401" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Association” means the Joint Insurance Association.</text> </level> <level label="c"> <text>“Association member” means an insurer that is licensed to write in the State, on a direct basis, essential property insurance or a component of essential property insurance in multi-peril policies.</text> </level> <level label="d"> <level label="1"> <text>“Essential property insurance” means insurance against direct loss to property from the perils of fire, lightning, removal, explosion, windstorm, hail, smoke, aircraft, vehicles, riot, civil commotion, or vandalism as defined and limited in property insurance forms that the Association files with the Commissioner.</text> </level> <level label="2"> <text>“Essential property insurance” does not include:</text> <level label="i"> <text>motor vehicle insurance;</text> </level> <level label="ii"> <text>inland marine insurance; or</text> </level> <level label="iii"> <text>insurance on property that:</text> <level label="1"> <text>is used for fabrication, processing, or assembly of products or components of products;</text> </level> <level label="2"> <text>has an insurable value in excess of $250,000; and</text> </level> <level label="3"> <text>is used in a business that employs at least 25 individuals.</text> </level> </level> </level> </level> <level label="e"> <text>“Homeowner’s insurance” means insurance for residential property that provides a combination of coverages including:</text> <level label="1"> <text>fire;</text> </level> <level label="2"> <text>extended coverage;</text> </level> <level label="3"> <text>vandalism and malicious mischief;</text> </level> <level label="4"> <text>burglary;</text> </level> <level label="5"> <text>theft; and</text> </level> <level label="6"> <text>personal liability.</text> </level> </level> <level label="f"> <level label="1"> <text>“Premiums written” means, as computed by the Association, gross direct premiums charged during the second preceding calendar year with respect to property in the State on all policies of essential property insurance and the essential property insurance components of multi-peril policies, less return premiums, dividends paid or credited to policyholders, or the unused or unabsorbed parts of premium deposits.</text> </level> <level label="2"> <text>“Premiums written” does not include premiums or parts of premiums relating to risks ceded to the Association.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-402" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <text>The purposes of this subtitle are:</text> <level label="1"> <text>to authorize and establish:</text> <level label="i"> <text>the Joint Insurance Association;</text> </level> <level label="ii"> <text>a program to make essential property insurance available from the Association to qualified applicants with the least possible administrative detail and expense; and</text> </level> <level label="iii"> <text>a program to make the homeowner’s insurance that is provided by the Association available to qualified applicants with the least possible administrative detail and expense;</text> </level> </level> <level label="2"> <text>to encourage the improvement of the condition of properties located in the State;</text> </level> <level label="3"> <text>to further orderly community development in general;</text> </level> <level label="4"> <text>to publicize the purposes and procedures of this subtitle so that no one fails to seek assistance from the Association because of ignorance;</text> </level> <level label="5"> <text>to utilize fully the voluntary insurance market as a source of essential property insurance and homeowner’s insurance; and</text> </level> <level label="6"> <text>to encourage the delivery of essential property insurance, and the homeowner’s insurance that is provided by the Association, at the most reasonable cost possible, provided that insurance pricing by the Association:</text> <level label="i"> <text>is actuarially self-supporting; and</text> </level> <level label="ii"> <text>does not actively compete with insurance pricing in the voluntary insurance market.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-403" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <level label="a"> <level label="1"> <text>There is a Joint Insurance Association.</text> </level> <level label="2"> <text>The Association is an unincorporated association.</text> </level> </level> <level label="b"> <level label="1"> <text>The Association consists of all insurers that are licensed to write in the State, on a direct basis, essential property insurance or a component of essential property insurance in multi-peril policies.</text> </level> <level label="2"> <text>As a condition of its authority to transact essential property insurance business in the State, an insurer must be and remain an Association member.</text> </level> </level> <level label="c"> <text>The Association may:</text> <level label="1"> <text>establish a program of operation, subject to the approval of the Commissioner; and</text> </level> <level label="2"> <text>cause policies to be issued and assume and cede reinsurance on risks written in conformity with the program of operation.</text> </level> </level> <level label="d"> <text>Each Association member shall participate in the Association’s expenses, profits, and losses in the proportion that the Association member’s premiums written bear to the aggregate premiums written by all Association members.</text> </level> <level label="e"> <level label="1"> <text>A Governing Committee shall administer the Association.</text> </level> <level label="2"> <text>The Governing Committee consists of nine Association members.</text> </level> <level label="3"> <text>All Association members annually shall elect the members of the Governing Committee.