In this subtitle the following words have the meanings indicated.
“Certificate of qualification” means a certificate of qualification issued by the Commissioner to act as a managing general agent.
“Managing general agent” means a person:
that:
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
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
that:
negotiates or binds ceding reinsurance contracts for the insurer;
adjusts or pays claims of more than $500; or
maintains loss reserves from which claims may be paid.
“Managing general agent” does not include:
an employee of the insurer;
a United States manager of the United States branch of an alien insurer;
an attorney in fact authorized by and acting for the subscribers of a reciprocal insurer under a power of attorney;
an authorized insurance producer acting for a surety insurer that engages exclusively in the business of issuing bail bonds; or
an underwriting manager that, by contract:
manages all the insurance operations of the insurer;
is under common control with the insurer and is subject to Title 7, Subtitle 6 of this article; and
is not compensated based on the volume of premiums written.
“Underwrite” means to accept or reject risks for an insurer.
A person must obtain a certificate of qualification before the person acts as a managing general agent in the State.
An applicant for a certificate of qualification must be:
licensed as an insurance producer under Title 10, Subtitle 1 of this article; and
competent and trustworthy, as determined by the Commissioner.
An applicant for a certificate of qualification shall:
file with the Commissioner an application on the form that the Commissioner provides; and
pay to the Commissioner the fee required by § 2-112 of this article.
The Commissioner shall issue a certificate of qualification to each applicant who meets the requirements of this subtitle.
A certificate of qualification expires on the first June 30 after its effective date unless it is renewed as provided in this section.
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:
otherwise is entitled to a certificate of qualification; and
pays to the Commissioner the renewal fee required by § 2-112 of this article.
The Commissioner shall renew the certificate of qualification of each holder who meets the requirements of this section.
The Commissioner shall deny or refuse to renew a certificate of qualification if the applicant or holder of the certificate of qualification:
has willfully violated this article or another law of the State that relates to insurance;
has intentionally misrepresented or concealed a material fact in an application for a certificate of qualification;
has obtained or attempted to obtain a certificate of qualification by misrepresentation, concealment, or other fraud;
has misappropriated, converted, or unlawfully withheld money that belongs to an insurer, insurance producer, beneficiary, or insured;
has willfully and materially misrepresented the provisions of a policy;
has committed fraudulent or dishonest practices in the insurance business;
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;
has been convicted by final judgment in any state or federal court of a crime involving moral turpitude;
has knowingly participated in writing or issuing substantial over-insurance of property insurance risks;
has failed to pass an examination required by this subtitle;
has willfully failed to comply with or has willfully violated a proper order or regulation of the Commissioner;
has failed or refused to pay over on demand money that belongs to an insurer, insurance producer, or other person entitled to the money;
has otherwise shown a lack of trustworthiness or competence to act as a managing general agent;
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;
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;
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
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.
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:
is insolvent;
is conducting business fraudulently;
unreasonably refuses or delays payment to claimants of amounts due them;
fails to pay any final judgment entered against the applicant or holder in the State within 60 days after the judgment becomes final;
has a certificate of qualification revoked or suspended by the insurance regulatory authority in another state;
is found by the Commissioner to be in:
an unsound condition; or
a condition that makes further transaction of business hazardous to policyholders or the public; or
refuses to:
be examined;
produce its accounts, records, and files for examination by the Commissioner; or
provide additional information that the Commissioner requests while considering an application for renewal of a certificate of qualification.
The Commissioner may suspend or revoke a certificate of qualification for any ground listed in § 10-126 of this article.
Instead of or in addition to denying, refusing to renew, suspending, or revoking a certificate of qualification, the Commissioner may:
impose a penalty of not less than $100 but not exceeding $50,000 for each violation of this article;
require that restitution be made to any person that has suffered financial injury because of the violation of this article; and
impose any other penalty authorized by this article.
This section does not limit the rights of policyholders or claimants.
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.
A managing general agent is subject to examination under §§ 2-205 through 2-209 of this article.
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.
