<section article="gin" article_name="Insurance" number="8-101" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Control”, “controlling”, “controlled by”, or “under common control with” means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, through ownership of voting securities or of securities convertible into voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, whether or not the power is exercised or sought to be exercised.</text> </level> <level label="c"> <text>“Controlled insurer” means an insurer that is under the control of a controlling insurance producer.</text> </level> <level label="d"> <text>“Controlling insurance producer” means an insurance producer that has control of a controlled insurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-102" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <text>This subtitle applies only to authorized insurers that issue policies covered by the Property and Casualty Insurance Guaranty Corporation.</text> </section> <section article="gin" article_name="Insurance" number="8-103" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <level label="a"> <text>This subtitle does not affect the rights of policyholders, claimants, or creditors of a controlled insurer, or other third parties.</text> </level> <level label="b"> <text>This subtitle does not affect the responsibility of any person to comply with applicable provisions of Title 7 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-104" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <level label="a"> <level label="1"> <text>Control is presumed to exist if a person directly or indirectly owns, directs the voting of, holds with the power to vote, or holds proxies representing 10% or more of the voting securities of another person.</text> </level> <level label="2"> <text>However, control is not presumed to exist if proxies have been obtained by an official of the person solely in connection with voting at a meeting of the owners of the person.</text> </level> </level> <level label="b"> <text>The presumption of control may be rebutted by showing by a preponderance of the evidence that control does not exist in fact.</text> </level> <level label="c"> <level label="1"> <text>Notwithstanding the presumption of control, the Commissioner, on application of an insurer, may find that a person presumed to control an insurer does not have control of the insurer.</text> </level> <level label="2"> <text>In addition, the Commissioner, after notice and an opportunity to be heard, may find that a person not presumed to have control of an insurer does have control of the insurer.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-105" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <level label="a"> <text>In this section, “independent casualty actuary” means a casualty actuary who:</text> <level label="1"> <text>is a member of the American Academy of Actuaries; and</text> </level> <level label="2"> <text>is not affiliated with, an employee of, a principal of, the direct or indirect owner of, or in any way in the control of a controlled insurer or a controlling insurance producer.</text> </level> </level> <level label="b"> <text>If a controlling insurance producer, when the insurance business is placed, is acting in a transaction on behalf of an insured for compensation, commission, or other valuable consideration, the controlling insurance producer may not directly or indirectly place insurance business with its controlled insurer unless the requirements of this section are met.</text> </level> <level label="c"> <text>There shall be a written contract between the controlling insurance producer and controlled insurer that has been approved by the board of directors of the controlled insurer.</text> </level> <level label="d"> <level label="1"> <text>If insurance business is placed through a controlling insurance producer, the controlling insurance producer shall deliver written notice to the prospective insured before the effective date of the policy, disclosing the relationship between the controlling insurance producer and the controlled insurer.</text> </level> <level label="2"> <text>The disclosure shall be signed by the prospective insured and retained in the underwriting file until the filing of the examination report for the period during which the policy is in effect.</text> </level> <level label="3"> <text>If insurance business is placed through a sub-insurance producer that is not a controlling insurance producer, the controlling insurance producer shall retain in the controlling insurance producer’s records a signed statement from the sub-insurance producer that:</text> <level label="i"> <text>the sub-insurance producer is aware of the relationship between the controlling insurance producer and the controlled insurer;</text> </level> <level label="ii"> <text>the sub-insurance producer has delivered to the prospective insured written notice disclosing that relationship; and</text> </level> <level label="iii"> <text>the disclosure has been signed by the prospective insured and will be retained by the sub-insurance producer for 3 years.</text> </level> </level> </level> <level label="e"> <text>At least quarterly, the controlling insurance producer shall pay to the controlled insurer all money that the controlling insurance producer collected for the account of the controlled insurer, net of commissions, cancellations, and other adjustments.</text> </level> <level label="f"> <level label="1"> <text>In addition to any other required loss reserve certification, the controlled insurer on or before April 1 of each year shall file with the Commissioner an opinion of:</text> <level label="i"> <text>an independent casualty actuary; or</text> </level> <level label="ii"> <text>another independent loss reserve specialist acceptable to the Commissioner.</text> </level> </level> <level label="2"> <text>The opinion shall:</text> <level label="i"> <text>report loss ratios for each line of insurance business written; and</text> </level> <level label="ii"> <text>attest that loss reserves are adequate for losses incurred and outstanding as of year end on insurance business placed by the controlling insurance producer, including losses incurred but not reported.</text> </level> </level> </level> <level label="g"> <text>The controlled insurer shall report annually to the Commissioner:</text> <level label="1"> <text>the amount of commission it paid to the controlling insurance producer;</text> </level> <level label="2"> <text>the percentage that amount represents of the net premiums written; and</text> </level> <level label="3"> <text>comparable amounts and percentages paid to noncontrolling insurance producers for placement of the same kinds of insurance.</text> </level> </level> <level label="h"> <level label="1"> <text>The controlled insurer shall have an audit committee of the board of directors composed of independent directors.</text> </level> <level label="2"> <text>Before approval of the annual financial statement, the audit committee shall meet to review the adequacy of the controlled insurer's loss reserves with:</text> <level label="i"> <text>management;</text> </level> <level label="ii"> <text>the controlled insurer's independent certified public accountants; and</text> </level> <level label="iii"> <text>another independent loss reserve specialist acceptable to the Commissioner or an independent casualty actuary.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-106" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <level label="a"> <text>In this section, “reinsurance intermediary” means a person that acts as an insurance producer in:</text> <level label="1"> <text>soliciting, negotiating, or procuring a reinsurance contract or binder for a ceding insurer; or</text> </level> <level label="2"> <text>accepting a reinsurance contract or binder for an assuming insurer.</text> </level> </level> <level label="b"> <text>This section does not apply to a reinsurance intermediary that makes a complete written disclosure to the parties of its relationship with the assuming or ceding insurer before completion of the transaction.</text> </level> <level label="c"> <text>A reinsurance intermediary that has control of an assuming insurer may not directly or indirectly place insurance business with the assuming insurer in a transaction in which the reinsurance intermediary acts as an insurance producer for the ceding insurer.</text> </level> <level label="d"> <text>A reinsurance intermediary that has control of a ceding insurer may not directly or indirectly accept business from the ceding insurer in a transaction in which the reinsurance intermediary acts as an insurance producer for the assuming insurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-107" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <level label="a"> <level label="1"> <text>With respect to insurance business placed by its controlling insurance producer, the controlled insurer may not engage in a pattern of charging premiums that are unjustifiably lower than those being charged by the controlled insurer or other insurers for similar risks written during the same period and placed by noncontrolling insurance producers.</text> </level> <level label="2"> <text>When determining whether premiums are unjustifiably lower than those prevailing in the market, the Commissioner shall take into consideration applicable industry or actuarial standards at the time the insurance business was written.</text> </level> </level> <level label="b"> <text>With respect to insurance business placed by its controlling insurance producer, the controlled insurer shall establish underwriting procedures and may not deviate from them.</text> </level> <level label="c"> <text>A controlled insurer’s capitalization at the time insurance business is placed by the controlling insurance producer and with respect to that insurance business shall comply with:</text> <level label="1"> <text>criteria set by the Commissioner; and</text> </level> <level label="2"> <text>all applicable insurance laws.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-108" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <text>The controlling insurance producer shall keep records sufficient to:</text> <level label="1"> <text>demonstrate that the controlling insurance producer’s dealings with its controlled insurer were fair and comply with Title 7 of this article; and</text> </level> <level label="2"> <text>disclose accurately the nature and details of the controlling insurance producer’s transactions with its controlled insurer, including any information that is necessary to support the charges or fees to the respective parties.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-109" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="1" subtitle_name="Broker Controlled Business"> <level label="a"> <text>If the Commissioner has reason to believe that a controlling insurance producer has violated or is violating this subtitle, the Commissioner shall:</text> <level label="1"> <text>serve on the controlling insurance producer a statement of charges and notice of hearing; and</text> </level> <level label="2"> <text>hold a hearing subject to §§ 2-210 through 2-214 of this article.</text> </level> </level> <level label="b"> <text>An order of the Commissioner is subject to judicial review under § 2-215 of this article.</text> </level> <level label="c"> <text>The controlling insurance producer shall reimburse the Property and Casualty Insurance Guaranty Corporation for any payments made by the Property and Casualty Insurance Guaranty Corporation for losses, loss adjustment, and administrative expenses on the insurance business placed by the controlling insurance producer in excess of gross earned premiums and investment income earned on premiums and loss reserves for the insurance business if the Commissioner finds that:</text> <level label="1"> <text>the controlling insurance producer violated this subtitle; and</text> </level> <level label="2"> <text>the violation substantially contributed to the insolvency of the controlled insurer.</text> </level> </level> <level label="d"> <text>This section does not affect the right of the Commissioner to impose any other penalty provided in this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-201" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Certificate of qualification” means a certificate of qualification issued by the Commissioner to act as a managing general agent.</text> </level> <level label="c"> <level label="1"> <text>“Managing general agent” means a person:</text> <level label="i"> <text>that:</text> <level label="1"> <text>manages all or part of the insurance business of an insurer, including the management of a separate division, department, office, or subsidiary of the insurer; and</text> </level> <level label="2"> <text>with or without authority, separately or with affiliates, directly or indirectly produces or underwrites gross direct written premiums at least equal to 5% of the insurer’s policyholder surplus for any quarter or year, as reported in the insurer’s most recently filed quarterly report or annual statement; and</text> </level> </level> <level label="ii"> <text>that:</text> <level label="1"> <text>negotiates or binds ceding reinsurance contracts for the insurer;</text> </level> <level label="2"> <text>adjusts or pays claims of more than $500; or</text> </level> <level label="3"> <text>maintains loss reserves from which claims may be paid.</text> </level> </level> </level> <level label="2"> <text>“Managing general agent” does not include:</text> <level label="i"> <text>an employee of the insurer;</text> </level> <level label="ii"> <text>a United States manager of the United States branch of an alien insurer;</text> </level> <level label="iii"> <text>an attorney in fact authorized by and acting for the subscribers of a reciprocal insurer under a power of attorney;</text> </level> <level label="iv"> <text>an authorized insurance producer acting for a surety insurer that engages exclusively in the business of issuing bail bonds; or</text> </level> <level label="v"> <text>an underwriting manager that, by contract:</text> <level label="1"> <text>manages all the insurance operations of the insurer;</text> </level> <level label="2"> <text>is under common control with the insurer and is subject to Title 7, Subtitle 6 of this article; and</text> </level> <level label="3"> <text>is not compensated based on the volume of premiums written.</text> </level> </level> </level> </level> <level label="d"> <text>“Underwrite” means to accept or reject risks for an insurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-202" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <text>A person must obtain a certificate of qualification before the person acts as a managing general agent in the State.</text> </section> <section article="gin" article_name="Insurance" number="8-202.1" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <text>An applicant for a certificate of qualification must be:</text> <level label="1"> <text>licensed as an insurance producer under Title 10, Subtitle 1 of this article; and</text> </level> <level label="2"> <text>competent and trustworthy, as determined by the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-203" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <text>An applicant for a certificate of qualification shall:</text> <level label="1"> <text>file with the Commissioner an application on the form that the Commissioner provides; and</text> </level> <level label="2"> <text>pay to the Commissioner the fee required by § 2-112 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-204" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <text>The Commissioner shall issue a certificate of qualification to each applicant who meets the requirements of this subtitle.</text> </section> <section article="gin" article_name="Insurance" number="8-205" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>A certificate of qualification expires on the first June 30 after its effective date unless it is renewed as provided in this section.</text> </level> <level label="b"> <text>Before a certificate of qualification expires, the holder of the certificate of qualification may renew it for an additional 1-year term, if the holder:</text> <level label="1"> <text>otherwise is entitled to a certificate of qualification; and</text> </level> <level label="2"> <text>pays to the Commissioner the renewal fee required by § 2-112 of this article.</text> </level> </level> <level label="c"> <text>The Commissioner shall renew the certificate of qualification of each holder who meets the requirements of this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-206" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>The Commissioner shall deny or refuse to renew a certificate of qualification if the applicant or holder of the certificate of qualification:</text> <level label="1"> <text>has willfully violated this article or another law of the State that relates to insurance;</text> </level> <level label="2"> <text>has intentionally misrepresented or concealed a material fact in an application for a certificate of qualification;</text> </level> <level label="3"> <text>has obtained or attempted to obtain a certificate of qualification by misrepresentation, concealment, or other fraud;</text> </level> <level label="4"> <text>has misappropriated, converted, or unlawfully withheld money that belongs to an insurer, insurance producer, beneficiary, or insured;</text> </level> <level label="5"> <text>has willfully and materially misrepresented the provisions of a policy;</text> </level> <level label="6"> <text>has committed fraudulent or dishonest practices in the insurance business;</text> </level> <level label="7"> <text>has participated, with or without the knowledge of an insurer, in selling motor vehicle insurance without the intention to sell the insurance, as evidenced by a persistent pattern of filing certificates of insurance together with or closely followed by cancellation notices for the insurance;</text> </level> <level label="8"> <text>has been convicted by final judgment in any state or federal court of a crime involving moral turpitude;</text> </level> <level label="9"> <text>has knowingly participated in writing or issuing substantial over-insurance of property insurance risks;</text> </level> <level label="10"> <text>has failed to pass an examination required by this subtitle;</text> </level> <level label="11"> <text>has willfully failed to comply with or has willfully violated a proper order or regulation of the Commissioner;</text> </level> <level label="12"> <text>has failed or refused to pay over on demand money that belongs to an insurer, insurance producer, or other person entitled to the money;</text> </level> <level label="13"> <text>has otherwise shown a lack of trustworthiness or competence to act as a managing general agent;</text> </level> <level label="14"> <text>is not or does not intend to carry on business in good faith and represent to the public that the person is a managing general agent;</text> </level> <level label="15"> <text>has been denied a license or certificate as a managing general agent or has had a license or certificate suspended or revoked in another state;</text> </level> <level label="16"> <text>has intentionally or willfully made or issued, or caused to be made or issued, a statement that materially misrepresents or makes incomplete comparisons about the terms or conditions of a policy or contract issued by an authorized insurer, for the purpose of inducing or attempting to induce the owner of the policy or contract to forfeit or surrender it or allow it to lapse in order to replace it with another; or</text> </level> <level label="17"> <text>has transacted insurance business that was directed to the applicant or holder for consideration by a person whose license or certificate to engage in the insurance business at the time was suspended or revoked, and the applicant or holder knew or should have known of the suspension or revocation.</text> </level> </level> <level label="b"> <text>The Commissioner shall deny a certificate of qualification to an applicant or refuse to renew, suspend, or revoke a certificate of qualification if the applicant or holder of the certificate of qualification:</text> <level label="1"> <text>is insolvent;</text> </level> <level label="2"> <text>is conducting business fraudulently;</text> </level> <level label="3"> <text>unreasonably refuses or delays payment to claimants of amounts due them;</text> </level> <level label="4"> <text>fails to pay any final judgment entered against the applicant or holder in the State within 60 days after the judgment becomes final;</text> </level> <level label="5"> <text>has a certificate of qualification revoked or suspended by the insurance regulatory authority in another state;</text> </level> <level label="6"> <text>is found by the Commissioner to be in:</text> <level label="i"> <text>an unsound condition; or</text> </level> <level label="ii"> <text>a condition that makes further transaction of business hazardous to policyholders or the public; or</text> </level> </level> <level label="7"> <text>refuses to:</text> <level label="i"> <text>be examined;</text> </level> <level label="ii"> <text>produce its accounts, records, and files for examination by the Commissioner; or</text> </level> <level label="iii"> <text>provide additional information that the Commissioner requests while considering an application for renewal of a certificate of qualification.</text> </level> </level> </level> <level label="c"> <text>The Commissioner may suspend or revoke a certificate of qualification for any ground listed in § 10-126 of this article.</text> </level> <level label="d"> <text>Instead of or in addition to denying, refusing to renew, suspending, or revoking a certificate of qualification, the Commissioner may:</text> <level label="1"> <text>impose a penalty of not less than $100 but not exceeding $50,000 for each violation of this article;</text> </level> <level label="2"> <text>require that restitution be made to any person that has suffered financial injury because of the violation of this article; and</text> </level> <level label="3"> <text>impose any other penalty authorized by this article.</text> </level> </level> <level label="e"> <text>This section does not limit the rights of policyholders or claimants.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-207" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>By regulation, the Commissioner may require a managing general agent to maintain a bond or other security in an amount set by the Commissioner to protect the insurer and policyholders or to maintain an errors and omissions policy issued by an authorized insurer, or both.</text> </level> <level label="b"> <text>A managing general agent is subject to examination under §§ 2-205 through 2-209 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-208" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>A managing general agent may not place business with an insurer or maintain loss reserves from which claims against an insurer may be paid unless a written contract is in force between the managing general agent and insurer.</text> </level> <level label="b"> <text>At a minimum, the contract shall:</text> <level label="1"> <text>state the responsibilities of each party and specify the division of responsibilities for shared functions;</text> </level> <level label="2"> <text>provide that the insurer may:</text> <level label="i"> <text>terminate the contract for cause on written notice to the managing general agent; and</text> </level> <level label="ii"> <text>suspend the managing general agent’s underwriting authority during a dispute about the termination;</text> </level> </level> <level label="3"> <text>require the managing general agent to:</text> <level label="i"> <text>give accounts to the insurer detailing all transactions; and</text> </level> <level label="ii"> <text>remit to the insurer at least monthly all money due under the contract;</text> </level> </level> <level label="4"> <text>require that:</text> <level label="i"> <text>all money collected for the account of the insurer be held by the managing general agent in a fiduciary capacity in a federally insured financial institution; and</text> </level> <level label="ii"> <text>all payments for the insurer be made from this account;</text> </level> </level> <level label="5"> <text>prohibit the managing general agent from keeping more than 3 months’ estimated claims payments and allocated loss adjustment expenses;</text> </level> <level label="6"> <text>require the managing general agent to:</text> <level label="i"> <text>keep separate records of business written for the insurer; and</text> </level> <level label="ii"> <text>allow the insurer and the Commissioner to have access to those records;</text> </level> </level> <level label="7"> <text>require the managing general agent to keep all books, records, and accounts in a form acceptable to the Commissioner;</text> </level> <level label="8"> <text>prohibit the managing general agent from wholly or partly assigning the contract;</text> </level> <level label="9"> <text>state appropriate underwriting guidelines, including:</text> <level label="i"> <text>maximum annual volume of premiums;</text> </level> <level label="ii"> <text>types or classifications of risks that may be written;</text> </level> <level label="iii"> <text>maximum limits of liability;</text> </level> <level label="iv"> <text>applicable exclusions;</text> </level> <level label="v"> <text>territorial limitations;</text> </level> <level label="vi"> <text>provisions for cancellation of policies; and</text> </level> <level label="vii"> <text>maximum periods of policies;</text> </level> </level> <level label="10"> <text>subject to all applicable laws about policy cancellation and nonrenewal, grant the insurer the right to cancel or nonrenew any policy underwritten by the managing general agent;</text> </level> <level label="11"> <text>require the managing general agent, when conducting business or entering into contracts on behalf of or for the benefit of the insurer, to comply with all applicable insurance laws and regulations; and</text> </level> <level label="12"> <text>address the timely transmission of data for any electronic claims files.</text> </level> </level> <level label="c"> <level label="1"> <text>This subsection applies if:</text> <level label="i"> <text>the contract provides for a sharing of profits by the managing general agent; and</text> </level> <level label="ii"> <text>the managing general agent has the authority to determine the amount of interim profits by establishing loss reserves, controlling claims payments, or any other method.</text> </level> </level> <level label="2"> <text>Interim profits may not be paid to a managing general agent subject to this subsection:</text> <level label="i"> <text>until:</text> <level label="1"> <text>at least 1 year after the profits are earned, for property insurance business; or</text> </level> <level label="2"> <text>at least 5 years after the profits are earned, for casualty insurance business; and</text> </level> </level> <level label="ii"> <text>until the profits have been verified by the insurer under § 8-210 of this subtitle.