</text> </level> <level label="4"> <text>Votes shall be weighted in accordance with the premiums written by each Association member.</text> </level> </level> <level label="f"> <level label="1"> <text>An Association member, the Association or its agents or employees, the Board of Directors, and the Commissioner or the Commissioner’s representatives shall have the immunity from liability described in § 5-411(a) of the Courts Article.</text> </level> <level label="2"> <text>An Association member, the Association, the Governing Committee, their agents or employees, the Commissioner, and the Commissioner’s authorized representatives shall have the immunity from liability described in § 5-411(b) of the Courts Article.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-404" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <level label="a"> <level label="1"> <text>The Association is not and may not be deemed a department, unit, agency, or instrumentality of the State.</text> </level> <level label="2"> <text>All debts, claims, obligations, and liabilities incurred by the Association shall be the debts, claims, obligations, and liabilities of the Association only and not of the State or the State’s agencies, instrumentalities, officers, or employees.</text> </level> </level> <level label="b"> <level label="1"> <text>The money of the Association is not part of the General Fund of the State.</text> </level> <level label="2"> <text>The State may not budget for or provide General Fund appropriations to the Association.</text> </level> <level label="3"> <text>The debts, claims, obligations, and liabilities of the Association are not debts of the State or pledges of the credit of the State.</text> </level> </level> <level label="c"> <text>The records, reports, and communications of the Association, the Governing Committee, the committees of the Association, and their representatives, agents, and employees are not public documents.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-405" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <level label="a"> <text>The Governing Committee shall adopt a program of operation in accordance with this subtitle.</text> </level> <level label="b"> <text>The program of operation shall provide for economical, fair, and nondiscriminatory administration and for the prompt and efficient delivery of essential property insurance and homeowner’s insurance to promote orderly community development.</text> </level> <level label="c"> <level label="1"> <text>With the approval of the Commissioner, the Association may amend the program of operation.</text> </level> <level label="2"> <text>Association members shall vote on proposed amendments to the program of operation.</text> </level> <level label="3"> <text>Votes shall be cast and counted on a weighted basis in accordance with the premiums written by each Association member.</text> </level> <level label="4"> <text>An amendment to the program of operation is not effective until approved by a majority of the votes cast by Association members.</text> </level> </level> <level label="d"> <text>The program of operation shall provide for:</text> <level label="1"> <text>establishment of adequate service facilities and other necessary facilities;</text> </level> <level label="2"> <text>management of the Association;</text> </level> <level label="3"> <text>assessment of Association members to defray losses and expenses;</text> </level> <level label="4"> <text>commission arrangements;</text> </level> <level label="5"> <text>reasonable and objective underwriting standards;</text> </level> <level label="6"> <text>acceptance and cession of reinsurance;</text> </level> <level label="7"> <text>procedures to determine amounts of insurance to be provided;</text> </level> <level label="8"> <text>immediate binding of eligible risks;</text> </level> <level label="9"> <text>a premium installment plan; and</text> </level> <level label="10"> <text>notwithstanding Title 27, Subtitle 6 of this article, underwriting guidelines and procedures that allow the Association to shorten the cancellation period for policies of essential property insurance and homeowner’s insurance for certain conditions that are determined to exist.</text> </level> </level> <level label="e"> <text>The program of operation shall provide that the Association may not appoint insurance producers to act on its behalf and shall do business directly with applicants or with licensed insurance producers that represent applicants.</text> </level> <level label="f"> <text>The program of operation shall establish:</text> <level label="1"> <text>a maximum limit of liability of $1,500,000 on real or personal property composed of or contained in a single building; and</text> </level> <level label="2"> <text>appropriate sublimits of liability based on construction, protection, and class of occupancy.</text> </level> </level> <level label="g"> <level label="1"> <text>The program of operation shall implement procedures to make homeowner’s insurance coverage available through the Association.</text> </level> <level label="2"> <text>The homeowner’s insurance policies that the Association issues may be limited to basic market value, repair cost, or actual cash value contracts for owner-occupants of one- to four-family dwellings, as approved by the Commissioner.</text> </level> <level label="3"> <text>The homeowner’s insurance shall be implemented through a program that entitles eligible applicants to immediate binding of coverage through the Association for a reasonable period of time pending underwriting and inspection of the premises to determine whether the premises meet the eligibility standards of the program.</text> </level> </level> <level label="h"> <level label="1"> <text>The program of operation shall provide a method of recoupment by which Association members may recover losses and expenses that have been incurred by the Association and assessed to Association members.