Title 5. Assets, Liabilities, Reserves, and Investments of Insurers — Subtitle 2. Reserves
Statutes in effect as of October 1, 2026.
Md. Code Ann., Ins. § 5-201 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 2. Reserves
§ 5–201LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Operative date of the valuation manual” has the meaning stated in § 5–201.1 of this subtitle.
(3)
“Opinion” means an opinion issued by a qualified actuary and developed in accordance with the standards of practice of the Actuarial Standards Board.
(4)
“Qualified actuary” means a member in good standing of the American Academy of Actuaries who meets the qualification standards of the Academy for issuing an opinion required by this section.
(b)
This section applies to reserve requirements and opinions relating to reserve requirements for policies, contracts, and benefit agreements of life insurers, nonprofit health service plans, and fraternal benefit societies required before the operative date of the valuation manual.
(c)
(1)
In addition to the requirement of paragraph (2) of this subsection, the aggregate reserves for all policies, contracts, and benefit agreements of a life insurer may not be less than the aggregate reserves computed under Subtitle 3 of this title.
(2)
(i)
The aggregate reserves for all policies, contracts, and benefit agreements of a life insurer, nonprofit health service plan, or fraternal benefit society may not be less than the aggregate reserves that a qualified actuary determines to be necessary under subsection (e) of this section.
(ii)
By regulation, the Commissioner may provide for a transition period to establish any higher reserves required by this paragraph.
(d)
Each life insurer, nonprofit health service plan, and fraternal benefit society that does business in the State shall submit annually the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the life insurer’s policies, contracts, and benefit agreements are:
(1)
computed appropriately;
(2)
based on assumptions that satisfy contractual provisions;
(3)
consistent with prior reported amounts; and
(4)
in compliance with applicable laws of the State.
(e)
(1)
Except as exempted by regulations adopted by the Commissioner, each life insurer, nonprofit health service plan, and fraternal benefit society shall include with the opinion required by subsection (d) of this section an additional opinion of the same qualified actuary, stating whether the reserves and related actuarial items that are held in support of the policies, contracts, and benefit agreements by the life insurer, nonprofit health service plan, or fraternal benefit society are adequate to meet its obligations under its policies, contracts, and benefit agreements, in light of the assets held with respect to the reserves and related actuarial items.
(2)
The obligations of a life insurer, nonprofit health service plan, or fraternal benefit society under its policies, contracts, and benefit agreements include benefits to be provided and associated expenses that may reasonably be expected.
(3)
In reviewing the assets held by the life insurer, nonprofit health service plan, or fraternal benefit society with respect to the reserves and related actuarial items, the qualified actuary shall consider the expected investment earnings on the assets and other consideration that the life insurer, nonprofit health service plan, or fraternal benefit society expects to receive and retain under the policies, contracts, and benefit agreements.
(f)
(1)
A memorandum acceptable to the Commissioner shall be prepared to support each opinion required under this section.
(2)
The supporting memorandum shall be in the form and contain the information that is specified by regulation.
(3)
The life insurer, nonprofit health service plan, or fraternal benefit society shall:
(i)
keep the supporting memorandum in its home office; and
(ii)
on request, submit a copy of the memorandum to the Commissioner.
(4)
The Commissioner may engage a qualified actuary at the expense of the life insurer, nonprofit health service plan, or fraternal benefit society to review each opinion and prepare a supporting memorandum if:
(i)
the life insurer, nonprofit health service plan, or fraternal benefit society fails to provide a supporting memorandum within the period specified by regulation; or
(ii)
the Commissioner determines that the supporting memorandum that the life insurer, nonprofit health service plan, or fraternal benefit society provides fails to meet necessary standards or is unacceptable.
(g)
(1)
Each opinion required by this section shall:
(i)
be submitted with the annual statement required by this article and reflect the valuation of the reserve liabilities of the life insurer, nonprofit health service plan, or fraternal benefit society;
(ii)
apply to all business in force, including individual and group health insurance plans; and
(iii)
be based on standards adopted by the Actuarial Standards Board.