</text> </level> </level> </level> <level label="d"> <text>If the contract allows the managing general agent to settle claims for the insurer:</text> <level label="1"> <text>the managing general agent shall report all claims to the insurer in a timely manner;</text> </level> <level label="2"> <text>the managing general agent shall give to the insurer a copy of any claim file that:</text> <level label="i"> <text>is requested by the insurer;</text> </level> <level label="ii"> <text>involves a coverage dispute;</text> </level> <level label="iii"> <text>potentially exceeds the managing general agent’s settlement authority;</text> </level> <level label="iv"> <text>remains open for more than 6 months after the date the managing general agent receives the claim; or</text> </level> <level label="v"> <text>is settled in an amount of more than $500;</text> </level> </level> <level label="3"> <text>the insurer may:</text> <level label="i"> <text>terminate for cause any settlement authority granted to the managing general agent if the insurer gives the managing general agent 30 days’ notice of the termination; and</text> </level> <level label="ii"> <text>suspend the settlement authority during a dispute about the cause for termination; and</text> </level> </level> <level label="4"> <text>all claims files are property of the insurer except, if the Commissioner obtains an order of liquidation, rehabilitation, reorganization, or conservation against an insurer, the claims files become the property of the person appointed liquidator, rehabilitator, conservator, or receiver.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-209" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>A managing general agent may not:</text> <level label="1"> <text>commit the insurer to participate in insurance or reinsurance syndicates;</text> </level> <level label="2"> <text>appoint or hire an insurance producer to solicit, procure, or negotiate insurance contracts for the insurer without ensuring that the insurance producer is licensed under Title 10, Subtitle 1 of this article;</text> </level> <level label="3"> <text>take an action that would violate § 27-503 of this article if taken directly by the insurer;</text> </level> <level label="4"> <text>without the insurer’s written approval, pay or commit the insurer to pay a claim, net of reinsurance, that exceeds 1% of the insurer’s policyholder surplus as of December 31 of the immediately preceding calendar year;</text> </level> <level label="5"> <text>without the insurer’s prior written approval, collect any payment from a reinsurer;</text> </level> <level label="6"> <text>commit the insurer to a claim settlement with a reinsurer;</text> </level> <level label="7"> <text>employ an individual who also is employed by the insurer;</text> </level> <level label="8"> <text>allow an agent or employee of the managing general agent to serve on the insurer’s board of directors; or</text> </level> <level label="9"> <text>appoint a submanaging general agent unless:</text> <level label="i"> <text>approval of the appointment is obtained from the Commissioner and from the insurer for whom the managing general agent acts; and</text> </level> <level label="ii"> <text>the submanaging general agent complies with any requirements imposed by the Commissioner under § 8-213 of this subtitle.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, a managing general agent may not bind reinsurance or retrocessions for an insurer.</text> </level> <level label="2"> <text>A managing general agent may bind facultative reinsurance contracts under obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines for reinsurance both assumed and ceded, including:</text> <level label="i"> <text>a list of reinsurers with which the automatic agreements are in effect;</text> </level> <level label="ii"> <text>the coverages and amounts or percentages that may be reinsured; and</text> </level> <level label="iii"> <text>commission schedules.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-210" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <level label="1"> <text>An insurer shall maintain independent financial examinations, in a form acceptable to the Commissioner, of each managing general agent with whom the insurer has done business.</text> </level> <level label="2"> <text>The insurer shall keep records for at least 5 years.</text> </level> </level> <level label="b"> <level label="1"> <text>If, by contract, an insurer allows a managing general agent to maintain loss reserves, the insurer annually shall get an opinion, attesting to the adequacy of the loss reserves established, from an independent actuary who is a member in good standing of the American Academy of Actuaries.</text> </level> <level label="2"> <text>The insurer shall keep the report of the actuary for at least 5 years.</text> </level> </level> <level label="c"> <text>At least twice a year, an insurer shall conduct a review of the underwriting and claims processing operations of its managing general agent.</text> </level> <level label="d"> <level label="1"> <text>Within 30 days after entering into or terminating a contract with a managing general agent, an insurer shall notify the Commissioner in writing of doing so.</text> </level> <level label="2"> <text>The notice of entering into a contract shall include:</text> <level label="i"> <text>a statement of the duties and responsibilities of the managing general agent;</text> </level> <level label="ii"> <text>the lines of insurance that the managing general agent is contractually authorized to negotiate, procure, or bind for the insurer;</text> </level> <level label="iii"> <text>a copy of the contract; and</text> </level> <level label="iv"> <text>any other information or documentation that the Commissioner requests.</text> </level> </level> </level> <level label="e"> <text>Unless the relationship between an insurer and managing general agent is controlled by and disclosed under Title 7, Subtitle 6 or 7 of this article, the insurer may not have on its board of directors an officer, director, employee, agent, or shareholder of its managing general agent.</text> </level> <level label="f"> <level label="1"> <text>Each insurer shall review its books and records each quarter to determine if any insurance producer has become a managing general agent.</text> </level> <level label="2"> <text>If the insurer determines that an insurance producer has become a managing general agent:</text> <level label="i"> <text>the insurer promptly shall notify the insurance producer and the Commissioner of the determination; and</text> </level> <level label="ii"> <text>the insurer and insurance producer must comply fully with the provisions of this subtitle within 30 days after the determination.</text> </level> </level> </level> <level label="g"> <text>The Commissioner may adopt regulations to carry out this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-211" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>The acts of a managing general agent are deemed to be the acts of the insurer for whom the managing general agent is acting.</text> </level> <level label="b"> <text>If a managing general agent becomes insolvent, the obligations of the managing general agent with respect to policyholders of an insurer shall be assumed by that insurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-212" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <level label="a"> <text>Unless the insurer to which a contract relates gives written consent, the contract between a managing general agent and an insurer obtained by the Commissioner during an examination or investigation under this subtitle, or reported or filed under this subtitle:</text> <level label="1"> <text>shall be treated confidentially;</text> </level> <level label="2"> <text>is not subject to subpoena; and</text> </level> <level label="3"> <text>may not be made public by the Commissioner, the National Association of Insurance Commissioners, or any other person.</text> </level> </level> <level label="b"> <text>The Commissioner may publish all or part of a contract between a managing general agent and an insurer in the manner that the Commissioner considers appropriate if, after giving the managing general agent and insurer notice and an opportunity to be heard, the Commissioner finds that the interest of the policyholders or the public will be served by publication of the contract.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-213" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="2" subtitle_name="Managing General Agents"> <text>The Commissioner may require a submanaging general agent appointed by a managing general agent to comply with any provision of this subtitle that applies to a managing general agent.</text> </section> <section article="gin" article_name="Insurance" number="8-301" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <level label="1"> <text>“Administrator” means a person that, to the extent that the person is acting for an insurer or plan sponsor, has:</text> <level label="i"> <text>control over or custody of premiums, contributions, or any other money on behalf of a life insurer or with respect to a plan, for any period of time; or</text> </level> <level label="ii"> <text>discretionary authority over the adjustment, payment, or settlement of benefit claims on behalf of a life insurer or under a plan or over the investment of a life insurer’s or a plan’s assets.</text> </level> </level> <level label="2"> <text>“Administrator” does not include a person that:</text> <level label="i"> <text>with respect to a particular plan:</text> <level label="1"> <text>is, or is an employee of, the plan sponsor;</text> </level> <level label="2"> <text>is, or is an employee, insurance producer, or managing general agent of, an insurer or health maintenance organization that insures or administers the plan; or</text> </level> <level label="3"> <text>is an insurance producer that solicits, procures, or negotiates a plan for a plan sponsor and that has no authority over the adjustment, payment, or settlement of benefit claims under the plan or over the investment or handling of the plan’s assets;</text> </level> </level> <level label="ii"> <text>is retained by the Life and Health Insurance Guaranty Corporation to administer a plan underwritten by an impaired insurer that is subject to an order of conservation, liquidation, or rehabilitation;</text> </level> <level label="iii"> <text>is a participant or beneficiary of a plan that provides for individual accounts and allows a participant or beneficiary to exercise investment control over assets in the participant’s or beneficiary’s account, and the participant or beneficiary exercises that investment control;</text> </level> <level label="iv"> <text>administers only plans that are subject to ERISA and that do not provide benefits through insurance, unless any of the plans administered is a multiple employer welfare arrangement as defined in § 514(b)(6)(A)(ii) of ERISA;</text> </level> <level label="v"> <text>is, or is an employee of, a bank, savings bank, trust company, savings and loan association, or credit union that is regulated under the laws of this State, another state, or the United States;</text> </level> <level label="vi"> <text>is, or is an employee of, a person that is registered as:</text> <level label="1"> <text>an investment adviser under the Investment Advisers Act of 1940 or the Maryland Securities Act;</text> </level> <level label="2"> <text>a broker–dealer or transfer agent under the Securities Exchange Act of 1934 or the Maryland Securities Act; or</text> </level> <level label="3"> <text>an investment company under the Investment Company Act of 1940; or</text> </level> </level> <level label="vii"> <text>is, or is an employee of, the Maryland Health Benefit Exchange, including the Maryland Health Benefit Exchange’s Consolidated Services Center.</text> </level> </level> </level> <level label="c"> <text>“Employee organization” means:</text> <level label="1"> <text>a labor union or other labor organization;</text> </level> <level label="2"> <text>an agency or employee representation committee, association, group, or plan:</text> <level label="i"> <text>in which employees participate; and</text> </level> <level label="ii"> <text>that exists for the purpose, wholly or partly, of dealing with employers about a plan or other matters incidental to employment relationships; or</text> </level> </level> <level label="3"> <text>an employees’ beneficiary association that is organized for the purpose, wholly or partly, to establish a plan.</text> </level> </level> <level label="d"> <level label="1"> <text>“Employer” means a person that, in relation to a plan, acts directly as an employer or indirectly in the interest of an employer.</text> </level> <level label="2"> <text>“Employer” includes a group or association of employers acting for an employer.</text> </level> </level> <level label="e"> <text>“ERISA” means the federal Employee Retirement Income Security Act of 1974.</text> </level> <level label="f"> <level label="1"> <text>“Plan” means a fund or other arrangement that is established, maintained, or contributed to by an employer, employee organization, or both, to the extent that the fund or arrangement was established or is maintained for the purpose of:</text> <level label="i"> <text>providing for participants or beneficiaries, any of whom are residents of the State, through the purchase of insurance or otherwise:</text> <level label="1"> <text>medical, surgical, or hospital care or benefits;</text> </level> <level label="2"> <text>benefits in the event of sickness, accident, disability, death, or unemployment;</text> </level> <level label="3"> <text>vacation benefits;</text> </level> <level label="4"> <text>apprenticeship or other training programs;</text> </level> <level label="5"> <text>child care centers;</text> </level> <level label="6"> <text>scholarship funds;</text> </level> <level label="7"> <text>prepaid legal services;</text> </level> <level label="8"> <text>severance pay arrangements;</text> </level> <level label="9"> <text>supplemental retirement income payments; or</text> </level> <level label="10"> <text>life insurance; or</text> </level> </level> <level label="ii"> <text>providing retirement income to or allowing the deferral of income by employees, any of whom are residents of the State, until or after the termination of covered employment.</text> </level> </level> <level label="2"> <text>“Plan” does not include a fund or arrangement established or maintained solely for the purpose of complying with the workers’ compensation laws of the State.</text> </level> </level> <level label="g"> <text>“Plan sponsor” means:</text> <level label="1"> <text>the employer, for a plan established or maintained by a single employer;</text> </level> <level label="2"> <text>the employee organization, for a plan established or maintained by an employee organization; or</text> </level> <level label="3"> <text>the association, committee, joint board of trustees, or other similar group of representatives of the parties that establish or maintain the plan, for a plan established or maintained by two or more employers or jointly by one or more employers and one or more employee organizations.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-302" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>The Commissioner may adopt regulations necessary to carry out this subtitle.</text> </section> <section article="gin" article_name="Insurance" number="8-303" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>A person must register with the Commissioner before the person acts as or represents itself as an administrator in the State.</text> </level> <level label="b"> <text>A person that would be an administrator subject to this subtitle but for the exemption under § 8-301(b)(2)(iv) of this subtitle shall provide to the Commissioner:</text> <level label="1"> <text>written notice that the person operates in the State; and</text> </level> <level label="2"> <text>evidence satisfactory to the Commissioner that the person is complying with any applicable bonding requirements imposed by ERISA.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-304" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>To register as an administrator, an applicant must present evidence satisfactory to the Commissioner that the applicant:</text> <level label="1"> <text>has not been convicted of:</text> <level label="i"> <text>a felony;</text> </level> <level label="ii"> <text>a misdemeanor involving moral turpitude;</text> </level> <level label="iii"> <text>a violation of this subtitle;</text> </level> <level label="iv"> <text>an attempt or conspiracy to commit any of the violations listed in items (i) through (iii) of this item; or</text> </level> <level label="v"> <text>a crime in which any other violation listed in this item is an element;</text> </level> </level> <level label="2"> <text>has obtained the bond required by § 8–306 of this subtitle or has qualified for one of the applicable exemptions from the bonding requirement;</text> </level> <level label="3"> <text>has met any applicable examination requirements adopted by the Commissioner under subsection (b) of this section; and</text> </level> <level label="4"> <text>for the administration of health benefit plans in the State, uses only the uniform claim forms adopted by the Commissioner under § 15–1003 of this article.</text> </level> </level> <level label="b"> <level label="1"> <text>The Commissioner may develop appropriate testing procedures to measure an applicant’s familiarity with this subtitle.</text> </level> <level label="2"> <text>To develop testing procedures, the Commissioner shall consult with representatives of administrators, employee organizations, and employers.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-305" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>An applicant for registration shall:</text> <level label="1"> <text>file with the Commissioner an application on the form that the Commissioner requires; and</text> </level> <level label="2"> <text>pay to the Commissioner an application fee of $250.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-306" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>The bond required for an administrator under this subtitle must:</text> <level label="1"> <text>provide protection to the plans or the life insurer, for which the administrator acts as an administrator, against loss because of acts of fraud or dishonesty on the part of the administrator, directly or through connivance with others; and</text> </level> <level label="2"> <text>be issued by an authorized corporate surety insurer that is an acceptable surety on federal bonds under authority granted by the Secretary of the Treasury.</text> </level> </level> <level label="b"> <level label="1"> <text>Subject to this section, the amount of the bond shall be determined at the time an application for registration or renewal of registration is filed.</text> </level> <level label="2"> <text>To determine the amount of the bond:</text> <level label="i"> <text>the average amount of money that the administrator and any predecessor of the administrator handled at any one time during the immediately preceding calendar year shall be considered; and</text> </level> <level label="ii"> <text>the average amount of money that the administrator expects to handle at any one time during the current calendar year shall be considered.</text> </level> </level> <level label="3"> <text>The amount of the bond:</text> <level label="i"> <text>may not be less than 10% of the average amount of money that the administrator expects to handle at any one time for the life insurer or all the plans that the administrator expects to administer during the coming year; and</text> </level> <level label="ii"> <text>subject to paragraph (4) of this subsection, may not be less than $5,000 or more than $500,000.</text> </level> </level> <level label="4"> <text>After a hearing held under Title 2 of this article, the Commissioner may set the amount of the bond to exceed $500,000, up to 10% of the average amount of money that the administrator expects to handle at any one time for all the plans that the administrator expects to administer during the coming year.</text> </level> </level> <level label="c"> <text>Subject to approval by the Commissioner, the bond may be an individual bond or a blanket bond that covers a group or class.</text> </level> <level label="d"> <level label="1"> <text>An applicant need not file evidence of a bond as a condition of registration or renewal of registration if:</text> <level label="i"> <text>the applicant only administers plans under which benefits are paid only from the general assets of an employee organization or of an employer; or</text> </level> <level label="ii"> <text>the applicant:</text> <level label="1"> <text>is a corporation organized and doing business under the laws of the United States or a state;</text> </level> <level label="2"> <text>is authorized under the laws of the United States or a state to exercise trust powers or to engage in business as an insurer;</text> </level> <level label="3"> <text>is subject to supervision or examination by a federal or State authority; and</text> </level> <level label="4"> <text>at all times has a combined capital and surplus that exceeds $1,000,000 or any greater amount set by regulation of the Commissioner.</text> </level> </level> </level> <level label="2"> <text>The Commissioner may waive the requirement for an applicant to file evidence of a bond as a condition of registration or renewal of registration if the Commissioner finds that:</text> <level label="i"> <text>other arrangements, including providing letters of credit or similar instruments, would be adequate to protect the interests of plan participants and beneficiaries; or</text> </level> <level label="ii"> <text>the overall financial condition of the applicant would be adequate to protect the interests of plan participants and beneficiaries.</text> </level> </level> </level> <level label="e"> <text>Notwithstanding any other provision of the Code, an applicant that complies with this section and is registered as an administrator under this subtitle is not subject to any other bonding requirement imposed by the law of the State for the same activities that required the applicant to be registered and bonded under this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-307" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>The Commissioner shall register each applicant who meets the requirements of this subtitle.</text> </section> <section article="gin" article_name="Insurance" number="8-308" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>A registration expires 2 years from the date of issuance unless it is renewed as provided in this section.</text> </level> <level label="b"> <text>Before a registration expires, the registrant may renew it for an additional 2–year term, if the registrant:</text> <level label="1"> <text>otherwise is entitled to be registered;</text> </level> <level label="2"> <text>files with the Commissioner a renewal application on the form that the Commissioner requires;</text> </level> <level label="3"> <text>pays to the Commissioner a renewal fee of $50; and</text> </level> <level label="4"> <text>except as provided in § 8–306(d) of this subtitle, files with the Commissioner evidence of a bond in compliance with § 8–306 of this subtitle.</text> </level> </level> <level label="c"> <text>An application for renewal of a registration shall be considered made in a timely manner if it is postmarked on or before the date the registration expires.</text> </level> <level label="d"> <text>The Commissioner shall renew the registration of each registrant that meets the requirements of this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-308.1" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>Within 1 year after the expiration date, a person whose third party administrator’s registration has expired may reinstate the expired registration by:</text> <level label="1"> <text>filing with the Commissioner the appropriate reinstatement application;</text> </level> <level label="2"> <text>subject to subsection (b) of this section, paying to the Commissioner a reinstatement fee of $100; and</text> </level> <level label="3"> <text>complying with the bond requirement of § 8–306 of this subtitle.</text> </level> </level> <level label="b"> <text>The Commissioner may limit the reinstatement fee to the amount of the renewal fee in cases where the reinstatement applicant did not make timely renewal because of temporary incapacity, hospitalization, or other hardship.</text> </level> <level label="c"> <text>A person whose third party administrator’s registration has expired is prohibited from acting as a third party administrator until the effective date of reinstatement of the registration.</text> </level> <level label="d"> <text>A person who does not comply with subsection (a) of this section within 1 year after the expiration date shall apply for a third party administrator’s registration under § 8–305 of this subtitle and meet any other requirements specified by the Commissioner in regulation.</text> </level> <level label="e"> <text>The Commissioner may adopt regulations to carry out this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-309" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>Subject to the hearing provisions of Title 2 of this article, the Commissioner may deny a registration to an applicant or refuse to renew, suspend, or revoke the registration of a registrant if the applicant or registrant:</text> <level label="1"> <text>makes a material misstatement in an application for registration;</text> </level> <level label="2"> <text>fraudulently or deceptively obtains or attempts to obtain a registration for the applicant or registrant or for another;</text> </level> <level label="3"> <text>has been convicted of a felony or of a misdemeanor involving moral turpitude;</text> </level> <level label="4"> <text>in connection with the administration of a plan or with activities on behalf of a life insurer, commits fraud or engages in illegal or dishonest activities;</text> </level> <level label="5"> <text>has violated this article or another law of the State that relates to insurance; or</text> </level> <level label="6"> <text>knowingly fails to comply with a regulation adopted by or an order of the Commissioner.