# Insurance (GIN)

## Title 4. General Requirements for Insurers

### Subtitle 3. Risk Based Capital Standards for Insurers

#### Section 4-301

(a) In this subtitle the following words have the meanings indicated.

(b) "Adjusted RBC report" means an RBC report that has been adjusted by the Commissioner in accordance with Sec. 4-303(b) of this subtitle.

(c) "Corrective order" means an order issued by the Commissioner that specifies corrective actions that the Commissioner has determined are required.

(d)

  (1) "Domestic insurer" means an insurer:

    (i) as defined in subsection (h) of this section; and

    (ii) that is formed under the laws of this State.

  (2) "Domestic insurer" does not include the Maryland Automobile Insurance Fund.

(e) "Filing date" means March 1 of any given year.

(f) "Foreign insurer" means an insurer:

  (1) as defined in subsection (h) of this section; and

  (2) that is formed under the laws of a jurisdiction other than this State.

(f-1) "Fraternal benefit society" means a person authorized to transact insurance business in the State under Title 8, Subtitle 4 of this article.

(g)

  (1) "Health insurer" means an insurer that:

    (i) is authorized to write health insurance in the State; and

    (ii) receives the majority of its premium from the sale of health insurance.

  (2) "Health insurer" includes:

    (i) a health maintenance organization operating under a certificate of authority issued by the Commissioner under Title 19, Subtitle 7 of the Health - General Article;

    (ii) a nonprofit health service plan operating under Title 14, Subtitle 1 of this article;

    (iii) a dental plan operating under Title 14, Subtitle 4 of this article; and

    (iv) a provider-sponsored organization operating under Title 19, Subtitle 7A of the Health - General Article.

  (3) "Health insurer" does not include a managed care organization operating under Title 15, Subtitle 1 of the Health - General Article.

(h)

  (1) "Insurer" means an insurer or other entity authorized to engage in the insurance business in the State under a certificate of authority issued by the Commissioner.

  (2) "Insurer" includes:

    (i) a health maintenance organization operating under a certificate of authority issued by the Commissioner under Title 19, Subtitle 7 of the Health - General Article;

    (ii) a nonprofit health service plan operating under Title 14, Subtitle 1 of this article;

    (iii) a dental plan operating under Title 14, Subtitle 4 of this article; and

    (iv) a provider-sponsored organization operating under Title 19, Subtitle 7A of the Health - General Article.

  (3) "Insurer" does not include:

    (i) monoline:

      (1) mortgage guaranty insurers;

      (2) financial guaranty insurers; or

      (3) title insurers; or

    (ii) managed care organizations operating under Title 15, Subtitle 1 of the Health - General Article.

(i) "Life insurer" means an insurer that:

  (1) is authorized to write life insurance in the State; and

  (2) receives the majority of its premium from the sale of life insurance.

(j) "NAIC" means the National Association of Insurance Commissioners.

(k) "Negative trend" means, with respect to a life insurer, health insurer, or fraternal benefit society, negative trend over a period of time, as determined in accordance with the "trend test calculation" included in the RBC instructions.

(l)

  (1) "Property and casualty insurer" means an insurer that:

    (i) is authorized to write property insurance or casualty insurance in the State; and

    (ii) receives the majority of its premium from the sale of property insurance or casualty insurance.

  (2) "Property and casualty insurer" does not include:

    (i) a health maintenance organization operating under a certificate of authority issued by the Commissioner under Title 19, Subtitle 7 of the Health - General Article;

    (ii) a nonprofit health service plan operating under Title 14, Subtitle 1 of this article;

    (iii) a dental plan operating under Title 14, Subtitle 4 of this article;

    (iv) a provider-sponsored organization operating under Title 19, Subtitle 7A of the Health - General Article; or

    (v) a managed care organization operating under Title 15, Subtitle 1 of the Health - General Article.

(m) "RBC instructions" means the risk based capital instructions developed and adopted by the NAIC.