(2)
The Commissioner may adopt regulations to establish additional requirements for an opinion.
(3)
For a foreign insurer or alien insurer, the Commissioner may accept an opinion that the foreign insurer or alien insurer files with the insurance supervisory official of another state if the Commissioner determines that the opinion reasonably meets the requirements applicable to a life insurer, nonprofit health service plan, or fraternal benefit society domiciled in this State.
(h)
(1)
Except as provided in subsection (i) of this section, the Commissioner shall keep confidential and may not make public any memorandum or other material that the life insurer, nonprofit health service plan, or fraternal benefit society provides in connection with an opinion issued under this section.
(2)
A memorandum or other material provided to the Commissioner is not subject to a subpoena except for defending in a suit that:
(i)
seeks damages from any person; and
(ii)
is based on an action required by this section.
(i)
(1)
The Commissioner may release a memorandum or other material provided to the Commissioner:
(i)
with the written consent of the life insurer, nonprofit health service plan, or fraternal benefit society that provides the memorandum or material; or
(ii)
to the American Academy of Actuaries, if the Academy:
(1)
requests the memorandum or other material for professional disciplinary proceedings; and
(2)
sets forth procedures satisfactory to the Commissioner to preserve the confidentiality of the memorandum or other material.
(2)
All parts of a memorandum or other material are no longer confidential if any part of the memorandum or material is:
(i)
cited by the life insurer, nonprofit health service plan, or fraternal benefit society in its marketing;
(ii)
cited before a governmental unit other than a State insurance department; or
(iii)
released by the life insurer, nonprofit health service plan, or fraternal benefit society to the news media.
(j)
Except for fraud, willful misconduct, or gross negligence, a qualified actuary is not liable for damages to any person other than the life insurer, nonprofit health service plan, fraternal benefit society, or the Commissioner for any act, error, omission, decision, or conduct related to an opinion that the qualified actuary issues under this section.
(k)
The Commissioner shall adopt regulations to establish disciplinary action against a life insurer, nonprofit health service plan, fraternal benefit society, or qualified actuary that violates this section.
Md. Code Ann., Ins. § 5-201.1 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 2. Reserves
§ 5–201.1LinkCopy Citation
(a)
(1)
In this section the following words have the meanings indicated.
(2)
“Accident and health insurance contract” means a contract, as specified in the valuation manual, that:
(i)
incorporates morbidity risk; and
(ii)
provides protection against economic loss resulting from accident, sickness, or medical conditions.
(3)
“Appointed actuary” means a qualified actuary who is appointed in accordance with the valuation manual to issue an opinion required by this section.
(4)
“Company” means an entity that:
(i)
(1)
has written, issued, or reinsured life insurance policies, accident and health insurance contracts, or deposit–type contracts in the State; and
(2)
has at least one of the policies or contracts specified in item 1 of this item in force or on claim; or
(ii)
(1)
has written, issued, or reinsured life insurance policies, accident and health insurance contracts, or deposit–type contracts in any state; and
(2)
is required to hold a certificate of authority to write life insurance policies, accident and health insurance contracts, or deposit–type contracts in this State.
(5)
“Deposit–type contract” means a contract, as specified in the valuation manual, that does not incorporate mortality or morbidity risks.
(6)
(i)
“Life insurance policy” means a policy, as specified in the valuation manual, that incorporates mortality risk.
(ii)
“Life insurance policy” includes:
(1)
an annuity contract; and
(2)
a pure endowment contract.
(7)
“Operative date of the valuation manual” means the date determined in accordance with § 5–313 of this title.
(8)
“Qualified actuary” means an individual who:
(i)
is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements; and
(ii)
meets the requirements specified in the valuation manual.
(9)
“Valuation manual” means the manual of valuation instructions adopted by the National Association of Insurance Commissioners in the manner specified in § 5–313(b)(1) of this title.