</text> </level> </level> <level label="b"> <text>This section does not limit any regulatory power of the Commissioner under Title 2 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-310" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>An administrator shall discharge the administrator’s duties with respect to a plan or a life insurer:</text> <level label="1"> <text>solely in the interest of providing to the plan’s participants and beneficiaries the benefits to which they are entitled under the plan or on behalf of a life insurer;</text> </level> <level label="2"> <text>for the exclusive purpose of providing benefits to the plan’s participants and beneficiaries and defraying reasonable expenses of administering the plan or on behalf of a life insurer;</text> </level> <level label="3"> <text>with the care, skill, prudence, and diligence that a prudent person acting in a similar capacity and under similar circumstances would use to conduct an enterprise of similar character and with similar aims;</text> </level> <level label="4"> <text>if applicable, by diversifying the investments of the plan or the life insurer to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and</text> </level> <level label="5"> <text>in accordance with the documents and instruments governing the plan or the life insurer to the extent that the documents and instruments are not inconsistent with this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-311" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>A person may not act as an administrator without a written agreement between the administrator and the plan sponsor or insurer.</text> </level> <level label="b"> <text>An administrator shall retain the agreement required by this section as an official record of the administrator for the duration of the agreement and for 3 years after termination of the agreement.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-312" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>An administrator shall maintain adequate books and records about each plan administered by the administrator or about activities of the administrator on behalf of a life insurer:</text> <level label="1"> <text>in accordance with prudent standards of record keeping; and</text> </level> <level label="2"> <text>for the duration of the agreement required by § 8–311 of this subtitle.</text> </level> </level> <level label="b"> <text>Subject to any restrictions in the agreement required by § 8–311 of this subtitle on the proprietary rights of the parties in the books and records, the plan sponsor or insurer has the right to reasonable access to the books and records that is sufficient to allow the plan sponsor or insurer to fulfill its contractual obligations to the plan participants and beneficiaries.</text> </level> <level label="c"> <text>If an administrator ceases to administer a plan or ceases to act on behalf of a life insurer, the administrator:</text> <level label="1"> <text>shall deliver the books and records about the plan or about activities on behalf of the life insurer that are in the administrator’s possession to the administrator’s successor, the plan sponsor, or the insurer; or</text> </level> <level label="2"> <text>for 3 years after the administrator ceases to administer the plan or act on behalf of the life insurer:</text> <level label="i"> <text>shall retain the books and records about the plan or about activities on behalf of the life insurer; and</text> </level> <level label="ii"> <text>shall provide access to the plan sponsor and insurer as provided under subsection (b) of this section.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-313" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>At least 30 days before the change is effective, an administrator of a plan that provides pharmaceutical benefits shall notify in writing all pharmacies under contract with the plan of any of the following changes in the pharmaceutical benefit program rules or requirements:</text> <level label="1"> <text>exclusion of coverage for classes of drugs as specified by contract;</text> </level> <level label="2"> <text>changes in prior or preauthorization procedures; or</text> </level> <level label="3"> <text>selection of new prescription claims processors.</text> </level> </level> <level label="b"> <text>An administrator that fails to provide advance notice under subsection (a) of this section shall honor and pay in full any claim under the program rules or requirements that existed before the change for 30 days after the postmarked date of the notice.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-314" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>On request of the Commissioner, an administrator shall submit to the Commissioner a copy of any errors and omissions policy covering the administrator.</text> </section> <section article="gin" article_name="Insurance" number="8-315" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>A provision in an agreement or instrument that relates to the administration of a plan that purports to relieve an administrator from responsibility or liability for a duty or requirement imposed under this subtitle is void as against public policy.</text> </level> <level label="b"> <text>Notwithstanding subsection (a) of this section:</text> <level label="1"> <text>a plan may purchase insurance for its administrators or for itself to cover liability or losses that occur because of an act or omission of an administrator if the insurance allows recourse by the insurer against the administrator in a case of breach of responsibility under this subtitle by the administrator;</text> </level> <level label="2"> <text>an administrator may purchase insurance to cover the administrator’s possible liability under this subtitle if the insurance is obtained for and paid from the administrator’s own account; or</text> </level> <level label="3"> <text>an employer or an employee organization may purchase insurance to cover possible liability of one or more persons that act as administrators with respect to a plan.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-316" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>With respect to a plan or the life insurer, an administrator, directly or indirectly:</text> <level label="1"> <text>may not deal with the assets of the plan or the life insurer in the administrator’s own interest or for the administrator’s own account;</text> </level> <level label="2"> <text>in a transaction involving the plan or the life insurer, may not act in any capacity on behalf of or represent in any capacity a party whose interests are adverse to the interests of the life insurer, the plan, or the plan’s participants or beneficiaries;</text> </level> <level label="3"> <text>other than commissions or service fees received from an insurer, may not receive consideration for the administrator’s own personal account from a party dealing with the plan or the life insurer in connection with a transaction involving the assets of the plan or the life insurer; or</text> </level> <level label="4"> <text>may not knowingly participate in or attempt to conceal an act or omission of another administrator involved in the administration of that plan or in activities on behalf of the life insurer, knowing that the act or omission of the other administrator would be a violation of this subtitle.</text> </level> </level> <level label="b"> <text>An administrator may not procure the bond required by this subtitle from a surety insurer or other company or through an insurance producer in whose business operations the administrator has direct or indirect control or significant financial interest.</text> </level> <level label="c"> <text>Notwithstanding subsection (a)(1) of this section, an administrator is not considered to have dealt with the assets of a plan in the administrator’s own interest or for the administrator’s own account solely because:</text> <level label="1"> <text>the administrator held the assets, at interest for the benefit of the administrator, for an administratively reasonable period of time before remitting the assets to an insurer or other payee; or</text> </level> <level label="2"> <text>the compensation that the administrator receives for services necessary for establishing or operating the plan does not exceed reasonable compensation.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-317" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>A person may not knowingly allow another person to act as an administrator with respect to a plan in violation of this subtitle.</text> </section> <section article="gin" article_name="Insurance" number="8-318" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>A person may not discharge, fine, suspend, expel, discipline, or discriminate against a plan participant or beneficiary:</text> <level label="1"> <text>for exercising a right to which the participant or beneficiary is entitled under this subtitle; or</text> </level> <level label="2"> <text>for the purpose of interfering with a right to which the participant or beneficiary may become entitled under this subtitle.</text> </level> </level> <level label="b"> <text>A person may not discharge, fine, suspend, expel, discipline, or discriminate against a person, whether or not the person is a plan participant or beneficiary, because the person:</text> <level label="1"> <text>has given information or testified in an inquiry or proceeding that relates to this subtitle; or</text> </level> <level label="2"> <text>is about to give information or testify in an inquiry or proceeding that relates to this subtitle.</text> </level> </level> <level label="c"> <text>A person may not, by fraud, force, violence, or the threat of force or violence, restrain, coerce, or intimidate or attempt to restrain, coerce, or intimidate a plan participant or beneficiary for the purpose of interfering with or preventing the exercise of a right to which the plan participant or beneficiary is or may become entitled under this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-319" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <level label="1"> <text>A person aggrieved by the conduct of a person registered or required to be registered under this subtitle may file a written complaint with the Commissioner.</text> </level> <level label="2"> <text>On receipt of a complaint, the Commissioner shall investigate the complaint.</text> </level> </level> <level label="b"> <text>The Commissioner may investigate any person if the Commissioner has reasonable cause to believe that the person has violated any provision of this subtitle or a regulation adopted under it.</text> </level> <level label="c"> <text>Without limitation of the powers granted to the Commissioner under Title 2 of this article, in connection with an investigation under this section, the Commissioner may:</text> <level label="1"> <text>examine the books and records of a person registered under this subtitle or any other person that the Commissioner believes has violated this subtitle or a regulation adopted under it;</text> </level> <level label="2"> <text>subpoena documents and other evidence; and</text> </level> <level label="3"> <text>summon and examine under oath a person whose testimony the Commissioner requires.</text> </level> </level> <level label="d"> <text>For the purpose of conducting an investigation under this section, the Commissioner may not require an administrator to submit to the Commissioner, more than once in a 12-month period, any books or records of a plan administered by the administrator unless the Commissioner has reasonable cause to believe that a violation of this subtitle or a regulation adopted or order issued under it exists.</text> </level> <level label="e"> <text>Subject to subsection (f) of this section, the Commissioner may make available information about a matter that may be subject to an investigation to:</text> <level label="1"> <text>the National Association of Insurance Commissioners;</text> </level> <level label="2"> <text>a unit of state or federal government; and</text> </level> <level label="3"> <text>a person that is the subject of the investigation.</text> </level> </level> <level label="f"> <text>Unless disclosure is required by a court of competent jurisdiction in a legal proceeding, the Commissioner shall keep confidential and may not disclose a trade secret or commercial information contained in:</text> <level label="1"> <text>an administrator’s books, records, or other documents; or</text> </level> <level label="2"> <text>data provided by the administrator, including the identity and address of persons covered by a plan.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-320" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>To enforce this subtitle and any regulation adopted under it, the Commissioner may issue an order that requires the violator to:</text> <level label="1"> <text>cease and desist from the violation and further similar violations; and</text> </level> <level label="2"> <text>take specific affirmative action to correct the violation, including:</text> <level label="i"> <text>the restitution of money, property, or other assets to a person aggrieved by the violation;</text> </level> <level label="ii"> <text>the restoration to the plan or the life insurer of profits realized by the administrator that have been made through use of assets of the plan or the life insurer by the administrator; and</text> </level> <level label="iii"> <text>the removal of the administrator that committed the violation.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>The Commissioner may file a petition in the circuit court of any county to enforce an order issued under this section.</text> </level> <level label="2"> <text>In an action brought by the Commissioner under this section, the Commissioner may recover for the use of the State reasonable attorney’s fees and the costs of the action.</text> </level> </level> <level label="c"> <level label="1"> <text>In addition to any other enforcement action taken by the Commissioner under this section, the Commissioner may impose a civil penalty of not more than $10,000 for each violation of this article committed by an administrator.</text> </level> <level label="2"> <text>Notwithstanding paragraph (1) of this subsection, the Commissioner may impose a civil penalty of not more than $1,000 per day for each day that a person is in violation of § 8–303(a) of this subtitle.</text> </level> <level label="3"> <text>In determining the amount of the civil penalty imposed under this subsection, the Commissioner shall consider:</text> <level label="i"> <text>the seriousness of the violation;</text> </level> <level label="ii"> <text>the good faith of the violator;</text> </level> <level label="iii"> <text>the violator’s history of previous violations;</text> </level> <level label="iv"> <text>the deleterious effect of the violation on the plan and its participants and beneficiaries;</text> </level> <level label="v"> <text>the assets of the violator; and</text> </level> <level label="vi"> <text>any other factors that relate to the determination of a financial penalty.</text> </level> </level> </level> <level label="d"> <text>This section does not limit any regulatory power of the Commissioner under Title 2 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-321" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <level label="a"> <text>With respect to a plan or activities on behalf of a life insurer, an administrator who breaches a responsibility imposed on the administrator by this subtitle:</text> <level label="1"> <text>is personally liable for the restitution of money, property, or other assets to a person aggrieved by the violation and for the restoration to the plan of any profits realized by the administrator that have been made through use of assets of the plan by the administrator; and</text> </level> <level label="2"> <text>is subject to any other equitable or remedial relief that a court considers appropriate, including removal of the administrator.</text> </level> </level> <level label="b"> <text>In addition to any liability that an administrator may have under subsection (a) of this section, the administrator is liable for a breach of responsibility under this subtitle by another administrator with respect to the same plan if the administrator:</text> <level label="1"> <text>knowingly participates in or knowingly attempts to conceal an act or omission of the other administrator involved in the administration of the same plan, knowing that the act or omission of the other administrator would be a violation of this subtitle;</text> </level> <level label="2"> <text>by the administrator’s failure to comply with § 8–310 of this subtitle, has enabled the other administrator to violate this subtitle; or</text> </level> <level label="3"> <text>knows of a violation of this subtitle by the other administrator, unless the administrator makes reasonable efforts under the circumstances to remedy the violation.</text> </level> </level> <level label="c"> <level label="1"> <text>An administrator is not liable under this subtitle, by reason of a breach of responsibility, for a loss to a participant’s or beneficiary’s account if:</text> <level label="i"> <text>the plan provides for individual accounts and allows a participant or beneficiary to exercise investment control over assets in the participant’s or beneficiary’s account;</text> </level> <level label="ii"> <text>the participant or beneficiary exercises that control; and</text> </level> <level label="iii"> <text>the loss or breach results from the participant’s or beneficiary’s exercise of that investment control.</text> </level> </level> <level label="2"> <text>An administrator is not liable for a violation of this subtitle if the violation was committed before the administrator became an administrator or after the administrator ceased to be an administrator.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-321.1" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>A third party administrator shall comply with § 27–803 of this article.</text> </section> <section article="gin" article_name="Insurance" number="8-321.2" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>A third–party administrator shall comply with Title 33 of this article.</text> </section> <section article="gin" article_name="Insurance" number="8-322" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="3" subtitle_name="Third Party Administrators"> <text>A person that intentionally violates this subtitle or a regulation adopted under it is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $10,000 or imprisonment not exceeding 1 year or both.</text> </section> <section article="gin" article_name="Insurance" number="8-401" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Benefit contract” means the agreement for provision of benefits authorized by § 8-432 of this subtitle.</text> </level> <level label="c"> <text>“Benefit member” means an adult member who is designated by the laws or rules of a society to be a benefit member under a benefit contract.</text> </level> <level label="d"> <text>“Certificate” means the document issued as written evidence of a benefit contract.</text> </level> <level label="e"> <text>“Laws” means a society’s articles of incorporation, constitution, and bylaws, however designated.</text> </level> <level label="f"> <text>“Lodge” means subordinate member units of a society, known as camps, courts, councils, branches, or by any other designation.</text> </level> <level label="g"> <text>“Premiums” means premiums, rates, dues, or other required contributions by whatever name known that are payable under a certificate.</text> </level> <level label="h"> <text>“Rules” means all rules, regulations, or resolutions adopted by the supreme governing body or board of directors of a society which are intended to have general application to the members of the society.</text> </level> <level label="i"> <text>Unless the context requires otherwise, “society” means fraternal benefit society.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-402" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>An incorporated society, order, or supreme lodge without capital stock is deemed to be a fraternal benefit society if it:</text> <level label="i"> <text>is conducted solely for the benefit of its members and their beneficiaries;</text> </level> <level label="ii"> <text>is not conducted for profit;</text> </level> <level label="iii"> <text>is operated on a lodge system with ritualistic form of work;</text> </level> <level label="iv"> <text>has a representative form of government; and</text> </level> <level label="v"> <text>provides for benefits to be paid in accordance with this subtitle.</text> </level> </level> <level label="2"> <text>An incorporated or unincorporated society, order, or supreme lodge without capital stock that is exempted under § 8-404(a)(2) of this subtitle is deemed to be a fraternal benefit society.</text> </level> </level> <level label="b"> <text>A society is deemed to be operating on a lodge system if it operates under a system by which the society:</text> <level label="1"> <text>has a supreme legislative or governing body and subordinate lodges or branches, by whatever name known;</text> </level> <level label="2"> <text>by its laws, requires the subordinate lodges or branches to hold regular meetings at least once each month in furtherance of the purposes of the society; and</text> </level> <level label="3"> <text>elects, initiates, or admits members in accordance with its laws, rituals, and rules.</text> </level> </level> <level label="c"> <text>A society is deemed to have a representative form of government if:</text> <level label="1"> <level label="i"> <text>the society provides in its laws for a supreme legislative or governing body composed of:</text> <level label="1"> <text>representatives elected by the members of the society or by delegates elected directly or indirectly by the members; and</text> </level> <level label="2"> <text>any other individuals required by the laws of the society;</text> </level> </level> <level label="ii"> <text>election of delegates may be accomplished by mail;</text> </level> <level label="iii"> <text>the elected representatives of the society:</text> <level label="1"> <text>are a majority of the supreme legislative or governing body;</text> </level> <level label="2"> <text>have at least two-thirds of the votes; and</text> </level> <level label="3"> <text>have at least the number of votes required to amend the laws of the society;</text> </level> </level> <level label="iv"> <text>at least once every 4 years:</text> <level label="1"> <text>the supreme legislative or governing body of the society meets; and</text> </level> <level label="2"> <text>officers, representatives, or delegates of the society are elected;</text> </level> </level> <level label="v"> <text>each insured member is eligible for election to act or serve as a delegate to the meeting;</text> </level> <level label="vi"> <text>the society has a board of directors that:</text> <level label="1"> <text>is responsible for the management of the affairs of the society between meetings of the supreme legislative or governing body;</text> </level> <level label="2"> <text>is subject to control by the supreme legislative or governing body;</text> </level> <level label="3"> <text>except when a vacancy is filled between meetings of the supreme legislative or governing body, is elected by the supreme legislative or governing body; and</text> </level> <level label="4"> <text>has powers and duties delegated by the laws of the society;</text> </level> </level> <level label="vii"> <text>the officers of the society are elected by the supreme legislative or governing body or by the board of directors; and</text> </level> <level label="viii"> <text>the members, officers, representatives, or delegates of the society may not vote by proxy; or</text> </level> </level> <level label="2"> <level label="i"> <text>the society provides in its laws for a supreme legislative or governing body composed of:</text> <level label="1"> <text>a board composed of individuals elected by the members, either directly or by their representatives in intermediate assemblies; and</text> </level> <level label="2"> <text>any other individuals required by the laws of the society;</text> </level> </level> <level label="ii"> <text>election of the board may be accomplished by mail;</text> </level> <level label="iii"> <text>the term of an elected board member may not exceed 4 years;</text> </level> <level label="iv"> <text>the individuals elected to the board:</text> <level label="1"> <text>are a majority of the board; and</text> </level> <level label="2"> <text>have at least the number of votes required to amend the laws of the society;</text> </level> </level> <level label="v"> <text>vacancies on the board between elections are filled as prescribed by the laws of the society;</text> </level> <level label="vi"> <text>an individual filling the unexpired term of an elected board member is considered to be an elected member; and</text> </level> <level label="vii"> <text>the board meets at least quarterly to conduct the business of the society.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-403" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>Except as otherwise provided in this section, societies are:</text> <level label="i"> <text>governed exclusively by this subtitle; and</text> </level> <level label="ii"> <text>exempt from the other insurance laws of the State.</text> </level> </level> <level label="2"> <text>A statute enacted after December 31, 1963, does not apply to societies unless the statute expressly states that it applies to them.</text> </level> </level> <level label="b"> <level label="1"> <text>In addition to the provisions of this subtitle, the following provisions of this article apply to societies to the extent not in conflict with the express provisions and reasonable implications of this subtitle:</text> <level label="i"> <text>Title 1 of this article;</text> </level> <level label="ii"> <text>Title 2, Subtitle 1 of this article, including § 2–112 of this article;</text> </level> <level label="iii"> <text>Title 2, Subtitle 2 of this article;</text> </level> <level label="iv"> <text>§ 3–117 of this article;</text> </level> <level label="v"> <text>§ 3–127 of this article;</text> </level> <level label="vi"> <text>§ 4–102(b) of this article;</text> </level> <level label="vii"> <text>§ 4–113(a)(7), (8), and (9) of this article;</text> </level> <level label="viii"> <text>§ 4–203 of this article;</text> </level> <level label="ix"> <text>§ 4–204 of this article;</text> </level> <level label="x"> <text>§ 5–103 of this article;</text> </level> <level label="xi"> <text>§ 5–201 of this article;</text> </level> <level label="xii"> <text>Title 6, Subtitle 2 of this article;</text> </level> <level label="xiii"> <text>Title 9, Subtitle 2 of this article;</text> </level> <level label="xiv"> <text>§ 10–120 of this article;</text> </level> <level label="xv"> <text>Title 15, Subtitle 9 of this article;</text> </level> <level label="xvi"> <text>Title 27 of this article;</text> </level> <level label="xvii"> <text>§ 1–301 of this article; and</text> </level> <level label="xviii"> <text>Title 4, Subtitle 3 of this article.</text> </level> </level> <level label="2"> <text>In addition to the provisions of this subtitle, societies are subject to the provisions of Title 13, Subtitle 5 of the Estates and Trusts Article.