(n) "RBC level" means an insurer's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC if:

  (1) "company action level RBC" means the product of 2.0 and the authorized control level RBC;

  (2) "regulatory action level RBC" means the product of 1.5 and the authorized control level RBC;

  (3) "authorized control level RBC" means the number determined under the risk based capital formula in accordance with the RBC instructions; or

  (4) "mandatory control level RBC" means the product of .70 and the authorized control level RBC.

(o) "RBC plan" means a comprehensive financial plan that contains the elements specified in Sec. 4-305(b) of this subtitle.

(p) "RBC report" means a report prepared by a domestic insurer and submitted to the Commissioner that details the domestic insurer's RBC levels as of the end of the immediately preceding calendar year.

(q) "Revised RBC plan" means an RBC plan that has been:

  (1) rejected by the Commissioner; and

  (2) subsequently revised by the insurer, with or without the Commissioner's recommendation.

(r) "Total adjusted capital" means the sum of:

  (1) an insurer's statutory capital and surplus as determined in accordance with the statutory accounting principles applicable to the annual financial statements required to be filed under State law and regulations; and

  (2) any other items provided for in the RBC instructions.

#### Section 4-302

It is the public policy of the State that, in order to safeguard the solvency of the insurance business in the State:

(1) an insurer should maintain an amount of capital in excess of the minimum RBC levels derived from the risk based capital requirements contained in this subtitle and the attendant formulas, schedules, and instructions; and

(2) additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the insurance business and not accounted for or only partially measured by the risk based capital requirements contained in this subtitle.

#### Section 4-303

(a)

  (1)

    (i) On or before the filing date, each domestic insurer shall prepare and submit to the Commissioner a report of its RBC levels as of the end of the immediately preceding calendar year.

    (ii) The RBC report shall be in the form and shall contain the information required by the RBC instructions.

  (2) In addition to the requirements of paragraph (1) of this subsection, each domestic insurer shall file its RBC report:

    (i) with the NAIC in accordance with the RBC instructions; and

    (ii) on written request, with the insurance commissioner of any state in which the insurer is authorized to do business, on or before the later of:

      (1) 15 days after receipt of the written request to file its RBC report with that state; or

      (2) the filing date.

(b) If a domestic insurer files an RBC report that, in the judgment of the Commissioner, is inaccurate, the Commissioner shall:

  (1) adjust the RBC report to correct the inaccuracy; and

  (2) notify the insurer of the adjustment, including a statement of the reason for the adjustment.

#### Section 4-304

(a)

  (1) A life insurer's or fraternal benefit society's risk based capital shall be determined in accordance with the formula set forth in the RBC instructions.

  (2) By applying the factors in the manner set forth in the RBC instructions, the formula shall take into account and may adjust for the covariance between:

    (i) the risk with respect to the life insurer's or fraternal benefit society's assets;

    (ii) the risk of adverse insurance experience with respect to the life insurer's or fraternal benefit society's liabilities and obligations;

    (iii) the interest rate risk with respect to the life insurer's or fraternal benefit society's business; and

    (iv) all other business risks and other relevant risks as set forth in the RBC instructions.

(b)

  (1) Except as provided in subsection (a) of this section, an insurer's risk based capital shall be determined in accordance with the formula set forth in the RBC instructions.

  (2) By applying the factors in the manner set forth in the RBC instructions, the formula shall take into account and may adjust for the covariance between:

    (i) asset risk;

    (ii) credit risk;

    (iii) underwriting risk; and

    (iv) all other business risks and other relevant risks as set forth in the RBC instructions.

#### Section 4-305

(a) A company action level event occurs:

  (1) when an insurer files an RBC report that indicates that:

    (i) the insurer has total adjusted capital that is:

      (1) greater than or equal to its regulatory action level RBC; and

      (2) less than its company action level RBC;

    (ii) in the case of a life insurer or fraternal benefit society, the life insurer or fraternal benefit society has total adjusted capital that:

      (1) is greater than or equal to its company action level RBC;

      (2) is less than the product of its authorized control level RBC and 3.0; and

      (3) has a negative trend;

    (iii) in the case of a property and casualty insurer, the property and casualty insurer has total adjusted capital that:

      (1) is greater than or equal to its company action level RBC;