(b)
This section applies to each company that, on or after the operative date of the valuation manual:
(1)
has outstanding life insurance policies, accident and health insurance contracts, or deposit–type contracts in the State; and
(2)
is subject to regulation by the Commissioner.
(c)
(1)
A company subject to this section shall submit annually the opinion of an appointed actuary as to whether the reserves and related actuarial items held in support of the company’s life insurance policies, accident and health insurance contracts, and deposit–type contracts are:
(i)
computed appropriately;
(ii)
based on assumptions that satisfy contractual provisions;
(iii)
consistent with prior reported amounts; and
(iv)
in compliance with applicable laws of the State.
(2)
The valuation manual shall prescribe the contents of the opinion and any other items considered necessary to the scope of the opinion.
(d)
(1)
Except as exempted in the valuation manual, a company subject to this section shall include with the opinion required by subsection (c) of this section an additional opinion of the same appointed actuary, stating whether the reserves and related actuarial items that are held in support of the company’s life insurance policies, accident and health insurance contracts, and deposit–type contracts are adequate to meet the company’s obligations under the life insurance policies, accident and health insurance contracts, and deposit–type contracts, in light of the assets held with respect to the reserves and related actuarial items.
(2)
The obligations of a company under its life insurance policies, accident and health insurance contracts, and deposit–type contracts include benefits to be provided and associated expenses that may reasonably be expected.
(3)
In reviewing the assets held by a company with respect to the reserves and related actuarial items, the appointed actuary shall consider the expected investment earnings on the assets and other consideration that the company expects to receive and retain under the company’s life insurance policies, accident and health insurance contracts, and deposit–type contracts.
(e)
(1)
A memorandum shall be prepared to support each opinion required under this section.
(2)
The supporting memorandum shall be:
(i)
in the form and contain the information that is specified in the valuation manual; and
(ii)
acceptable to the Commissioner.
(3)
The Commissioner may engage a qualified actuary at the expense of a company subject to this section to review each opinion and the basis for the opinion and prepare a supporting memorandum if:
(i)
the company fails to provide a supporting memorandum, at the request of the Commissioner, within the period specified in the valuation manual; or
(ii)
the Commissioner determines that the supporting memorandum that the company provides fails to meet the standards prescribed by the valuation manual or is otherwise unacceptable to the Commissioner.
(f)
(1)
Each opinion required by this section shall:
(i)
be in the form and contain the information that is specified in the valuation manual;
(ii)
be acceptable to the Commissioner;
(iii)
be submitted with the annual statement required by this article;
(iv)
reflect the valuation of the reserve liabilities of a company subject to this section for each year ending on or after the operative date of the valuation manual;
(v)
apply to all life insurance policies, accident and health insurance contracts, and deposit–type contracts subject to subsection (d) of this section and any other actuarial liabilities as may be specified in the valuation manual; and
(vi)
be based on standards adopted by the Actuarial Standards Board and any additional standards as may be prescribed in the valuation manual.
(2)
For a foreign company or an alien company, the Commissioner may accept an opinion that the foreign or alien company files with the insurance supervisory official of another state if the Commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.
(g)
Except for fraud or willful misconduct, an appointed actuary is not liable for damages to any person other than the company or the Commissioner for any act, error, omission, decision, or conduct related to the appointed actuary’s opinion.
(h)
The Commissioner shall adopt regulations to establish disciplinary action against a company or an appointed actuary that violates this section.
Md. Code Ann., Ins. § 5-202 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 2. Reserves
§ 5–202LinkCopy Citation
(a)
If the Commissioner determines that an insurer’s unearned premium reserve is inadequate, the Commissioner may require the insurer to increase the unearned premium reserve and maintain it at an adequate level.
(b)
If the Commissioner determines that an insurer’s loss reserves are inadequate as shown by the insurer’s loss experience, the Commissioner shall require the insurer to increase the reserves and maintain them at an adequate level.