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-404" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Except as provided in this section, this subtitle and the other insurance laws of the State do not apply to:</text> <level label="1"> <text>a grand or subordinate lodge or society, order, or association that:</text> <level label="i"> <text>was doing business in the State on December 31, 1963;</text> </level> <level label="ii"> <text>provides benefits exclusively through local or subordinate lodges; and</text> </level> <level label="iii"> <text>does not issue benefit certificates;</text> </level> </level> <level label="2"> <text>an order, society, or association that:</text> <level label="i"> <level label="1"> <text>limits its membership to individuals engaged in one or more crafts or hazardous occupations in the same or similar lines of business; and</text> </level> <level label="2"> <text>insures only its members and their families and dependents; or</text> </level> </level> <level label="ii"> <level label="1"> <text>as to individual health insurance policies, offers those policies in this State only to members of the Mennonite Church and their dependents and families;</text> </level> <level label="2"> <text>was formed as a fraternal benefit society under the laws of the State of Indiana prior to January 1, 1966 for the purpose of providing mutual aid in affiliation with the Mennonite Church; and</text> </level> <level label="3"> <text>is registered as a foreign corporation under § 7–202 of the Corporations and Associations Article;</text> </level> </level> </level> <level label="3"> <text>a society or auxiliary of an order, society, or association described in item (2) of this subsection;</text> </level> <level label="4"> <text>a domestic society that:</text> <level label="i"> <text>limits its membership to employees of a particular municipal area or a designated firm, business house, or corporation;</text> </level> <level label="ii"> <text>provides for individual death benefits not exceeding $400 per year or disability benefits not exceeding $350 per year or both; and</text> </level> <level label="iii"> <text>does not issue benefit certificates;</text> </level> </level> <level label="5"> <text>a domestic society or association that:</text> <level label="i"> <text>has a purely religious, charitable, or benevolent purpose;</text> </level> <level label="ii"> <text>provides for individual death benefits not exceeding $400 per year or disability benefits not exceeding $350 per year or both;</text> </level> <level label="iii"> <text>does not issue benefit certificates; and</text> </level> <level label="iv"> <text>has a membership of not more than 1,000 individuals; and</text> </level> </level> <level label="6"> <text>any association, whether or not a fraternal benefit society:</text> <level label="i"> <text>that was organized before 1880;</text> </level> <level label="ii"> <text>the members of which are officers or enlisted, regular or reserve, active, retired, or honorably discharged members of the uniformed services; and</text> </level> <level label="iii"> <text>a principal purpose of which is to provide insurance and other benefits to its members and the dependents or beneficiaries of its members.</text> </level> </level> </level> <level label="b"> <text>Except for an organization described in subsection (a)(2) or (3) of this section, a society that is exempt from this subtitle may not give, allow, or promise to give or allow to any person compensation for obtaining new members.</text> </level> <level label="c"> <text>The provisions of this subtitle relating to medical examination, valuation of benefit certificates, and incontestability do not apply to a society that:</text> <level label="1"> <text>provides benefits in case of death or disability resulting solely from accident; and</text> </level> <level label="2"> <text>does not obligate itself to pay natural death or sickness benefits.</text> </level> </level> <level label="d"> <text>By examination or otherwise, the Commissioner may require information from any society or association that will enable the Commissioner to determine whether the society or association is exempt from this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-405" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A society organized or authorized to transact business under this subtitle is deemed to be a charitable and benevolent institution.</text> </level> <level label="b"> <text>The funds of a society organized or authorized to transact business under this subtitle are exempt from all taxes, except taxes on real estate and office equipment.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-406" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>An incorporated society authorized to transact insurance business in the State on December 31, 1963, may exercise all the rights, powers, and privileges prescribed in this subtitle and in the charter or articles of incorporation of the society to the extent consistent with this subtitle.</text> </level> <level label="b"> <text>A domestic society is not required to reincorporate.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-407" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>Each society authorized to do business in the State must appoint the Commissioner as attorney for service of process issued against the society and any successor in interest in the State.</text> </level> <level label="2"> <text>The appointment of the Commissioner shall:</text> <level label="i"> <text>be made in writing; and</text> </level> <level label="ii"> <text>state that:</text> <level label="1"> <text>any process against the society that is served on the Commissioner has the same legal effect as if served on the society; and</text> </level> <level label="2"> <text>the appointment remains in effect as long as any liability of the society remains outstanding in the State.</text> </level> </level> </level> </level> <level label="b"> <text>A copy of an appointment made under this section and certified by the Commissioner is deemed sufficient evidence of the appointment and shall be admitted in evidence with the same effect as if it were the original.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-410" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Seven or more individuals, acting as incorporators, may form a society under this subtitle.</text> </level> <level label="b"> <level label="1"> <text>Each incorporator of a society must be a citizen of the United States.</text> </level> <level label="2"> <text>A majority of the incorporators must be citizens of the State.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-411" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>The incorporators shall sign and acknowledge the articles of incorporation.</text> </level> <level label="b"> <text>The articles of incorporation shall include:</text> <level label="1"> <text>the purpose for which the society is being formed and the manner in which its corporate powers are to be exercised;</text> </level> <level label="2"> <text>the name of the society;</text> </level> <level label="3"> <text>the name, address, and state of residence of each incorporator; and</text> </level> <level label="4"> <text>the name, address, residence, and official title of each officer, trustee, director, and any other individual who will have general control of the management of the affairs and funds of the society for the first year and until the first election.</text> </level> </level> <level label="c"> <level label="1"> <text>The powers set forth in the articles of incorporation may not exceed the powers granted to societies by this subtitle.</text> </level> <level label="2"> <text>The purposes of a society may include any lawful social, intellectual, educational, charitable, benevolent, moral, fraternal, or religious activity.</text> </level> </level> <level label="d"> <text>The name of a society may not be misleadingly or confusingly similar to the name of any other society or insurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-412" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>The incorporators shall file with the Commissioner:</text> <level label="1"> <text>the articles of incorporation of the society;</text> </level> <level label="2"> <text>certified copies of the society’s laws and rules;</text> </level> <level label="3"> <text>copies of all proposed:</text> <level label="i"> <text>forms of certificates;</text> </level> <level label="ii"> <text>applications for certificates; and</text> </level> <level label="iii"> <text>circulars to be issued by the society; and</text> </level> </level> <level label="4"> <text>a bond conditioned on the return to applicants of advance premiums if the organization of the society is not completed within 1 year.</text> </level> </level> <level label="b"> <text>The Commissioner may require any additional information that the Commissioner considers necessary.</text> </level> <level label="c"> <text>The bond required under subsection (a) of this section must:</text> <level label="1"> <text>be issued by a surety insurer approved by the Commissioner; and</text> </level> <level label="2"> <text>be in the amount required by the Commissioner, but not less than $300,000 nor more than $1,500,000.</text> </level> </level> <level label="d"> <text>Each document filed shall be in the English language.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-413" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Each society that applies on or after July 1, 1968, for an initial certificate of authority under this subtitle must have working capital of at least $125,000.</text> </level> <level label="b"> <text>After issuance of its initial certificate of authority, a society described in subsection (a) of this section shall maintain unencumbered assets that exceed all liabilities by $100,000.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-414" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <text>If a society complies with this subtitle, the Commissioner shall:</text> <level label="1"> <text>certify, retain, and record the articles of incorporation of the society; and</text> </level> <level label="2"> <text>provide the incorporators with a preliminary certificate of authority that authorizes the society to solicit members as provided in this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-415" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>After receiving a preliminary certificate of authority from the Commissioner, a society may solicit members for the purposes of completing its organization.</text> </level> <level label="2"> <text>Until the society complies with the requirements of subsection (b) of this section, the society may not:</text> <level label="i"> <text>incur any liability other than for the return of an advance premium;</text> </level> <level label="ii"> <text>issue any certificate; or</text> </level> <level label="iii"> <text>pay, allow, or offer or promise to pay or allow any death or disability benefit.</text> </level> </level> </level> <level label="b"> <text>Each society shall:</text> <level label="1"> <text>secure bona fide applications for death benefits in an aggregate amount of at least $500,000 on at least 500 lives;</text> </level> <level label="2"> <text>receive from each applicant evidence of insurability satisfactory to the society;</text> </level> <level label="3"> <text>have on file certificates of examination or acceptable declarations of insurability approved by the society’s chief medical examiner;</text> </level> <level label="4"> <text>collect from each applicant the amount of at least one regular monthly premium under the society’s table of rates as provided by the society’s laws, and issue to each applicant a receipt for the amount received;</text> </level> <level label="5"> <text>collect premiums as provided in item (4) of this subsection in an aggregate amount of at least $150,000 and credit the premiums to the funds from which benefits are to be paid;</text> </level> <level label="6"> <text>establish at least ten subordinate lodges or branches into which the applicants are admitted;</text> </level> <level label="7"> <text>submit to the Commissioner, under the oath of the president, secretary, or an equivalent officer of the society, the name, address, date of admission, and amounts of benefits and premiums of each applicant, and the name and number of the subordinate branch of which the applicant is a member; and</text> </level> <level label="8"> <text>submit to the Commissioner, under oath of the treasurer or an equivalent officer of the society, a statement that at least 500 applicants have paid the premiums required by items (4) and (5) of this subsection.</text> </level> </level> <level label="c"> <text>All advance premiums shall be held in trust during the period of organization and, if the society has not qualified for a certificate of authority within 1 year, the premiums shall be returned to the applicants.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-416" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Except as provided in subsection (b) of this section, unless a society receives a certificate of authority as provided in § 8-417 of this subtitle, the preliminary certificate of authority of the society, its articles of incorporation, and each action taken under the authority of the preliminary certificate of authority are void 1 year after the preliminary certificate of authority is issued.</text> </level> <level label="b"> <text>For good cause shown, the Commissioner may extend the preliminary certificate of authority for an additional period not exceeding 1 year.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-417" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Before the Commissioner issues a certificate of authority, the Commissioner may make any examination and require any additional information that the Commissioner considers necessary.</text> </level> <level label="b"> <text>On presentation of satisfactory evidence that the society has complied with this subtitle, the Commissioner shall issue to the society a certificate of authority that authorizes the society to transact business under this subtitle.</text> </level> <level label="c"> <text>The certificate of authority is prima facie evidence that the society existed on the date of the certificate of authority.</text> </level> <level label="d"> <text>The Commissioner shall record the certificate of authority in the office of the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-418" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A society may adopt and amend laws to:</text> <level label="1"> <text>govern the society;</text> </level> <level label="2"> <text>admit society members;</text> </level> <level label="3"> <text>manage society affairs; and</text> </level> <level label="4"> <text>fix and readjust the rates of society members.</text> </level> </level> <level label="b"> <level label="1"> <text>The laws of the society may provide that subordinate lodges or branches and their officers and members may not waive any provisions of the laws of the society.</text> </level> <level label="2"> <text>A provision adopted in accordance with this subsection is binding on the society and each member and beneficiary of a member.</text> </level> </level> <level label="c"> <text>Except as prohibited by this subtitle, a society has any other power necessary and incidental to accomplish the purposes for which it is established.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-419" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A society may amend the society’s laws, in accordance with the provisions of those laws, by:</text> <level label="1"> <text>action of its supreme legislative or governing body at a regular or special meeting of the body; or</text> </level> <level label="2"> <text>referendum.</text> </level> </level> <level label="b"> <level label="1"> <text>An amendment by referendum may be approved in accordance with the laws of a society, by the vote of:</text> <level label="i"> <text>the society’s voting members;</text> </level> <level label="ii"> <text>the delegates or representatives of the society’s voting members; or</text> </level> <level label="iii"> <text>the society’s local lodges or branches.</text> </level> </level> <level label="2"> <text>An amendment may not be adopted by referendum unless, within 6 months after it is submitted for adoption, a majority of all the voting members of the society have consented to the amendment.</text> </level> </level> <level label="c"> <level label="1"> <text>An amendment to the laws of a society may not take effect unless the Commissioner approves.</text> </level> <level label="2"> <text>The Commissioner shall approve an amendment if the Commissioner finds that the amendment was adopted properly and is not inconsistent with the laws of the State or the society.</text> </level> <level label="3"> <text>The Commissioner’s approval or disapproval shall be in writing and mailed to the secretary or equivalent officer of the society at the society’s principal office.</text> </level> <level label="4"> <text>The Commissioner shall include in a notice of disapproval a statement of the reasons for the disapproval.</text> </level> <level label="5"> <text>Unless disapproved by the Commissioner, an amendment is deemed approved 60 days after it is filed with the Commissioner.</text> </level> </level> <level label="d"> <level label="1"> <text>Within 90 days after approval by the Commissioner, each amendment or a synopsis of it shall be mailed by the society to each member of the society or published in full in the official publication of the society.</text> </level> <level label="2"> <text>The affidavit of an individual authorized by the society to mail an amendment or synopsis, stating that the amendment or synopsis was addressed properly and mailed, is prima facie evidence that the amendment or synopsis was provided to the addressee.</text> </level> </level> <level label="e"> <text>A printed copy of the laws as amended, certified by the secretary or equivalent officer of the society, is prima facie evidence of the amendment.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-420" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>The officers, trustees, directors, or other individuals who have general control of the management of the affairs and funds of the society shall be elected by the supreme legislative or governing body of the society.</text> </level> <level label="2"> <text>The election shall be held within 1 year after a permanent certificate of authority is issued under § 8-417 of this subtitle.</text> </level> </level> <level label="b"> <text>The officers of a grand, supreme, or subordinate lodge or branch of a society are not personally liable for payment of a benefit provided by the society.</text> </level> <level label="c"> <level label="1"> <text>An individual may be indemnified and reimbursed by a society for expenses reasonably incurred by, and liabilities imposed on, the individual in connection with or arising out of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, in which the individual may be involved because the individual is or was a director, officer, employee, or agent of the society or of any firm, corporation, or organization in which the individual served in any capacity at the request of the society.</text> </level> <level label="2"> <text>An individual may not be indemnified or reimbursed:</text> <level label="i"> <text>in relation to any matter in an action, suit, or proceeding as to which the individual is finally adjudged to be or have been guilty of breach of a duty as a director, officer, employee, or agent of the society; or</text> </level> <level label="ii"> <text>in relation to any matter in a threatened or pending action, suit, or proceeding that has been made the subject of a compromise settlement, unless the individual:</text> <level label="1"> <text>acted in good faith for a purpose the individual reasonably believed to be in, or not opposed to, the best interests of the society; and</text> </level> <level label="2"> <text>in a criminal action or proceeding, had no reasonable cause to believe that the individual’s conduct was unlawful.</text> </level> </level> </level> <level label="3"> <text>The determination of whether the conduct of an individual met the standard required to justify indemnification and reimbursement in relation to any matter described in paragraph (2) of this subsection may be made only by:</text> <level label="i"> <text>the supreme governing body or board of directors of the society by a majority vote of a quorum that consists of individuals who were not parties to the action, suit, or proceeding; or</text> </level> <level label="ii"> <text>a court of competent jurisdiction.</text> </level> </level> <level label="4"> <text>The termination of an action, suit, or proceeding by judgment, order, settlement, conviction, or on a plea of no contest, as to an individual shall not in itself create a conclusive presumption that the individual did not meet the standard of conduct required to justify indemnification and reimbursement.</text> </level> <level label="5"> <text>The right of indemnification and reimbursement under this subsection shall not be exclusive of other rights to which an individual may be entitled as a matter of law, and shall inure to the benefit of the individual’s heirs, executors, and administrators.</text> </level> </level> <level label="d"> <text>A society may purchase and maintain insurance on behalf of any individual who is or was a director, officer, employee, or agent of the society, or who is or was serving at the request of the society as a director, officer, employee, or agent of any other firm, corporation, or organization against any liability asserted against the individual and incurred by the individual in any such capacity or arising out of the individual’s status as such, whether or not the society would have the power to indemnify the individual against such liability under this section.</text> </level> <level label="e"> <text>No director, officer, employee, member, or volunteer of a society serving without compensation, shall be liable, and no cause of action may be brought, for damages resulting from the exercise of judgment or discretion in connection with the duties or responsibilities of the individual for the society unless the act or omission involved willful or wanton misconduct.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-421" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>A society may admit to membership an individual who:</text> <level label="i"> <text>is older than 14 1/2 years old; and</text> </level> <level label="ii"> <text>gives the society evidence of insurability acceptable to the society.</text> </level> </level> <level label="2"> <text>A minor who is admitted to the society is:</text> <level label="i"> <text>bound by the terms of the application and certificate and by the laws and rules of the society; and</text> </level> <level label="ii"> <text>entitled to the rights and privileges of membership as though the individual were an adult at the time of application.</text> </level> </level> </level> <level label="b"> <text>A society also may admit general or social members who do not have a voice or vote in the management of the society’s insurance affairs.</text> </level> <level label="c"> <text>The members of a grand, supreme, or subordinate lodge or branch of a society are not personally liable for payment of a benefit provided by the society.</text> </level> <level label="d"> <text>A society shall specify in its laws or rules the rights and privileges of each membership class.</text> </level> <level label="e"> <text>Membership rights in a society are personal to the member and not assignable.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-422" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>The principal office of a domestic society shall be located in the State.</text> </level> <level label="b"> <text>Meetings of the supreme legislative or governing body of a society may be held in any state, district, province, or territory where the society has at least five subordinate branches.</text> </level> <level label="c"> <text>The minutes of the proceedings of the supreme legislative or governing body and of the board of directors or equivalent body of a society shall be in English.</text> </level> <level label="d"> <text>A society may provide in its laws or rules for grievance or complaint procedures for members.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-423" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A certificate of authority of a society expires on the first June 30 after its effective date unless it is renewed as provided in this section.</text> </level> <level label="b"> <text>At least 1 month before a certificate of authority expires, the Commissioner shall mail to the holder of the certificate of authority, at the last known address of the holder, or send by electronic means in accordance with § 2–116 of this article:</text> <level label="1"> <text>a renewal application form; and</text> </level> <level label="2"> <text>a notice that states:</text> <level label="i"> <text>the date on which the current certificate of authority expires;</text> </level> <level label="ii"> <text>the date by which the Commissioner must receive the renewal application for the renewal to be issued and mailed before the certificate of authority expires; and</text> </level> <level label="iii"> <text>the amount of the renewal fee.</text> </level> </level> </level> <level label="c"> <text>Before a certificate of authority expires, the holder of the certificate of authority may renew it for an additional 1-year term, if the holder:</text> <level label="1"> <text>otherwise is entitled to a certificate of authority;</text> </level> <level label="2"> <text>files with the Commissioner a renewal application on the form that the Commissioner provides; and</text> </level> <level label="3"> <text>pays to the Commissioner the fee for renewal of certificates of authority of insurers required by § 2-112 of this article.</text> </level> </level> <level label="d"> <level label="1"> <text>The Commissioner shall renew the certificate of authority of each holder who meets the requirements of this subtitle.</text> </level> <level label="2"> <text>If a certificate holder pays the applicable renewal fee before the certificate of authority expires, the certificate of authority remains in effect until the Commissioner renews or refuses to renew the certificate of authority.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-424" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A foreign or alien society may not transact insurance business in the State unless the society has a certificate of authority issued by the Commissioner.</text> </level> <level label="b"> <text>A foreign or alien society that desires to transact insurance business in the State must have the qualifications required of domestic societies organized under this subtitle.