      (2) is less than the product of its authorized control level RBC and 3.0; and

      (3) triggers the trend test calculation included in the property and casualty RBC instructions; or

    (iv) in the case of a health insurer, the health insurer has total adjusted capital that:

      (1) is greater than or equal to its company action level RBC;

      (2) is less than the product of its authorized control level RBC and 3.0; and

      (3) triggers the trend test calculation included in the health RBC instructions;

  (2) when the Commissioner notifies an insurer of an adjusted RBC report that indicates an event under item (1) of this subsection; or

  (3) if an insurer requests a hearing to challenge an adjusted RBC report that indicates an event under item (1) of this subsection, when the Commissioner notifies the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge.

(b) In the event of a company action level event, the insurer shall prepare and submit to the Commissioner an RBC plan that shall:

  (1) identify the conditions that contribute to the company action level event;

  (2) contain proposals of corrective actions that the insurer intends to take and that would be expected to result in the elimination of the company action level event;

  (3) provide projections of the insurer's financial results in the current year and at least the 4 succeeding years that:

    (i) project financial results:

      (1) in the absence of proposed corrective actions; and

      (2) that give effect to the proposed corrective actions;

    (ii) include projections of statutory operating income, net income, capital, and surplus; and

    (iii) for both new and renewal business, include separate projections for each major line of business and separately identify each significant income, expense, and benefit component;

  (4) identify the key assumptions that impact the insurer's projections and the sensitivity of the projections to the assumptions; and

  (5) identify the quality of and the problems associated with the insurer's business, including its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, as appropriate.

(c) The insurer shall submit the RBC plan to the Commissioner:

  (1) within 45 days after the date of the company action level event; or

  (2) if the insurer requests a hearing to challenge an adjusted RBC report, within 45 days after notification to the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge.

(d)

  (1) Within 60 days after an insurer submits an RBC plan to the Commissioner, the Commissioner shall notify the insurer whether the Commissioner has determined that the RBC plan may be implemented or that the RBC plan is unsatisfactory.

  (2) If the Commissioner determines that the RBC plan is unsatisfactory, the notification to the insurer:

    (i) shall set forth the reasons for the determination; and

    (ii) may set forth proposed revisions that will make the RBC plan satisfactory to the Commissioner.

  (3) On notification that the RBC plan is unsatisfactory, the insurer shall:

    (i) prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the Commissioner; and

    (ii) submit the revised RBC plan to the Commissioner.

  (4) The insurer shall submit the revised RBC plan required by paragraph (3) of this subsection to the Commissioner:

    (i) within 45 days after the notification from the Commissioner; or

    (ii) if the insurer requests a hearing to challenge the notification from the Commissioner, within 45 days after notification to the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge.

(e) Subject to the right of the insurer to a hearing, when the Commissioner notifies an insurer that the insurer's RBC plan or revised RBC plan is unsatisfactory, the Commissioner may specify in the notification that the notification constitutes a regulatory action level event.

(f)

  (1) Each domestic insurer that files an RBC plan or revised RBC plan with the Commissioner shall file a copy of the RBC plan or revised RBC plan with the insurance commissioner of any state in which the insurer is authorized to do business if:

    (i) the state has a confidentiality provision substantially similar to Sec. 4-310(a) of this subtitle; and

    (ii) the insurance commissioner of that state has notified the insurer in writing of its request for the filing.

  (2) On request of an insurance commissioner of another state under this subsection, the insurer shall file a copy of the RBC plan or revised RBC plan with that insurance commissioner by the later of:

    (i) 15 days after receipt of the notification to file a copy of its RBC plan or revised RBC plan with that state; or

    (ii) the date on which the RBC plan or revised RBC plan is filed under subsection (c) or (d) of this section.