At a minimum, the contract shall:
state the responsibilities of each party and specify the division of responsibilities for shared functions;
provide that the insurer may:
terminate the contract for cause on written notice to the managing general agent; and
suspend the managing general agent’s underwriting authority during a dispute about the termination;
require the managing general agent to:
give accounts to the insurer detailing all transactions; and
remit to the insurer at least monthly all money due under the contract;
require that:
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
all payments for the insurer be made from this account;
prohibit the managing general agent from keeping more than 3 months’ estimated claims payments and allocated loss adjustment expenses;
require the managing general agent to:
keep separate records of business written for the insurer; and
allow the insurer and the Commissioner to have access to those records;
require the managing general agent to keep all books, records, and accounts in a form acceptable to the Commissioner;
prohibit the managing general agent from wholly or partly assigning the contract;
state appropriate underwriting guidelines, including:
maximum annual volume of premiums;
types or classifications of risks that may be written;
maximum limits of liability;
applicable exclusions;
territorial limitations;
provisions for cancellation of policies; and
maximum periods of policies;
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;
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
address the timely transmission of data for any electronic claims files.
This subsection applies if:
the contract provides for a sharing of profits by the managing general agent; and
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.
Interim profits may not be paid to a managing general agent subject to this subsection:
until:
at least 1 year after the profits are earned, for property insurance business; or
at least 5 years after the profits are earned, for casualty insurance business; and
until the profits have been verified by the insurer under § 8-210 of this subtitle.
If the contract allows the managing general agent to settle claims for the insurer:
the managing general agent shall report all claims to the insurer in a timely manner;
the managing general agent shall give to the insurer a copy of any claim file that:
is requested by the insurer;
involves a coverage dispute;
potentially exceeds the managing general agent’s settlement authority;
remains open for more than 6 months after the date the managing general agent receives the claim; or
is settled in an amount of more than $500;
the insurer may:
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
suspend the settlement authority during a dispute about the cause for termination; and
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.
A managing general agent may not:
commit the insurer to participate in insurance or reinsurance syndicates;
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;
take an action that would violate § 27-503 of this article if taken directly by the insurer;
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;
without the insurer’s prior written approval, collect any payment from a reinsurer;
commit the insurer to a claim settlement with a reinsurer;
employ an individual who also is employed by the insurer;
allow an agent or employee of the managing general agent to serve on the insurer’s board of directors; or
appoint a submanaging general agent unless:
approval of the appointment is obtained from the Commissioner and from the insurer for whom the managing general agent acts; and
the submanaging general agent complies with any requirements imposed by the Commissioner under § 8-213 of this subtitle.
Except as provided in paragraph (2) of this subsection, a managing general agent may not bind reinsurance or retrocessions for an insurer.
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:
a list of reinsurers with which the automatic agreements are in effect;
the coverages and amounts or percentages that may be reinsured; and
commission schedules.
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.
The insurer shall keep records for at least 5 years.
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.
The insurer shall keep the report of the actuary for at least 5 years.
At least twice a year, an insurer shall conduct a review of the underwriting and claims processing operations of its managing general agent.
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.
The notice of entering into a contract shall include:
a statement of the duties and responsibilities of the managing general agent;
the lines of insurance that the managing general agent is contractually authorized to negotiate, procure, or bind for the insurer;
a copy of the contract; and
any other information or documentation that the Commissioner requests.
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.
Each insurer shall review its books and records each quarter to determine if any insurance producer has become a managing general agent.
If the insurer determines that an insurance producer has become a managing general agent:
the insurer promptly shall notify the insurance producer and the Commissioner of the determination; and
the insurer and insurance producer must comply fully with the provisions of this subtitle within 30 days after the determination.
The Commissioner may adopt regulations to carry out this section.
The acts of a managing general agent are deemed to be the acts of the insurer for whom the managing general agent is acting.
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.
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:
shall be treated confidentially;
is not subject to subpoena; and
may not be made public by the Commissioner, the National Association of Insurance Commissioners, or any other person.
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.
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.