</text> </level> <level label="c"> <text>A foreign or alien society may be authorized to transact insurance business in the State if the society:</text> <level label="1"> <text>shows that its assets are invested in accordance with this subtitle; and</text> </level> <level label="2"> <text>files with the Commissioner:</text> <level label="i"> <text>a certified copy of its charter or articles of incorporation;</text> </level> <level label="ii"> <text>a copy of its constitution and laws, certified by its secretary or equivalent officer;</text> </level> <level label="iii"> <text>a power of attorney as required by § 8-407 of this subtitle;</text> </level> <level label="iv"> <text>a statement of the society’s insurance business that is:</text> <level label="1"> <text>under oath of its president and secretary or equivalent officers;</text> </level> <level label="2"> <text>in the form required by the Commissioner;</text> </level> <level label="3"> <text>verified by an examination made by the insurance supervisory official of its home state or another state, territory, province, or country; and</text> </level> <level label="4"> <text>satisfactory to the Commissioner;</text> </level> </level> <level label="v"> <text>a certificate of compliance from the proper official of its home state, territory, province, or country that the society is legally incorporated and authorized to transact insurance business in that state, territory, province, or country;</text> </level> <level label="vi"> <text>copies of its forms of certificates; and</text> </level> <level label="vii"> <text>any additional information that the Commissioner considers necessary.</text> </level> </level> </level> <level label="d"> <text>Each foreign or alien society authorized to do insurance business in the State shall file with the Commissioner, within 90 days after enactment, a certified copy of each amendment of, or addition to, its articles of incorporation, constitution, or laws.</text> </level> <level label="e"> <level label="1"> <text>The Commissioner may deny a certificate of authority to a foreign or alien society applicant or suspend or revoke a certificate of authority of a foreign or alien society if, on investigation, the Commissioner finds that the society:</text> <level label="i"> <text>has exceeded its powers;</text> </level> <level label="ii"> <text>has failed to comply with any provision of this subtitle;</text> </level> <level label="iii"> <text>is not fulfilling its contracts in good faith;</text> </level> <level label="iv"> <text>is conducting its insurance business fraudulently; or</text> </level> <level label="v"> <text>is conducting its insurance business in a manner hazardous to its members, creditors, or the public.</text> </level> </level> <level label="2"> <text>If the Commissioner makes a finding under subsection (a) of this section, the Commissioner shall:</text> <level label="i"> <text>notify the society of the finding;</text> </level> <level label="ii"> <text>state in writing the reasons for dissatisfaction; and</text> </level> <level label="iii"> <text>require the society to show cause on or before a specified date why its certificate of authority should not be denied, suspended, or revoked.</text> </level> </level> <level label="3"> <text>If, on or before the date specified in the notice, the society does not show good and sufficient reason why its certificate of authority should not be denied, suspended, or revoked, the Commissioner may:</text> <level label="i"> <text>deny or suspend the certificate of authority until satisfactory evidence is provided to the Commissioner that the denial or suspension should be withdrawn; or</text> </level> <level label="ii"> <text>revoke the certificate of authority.</text> </level> </level> </level> <level label="f"> <text>The provisions of subsection (e) of this section do not prevent a foreign or alien society from continuing in good faith all contracts made in the State during the time the society was legally authorized to transact insurance business in the State.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-427" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A society authorized to do insurance business in the State may provide for the payment of:</text> <level label="1"> <text>life insurance benefits;</text> </level> <level label="2"> <text>annuity benefits;</text> </level> <level label="3"> <text>health insurance benefits;</text> </level> <level label="4"> <text>monument or tombstone benefits to the memory of a deceased member of the society; and</text> </level> <level label="5"> <text>such other benefits as authorized for life insurers and which are not inconsistent with this subtitle.</text> </level> </level> <level label="b"> <level label="1"> <text>A society shall specify in its laws those persons who may receive benefits through the society.</text> </level> <level label="2"> <level label="i"> <text>For all coverages, the member shall be the applicant or the insured.</text> </level> <level label="ii"> <text>If the member is the applicant, there shall be a bona fide familial or other dependent relationship between the member and the insured or beneficiary.</text> </level> </level> <level label="3"> <level label="i"> <text>Every society, by its laws, may limit the scope of beneficiaries only to the extent required by federal law governing fraternal benefit societies.</text> </level> <level label="ii"> <text>The society may specify the terms and conditions on which benefits certificates may be assigned.</text> </level> </level> </level> <level label="c"> <text>A society may not provide benefits through group insurance coverages.</text> </level> <level label="d"> <text>A member who applies for additional benefits more than 6 months after becoming a benefit member shall provide additional evidence of insurability acceptable to the society.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-428" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>In this section, “eligible children” means children under the minimum age for adult membership but not more than 18 years old at the time of application.</text> </level> <level label="b"> <text>A society may provide for benefits on the lives of eligible children:</text> <level label="1"> <text>in accordance with § 8-427 of this subtitle;</text> </level> <level label="2"> <text>in accordance with the laws or rules of the society; and</text> </level> <level label="3"> <text>on application of an adult.</text> </level> </level> <level label="c"> <level label="1"> <text>A society may organize and operate branches for eligible children.</text> </level> <level label="2"> <text>A society may not require eligible children to be members of or be initiated in a local lodge.</text> </level> <level label="3"> <text>Eligible children may not participate in the management of the society.</text> </level> </level> <level label="d"> <level label="1"> <text>On obtaining the minimum age for adult beneficial membership under the laws of the society, eligible children insured under certificates issued under this section shall be transferred to and become members of the adult branch of the society if the children otherwise meet the eligibility requirements of the society.</text> </level> <level label="2"> <text>If a child fails to meet the adult eligibility requirements of the society, the transfer is effective only as to the child’s insurance account.</text> </level> </level> <level label="e"> <text>A society may provide for:</text> <level label="1"> <text>the designation and changing of designation of beneficiaries in certificates;</text> </level> <level label="2"> <text>the regulation of certificates; and</text> </level> <level label="3"> <text>all rights, obligations, and liabilities incident to the certificates.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-429" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>For certificates issued before January 1, 1998, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall comply with the provisions of law applicable on December 31, 1997.</text> </level> <level label="b"> <level label="1"> <text>Each paid-up nonforfeiture benefit and the amount of any cash surrender value, loan, or other option granted under a certificate may not be less than the corresponding amount ascertained under the laws of the State that apply to life insurers issuing policies containing like insurance benefits based on the same tables.</text> </level> <level label="2"> <text>This subsection applies to certificates issued on or after January 1, 1998, for which reserves are computed on:</text> <level label="i"> <text>the Commissioners 1941 Standard Ordinary Mortality Table;</text> </level> <level label="ii"> <text>the Commissioners 1941 Standard Industrial Table;</text> </level> <level label="iii"> <text>the Commissioners 1958 Standard Ordinary Mortality Table;</text> </level> <level label="iv"> <text>the Commissioners 1980 Standard Mortality Table; or</text> </level> <level label="v"> <text>any more recent table authorized for use under § 5-304(b) of this article.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-430" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>A member of a society may change the beneficiary in a certificate at any time in accordance with the laws or rules of the society.</text> </level> <level label="2"> <text>By its laws or rules, a society:</text> <level label="i"> <text>may limit the scope of beneficiaries; and</text> </level> <level label="ii"> <text>shall provide that a beneficiary may not have or get a vested interest in the proceeds of a certificate until the certificate becomes due and payable under the insurance contract.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>A society may provide for the payment of funeral benefits, not exceeding $5,000, to the extent of that part of any payment under a certificate that reasonably appears to be due to a person equitably entitled to reimbursement of expenses incurred by the burial of a member.</text> </level> <level label="2"> <level label="i"> <text>Subject to subparagraph (ii) of this paragraph, if at the death of a member there is no lawful beneficiary to whom the insurance benefits are payable, the society shall pay to the personal representative of the deceased member the insurance benefits under the certificate, less any funeral benefits paid under paragraph (1) of this subsection.</text> </level> <level label="ii"> <text>If the owner of the certificate is other than the insured, the proceeds shall be payable to that owner.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-431" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <text>Benefits to be paid by a society are not subject to attachment, garnishment, or other process and may not be seized, appropriated, or applied by any process or operation of law to pay a debt or liability of a member, beneficiary, or other person with a right to the benefit, whether before or after payment.</text> </section> <section article="gin" article_name="Insurance" number="8-432" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>Each society authorized to do business in the State shall issue to each member entitled to benefits a certificate that specifies the amount of benefits provided under the certificate.</text> </level> <level label="2"> <text>The certificate, any rider or endorsement attached to the certificate, the laws of the society, the application for membership, any declaration of insurability signed by the applicant, and all amendments to each of these documents constitute the agreement between the society and the member as of the date of issuance of the certificate.</text> </level> <level label="3"> <text>The certificate shall state that the documents listed in paragraph (2) of this subsection constitute the agreement between the society and the member as of the date of issuance of the certificate.</text> </level> <level label="4"> <text>A copy of the application for membership and of any declaration of insurability shall be endorsed on or attached to the certificate.</text> </level> </level> <level label="b"> <level label="1"> <text>Each statement purporting to be made by an applicant for insurance is a representation and not a warranty.</text> </level> <level label="2"> <text>A waiver of this subsection is void.</text> </level> </level> <level label="c"> <level label="1"> <text>Subject to paragraph (2) of this subsection, an amendment to the laws made after the date of issuance of the certificate:</text> <level label="i"> <text>binds the member and each beneficiary; and</text> </level> <level label="ii"> <text>governs the agreement between the society and the member as though the amendments were made before and were in force on the date that the member applied for membership.</text> </level> </level> <level label="2"> <text>An amendment does not destroy or diminish the benefits that the society contracted to give the member or owner as of the date of issuance of the certificate.</text> </level> </level> <level label="d"> <text>A copy of a document listed in this section, certified by the secretary or equivalent officer of the society, is evidence of the terms and conditions of the document.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-433" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>After December 31, 1997, a benefit certificate may not be delivered or issued for delivery in the State unless the form has been:</text> <level label="i"> <text>filed with the Commissioner; and</text> </level> <level label="ii"> <text>approved by the Commissioner in the manner provided for like policies issued by life insurers in the State.</text> </level> </level> <level label="2"> <text>Unless disapproved by the Commissioner, a benefit certificate is deemed approved 60 days after the date the form is filed with the Commissioner.</text> </level> </level> <level label="b"> <level label="1"> <text>Each life, accident, health, or disability insurance certificate and each annuity certificate issued on or after January 1, 1998, shall meet requirements not inconsistent with this subtitle for like policies and annuities issued by life insurers in the State.</text> </level> <level label="2"> <text>Unless the benefit certificate contains provisions that are more favorable to the member, each benefit certificate shall contain in substance each of the following standard provisions:</text> <level label="i"> <text>a statement of:</text> <level label="1"> <text>the amount of rates, premiums, or other required contributions, however named, that are payable by the insured under the certificate; and</text> </level> <level label="2"> <text>the member’s share of a deficiency if reserves are impaired; and</text> </level> </level> <level label="ii"> <text>a provision that:</text> <level label="1"> <text>for payment of any premium after the first, the member is entitled to a grace period of not less than a full month or, at the option of the society, 30 days;</text> </level> <level label="2"> <text>the certificate shall continue in full force during the grace period;</text> </level> <level label="3"> <text>if the certificate becomes a claim during the grace period before the overdue payment is made, the amount of the overdue payment may be deducted in a settlement under the certificate;</text> </level> <level label="4"> <text>recites fully or sets forth the substance of all sections of the laws or rules of the society that are in force on the date of issuance of the certificate, the violation of which will result in the termination or reduction of benefits payable under the certificate; and</text> </level> <level label="5"> <text>if the laws of the society provide for expulsion or suspension, a member who is expelled or suspended has the privilege of maintaining the insurance in force by continuing payment of the required premium, unless the expulsion or suspension is for:</text> </level> <level label="A"> <text>nonpayment of a premium; or</text> </level> <level label="B"> <text>a material misrepresentation in the member’s application for membership that is discovered within the contestable period.</text> </level> </level> </level> </level> <level label="c"> <text>Certificates issued on the lives of individuals below the society’s minimum age for adult membership:</text> <level label="1"> <text>may provide for transfer of control of ownership to the insured at an age specified in the certificate;</text> </level> <level label="2"> <text>may require approval of an application for membership in order to effect the transfer;</text> </level> <level label="3"> <text>may provide in all other respects for the regulation, government, and control of the certificate and all rights, obligations, and liabilities incident to and connected with the certificate; and</text> </level> <level label="4"> <text>shall specify ownership rights to the certificate prior to any transfer of the certificate.</text> </level> </level> <level label="d"> <text>A society may specify the terms and conditions on which benefit certificates may be assigned.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-437" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A society may create, maintain, and operate charitable, benevolent, or educational institutions for the benefit of:</text> <level label="1"> <text>society members;</text> </level> <level label="2"> <text>families and dependents of society members; and</text> </level> <level label="3"> <text>children insured by the society.</text> </level> </level> <level label="b"> <level label="1"> <text>For the purposes of an institution authorized by subsection (a) of this section, a society may own, hold, or lease personal or real property inside or outside the State.</text> </level> <level label="2"> <text>The property shall be reported in each annual statement of the society, but may not be allowed as an admitted asset of the society.</text> </level> </level> <level label="c"> <level label="1"> <text>Subject to paragraph (2) of this subsection, a society may charge a reasonable fee for maintenance, treatment, and proper attendance in an institution authorized by subsection (a) of this section.</text> </level> <level label="2"> <text>A society may not operate an institution authorized under subsection (a) of this section for profit.</text> </level> </level> <level label="d"> <text>A society may not own or operate a funeral home or undertaking establishment.</text> </level> <level label="e"> <text>A society shall maintain a separate accounting for any income and disbursements under this section and report them in its annual statement.</text> </level> <level label="f"> <text>The purposes of a society as specified in its laws, and as provided in this section and § 8-411(c)(2) of this subtitle, may be carried out:</text> <level label="1"> <text>directly by the society; or</text> </level> <level label="2"> <text>indirectly:</text> <level label="i"> <text>with respect to activities regulated by the Insurance Commissioner, through a subsidiary or affiliate operating under a certificate of authority, certificate of qualification, or other license issued by the Commissioner; and</text> </level> <level label="ii"> <text>for all other activities, through subsidiary corporations and affiliated organizations.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-438" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A society may consolidate or merge with another society as provided in this section.</text> </level> <level label="b"> <text>The society shall file with the Commissioner:</text> <level label="1"> <text>a certified copy of the written contract that contains the terms and conditions of the consolidation or merger;</text> </level> <level label="2"> <text>a statement verified under oath by the president and secretary or equivalent officers of each society party to the contract that shows the financial condition of the society on a date set by the Commissioner, but not before December 31 preceding the date of the contract;</text> </level> <level label="3"> <text>a certificate verified under oath by the officers described in item (2) of this subsection that states that the consolidation or merger was approved by a two-thirds vote of the supreme legislative or governing body of each society; and</text> </level> <level label="4"> <text>evidence that, at least 60 days before the approval of the supreme legislative or governing body of each society, the text of the contract was mailed to each member of each society or was published in full in the official publication of that society.</text> </level> </level> <level label="c"> <text>The affidavit of an officer of the society or an individual authorized by the society to mail a notice or document, stating that the text of the contract was properly addressed and mailed, is prima facie evidence that the text was provided to the addressee.</text> </level> <level label="d"> <text>The Commissioner shall approve the contract and issue a certificate of approval if the Commissioner finds that:</text> <level label="1"> <text>the society has complied with the provisions of this section;</text> </level> <level label="2"> <text>the financial statements are correct; and</text> </level> <level label="3"> <text>the consolidation or merger is equitable to the members of each society party to the contract.</text> </level> </level> <level label="e"> <level label="1"> <text>Unless a society party to the contract is incorporated under the laws of another state, the contract is effective on approval.</text> </level> <level label="2"> <text>If a society party to the contract is incorporated under the laws of another state, the consolidation or merger is not effective:</text> <level label="i"> <text>until it is approved under the laws of the other state and a certificate of the approval is filed with the Commissioner; or</text> </level> <level label="ii"> <text>if the laws of the other state do not provide for approval, until it is approved by the insurance supervisory official of the other state and a certificate of the approval is filed with the Commissioner.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-439" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>When a consolidation or merger becomes effective, each right, franchise, and interest of the consolidated or merged society in an asset vests in the successor society, without the need for any other instrument.</text> </level> <level label="b"> <text>A conveyance of real property may be evidenced by a proper deed.</text> </level> <level label="c"> <text>The title to or any interest in real property vested under the laws of the State in a consolidated or merged society does not revert and is not in any way impaired because of the consolidation or merger, but vests absolutely in the successor society.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-440" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A domestic society may convert to and be licensed as a mutual life insurer by complying with the applicable requirements of Title 3, Subtitle 1 of this article if the plan of conversion is approved by the Commissioner.</text> </level> <level label="b"> <level label="1"> <text>The plan of conversion shall be in writing and shall set forth the terms and conditions of the conversion.</text> </level> <level label="2"> <text>The board of directors shall submit the plan of conversion to the supreme legislative or governing body of the society at a regular or special meeting, by giving a complete copy of the plan with the notice of the meeting.</text> </level> <level label="3"> <text>Notice shall be given as provided in the applicable laws of the society for a regular or special meeting.</text> </level> <level label="4"> <text>The affirmative vote of two-thirds of the members of the body is necessary for approval of the plan.</text> </level> </level> <level label="c"> <level label="1"> <text>Conversion to a mutual life insurer may not take effect unless approved by the Commissioner.</text> </level> <level label="2"> <text>The Commissioner may approve the conversion if the Commissioner finds that the proposed change conforms to the requirements of law and is not prejudicial to the certificate holders of the society.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-441" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Subject to subsection (b) of this section, a domestic society may cede wholly or partly any individual risk by reinsurance agreement to an insurer that:</text> <level label="1"> <text>is not a fraternal benefit society;</text> </level> <level label="2"> <text>has the power to make reinsurance; and</text> </level> <level label="3"> <text>is authorized to do insurance business in the State or is approved by the Commissioner.</text> </level> </level> <level label="b"> <text>A domestic society may not reinsure substantially all of its insurance in force without the written permission of the Commissioner.</text> </level> <level label="c"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, a ceding domestic society may take credit for the reserves on risks ceded under this section to the extent reinsured.</text> </level> <level label="2"> <text>A ceding domestic society may not be allowed credit, as an admitted asset or as a deduction from liability, for reinsurance made, ceded, renewed, or that otherwise became effective after December 31, 1963, unless the reinsurance is payable by the assuming insurer on the basis of the liability of the ceding society under the contracts reinsured without diminution because of the insolvency of the ceding society.</text> </level> </level> <level label="d"> <text>Notwithstanding the limitations in this section, a society may reinsure the risks of another society in a consolidation or merger approved by the Commissioner under § 8-438 of this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-442" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <level label="1"> <text>All assets of a society shall be held, invested, and disbursed for the use and benefit of the society.</text> </level> <level label="2"> <text>A society member or beneficiary of a member does not have and may not acquire individual rights in the assets of the society and is not entitled to any apportionment or the surrender of any part of the assets except as provided in the insurance contract.</text> </level> </level> <level label="b"> <text>A society may create, maintain, invest, disburse, and apply special funds as necessary to carry out any purpose allowed by the laws of the society.</text> </level> <level label="c"> <level label="1"> <text>This subsection applies only to a society with admitted assets that are less than the sum of its accrued liabilities and reserves under all of its certificates when valued according to standards required for certificates issued after December 31, 1963.</text> </level> <level label="2"> <text>A society described in paragraph (1) of this subsection shall state distinctly, in each law of the society regarding payments by members, the purpose of the payments and the proportion of the payments that may be used for expenses.</text> </level> <level label="3"> <text>A society described in paragraph (1) of this subsection may not use any money collected for mortuary or disability purposes, or its net earnings, for expenses.</text> </level> </level> <level label="d"> <level label="1"> <text>A society, pursuant to resolution of its supreme governing body, may establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the provisions of law regulating life insurers establishing such accounts and issuing such contracts.