#### Section 4-306

(a) A regulatory action level event occurs when:

  (1) an insurer files an RBC report that indicates that the insurer has total adjusted capital that is:

    (i) greater than or equal to its authorized control level RBC; and

    (ii) less than its regulatory action level RBC;

  (2) the Commissioner notifies an insurer of an adjusted RBC report that indicates an event under item (1) of this subsection;

  (3) if an insurer requests a hearing to challenge an adjusted RBC report that indicates an event under item (1) of this subsection, the Commissioner notifies the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge;

  (4) an insurer fails to file an RBC report by the filing date, unless the insurer has:

    (i) provided the Commissioner with a satisfactory explanation for the failure; and

    (ii) cured the failure within 10 days after the filing date;

  (5) an insurer fails to submit an RBC plan to the Commissioner within the time period specified in Sec. 4-305(c) of this subtitle;

  (6) the Commissioner notifies an insurer that:

    (i) the RBC plan or revised RBC plan submitted by the insurer is, in the judgment of the Commissioner, unsatisfactory; and

    (ii) the notification constitutes a regulatory action level event with respect to the insurer;

  (7) the Commissioner notifies an insurer that the insurer has failed to adhere to its RBC plan or revised RBC plan, but only if:

    (i) the insurer's failure to adhere to the RBC plan or revised RBC plan has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC plan or revised RBC plan; and

    (ii) the Commissioner has stated in the notification that the insurer's failure to adhere to the RBC plan or revised RBC plan has a substantial adverse effect on the ability of the insurer to eliminate the company action level event; or

  (8) if an insurer requests a hearing to challenge a determination made by the Commissioner under item (6) or (7) of this subsection, the Commissioner notifies the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge.

(b) In the event of a regulatory action level event, the Commissioner shall:

  (1) require the insurer to prepare and submit an RBC plan or, if applicable, a revised RBC plan;

  (2) perform any examination or analysis that the Commissioner considers necessary of the assets, liabilities, and operations of the insurer, including a review of the insurer's RBC plan or revised RBC plan; and

  (3) after any examination or analysis performed under this subsection, issue a corrective order.

(c) In determining the type of corrective action to be taken by the insurer, the Commissioner may take into account all factors that the Commissioner considers relevant with respect to the insurer based on the Commissioner's examination or analysis of the assets, liabilities, and operation of the insurer, including the results of any sensitivity test undertaken pursuant to the RBC instructions.

(d) The insurer shall submit the RBC plan or revised RBC plan to the Commissioner:

  (1) within 45 days after the date of the regulatory action level event; or

  (2) if an insurer has requested a hearing to challenge an adjusted RBC report or revised RBC plan, within 45 days after notification to the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge.

(e)

  (1) The Commissioner may retain actuaries, investment experts, and other consultants as necessary in the judgment of the Commissioner to:

    (i) review an insurer's RBC plan or revised RBC plan;

    (ii) examine or analyze the assets, liabilities, and operation of the insurer; and

    (iii) formulate the corrective order to be imposed on the insurer.

  (2) The fees, costs, and expenses that relate to any actuaries, investment experts, or other consultants retained under this subsection shall be borne by the affected insurer as directed by the Commissioner.

#### Section 4-307

(a) An authorized control level event occurs when:

  (1) an insurer files an RBC report that indicates that the insurer has total adjusted capital that is:

    (i) greater than or equal to its mandatory control level RBC; and

    (ii) less than its authorized control level RBC;

  (2) the Commissioner notifies the insurer of an adjusted RBC report that indicates an event under item (1) of this subsection;

  (3) if an insurer requests a hearing to challenge an adjusted RBC report that indicates the event under item (1) of this subsection, the Commissioner notifies the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge;

  (4) the insurer fails to respond to a corrective order in a manner satisfactory to the Commissioner; or

  (5) if an insurer has requested a hearing to challenge a corrective order issued by the Commissioner:

    (i) the Commissioner notifies the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge or modified the corrective order; and

    (ii) the insurer fails to respond, in a manner satisfactory to the Commissioner, to the sustained or modified corrective order.

(b) In the event of an authorized control level event, the Commissioner shall:

  (1) take any action required under Sec. 4-306(b) of this subtitle for an insurer that experiences a regulatory action level event; or

  (2) if the Commissioner considers it to be in the best interest of the policyholders and creditors of the insurer and of the public, take any action that may be necessary to place the insurer under conservation, rehabilitation, or liquidation under Title 9 of this article.