</text> </level> <level label="2"> <text>To recoup loss and expense assessments, the program of operation shall provide for:</text> <level label="i"> <text>the calculation of the surcharge or rating factors to be added to direct premiums written for essential property insurance and homeowner’s insurance covering property located in the State; and</text> </level> <level label="ii"> <text>an adjustment each year for over or under recoupment of assessment.</text> </level> </level> </level> <level label="i"> <level label="1"> <text>The program of operation shall develop a participation credit for dwellings as an offset to Association member assessment for voluntary writings in those areas of the State with a significant proportion of essential property insurance policies or homeowner’s insurance policies issued by or for the Association.</text> </level> <level label="2"> <text>After consultation with the Governing Committee, the Commissioner shall determine whether an area has a significant proportion of Association policies.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-406" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <text>A person with an insurable interest in real or tangible personal property at a fixed location may apply to the Association for essential property insurance or homeowner’s insurance if the person has been:</text> <level label="1"> <text>unable to obtain essential property insurance or homeowner’s insurance;</text> </level> <level label="2"> <text>able to obtain essential property insurance or homeowner’s insurance only after application under § 11-210 or § 11-311 of this article; or</text> </level> <level label="3"> <text>able to obtain only partial coverage for the value of the property.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-407" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <level label="a"> <text>The Association may inspect the property of an applicant for essential property insurance or homeowner’s insurance coverage.</text> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, the Association shall inspect the property without cost to the owner.</text> </level> <level label="2"> <text>If the Association is unable to complete an inspection of the property due to the fault of the owner or applicant, the Association may require the applicant to pay in advance the reasonable cost of subsequent efforts to inspect the property.</text> </level> </level> <level label="c"> <level label="1"> <text>The applicant or representative of the applicant shall be afforded the opportunity to be present during the inspection.</text> </level> <level label="2"> <text>The inspector does not have authority to advise whether the Association will provide coverage to the property being inspected.</text> </level> <level label="3"> <text>The inspector may take photographs of the property during the inspection.</text> </level> </level> <level label="d"> <text>The inspection report shall:</text> <level label="1"> <text>cover pertinent structural and occupancy features and the general condition of the building and surrounding structures;</text> </level> <level label="2"> <text>indicate the pertinent features of building, construction, maintenance, occupancy, and surrounding property; and</text> </level> <level label="3"> <text>include a rate makeup statement that covers any condition charges or surcharges imposed:</text> <level label="i"> <text>as a result of the inspection;</text> </level> <level label="ii"> <text>under the program of operation; or</text> </level> <level label="iii"> <text>under a substandard rating plan approved by the Commissioner.</text> </level> </level> </level> <level label="e"> <text>On request, the Association shall make available a copy of the inspection report to the applicant or the applicant’s licensed insurance producer.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-408" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <level label="a"> <text>The Commissioner shall have the same powers over the Association as are granted under this article with respect to domestic insurers that are authorized insurers.</text> </level> <level label="b"> <text>If the Commissioner determines that the rate structure for policies of essential property insurance and homeowner’s insurance offered by or through the Association does not compete with the rate structure of the voluntary insurance market in the State, the Commissioner shall approve the rate structure.</text> </level> <level label="c"> <level label="1"> <text>The Commissioner shall monitor and review the financial condition of Association members to ensure that the Association members are able to pay assessments that the Association may levy on them.</text> </level> <level label="2"> <text>The Commissioner may use the annual statements of Association members and other available data to monitor and review their financial condition.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="25-409" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <level label="a"> <level label="1"> <text>An applicant for essential property insurance or homeowner’s insurance or an affected insurer may appeal to the Governing Committee.</text> </level> <level label="2"> <text>A decision of the Governing Committee may be appealed to the Commissioner within 30 days after the decision.</text> </level> </level> <level label="b"> <text>An order or decision of the Commissioner made under this subtitle is subject to judicial review.</text> </level> </section> <section article="gin" article_name="Insurance" number="25-410" title_number="25" title_name="Alternative Market Mechanisms" subtitle_number="4" subtitle_name="Maryland Property Insurance Availability Act"> <text>This subtitle is the Maryland Property Insurance Availability Act.</text> </section>