</text> </level> <level label="2"> <text>To the extent the society considers it necessary in order to comply with any applicable federal or State laws, or any rules issued under applicable federal or State laws, the society:</text> <level label="i"> <text>may adopt special procedures for the conduct of the business and affairs of a separate account;</text> </level> <level label="ii"> <text>for persons having beneficial interests in an account, may provide special voting and other rights, including special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants, and selection of a committee to manage the business and affairs of the account; and</text> </level> <level label="iii"> <text>may issue contracts on a variable basis to which §§ 8-432(c) and 8-446 of this subtitle shall not apply.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-443" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <text>For the purpose of compliance with standards set out in this article regarding required reserves and required surplus, a society shall invest its funds only in investments that are authorized by, and subject to the limitations of, the laws of the State for the investment of assets of life insurers under Title 5 of this article.</text> </section> <section article="gin" article_name="Insurance" number="8-444" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Each society transacting insurance business in the State shall:</text> <level label="1"> <text>file with the Commissioner an annual statement as provided in § 4-116 of this article;</text> </level> <level label="2"> <text>pay to the Commissioner a fee of $25 for filing the annual statement; and</text> </level> <level label="3"> <text>prepare a synopsis of the annual statement that explains the condition of the society as disclosed by the annual statement.</text> </level> </level> <level label="b"> <text>On or before June 1 of each year the synopsis required by subsection (a)(3) of this section shall be:</text> <level label="1"> <text>printed and mailed to each benefit member of the society; or</text> </level> <level label="2"> <text>published in the society’s official publication.</text> </level> </level> <level label="c"> <level label="1"> <text>A society that fails to file the annual statement required under subsection (a) of this section shall pay a penalty of $100 each day until the annual statement is filed.</text> </level> <level label="2"> <text>In addition to the penalty provided in paragraph (1) of this subsection, the Commissioner, after notice to the society, shall suspend the society’s authority to do business in the State until the annual statement is filed.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-445" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Standards of valuation for certificates issued before January 1, 1998, shall be those provided by the laws applicable on December 31, 1997.</text> </level> <level label="b"> <level label="1"> <text>The minimum standards of valuation for certificates issued on or after January 1, 1998, shall be based on the following tables:</text> <level label="i"> <text>for certificates of life insurance:</text> <level label="1"> <text>the Commissioners 1941 Standard Ordinary Mortality Table;</text> </level> <level label="2"> <text>the Commissioners 1941 Standard Industrial Mortality Table;</text> </level> <level label="3"> <text>the Commissioners 1958 Standard Ordinary Mortality Table;</text> </level> <level label="4"> <text>the Commissioners 1980 Standard Ordinary Mortality Table; or</text> </level> <level label="5"> <text>any more recent table authorized for use under § 5-304(b) of this article; and</text> </level> </level> <level label="ii"> <text>for annuity and pure endowment certificates, total and permanent disability benefits, accidental death benefits, and noncancelable accident and health benefits, the tables that are authorized for use by life insurers in the State.</text> </level> </level> <level label="2"> <text>Valuation of all certificates issued on or after January 1, 1998, shall be under valuation methods and standards, including interest assumptions, in accordance with the laws of the State applicable to life insurers issuing policies containing like benefits.</text> </level> </level> <level label="c"> <text>The Commissioner may:</text> <level label="1"> <text>accept other standards for valuation if the Commissioner finds that the reserves produced by those other standards will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard prescribed in this section; and</text> </level> <level label="2"> <text>vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra hazardous lives by any society authorized to do business in the State.</text> </level> </level> <level label="d"> <level label="1"> <text>With the consent of the commissioner of insurance of the state of domicile of the society, and subject to any conditions the commissioner may impose, a society may establish and maintain reserves on its certificates that exceed the reserves required under this section.</text> </level> <level label="2"> <text>The contractual rights of any benefit member may not be affected by a society establishing and maintaining reserves under paragraph (1) of this subsection.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-446" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Each society shall provide in its laws that:</text> <level label="1"> <text>if the reserves of the society as to all or any class of certificates become impaired, the board of directors or equivalent body of the society may require that the owner of each certificate pay the amount of the owner’s equitable proportion of the deficiency as determined by the board of directors or equivalent body and approved by the commissioner of the domiciliary state; and</text> </level> <level label="2"> <text>if the owner does not pay the owner’s share of the deficiency, that share:</text> <level label="i"> <text>shall stand as an indebtedness against the certificate and is subject to interest not exceeding the rate specified for certificate loans under the certificate; or</text> </level> <level label="ii"> <text>instead of or in combination with item (i) of this paragraph, the owner of the certificate may accept a proportionate reduction in benefits under the certificate.</text> </level> </level> </level> <level label="b"> <text>The society may specify the manner of the election and which alternative is to be presumed if no election is made.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-449" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Except as otherwise provided in this section, a person must obtain a license issued under Title 10, Subtitle 1 of this article before the person acts as an insurance producer for a fraternal benefit society.</text> </level> <level label="b"> <text>Subsection (a) of this section does not apply to a regular salaried officer or employee of a licensed society who:</text> <level label="1"> <text>devotes substantially all of the officer’s or employee’s services to activities other than soliciting insurance contracts; and</text> </level> <level label="2"> <text>does not receive, for soliciting insurance contracts, a commission or other compensation that is directly dependent on the amount of business obtained.</text> </level> </level> <level label="c"> <level label="1"> <text>Subsection (a) of this section does not apply to a fraternal benefit insurance producer or representative of a society that devotes, or intends to devote, less than 50% of the person’s time to selling, soliciting and negotiating insurance contracts for the society.</text> </level> <level label="2"> <text>For the purposes of paragraph (1) of this subsection, a person is presumed to be devoting, or intending to devote, 50% or more of the person’s time to selling, soliciting or negotiating insurance contracts for a society if, in the preceding calendar year, the person has sold, solicited and negotiated:</text> <level label="i"> <text>life insurance contracts that, in the aggregate, exceed $200,000 of coverage for all lives insured for the preceding calendar year;</text> </level> <level label="ii"> <text>a permanent life insurance contract offering more than $10,000 of coverage on an individual life;</text> </level> <level label="iii"> <text>a term life insurance contract offering more than $50,000 of coverage on an individual life;</text> </level> <level label="iv"> <text>any insurance contracts other than life that the society may write that insure the lives of more than 25 individuals; or</text> </level> <level label="v"> <text>any variable life insurance or variable annuity contract.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-461" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>The Commissioner or a person appointed by the Commissioner shall examine the affairs of each domestic society at least once every 3 years.</text> </level> <level label="b"> <text>In conducting an examination under this section:</text> <level label="1"> <text>the Commissioner or person appointed by the Commissioner shall have free access to all books, documents, and records that relate to the business of the society; and</text> </level> <level label="2"> <text>the Commissioner may subpoena and examine under oath any person, including the officers, agents, and employees of the society, in relation to the affairs, transactions, and condition of the society.</text> </level> </level> <level label="c"> <level label="1"> <text>A summary of the report of the Commissioner about the examination and any recommendations or statements of the Commissioner that accompany the report:</text> <level label="i"> <text>shall be read at the first meeting of the board of directors or equivalent body of the society after the receipt of the report; and</text> </level> <level label="ii"> <text>if the Commissioner directs, shall be read at the first meeting of the supreme legislative or governing body of the society after the receipt of the report.</text> </level> </level> <level label="2"> <text>A copy of the report, recommendations, and statements of the Commissioner shall be provided by the society to each member of the society’s board of directors or other governing body.</text> </level> </level> <level label="d"> <text>The expense of each examination or of each valuation, including the compensation and expenses of examiners, shall be paid by the society examined or the society whose certificates are valued, on statements provided by the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-462" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>The Commissioner or a person appointed by the Commissioner may examine any foreign or alien society that transacts or applies for admission to transact business in the State.</text> </level> <level label="b"> <text>In conducting an examination under this section, the Commissioner or person appointed by the Commissioner shall have free access to all books, documents, and records that relate to the business of the society.</text> </level> <level label="c"> <text>Instead of conducting an examination, the Commissioner may accept the examination of the insurance department of the state or jurisdiction where the society is organized.</text> </level> <level label="d"> <text>The compensation and expenses of the examiners making an examination or valuation shall be paid by the society examined or the society whose certificate obligations are valued, on statements provided by the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-463" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>Subject to subsection (b) of this section, during or after an examination or investigation of a domestic, foreign, or alien society, the Commissioner may not make public or allow to become public a financial statement, report, or finding that affects the status, standing, or rights of the society.</text> </level> <level label="b"> <text>The Commissioner may make public or allow to become public a financial statement, report, or finding described in subsection (a) of this section after:</text> <level label="1"> <text>a copy of the financial statement, report, or finding has been served on the society at its principal office; and</text> </level> <level label="2"> <text>the society has been given a reasonable opportunity to answer the financial statement, report, or finding.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-464" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>The Commissioner shall take action under subsection (b) of this section if, on investigation, the Commissioner finds that a domestic society:</text> <level label="1"> <text>has exceeded its powers;</text> </level> <level label="2"> <text>has failed to comply with this subtitle;</text> </level> <level label="3"> <text>is not fulfilling its contracts in good faith;</text> </level> <level label="4"> <text>has a membership of less than 400 after an existence of 1 year or more;</text> </level> <level label="5"> <text>is conducting its insurance business fraudulently; or</text> </level> <level label="6"> <text>is conducting its insurance business in a manner hazardous to its members, creditors, the public, or the business.</text> </level> </level> <level label="b"> <text>If the Commissioner makes a finding under subsection (a) of this section, the Commissioner shall:</text> <level label="1"> <text>notify the society of the finding;</text> </level> <level label="2"> <text>state in writing the reasons for dissatisfaction; and</text> </level> <level label="3"> <text>require the society to show cause on or before a specified date why:</text> <level label="i"> <text>the society should not be enjoined from conducting any insurance business until the violation has been corrected; or</text> </level> <level label="ii"> <text>an action seeking a mandatory injunction should not be commenced against the society.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>If, on or before the date specified in the notice, the society does not present good and sufficient reason why it should not be enjoined from conducting insurance business or why an action seeking a mandatory injunction should not be commenced, the Commissioner may present the facts relating to the violation to the Attorney General.</text> </level> <level label="2"> <text>On request of the Commissioner, the Attorney General may commence:</text> <level label="i"> <text>an action to enjoin the society from conducting insurance business; or</text> </level> <level label="ii"> <text>an action seeking a mandatory injunction.</text> </level> </level> <level label="3"> <text>The court shall schedule a hearing and notify the officers of the society of the hearing.</text> </level> <level label="4"> <text>If, after a full hearing, the court finds that a violation has occurred under subsection (a) of this section, the court shall pass an order:</text> <level label="i"> <text>enjoining the society from conducting insurance business;</text> </level> <level label="ii"> <text>liquidating the society; or</text> </level> <level label="iii"> <text>appointing the Commissioner as receiver of the society.</text> </level> </level> </level> <level label="d"> <text>A society enjoined from conducting insurance business under this section may not conduct insurance business until:</text> <level label="1"> <text>the Commissioner finds that the violation has been corrected;</text> </level> <level label="2"> <text>the costs of the action have been paid by the society, if the court finds that the society was in default;</text> </level> <level label="3"> <text>the court has dissolved the injunction; and</text> </level> <level label="4"> <text>the Commissioner has reinstated the society’s certificate of authority.</text> </level> </level> <level label="e"> <text>If a court orders a society to be liquidated:</text> <level label="1"> <text>the society may not conduct any further insurance business; and</text> </level> <level label="2"> <text>the receiver of the society immediately shall:</text> <level label="i"> <text>take possession of the books, papers, money, and other assets of the society; and</text> </level> <level label="ii"> <text>close the affairs of the society and distribute its funds to those entitled to the funds under the direction of the court.</text> </level> </level> </level> <level label="f"> <text>This section also applies to a society that voluntarily determines to discontinue business.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-465" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <text>A decision or finding of the Commissioner made under this subtitle is subject to judicial review in accordance with § 2-215 of this article.</text> </section> <section article="gin" article_name="Insurance" number="8-466" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <text>An unincorporated or voluntary association may not transact business in the State as a society.</text> </section> <section article="gin" article_name="Insurance" number="8-467" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A society doing insurance business in the State may not make or allow unfair discrimination between insured members of the same class and equal life expectancy in:</text> <level label="1"> <text>the premiums charged for certificates of insurance;</text> </level> <level label="2"> <text>the dividends or other benefits payable on certificates of insurance; or</text> </level> <level label="3"> <text>any other terms and conditions of the contracts the society makes.</text> </level> </level> <level label="b"> <level label="1"> <text>This subsection applies to:</text> <level label="i"> <text>a society;</text> </level> <level label="ii"> <text>a person acting for the society;</text> </level> <level label="iii"> <text>an insurance producer that acts on behalf of a fraternal benefit society; and</text> </level> <level label="iv"> <text>a person acting for an insurance producer that acts on behalf of a fraternal benefit society.</text> </level> </level> <level label="2"> <text>A person may not offer, promise, allow, give, set off, or pay, directly or indirectly, any valuable consideration or inducement to or for insurance on any risk authorized to be taken by a society that is not specified in the certificate.</text> </level> </level> <level label="c"> <text>A society member may not receive or accept, directly or indirectly:</text> <level label="1"> <text>a rebate of all or part of a premium payable on a certificate;</text> </level> <level label="2"> <text>a rebate of a fraternal benefit agent’s commission on a premium payable on a certificate;</text> </level> <level label="3"> <text>any favor, advantage, or share in the dividends or other benefits to accrue on the insurance contract; or</text> </level> <level label="4"> <text>any other valuable consideration or inducement not specified in the insurance contract.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-468" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="4" subtitle_name="Fraternal Benefit Societies"> <level label="a"> <text>A person may not cause or allow to be made, issued, or circulated in any form:</text> <level label="1"> <text>a misrepresentation or false or misleading statement about the terms, benefits, or advantages of a fraternal insurance contract issued or to be issued in the State;</text> </level> <level label="2"> <text>a misrepresentation or false or misleading statement about the financial condition of a society;</text> </level> <level label="3"> <text>a false or misleading estimate or statement about the dividends or shares of surplus paid or to be paid by a society on an insurance contract or policy; or</text> </level> <level label="4"> <text>an incomplete comparison of an insurance contract of one society with an insurance contract of another society or insurer for the purpose of inducing the lapse, forfeiture, or surrender of an insurance contract.</text> </level> </level> <level label="b"> <text>A comparison of insurance contracts is incomplete if:</text> <level label="1"> <text>the comparison does not compare in detail:</text> <level label="i"> <text>the gross rates, and the gross rates less any dividend or other reduction allowed at the date of the comparison; and</text> </level> <level label="ii"> <text>any increase in cash values, and all the benefits provided by each contract for the possible duration of the contract as determined by the life expectancy of the insured; or</text> </level> </level> <level label="2"> <text>the comparison omits from consideration:</text> <level label="i"> <text>any benefit or value provided in the contract;</text> </level> <level label="ii"> <text>any differences as to amount or period of rates; or</text> </level> <level label="iii"> <text>any differences in limitations, conditions, or provisions that directly or indirectly affect the benefits under the contract.</text> </level> </level> </level> <level label="c"> <text>In making a determination of the incompleteness or misleading character of a comparison or statement, it is presumed that the insured did not know the contents of the contract involved.</text> </level> <level label="d"> <level label="1"> <text>A person that violates subsection (a) of this section or knowingly receives compensation or a commission as a result of a violation of subsection (a) of this section is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $1,000 or imprisonment not exceeding 90 days or both.</text> </level> <level label="2"> <level label="i"> <text>In addition to the penalties provided by paragraph (1) of this subsection, a person that violates subsection (a) of this section is liable for a civil penalty of three times the sum received by the violator as compensation or commission from the violation.</text> </level> <level label="ii"> <text>A person or society aggrieved by the violation may file a civil action for the person’s or society’s own use and benefit to recover a civil penalty under this paragraph.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-501" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“License” means a license issued by the Commissioner to act as a reinsurance intermediary.</text> </level> <level label="c"> <text>“Qualified financial institution” means an institution that:</text> <level label="1"> <text>is organized or, in the case of a United States office of a foreign banking organization, licensed under the laws of the United States or a state;</text> </level> <level label="2"> <text>is regulated, supervised, and examined by the United States or any state by authorities with regulatory authority over banks and trust companies; and</text> </level> <level label="3"> <text>has been determined by the Commissioner or the securities valuation office of the National Association of Insurance Commissioners to meet the standards of financial condition and standing considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Commissioner.</text> </level> </level> <level label="d"> <level label="1"> <text>“Reinsurance broker” means a person that solicits, negotiates, or places reinsurance cessions or retrocessions for a ceding insurer without the authority to bind reinsurance for the ceding insurer.</text> </level> <level label="2"> <text>“Reinsurance broker” does not include an officer or employee of the ceding insurer.</text> </level> </level> <level label="e"> <text>“Reinsurance intermediary” means a reinsurance broker or a reinsurance manager.</text> </level> <level label="f"> <level label="1"> <text>“Reinsurance manager” means a person that:</text> <level label="i"> <text>acts as an insurance producer for a reinsurer; and</text> </level> <level label="ii"> <level label="1"> <text>has authority to bind the reinsurer; or</text> </level> <level label="2"> <text>manages all or part of the assumed reinsurance business of the reinsurer, including the management of a separate division, department, or underwriting office.</text> </level> </level> </level> <level label="2"> <text>“Reinsurance manager” does not include:</text> <level label="i"> <text>an employee of the reinsurer;</text> </level> <level label="ii"> <text>a United States manager of the United States branch of an alien reinsurer;</text> </level> <level label="iii"> <text>an underwriting manager that, by contract:</text> <level label="1"> <text>manages all or part of the reinsurance operations of the reinsurer;</text> </level> <level label="2"> <text>is under common control with the reinsurer; and</text> </level> <level label="3"> <text>is not compensated based on the volume of premiums written; or</text> </level> </level> <level label="iv"> <text>the manager of a group, association, pool, or organization of insurers that:</text> <level label="1"> <text>engages in joint underwriting or joint reinsurance; and</text> </level> <level label="2"> <text>is subject to examination by the insurance regulatory authority of the state where the manager’s principal business office is located.</text> </level> </level> </level> </level> <level label="g"> <text>“Reinsurer” means a person that engages in the business of reinsurance as:</text> <level label="1"> <text>an authorized insurer; or</text> </level> <level label="2"> <text>an accepted reinsurer approved by the Commissioner.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-502" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <text>The Commissioner may adopt regulations to carry out this subtitle.</text> </section> <section article="gin" article_name="Insurance" number="8-503" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>This section does not apply to a lawyer admitted to the bar of the State while acting within the scope of the profession of the lawyer.</text> </level> <level label="b"> <level label="1"> <text>Except as otherwise provided in paragraph (2) of this subsection, before a person acts as a reinsurance manager or reinsurance broker in the State, the person:</text> <level label="i"> <text>in the case of a person that maintains an office in the State:</text> <level label="1"> <text>must obtain a license under this subtitle; or</text> </level> <level label="2"> <text>must qualify as an insurance producer under Title 10, Subtitle 1 of this article; or</text> </level> </level> <level label="ii"> <text>in the case of a person that maintains an office in another state:</text> <level label="1"> <text>must obtain a license under this subtitle or under a law of another state that is substantially similar to this subtitle; or</text> </level> <level label="2"> <text>must qualify as an insurance producer under Title 10, Subtitle 1 of this article or under a law of another state that is substantially similar to Title 10, Subtitle 1 of this article.</text> </level> </level> </level> <level label="2"> <text>Before a person acts as a reinsurance manager for a reinsurer domiciled in the State, the person must:</text> <level label="i"> <text>obtain a license under this subtitle; or</text> </level> <level label="ii"> <text>qualify as an insurance producer under Title 10, Subtitle 1 of this article.</text> </level> </level> <level label="3"> <text>This subsection applies to a person that maintains an office in the State either directly or as a member or employee of a firm or association or as an officer, director, or employee of a corporation that maintains an office in the State.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-504" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>The Commissioner may require a reinsurance manager to:</text> <level label="1"> <text>file a bond from an insurer in an amount acceptable to the Commissioner for the protection of each reinsurer that the reinsurance manager represents; and</text> </level> <level label="2"> <text>maintain an errors and omissions policy in an amount acceptable to the Commissioner.