(c)

  (1) The Commissioner shall have the rights, powers, and duties under Title 9 of this article needed to carry out the requirements of this section.

  (2) If the Commissioner takes any action under Title 9 of this article pursuant to an adjusted RBC report as provided in this section, the insurer shall be entitled to the protections afforded to insurers under Title 9 of this article with regard to summary proceedings.

#### Section 4-308

(a) A mandatory control level event occurs when:

  (1) an insurer files an RBC report that indicates that the insurer has total adjusted capital that is less than its mandatory control level RBC;

  (2) the Commissioner notifies the insurer of an adjusted RBC report that indicates an event under item (1) of this subsection; or

  (3) if an insurer requests a hearing to challenge an adjusted RBC report that indicates the event under item (1) of this subsection, the Commissioner notifies the insurer that the Commissioner, after a hearing, has rejected the insurer's challenge.

(b)

  (1) In the case of a life insurer or fraternal benefit society, if a mandatory control level event occurs with respect to the life insurer or fraternal benefit society, the Commissioner shall take any action that may be necessary to place the life insurer or fraternal benefit society under conservation, rehabilitation, or liquidation under Title 9 of this article.

  (2) In the case of a property and casualty insurer, if a mandatory control level event occurs with respect to the property and casualty insurer, the Commissioner:

    (i) shall take any action that may be necessary to place the property and casualty insurer under conservation, rehabilitation, or liquidation under Title 9 of this article; or

    (ii) in the case of a property and casualty insurer that is not writing any new business and that is running off its existing business, may allow the property and casualty insurer to continue its run-off under the supervision of the Commissioner.

  (3) In the case of a health insurer, if a mandatory control level event occurs with respect to the health insurer, the Commissioner shall take any action that may be necessary to place the health insurer under conservation, rehabilitation, or liquidation under Title 9 of this article.

(c) The Commissioner may delay action under subsection (b) of this section for up to 90 days after the occurrence of the mandatory control level event if the Commissioner finds there is a reasonable expectation that the mandatory control level event may be eliminated within the 90-day period.

(d)

  (1) The Commissioner shall have the rights, powers, and duties under Title 9 of this article needed to carry out the requirements of this section.

  (2) If the Commissioner takes any action under Title 9 of this article pursuant to an adjusted RBC report as provided in this section, the insurer shall be entitled to the protections afforded to insurers under Title 9 of this article with regard to summary proceedings.

#### Section 4-309

(a) An insurer may challenge any of the following determinations made or actions taken by the Commissioner under this subtitle:

  (1) notification to an insurer by the Commissioner of an adjusted RBC report;

  (2) notification to an insurer by the Commissioner that:

    (i) the insurer's RBC plan or revised RBC plan is unsatisfactory; and

    (ii) the notification constitutes a regulatory action level event with respect to that insurer;

  (3) notification to an insurer by the Commissioner that:

    (i) the insurer has failed to adhere to its RBC plan or revised RBC plan; and

    (ii) the failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event with respect to the insurer in accordance with its RBC plan or revised RBC plan; or

  (4) notification to an insurer by the Commissioner of a corrective order with respect to the insurer.

(b)

  (1) At the request of an insurer, the Commissioner shall hold a confidential hearing on the record under Sec. 2-213(a) of this article to determine the validity of a challenge by the insurer.

  (2) To request a hearing under this subsection, the insurer shall notify the Commissioner of its request within 5 days after the notification by the Commissioner under subsection (a) of this section.

  (3) On receipt of the insurer's request for a hearing, the Commissioner shall hold a hearing within 30 days after the date of the insurer's request.

#### Section 4-310

(a) All RBC reports and RBC plans related to any domestic insurer or foreign insurer that are filed with the Commissioner:

  (1) constitute confidential commercial information that might be damaging to the insurer if made available to the insurer's competitors;

  (2) shall be kept confidential by the Commissioner; and

  (3) may not be made public or be subject to subpoena, other than by the Commissioner and then only for the purpose of enforcement actions taken by the Commissioner under this subtitle or any other provision of this article.