Md. Code Ann., Ins. § 5-203 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 2. Reserves
§ 5–203LinkCopy Citation
(a)
An insurer shall maintain active life reserves for all health insurance policies.
(b)
The active life reserves:
(1)
shall place a sound value on the insurer’s liabilities under the health insurance policies;
(2)
may not be less than the reserves required by the appropriate standards set forth in regulations that the Commissioner adopts; and
(3)
in the aggregate, may not be less than the pro rata gross unearned premiums for the health insurance policies.
Md. Code Ann., Ins. § 5-205 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 2. Reserves
§ 5–205LinkCopy Citation
(a)
Except as provided in subsection (e) of this section, each insurer shall maintain unearned premium reserves on all policies in force with respect to:
(1)
insurance against loss or damage to property;
(2)
general casualty insurance; and
(3)
surety insurance.
(b)
The Commissioner may require that, after deducting reinsurance ceded to solvent insurers in the manner provided in this article, the reserves equal the unearned parts of the gross premiums in force that are computed on each respective risk from the policy’s date of issue.
(c)
Reserves under this section shall be computed:
(1)
at the option of the insurer, on a daily pro rata basis or a monthly pro rata basis if the insurance risk does not vary significantly during the contract period; or
(2)
over the period of risk in proportion to the amount of insurance protection provided if the period of risk differs significantly from the contract period.
(d)
After adopting a method for computing reserves, an insurer may change the method only with the approval of the Commissioner or the insurance supervisory official of the insurer’s domicile.
(e)
(1)
A marine insurance premium on a trip risk not terminated is considered unearned.
(2)
The Commissioner may require an insurer to carry reserves for unearned premiums equal to 100% on trip risks written during the month ended as of the date of the insurer’s annual statement required by this article.
Md. Code Ann., Ins. § 5-206 (2026)
Title 5. Assets, Liabilities, Reserves, and Investments of Insurers
Subtitle 2. Reserves
§ 5–206LinkCopy Citation
(a)
(1)
In this section, “risk premiums” means the amount charged for the assumption of risk.
(2)
“Risk premiums” includes title insurance producer commissions.
(3)
“Risk premiums” does not include charges for services rendered in the preparation of documents, searching, underwriting, recording of documents, or closing of a risk.
(b)
In addition to adequate reserves required by § 5–103 of this title for outstanding losses, a title insurer domiciled in the State shall maintain a statutory reserve or unearned premium reserve of at least an amount computed as follows:
(1)
8% of the total amount of the risk premiums written in the calendar year for the retained liability for title insurance contracts shall be as assigned originally to the reserves; and
(2)
during each of the 20 years that follow the year in which the contract is issued, the reserves applicable to the contract shall be reduced in equal 12–month installments in accordance with the following formula:
(i)
35% of the aggregate sum in the year succeeding the year of addition;
(ii)
15% of the aggregate sum in each of the succeeding 2 years;
(iii)
10% of the aggregate sum in the succeeding year;
(iv)
3% of the aggregate sum in each of the succeeding 3 years;
(v)
2% of the aggregate sum in each of the succeeding 3 years; and
(vi)
1% of the aggregate sum in each of the succeeding 10 years.
(c)
(1)
Each title insurer shall file with its annual statement required under § 4–116 of this article a certification by a member in good standing of the Casualty Actuarial Society, or a member in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries, as to the adequacy of its reserves required under this section and § 5–103 of this title.
(2)
The actuarial certification required of a title insurer must conform to the National Association of Insurance Commissioners’ annual statement instructions for title insurers.
(d)
(1)
Unearned premium reserves may not be released under subsection (a) of this section to the extent that the release would result in the aggregate reserve falling below the amount required under this section and § 5–103 of this title.
(2)
Any amount of unearned premium reserves that may not be released under paragraph (1) of this subsection shall be considered an unearned premium reserve and may not be considered a supplemental reserve.