</text> </level> </level> <level label="b"> <level label="1"> <text>The bond required under subsection (a)(1) of this section must be written by an insurer that is authorized to write surety insurance in the State and is acceptable to the Commissioner.</text> </level> <level label="2"> <text>Subject to the approval of the Commissioner, a reinsurance manager may provide security other than a bond, including an irrevocable letter of credit, to satisfy the requirements of subsection (a)(1) of this section.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-505" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <level label="1"> <text>On the form that the Commissioner provides, each nonresident applicant for a license must appoint the Commissioner as attorney for service of process issued against the applicant in the State.</text> </level> <level label="2"> <text>The appointment:</text> <level label="i"> <text>is irrevocable;</text> </level> <level label="ii"> <text>binds the applicant and any successor in interest; and</text> </level> <level label="iii"> <text>remains in effect as long as there is in force in the State a contract made by the applicant or an obligation arising from a contract made by the applicant.</text> </level> </level> </level> <level label="b"> <level label="1"> <text>Each nonresident applicant for a license shall provide the Commissioner with the name and address of a resident of the State on whom notice and orders of the Commissioner and process issued against the applicant may be served.</text> </level> <level label="2"> <level label="i"> <text>A nonresident licensee promptly shall notify the Commissioner of a change in its designated agent for service.</text> </level> <level label="ii"> <text>A change is not effective until acknowledged by the Commissioner.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-506" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>An applicant for a license shall:</text> <level label="1"> <text>file with the Commissioner an application on the form that the Commissioner provides; and</text> </level> <level label="2"> <text>pay to the Commissioner an application fee of $25.</text> </level> </level> <level label="b"> <text>The application form shall require:</text> <level label="1"> <text>for a firm or association, the name of each member of the firm or association and of each employee of the firm or association who will act as a reinsurance intermediary under the license; and</text> </level> <level label="2"> <text>for a corporation, the name of each officer of the corporation and of each employee and director of the corporation who will act as a reinsurance intermediary under the license.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-507" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>The Commissioner shall issue a license to each applicant that:</text> <level label="1"> <text>meets the requirements of this subtitle; and</text> </level> <level label="2"> <text>pays the applicable fee for a license for an insurance producer under § 2-112 of this article.</text> </level> </level> <level label="b"> <level label="1"> <text>In this subsection, “controlling person” means a person that directly or indirectly has the power to direct, or cause to be directed, the management, control, or activities of a reinsurance intermediary.</text> </level> <level label="2"> <text>The Commissioner may refuse to issue a license if the Commissioner finds that the applicant, an individual named on the application, a member, principal, officer, or director of the applicant, or a controlling person of the applicant:</text> <level label="i"> <text>is not trustworthy to act as a reinsurance intermediary;</text> </level> <level label="ii"> <text>has given cause for revocation or suspension of a license; or</text> </level> <level label="iii"> <text>has failed to comply with a requirement for issuance of a license.</text> </level> </level> <level label="3"> <text>On written request, the Commissioner shall provide a summary of the basis for the refusal to issue a license.</text> </level> <level label="4"> <text>The summary of the basis for refusal is privileged and is not a public document under Title 10, Subtitle 6 of the State Government Article.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-508" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>A license issued to an individual authorizes the individual to act as a reinsurance intermediary.</text> </level> <level label="b"> <text>A license issued to a firm or association authorizes each member of the firm or association, and each employee of the firm or association who is listed on the license, to act as a reinsurance intermediary.</text> </level> <level label="c"> <text>A license issued to a corporation authorizes each officer of the corporation, and each employee or director of the corporation who is listed on the license, to act as a reinsurance intermediary.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-509" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>A license expires on the first July 1 after its effective date and in an odd-numbered year, unless it is renewed for a 2-year term as provided in this section.</text> </level> <level label="b"> <text>At least 1 month before a license expires, the Commissioner shall mail to the licensee, at the last known address of the licensee, or send by electronic means in accordance with § 2–116 of this article:</text> <level label="1"> <text>a renewal application form; and</text> </level> <level label="2"> <text>a notice that states:</text> <level label="i"> <text>the date by which the Commissioner must receive the renewal application for the renewal to be issued and mailed before the license expires; and</text> </level> <level label="ii"> <text>the amount of the renewal fee.</text> </level> </level> </level> <level label="c"> <text>Before a license expires, the licensee may renew it for an additional 2-year term, if the licensee:</text> <level label="1"> <text>otherwise is entitled to be licensed;</text> </level> <level label="2"> <text>files with the Commissioner a renewal application on the form that the Commissioner provides; and</text> </level> <level label="3"> <text>pays to the Commissioner the applicable renewal fee for an insurance producer under § 2-112 of this article.</text> </level> </level> <level label="d"> <text>The Commissioner shall renew the license of each licensee who meets the requirements of this section.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-510" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <text>To add a name to or delete a name from a license, the licensee shall:</text> <level label="1"> <text>submit to the Commissioner the change in the form that the Commissioner requires; and</text> </level> <level label="2"> <text>pay to the Commissioner a fee of $10.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-511" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>Subject to the hearing provisions of §§ 2-210 through 2-214 of this article, the Commissioner may deny, refuse to renew, suspend, or revoke a reinsurance intermediary’s license, or a reinsurance intermediary’s insurance producer license, if the reinsurance intermediary has violated this subtitle or § 10-126 of this article.</text> </level> <level label="b"> <text>Instead of or in addition to the penalties provided in subsection (a) of this section, the Commissioner:</text> <level label="1"> <text>may impose a penalty not exceeding $5,000 for each violation of this subtitle;</text> </level> <level label="2"> <text>may bring a civil action for the benefit of an insurer or reinsurer and its policyholders and creditors to recover compensatory damages or may seek other appropriate relief; and</text> </level> <level label="3"> <text>may impose any other penalty authorized by this article.</text> </level> </level> <level label="c"> <text>An order of the Commissioner issued under this section is subject to judicial review in accordance with § 2-215 of this article.</text> </level> <level label="d"> <text>A receiver appointed under Title 9, Subtitle 2 of this article may bring a civil action to recover damages or for other appropriate sanctions for the benefit of an insurer if the receiver determines that:</text> <level label="1"> <text>a reinsurance intermediary or other person has failed to comply materially with this subtitle; and</text> </level> <level label="2"> <text>the failure has caused an insurer under an order of rehabilitation or liquidation to suffer a loss or damage.</text> </level> </level> <level label="e"> <text>This section is not intended to limit the rights of policyholders or claimants of an insurer or reinsurer.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-512" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <text>A reinsurance intermediary may be examined under §§ 2-205 through 2-209 of this article.</text> </section> <section article="gin" article_name="Insurance" number="8-513" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>A person may not act as a reinsurance broker for an authorized insurer without a written authorization agreement between the reinsurance broker and the authorized insurer that states the responsibilities of the parties.</text> </level> <level label="b"> <text>The authorization agreement required by this section shall provide that:</text> <level label="1"> <text>on written notice, the authorized insurer may terminate at any time the authority of the reinsurance broker to act for it; and</text> </level> <level label="2"> <text>the reinsurance broker shall:</text> <level label="i"> <text>render accounts to the authorized insurer detailing all material transactions, including information necessary to support the commissions, charges, and other fees received by or owed to the reinsurance broker;</text> </level> <level label="ii"> <text>remit all funds due to the authorized insurer within 30 days after receipt;</text> </level> <level label="iii"> <text>hold in a fiduciary capacity in a qualified financial institution all funds collected for the account of the authorized insurer;</text> </level> <level label="iv"> <text>keep all books, records, and accounts in accordance with § 8-514 of this subtitle;</text> </level> <level label="v"> <text>comply with all written standards established by the authorized insurer for the cession or retrocession of all risks; and</text> </level> <level label="vi"> <text>disclose to the authorized insurer any relationship of the reinsurance broker with a reinsurer to which business is ceded or retroceded.</text> </level> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-514" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>A reinsurance broker shall keep a record of each transaction that relates to a contract of reinsurance transacted by the reinsurance broker for at least 10 years after the contract expires.</text> </level> <level label="b"> <text>For each contract of reinsurance, the record required by this section shall include:</text> <level label="1"> <text>the type of contract, limits, underwriting restrictions, classes or risks, and territory;</text> </level> <level label="2"> <text>the period of coverage, including effective and expiration dates, cancellation provisions, and required notice of cancellation;</text> </level> <level label="3"> <text>the requirements for reporting and settling balances;</text> </level> <level label="4"> <text>the rate used to compute the reinsurance premium;</text> </level> <level label="5"> <text>the names and addresses of assuming reinsurers;</text> </level> <level label="6"> <text>the rates of all reinsurance commissions, including commissions on any retrocessions handled by the reinsurance broker;</text> </level> <level label="7"> <text>proof of placement;</text> </level> <level label="8"> <text>details of retrocessions handled by the reinsurance broker, including the identity of retrocessionaires and the percentage of each contract assumed or ceded;</text> </level> <level label="9"> <text>financial records, including premium and loss accounts; and</text> </level> <level label="10"> <text>any related correspondence and memoranda.</text> </level> </level> <level label="c"> <text>In addition to the records required by this section, a reinsurance broker shall keep written evidence that the assuming reinsurer:</text> <level label="1"> <text>has agreed to accept the risk, if the reinsurance broker, while acting for a ceding authorized insurer, procured a reinsurance contract directly from an assuming reinsurer; and</text> </level> <level label="2"> <text>has delegated binding authority to its representative, if the reinsurance broker, while acting for a ceding authorized insurer, procures a reinsurance contract from a representative, other than an employee, of an assuming reinsurer.</text> </level> </level> <level label="d"> <level label="1"> <text>An authorized insurer shall have reasonable access to and the right to copy and audit all accounts and records maintained by the reinsurance broker that relate to business transactions with the authorized insurer.</text> </level> <level label="2"> <text>The reinsurance broker shall maintain accounts and records in a form usable by the authorized insurer.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-515" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <level label="1"> <text>A person may not act as a reinsurance manager for a reinsurer without a written contract that:</text> <level label="i"> <text>states the responsibilities of the reinsurance manager and the reinsurer; and</text> </level> <level label="ii"> <text>is approved by the board of directors of the reinsurer.</text> </level> </level> <level label="2"> <text>A reinsurance manager may not assign the contract required under this section.</text> </level> </level> <level label="b"> <text>At least 30 days before a reinsurer assumes or cedes business through a reinsurance manager, a copy of the contract required under this section shall be filed with the Commissioner for approval.</text> </level> <level label="c"> <text>The contract required by this section:</text> <level label="1"> <text>shall state the rates, terms, and purposes of commissions, charges, and other fees that the reinsurance manager may impose against the reinsurer; and</text> </level> <level label="2"> <text>shall provide that:</text> <level label="i"> <text>the reinsurer shall have reasonable access to and the right to copy all accounts and records maintained by the reinsurance manager that relate to business transactions with the reinsurer;</text> </level> <level label="ii"> <text>the reinsurance manager shall maintain accounts and records in a form usable by the reinsurer;</text> </level> <level label="iii"> <text>the reinsurance manager may not retain for more than 3 months estimated claims payments and allocated loss adjustment expenses;</text> </level> <level label="iv"> <text>the reinsurer may:</text> <level label="1"> <text>terminate the contract for cause on written notice to the reinsurance manager; and</text> </level> <level label="2"> <text>suspend immediately the authority of the reinsurance manager to assume or cede business during the pendency of a dispute about the termination of the contract; and</text> </level> </level> <level label="v"> <text>the reinsurance manager shall:</text> <level label="1"> <text>render accounts to the reinsurer detailing all material transactions, including information necessary to support the commissions, charges, and other fees received by or owed to the reinsurance manager;</text> </level> <level label="2"> <text>remit to the reinsurer at least monthly all funds due under the contract;</text> </level> <level label="3"> <text>hold in a fiduciary capacity in a qualified financial institution all funds collected for the account of the reinsurer;</text> </level> <level label="4"> <text>keep a separate bank account for each reinsurer that the reinsurance manager represents;</text> </level> <level label="5"> <text>comply with the written underwriting and rating standards established by the authorized insurer for the acceptance, rejection, or cession of all risks;</text> </level> <level label="6"> <text>provide annually to the reinsurer a statement of the reinsurance manager’s financial condition prepared by an independent certified accountant; and</text> </level> <level label="7"> <text>disclose to the reinsurer any relationship of the reinsurance manager with an authorized insurer before ceding or assuming business with the authorized insurer in accordance with the reinsurance contract.</text> </level> </level> </level> </level> <level label="d"> <level label="1"> <text>If the contract required by this section allows the reinsurance manager to settle claims for the reinsurer:</text> <level label="i"> <text>all claims shall be reported to the reinsurer in a timely manner;</text> </level> <level label="ii"> <text>the reinsurance manager shall provide the reinsurer with a copy of each claim file that:</text> <level label="1"> <text>is requested by the reinsurer;</text> </level> <level label="2"> <text>involves a coverage dispute;</text> </level> <level label="3"> <text>may exceed the reinsurance manager’s settlement authority;</text> </level> <level label="4"> <text>remains open for more than 6 months after the date the reinsurance manager receives the claim;</text> </level> <level label="5"> <text>has the potential to exceed the lesser of an amount determined by the Commissioner or a limit set by the reinsurer; or</text> </level> <level label="6"> <text>is closed by payment of the lesser of the amount determined by the Commissioner or the limit set by the reinsurer;</text> </level> </level> <level label="iii"> <level label="1"> <text>the settlement authority granted to a reinsurance manager under the contract may be terminated for cause on 30 days’ notice from the reinsurer to the reinsurance manager or on termination of the contract; and</text> </level> <level label="2"> <text>the reinsurer may suspend the settlement authority of the reinsurance manager during the pendency of a dispute about the cause for termination;</text> </level> </level> <level label="iv"> <text>except as provided in paragraph (2) of this subsection, all claim files are joint property of the reinsurer and reinsurance manager; and</text> </level> <level label="v"> <text>the reinsurer shall have reasonable access to and the right to copy the claim files on a timely basis.</text> </level> </level> <level label="2"> <text>If the Commissioner obtains an order of liquidation, rehabilitation, reorganization, or conservation against a reinsurer, the files become the sole property of the liquidator, rehabilitator, conservator, or receiver.</text> </level> </level> <level label="e"> <text>If the contract required by this section allows a sharing of interim profits by the reinsurance manager, the interim profits may not be paid until:</text> <level label="1"> <level label="i"> <text>1 year after the end of each underwriting period for property insurance business;</text> </level> <level label="ii"> <text>5 years after the end of each underwriting period for casualty insurance business; or</text> </level> <level label="iii"> <text>a longer period that the Commissioner sets for a specific line of insurance; and</text> </level> </level> <level label="2"> <text>the adequacy of reserves on remaining claims is verified as provided in § 8-520(a)(3) of this subtitle.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-516" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>A reinsurance manager shall keep a record of each transaction that relates to a contract of reinsurance transacted by the reinsurance manager for at least 10 years after the contract expires.</text> </level> <level label="b"> <text>For each contract of reinsurance, the record required by this section shall include:</text> <level label="1"> <text>the type of contract, limits, underwriting restrictions, classes or risks, and territory;</text> </level> <level label="2"> <text>the period of coverage, including effective and expiration dates, cancellation provisions, required notice of cancellation, and disposition of outstanding reserves on covered risks;</text> </level> <level label="3"> <text>the requirements for reporting and settling balances;</text> </level> <level label="4"> <text>the rate used to compute the reinsurance premium;</text> </level> <level label="5"> <text>the names and addresses of assuming reinsurers;</text> </level> <level label="6"> <text>the rates of all reinsurance commissions, including commissions on any retrocessions handled by the reinsurance manager;</text> </level> <level label="7"> <text>proof of placement;</text> </level> <level label="8"> <text>details of retrocessions handled by the reinsurance manager, including the identity of retrocessionaires and the percentage of each contract assumed or ceded;</text> </level> <level label="9"> <text>financial records, including premium and loss accounts; and</text> </level> <level label="10"> <text>any related correspondence and memoranda.</text> </level> </level> <level label="c"> <text>In addition to the records required by this section, a reinsurance manager shall keep written evidence that the assuming reinsurer:</text> <level label="1"> <text>has agreed to accept the risk, if the reinsurance manager, while acting for a ceding authorized insurer, procured a reinsurance contract directly from an assuming reinsurer; and</text> </level> <level label="2"> <text>has delegated binding authority to its representative, if the reinsurance manager, while acting for a ceding authorized insurer, procures a reinsurance contract from a representative, other than an employee, of an assuming reinsurer.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-517" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <text>The acts of a reinsurance manager are considered to be the acts of the reinsurer on whose behalf the reinsurance manager is acting.</text> </section> <section article="gin" article_name="Insurance" number="8-518" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>A reinsurance manager:</text> <level label="1"> <text>except as provided in subsection (b) of this section, may not cede retrocessions for a reinsurer;</text> </level> <level label="2"> <text>may not commit a reinsurer to participate in reinsurance syndicates;</text> </level> <level label="3"> <text>may not appoint or hire an insurance producer to solicit, procure, or negotiate reinsurance contracts for a reinsurer without ensuring that the insurance producer is qualified under Title 10, Subtitle 1 of this article;</text> </level> <level label="4"> <text>may not take an action that would constitute a violation of § 27-503 of this article if taken directly by a reinsurer;</text> </level> <level label="5"> <text>without the reinsurer’s prior written approval, may not pay or commit a reinsurer to pay a claim, net of reinsurance, that exceeds the lesser of 1% of the reinsurer’s policyholder surplus as of the preceding calendar year and an amount specified by the reinsurer;</text> </level> <level label="6"> <text>subject to subsection (b) of this section and without the reinsurer’s prior written approval:</text> <level label="i"> <text>may not collect a payment from a retrocessionaire; or</text> </level> <level label="ii"> <text>may not commit a reinsurer to a claim settlement with a retrocessionaire;</text> </level> </level> <level label="7"> <text>may not appoint a subreinsurance manager; or</text> </level> <level label="8"> <text>may not employ an individual who is also employed by a reinsurer that transacts business with the reinsurance manager, unless the reinsurance manager is under common control with the reinsurer and is subject to Title 7 of this article.</text> </level> </level> <level label="b"> <text>A reinsurance manager may cede facultative reinsurance contracts under obligatory facultative agreements if the contract between the reinsurance manager and reinsurer contains reinsurance underwriting guidelines for the retrocessions, including:</text> <level label="1"> <text>a list of reinsurers with which any automatic agreements are in effect;</text> </level> <level label="2"> <text>the coverages and amounts or percentages that may be reinsured; and</text> </level> <level label="3"> <text>commission schedules.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-519" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <text>An authorized insurer shall obtain annually a copy of statements of the financial condition of each reinsurance broker that transacts business with the authorized insurer.</text> </level> <level label="b"> <text>An authorized insurer may not:</text> <level label="1"> <text>engage the services of a person to act as a reinsurance broker on its behalf unless the person has complied with this subtitle; or</text> </level> <level label="2"> <text>employ an individual who also is employed by a reinsurance broker that transacts business with the authorized insurer, unless the reinsurance broker is under common control with the authorized insurer and is subject to Title 7 of this article.</text> </level> </level> <level label="c"> <text>An authorized insurer that violates any provision of this subtitle is subject to the disciplinary and penalty provisions of §§ 4-113 and 4-114 of this article.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-520" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="5" subtitle_name="Reinsurance Intermediaries"> <level label="a"> <level label="1"> <text>In this subsection, “actuary” means an individual who is a member in good standing of the American Academy of Actuaries.</text> </level> <level label="2"> <text>A reinsurer shall obtain annually a copy of statements by an independent certified accountant in a form acceptable to the Commissioner of the financial condition of each reinsurance manager that transacts business with the reinsurer.</text> </level> <level label="3"> <text>If a reinsurance manager is allowed by contract to maintain loss reserves, a reinsurer shall obtain annually the opinion of an independent actuary attesting to the adequacy of the loss reserves established for losses incurred and outstanding on business produced by the reinsurance manager.</text> </level> <level label="4"> <text>A reinsurer shall conduct at least semiannually an on-site review of the underwriting and claims processing operations of the reinsurance manager.</text> </level> <level label="5"> <text>A reinsurer shall notify the Commissioner, in writing, within 30 days after terminating a contract with a reinsurance manager.</text> </level> </level> <level label="b"> <level label="1"> <text>A reinsurer may not engage the services of a person to act as a reinsurance manager on its behalf unless the person has complied with this subtitle.</text> </level> <level label="2"> <text>Unless the relationship between the reinsurer and the reinsurance manager is controlled by and disclosed under § 8-106 of this title or Title 7, Subtitles 6 and 7 of this article, a reinsurer may not have on its board of directors an officer, director, employee, agent, or controlling shareholder of its reinsurance manager.