(b) The provisions of this section apply to:

  (1) RBC reports, to the extent the information in the RBC report is not required to be set forth in a publicly available annual statement schedule; and

  (2) RBC plans, including the results or report of any examination or analysis of an insurer performed in connection with any RBC plan and any corrective order issued by the Commissioner pursuant to the examination or analysis.

(c) It is the public policy of the State that the comparison of an insurer's total adjusted capital to any of its RBC levels:

  (1) is a regulatory tool that may indicate the need for possible corrective action with respect to the insurer; and

  (2) is not intended as a means to rank insurers generally.

(d) It is the public policy of the State that the RBC instructions, RBC reports, adjusted RBC reports, RBC plans, and revised RBC plans:

  (1) are intended solely for use by the Commissioner in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers; and

  (2) may not be used by the Commissioner for rate making or considered or introduced as evidence in any rate proceeding or used by the Commissioner to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance that an insurer or any affiliate is authorized to write.

#### Section 4-311

(a) The provisions of this subtitle are supplemental to other laws of the State, and may not preclude or limit any other powers or duties of the Commissioner.

(b)

  (1) The Commissioner may adopt regulations to carry out this subtitle.

  (2) The Commissioner, in consultation with the Secretary of Health, shall adopt regulations that apply appropriate risk based capital standards to managed care organizations as defined under Sec. 15-101(e) of the Health - General Article.

(c) The Commissioner may exempt from the application of this subtitle any domestic property and casualty insurer that:

  (1) writes direct business only in the State;

  (2) writes direct annual premiums of $2,000,000 or less; and

  (3) assumes no reinsurance in excess of 5% of direct premiums written.

(d) The Commissioner may exempt from the application of this Act any domestic health insurer that:

  (1)

    (i) writes direct business only in the State;

    (ii) assumes no reinsurance in excess of 5% of direct premiums written; and

    (iii) writes direct annual premiums for comprehensive medical business of $2,000,000 or less; or

  (2) covers less than 2,000 lives if the health insurer is:

    (i) a nonprofit health service plan that provides coverage solely for dental services; or

    (ii) a dental plan organization.

#### Section 4-312

(a) On written request of the Commissioner, a foreign insurer shall:

  (1) submit to the Commissioner an RBC report as of the end of the immediately preceding calendar year on the later of:

    (i) the date an RBC report would be required to be filed by a domestic insurer under this subtitle; or

    (ii) 15 days after the request is received by the foreign insurer; and

  (2) promptly submit to the Commissioner a copy of any RBC plan or revised RBC plan that the insurer has filed with the insurance commissioner of any other state.

(b)

  (1) The Commissioner may require a foreign insurer to file an RBC plan with the Commissioner in the event of a company action level event, regulatory action level event, or authorized control level event with respect to the foreign insurer:

    (i) under the risk based capital statute of the foreign insurer's state of domicile if the insurance commissioner of that state fails to require the foreign insurer to file an RBC plan in accordance with that state's risk based capital statute; or

    (ii) under this subtitle if there is no risk based capital statute in force in the foreign insurer's state of domicile.

  (2) If the foreign insurer fails to file an RBC plan with the Commissioner under this subsection, the Commissioner may order the foreign insurer to cease and desist from writing new insurance business in this State.

(c) If a mandatory control level event occurs with respect to a foreign insurer and a domiciliary receiver has not been appointed with respect to that foreign insurer under the rehabilitation and liquidation statute applicable in the foreign insurer's state of domicile, the Commissioner may file an action in the Circuit Court of Baltimore City under Title 9 of this article to seek the liquidation of any property of the foreign insurer found in the State.

#### Section 4-313

There is no liability on the part of, and no cause of action arises against, the Commissioner or the Administration or its employees or agents for any action taken by them in the performance of their powers and duties under this subtitle.

#### Section 4-314

All notices by the Commissioner to an insurer that may result in regulatory action under this subtitle shall be effective:

(1) if transmitted by registered or certified mail, on the date of mailing; or

(2) if transmitted by any other means, on the date of receipt of notice by the insurer.

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Md. Code Ann., Ins. (as displayed at mgaleg.maryland.gov, October 16, 2026)