</text> </level> </level> <level label="c"> <text>The binding authority for all retrocessional contracts or participation in reinsurance syndicates shall rest with an officer of the reinsurer who is not affiliated with the reinsurance manager.</text> </level> <level label="d"> <level label="1"> <text>Subject to the hearing provisions of Title 2 of this article, if a reinsurer violates any provision of this subtitle, the reinsurer may be:</text> <level label="i"> <text>refused approval as an accepted reinsurer; or</text> </level> <level label="ii"> <text>disapproved as an accepted reinsurer under Title 5, Subtitle 9 of this article.</text> </level> </level> <level label="2"> <text>In addition to removal as an accepted reinsurer under Title 5, Subtitle 9 of this article, a reinsurer is subject to a civil penalty not exceeding $5,000 for each violation of this subtitle.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-601" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Activities of daily living” includes bathing, continence, dressing, eating, toileting, and transferring.</text> </level> <level label="c"> <text>“Chronically ill” means that an individual:</text> <level label="1"> <text>is unable to perform at least two activities of daily living;</text> </level> <level label="2"> <text>requires substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or</text> </level> <level label="3"> <text>has a level of disability similar to that described in item (1) of this subsection.</text> </level> </level> <level label="d"> <text>“Credit enhancer” includes an authorized insurer that provides to a viatical settlement provider stop loss coverage, an annuity policy, an insurance policy, or similar coverage.</text> </level> <level label="e"> <text>“Financing entity” means a person:</text> <level label="1"> <text>that is an underwriter, a placement agent, a lender, a purchaser of securities, a purchaser of a policy or certificate from a viatical settlement provider, a credit enhancer, or an entity that has a direct ownership interest in a policy or certificate that is the subject of a viatical settlement contract; and</text> </level> <level label="2"> <level label="i"> <text>whose principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies;</text> </level> <level label="ii"> <text>that has an agreement in writing with one or more registered viatical settlement providers to finance the acquisition of viatical settlement contracts; or</text> </level> <level label="iii"> <text>that is a qualified institutional buyer, as that term is defined in Rule 144A of the federal Securities Act of 1933.</text> </level> </level> </level> <level label="f"> <text>“Fraudulent viatical settlement act” means a fraudulent insurance act as described in § 27–403(6) of this article.</text> </level> <level label="g"> <text>“Policy” means an individual or group policy, group certificate, contract, or arrangement of life insurance that affects the rights of a resident of the State or that bears a reasonable relation to the State, regardless of whether delivered or issued for delivery in the State.</text> </level> <level label="h"> <text>“Related provider trust” means a titling trust or other trust that:</text> <level label="1"> <text>is established by a registered viatical settlement provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction; and</text> </level> <level label="2"> <text>has a written agreement with the registered viatical settlement provider under which:</text> <level label="i"> <text>the viatical settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements; and</text> </level> <level label="ii"> <text>the trust agrees to make all records and files related to viatical settlement transactions available to the Commissioner as if those records and files were maintained directly by the registered viatical settlement provider.</text> </level> </level> </level> <level label="i"> <text>“Special purpose entity” means a corporation, partnership, trust, limited liability company, or other similar entity formed solely to provide, either directly or indirectly, access to institutional capital markets for a financing entity or a registered viatical settlement provider.</text> </level> <level label="j"> <text>“Terminally ill” means that an individual has an illness or sickness that can reasonably be expected to result in death in 24 months or less.</text> </level> <level label="k"> <level label="1"> <text>“Viatical settlement broker” means an insurance producer who:</text> <level label="i"> <text>is licensed under Title 10, Subtitle 1 of this article to sell life insurance; and</text> </level> <level label="ii"> <text>on behalf of a viator and for a fee, commission, or other valuable consideration offers or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers.</text> </level> </level> <level label="2"> <text>“Viatical settlement broker” does not include an attorney, certified public accountant, or financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider.</text> </level> </level> <level label="l"> <level label="1"> <text>“Viatical settlement contract” means a written agreement that establishes the terms under which compensation or anything of value will be paid, which compensation or value is less than the expected death benefit of the policy, in return for the viator’s assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any part of the policy.</text> </level> <level label="2"> <text>“Viatical settlement contract” includes:</text> <level label="i"> <text>a contract for a loan or other financing transaction with a viator secured primarily by a policy, other than a loan by a life insurer under the terms of the policy or a loan secured by the cash value of a policy; and</text> </level> <level label="ii"> <text>an agreement with a viator to transfer ownership or change the beneficiary designation at a later date regardless of the date that compensation is paid to the viator.</text> </level> </level> <level label="3"> <text>“Viatical settlement contract” does not include a contract entered into or effectuated between a viatical settlement provider and a financing entity, a related provider trust, or a special purpose entity.</text> </level> </level> <level label="m"> <level label="1"> <text>“Viatical settlement provider” means a person, other than a viator, that enters into or effectuates a viatical settlement contract.</text> </level> <level label="2"> <text>“Viatical settlement provider” does not include an individual who enters into or effectuates no more than one agreement in a calendar year for the transfer of policies for any value less than the expected death benefit.</text> </level> </level> <level label="n"> <text>“Viaticated policy” means a policy that has been acquired by a viatical settlement provider under a viatical settlement contract.</text> </level> <level label="o"> <level label="1"> <text>“Viator” means the owner or certificate holder of a policy who enters or seeks to enter into a viatical settlement contract.</text> </level> <level label="2"> <text>“Viator” does not include an accredited investor or qualified institutional buyer, as defined in Regulation D, Rule 501, or Rule 144A of the federal Securities Act of 1933.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-602" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <text>This subtitle applies only to a viatical settlement contract between a viator and a viatical settlement provider.</text> </section> <section article="gin" article_name="Insurance" number="8-603" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>A person must register with the Commissioner before the person acts as or represents itself as a viatical settlement provider in the State.</text> </level> <level label="b"> <level label="1"> <text>Except for an individual listed in § 8-601(k)(2) of this subtitle, only an individual who is a viatical settlement broker may negotiate viatical settlement contracts between a viator and one or more settlement providers.</text> </level> <level label="2"> <text>Not later than 30 days after negotiating a viatical settlement contract on behalf of a viator, a viatical settlement broker shall register with the Commissioner in accordance with § 8-604 of this subtitle.</text> </level> </level> <level label="c"> <text>Employees and agents of a registered viatical settlement provider or a registered viatical settlement broker may not be required to be separately registered except in accordance with regulations adopted by the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-604" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <text>An applicant for registration shall:</text> <level label="1"> <text>file with the Commissioner an application on the form that the Commissioner requires; and</text> </level> <level label="2"> <text>pay to the Commissioner a registration fee set by the Commissioner.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-605" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>Notwithstanding the manner in which the viatical settlement broker is compensated, a viatical settlement broker is deemed to represent only the viator and owes a fiduciary duty to the viator to act according to the viator’s instructions and in the best interest of the viator.</text> </level> <level label="b"> <text>For purposes of this subtitle, a viator may not be limited to an owner or certificate holder of a policy that insures the life of an individual who is terminally ill or chronically ill.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-605.1" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>At the time of each application for a viatical settlement, a viatical settlement broker shall provide to the viator a written disclosure that, at a minimum, contains a description of the services required by statute to be provided by the viatical settlement broker to the viator.</text> </level> <level label="b"> <text>A viatical settlement broker may not purchase a policy that is the subject of a viatical settlement brokerage contract between the viatical settlement broker and a viator directly or indirectly through:</text> <level label="1"> <text>a person owning or controlling an interest in the viatical settlement broker; or</text> </level> <level label="2"> <text>a person in which any interest is owned or controlled by the viatical settlement broker.</text> </level> </level> <level label="c"> <text>A viatical settlement broker shall submit to the viator all offers, counteroffers, acceptances, and rejections relating to the placement of the viator’s policy within 72 hours after receipt by the viatical settlement broker.</text> </level> <level label="d"> <level label="1"> <text>A viatical settlement broker shall provide to the viator a written disclosure of the amount and method of calculating the viatical settlement broker’s compensation, including anything of value received by a viatical settlement broker for the placement of a policy.</text> </level> <level label="2"> <text>A viatical settlement broker shall provide the disclosure required under this subsection no later than 72 hours before the viatical settlement contract is signed by all parties to the contract.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-606" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>Before an offer to purchase a policy can be made to a viator, a viatical settlement provider shall:</text> <level label="1"> <text>provide the viator with a disclosure statement that:</text> <level label="i"> <text>contains the disclosures required in subsections (b) and (c) of this section; and</text> </level> <level label="ii"> <text>has been signed by the viatical settlement provider; and</text> </level> </level> <level label="2"> <text>receive from the viator the disclosure statement signed by the viator.</text> </level> </level> <level label="b"> <text>Before an offer to purchase a policy can be made to the viator, a viatical settlement provider shall provide to the viator a disclosure statement that contains the following disclosures:</text> <level label="1"> <text>there are possible alternatives to viatical settlement contracts, including any accelerated death benefits or policy loans offered under the viator’s policy;</text> </level> <level label="2"> <text>some or all of the proceeds of the viatical settlement may be taxable under federal or State income tax law, and assistance should be sought from a professional tax adviser;</text> </level> <level label="3"> <text>proceeds of the viatical settlement could be subject to the claims of creditors;</text> </level> <level label="4"> <text>receipt of the proceeds of a viatical settlement may adversely affect the viator’s eligibility for Medicaid or other government benefits or entitlements, and advice should be obtained from the appropriate government agencies;</text> </level> <level label="5"> <level label="i"> <text>the viator has the right to rescind a viatical settlement contract for 15 calendar days after receipt of the viatical settlement proceeds by the viator, subject to repayment of all viatical settlement proceeds and any premiums and loan interest paid by the viatical settlement provider; and</text> </level> <level label="ii"> <text>if the insured dies during the rescission period, the viatical settlement contract shall be deemed to have been rescinded, subject to repayment of all viatical settlement proceeds and any premiums, loans, and loan interest to the viatical settlement provider;</text> </level> </level> <level label="6"> <text>funds will be sent to the viator within 3 business days after the viatical settlement provider has received the insurer’s or group administrator’s acknowledgment that ownership of or interest in the policy has been transferred and the beneficiary has been designated;</text> </level> <level label="7"> <text>entering into a viatical settlement contract may cause other rights or benefits, including conversion rights and waiver of premium benefits that may exist under the policy, to be forfeited by the viator, and assistance should be sought from a financial adviser; and</text> </level> <level label="8"> <level label="i"> <text>the insured may be contacted by either the viatical settlement provider or the viatical settlement broker or its authorized representative for the purpose of determining the insured’s health status; and</text> </level> <level label="ii"> <text>this contact is limited to:</text> <level label="1"> <text>once every 3 months if the insured has a life expectancy of more than 1 year; and</text> </level> <level label="2"> <text>not more than once per month if the insured has a life expectancy of 1 year or less.</text> </level> </level> </level> </level> <level label="c"> <level label="1"> <text>Disclosure to a viator also shall include distribution of a brochure that describes the process of viatical settlements and contains a description of the statutory fiduciary duty of a viatical settlement broker to a viator.</text> </level> <level label="2"> <text>The National Association of Insurance Commissioners form for the brochure shall be used unless a brochure is:</text> <level label="i"> <text>developed by the Commissioner; or</text> </level> <level label="ii"> <text>developed by a viatical settlement broker or viatical settlement provider and approved by the Commissioner.</text> </level> </level> </level> <level label="d"> <text>The disclosure statement shall contain the following language: “All medical, financial, or personal information solicited or obtained by a viatical settlement provider or viatical settlement broker about an insured, including the insured’s identity or the identity of family members, a spouse, or a significant other may be disclosed as necessary to effect the viatical settlement between the viator and the viatical settlement provider. If you are asked to provide this information, you will be asked to consent to the disclosure. The information may be provided to someone who buys the policy or provides funds for the purchase. You may be asked to renew your permission to share information every 2 years.”.</text> </level> <level label="e"> <text>A viatical settlement provider or viatical settlement broker shall provide the viator with a copy of the disclosure statement signed by the viator and the viatical settlement provider or viatical settlement broker, at the time that an application for a viatical settlement contract is provided to the viator.</text> </level> <level label="f"> <level label="1"> <text>A viatical settlement provider shall provide the viator with at least the disclosures required by this subsection no later than the date that the viatical settlement contract is signed by all parties.</text> </level> <level label="2"> <text>The disclosures shall be conspicuously displayed in the viatical settlement contract or in a separate document signed by the viator and the viatical settlement provider or viatical settlement broker.</text> </level> <level label="3"> <text>The disclosures required under this subsection shall provide the following information:</text> <level label="i"> <text>a statement of the affiliation, if any, between the viatical settlement broker, viatical settlement provider, and the insurer that issued the policy to be viaticated;</text> </level> <level label="ii"> <text>the name, address, and telephone number of the viatical settlement provider;</text> </level> <level label="iii"> <text>if the policy to be viaticated has been issued as a joint policy or involves family riders or any coverage of a life other than the insured under the policy to be viaticated, the viator shall be informed of the possible loss of coverage on the other lives under the policy and shall be advised to consult with an insurance producer or the insurer issuing the policy for advice on the proposed viatical settlement;</text> </level> <level label="iv"> <level label="1"> <text>the dollar amount of the current death benefit payable to the viatical settlement provider under the policy; and</text> </level> <level label="2"> <text>if known, the availability of any additional guaranteed insurance benefits, the dollar amount of any accidental death and dismemberment benefits under the policy, and the viatical settlement provider’s interest in those benefits; and</text> </level> </level> <level label="v"> <level label="1"> <text>the name, business address, and telephone number of the independent third party escrow agent; and</text> </level> <level label="2"> <text>the fact that the viator or owner may inspect or receive copies of the relevant escrow or trust agreements or documents.</text> </level> </level> </level> </level> <level label="g"> <text>If the viatical settlement provider transfers ownership or changes the beneficiary of the policy, the viatical settlement provider shall communicate the change in ownership or beneficiary to the insured within 20 days after the change.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-607" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>A registration expires at the end of every other year on the anniversary of the registration unless it is renewed as provided in this section.</text> </level> <level label="b"> <text>Before a registration expires, the registrant may renew it for an additional 2-year term, if the registrant:</text> <level label="1"> <text>otherwise is entitled to be registered;</text> </level> <level label="2"> <text>files with the Commissioner a renewal application on the form that the Commissioner requires; and</text> </level> <level label="3"> <text>pays to the Commissioner a renewal fee of $50.</text> </level> </level> <level label="c"> <text>An application for renewal of a registration shall be considered made in a timely manner if it is postmarked on or before the anniversary date of the registration of the year of renewal.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-608" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <text>Subject to the hearing provisions of Title 2 of this article, the Commissioner may deny a registration to an applicant or refuse to renew, suspend, or revoke the registration of a registrant if the applicant or registrant:</text> <level label="1"> <text>knowingly makes a material misstatement in an application for registration;</text> </level> <level label="2"> <text>fraudulently or deceptively obtains or attempts to obtain a registration for the applicant or registrant or for another;</text> </level> <level label="3"> <text>has been convicted of a felony or of a misdemeanor involving moral turpitude;</text> </level> <level label="4"> <text>in connection with the viatical settlement contract and related insurance application, commits fraud or engages in illegal or dishonest activities;</text> </level> <level label="5"> <text>otherwise has shown a lack of trustworthiness or competence to act as a viatical settlement broker or viatical settlement provider; or</text> </level> <level label="6"> <text>violates any provision of this subtitle or a regulation adopted under it.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-609" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <text>Instead of or in addition to suspending or revoking a registration, the Commissioner may:</text> <level label="1"> <text>impose on the holder a penalty not exceeding $125,000 for each violation of this subtitle; and</text> </level> <level label="2"> <text>require the holder to make restitution to any person that has suffered financial injury because of the violation of this subtitle.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-610" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>It is a violation of this subtitle for a viatical settlement broker or viatical settlement provider to:</text> <level label="1"> <text>violate any provision of this subtitle or any regulation adopted under this subtitle;</text> </level> <level label="2"> <text>fail to register with the Commissioner in accordance with this subtitle before acting or representing itself as a viatical settlement broker or viatical settlement provider;</text> </level> <level label="3"> <text>fail to provide a viator with a disclosure statement in accordance with this subtitle;</text> </level> <level label="4"> <text>fail to allow a viator to rescind a viatical settlement contract up to at least 15 calendar days after the receipt of the viatical settlement proceeds by the viator; and</text> </level> <level label="5"> <text>fail to deliver to a viator the viatical settlement proceeds in accordance with this subtitle.</text> </level> </level> <level label="b"> <text>It is a violation of this subtitle for a person to enter into a viatical settlement contract within a 2-year period commencing with the date of issuance of the insurance policy to be acquired under the viatical settlement contract unless:</text> <level label="1"> <text>the viator certifies to the viatical settlement provider that within the 2-year period:</text> <level label="i"> <text>the policy was issued on the viator’s exercise of conversion rights arising out of a group or individual policy;</text> </level> <level label="ii"> <text>the total time covered under the conversion policy and the prior policy is at least 24 months;</text> </level> <level label="iii"> <text>the time covered under the group policy is calculated without regard to any change in insurance carriers; and</text> </level> <level label="iv"> <text>the coverage under the group policy has been continuous and under the same group sponsorship;</text> </level> </level> <level label="2"> <text>the viator submits independent evidence to the viatical settlement provider that within the 2-year period the insured became terminally ill or chronically ill; or</text> </level> <level label="3"> <text>the viator submits independent evidence to the viatical settlement provider that within the 2-year period the viator or insured disposed of ownership interests in a closely held corporation.</text> </level> </level> <level label="c"> <text>Any copies of certification or independent evidence required under subsection (b) of this section shall be:</text> <level label="1"> <text>submitted to the insurer when the viatical settlement provider submits a request to the insurer for verification of coverage; and</text> </level> <level label="2"> <text>accompanied by a letter of attestation from the viatical settlement provider that the copies of certification or independent evidence required under subsection (b) of this section are true and correct copies of the documents received by the viatical settlement provider.</text> </level> </level> </section> <section article="gin" article_name="Insurance" number="8-610.1" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>An insurer shall respond to a request for verification of coverage submitted by a viatical settlement provider or a viatical settlement broker under this subtitle, including verification of whether the insurer intends, at the time of the request, to pursue an investigation regarding possible fraud affecting the validity of a policy, within 30 days after the request is received, if the following documents are submitted with the request:</text> <level label="1"> <text>an authorization signed by the viator; and</text> </level> <level label="2"> <text>a “Verification of Coverage for Life Insurance Policies” form adopted by the Commissioner under subsection (d) of this section that has been completed by the viatical settlement provider or viatical settlement broker.</text> </level> </level> <level label="b"> <text>An insurer may not charge a fee for responding to a request for verification of coverage submitted by a viatical settlement provider or a viatical settlement broker that exceeds $50.</text> </level> <level label="c"> <level label="1"> <text>An insurer may send an acknowledgment of receipt of a request for verification of coverage to the viator and, if the viator is other than the insured, to the insured.</text> </level> <level label="2"> <text>The acknowledgment may contain a general description of any accelerated death benefit that is available under the policy.</text> </level> </level> <level label="d"> <text>The Commissioner shall adopt by regulation a “Verification of Coverage for Life Insurance Policies” form.</text> </level> </section> <section article="gin" article_name="Insurance" number="8-611" title_number="8" title_name="Entities That Act as Insurers" subtitle_number="6" subtitle_name="Viatical Settlement Providers and Viatical Settlement Brokers"> <level label="a"> <text>Viatical settlement contracts and applications for viatical settlement contracts shall contain the following statement or a substantially similar statement:</text> <text>“Any person who knowingly presents false information in an application for insurance or an application for a viatical settlement contract has committed a fraudulent viatical settlement act and on conviction is subject to fines, imprisonment, or both, under § 27-408 of the Insurance Article of the Annotated Code of Maryland.”</text> </level> <level label="b"> <text>The absence of a statement as required in subsection (a) of this section does not constitute a defense in any prosecution for a fraudulent viatical settlement act.</text> </level> </section>