<subtitle num="01" heading="General Provisions"> <chapter num="01" heading="General"> <regulation prefix="Regulation" num=".01" heading="Authority and Purpose."> <text>This chapter is promulgated as an aid to carry out the statutory provisions set forth in the Insurance Article, Annotated Code of Maryland. Its purpose is to establish standards for the construction and application of all regulations heretofore and hereafter made in order to permit brevity, avoid needless repetition of language, and facilitate reference to related Code sections.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter applies to all persons subject to any laws enforced by the Maryland Insurance Administration.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Procedure."> <paragraph num="A."> <text>Each regulation made, amended, altered, or modified shall be deemed to contain or be subject to the provisions of this regulation, whether or not it is incorporated by reference or by express language.</text> </paragraph> <paragraph num="B."> <text>References. Any reference to articles not otherwise designated means articles of the Annotated Code of Maryland, as amended, as of the date of effectiveness of the subject regulation. Any reference to the Article or the Insurance Article or to an individual article not otherwise designated means Insurance Article, Annotated Code of Maryland. Any Code section reference not otherwise designated means the section of the Insurance Article so numbered. Any section, subsection, paragraph, or subparagraph reference not designated as a Code section and not otherwise designated means the section, subsection, paragraph, or subparagraph so numbered of the regulation in which the reference appears.</text> </paragraph> <paragraph num="C."> <text>Definitions.</text> <paragraph num="(1)"> <text>Unless a word is expressly defined in this title and the definition is applicable to a regulation or part of a regulation, any word used in any regulation shall have the meaning provided in the Insurance Article if applicable and as limited in the Insurance Article, including the list of definitions contained in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Notwithstanding §C(1) of this regulation, in the case of a conflict between a definition in the Insurance Article and a definition in this title, the definition in the Insurance Article is controlling.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Interpretation. If there is an ambiguity in a regulation which permits an interpretation or application to a person or circumstance in conflict with the Insurance Article, the ambiguity shall be resolved so as to be in conformity with the Insurance Article.</text> </paragraph> <paragraph num="E."> <text>Penalties. In addition to any other penalty provided, willful violation of any regulation issued under the provisions of Insurance Article, §2-109, Annotated Code of Maryland, shall subject the violator to such penalties as may be applicable under the Insurance Article for violation of the provision to which the regulation relates. A penalties section reference list is attached as Regulation .05 of this chapter but it should not be construed to represent necessarily a complete listing of all penalties provided in the Insurance Article.</text> </paragraph> <paragraph num="F."> <text>Severability. If any provision of any regulation or the application of the regulation to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the regulation which can be given effect without the invalid provision or application, and for this purpose the provisions of every regulation are declared to be separable.</text> </paragraph> <paragraph num="G."> <text>Gender and Number. The use of a masculine form in any regulation is deemed to include the feminine form unless the contrary is explicitly stated or clearly implied. The use of the singular of any word in any regulation is deemed to include the plural unless the contrary is explicitly stated or clearly implied.</text> </paragraph> <paragraph num="H."> <text>“Includes” or “including” means, unless the context requires otherwise, includes or including by way of illustration and not by way of limitation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Definitions Section Reference List."> <text>Definitions Section Admitted Assets 5-101 Adviser 10-201(b) Affiliate 7-101(b) Alien Insurer 1-101(c) Ancillary State 9-201(b) Annuity 1-101(d) Annuity Contract 1-101(e) Association 25-401(b) Attorney in fact 3-212(a) Authorized Insurer 1-101(g) Blanket Health Insurance 15-305 Burial Insurance 1-101(h) Casualty Insurance 1-101(i) Commissioner 1-101(k) Control 7-101(c) Controlled by 7-101(c) Controlling 7-101(c) Covered Claim 9-301(d) Delinquency Proceedings 9-201(d) Domestic Insurer 1-101(m) Domiciliary State 9-201(e) Doing an Insurance Business in This State 4-205(c) Essential Property Insurance 25-401(d) Foreign Country 9-201(f) Foreign Insurer 1-101(n) Franchise Health Insurance, Employees 15-1102(a) Fraternal Benefit Societies, Society 8-402 General Assets 9-201(g) Group Health Insurance 15-302 Group Health Insurance, Employees 15-302 Health Insurance 1-101(p) Impaired Insurer 9-201(h) Independent Insurance Producer 1-101(q) Industrial Life Insurance 1-101(r) Insurable Interest 12-301 Insurance 1-101(s) Insurance Business 1-101(t) Insurance Holding Company 7-101(d) Insurance Holding Company System 7-101(e) Insurance Producer 1-101(u) Insurer 1-101(v) Life Insurance 1-101(x) Life Insurer 1-101(y) Lodge System 8-402(b) Marine Insurance 1-101(z) Mutual Insurer 1-101(bb) Net Direct Written Premiums 9-301(g) Person 1-101(dd) Policy 1-101(ee) Preferred Claims 9-227(a) Premium 1-101(ff) Premium Finance Agreement 23-101(b) Premium Finance Company 23-101(c) Premiums Written 25-401(f) Property Insurance 1-101(gg) Public Adjuster 10-401(d) Qualified Jurisdiction 5-901(d) Qualified United States Financial Institution 5-901(e) Receiver 9-201(j) Reciprocal Insurance 1-101(hh) Reciprocal Insurer 1-101(ii) Reciprocal State 9-201(k) Reinsurance 1-101(jj) Residents 27-701 Representative Form of Government 8-402(c) Secured Claim 9-201(l) Special Deposit Claim 9-201(m) State 1-101(mm) State, Impaired Entities 9-201(n) Stock Insurer 1-101(nn) Subsidiary 7-101(f) Surety Insurance 1-101(oo) Title Insurance 1-101(qq) Ultimate Controlling Person 7-101(h) Unauthorized Insurer 1-101(rr) Under Common Control With 7-101(c) Unfair & Deceptive Acts or Practices in the Business of Insurance 27-201 Unfair Methods of Competition 27-201 Wet Marine and Transportation Insurance 1-101(ss) Wholesale Life Insurance 1-101(tt)</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Penalties Section Reference List."> <text>Section Annual Statement Filing—Penalty 4-116 Insurance Producer—Fine in Lieu of Revocation, etc. 10-126(c) Insurance Producer—Licenses 10-131 Insurance Producer—License Revocation, etc. 10-126 Insurance Producer—Restitution May Be Required 10-126(d) Enforcement in Courts 2-201 False Applications, etc. 27-406 Fraternal Benefit Society, Domestic—Injunction, etc. 8-464 Fraternal Benefit Society—License Revocation, etc. 8-424(e) Fraternal Benefit Society—Misrepresentation 8-468 General Criminal Penalty, Willful Violation 1-301 Insurance Adviser—License Revocation, etc. 10-212 Insurer—Certificate of Authority Revocation, etc. 4-113, 8-424(e), 9-308(b) Insurer—Penalties in Lieu of Revocation, etc. 4-113(d) Nonprofit Health Service Plans—License Revocation 14-112 Nonprofit Health Service Plans—Criminal Penalties 14-140 Premium Finance Registrations—Revocation & Fines 23-208, 23-209 Rating Violation—Casualty & Surety Insurance 11-232 Rating Violation—Property & Marine Insurance 11-232 Rating Violation—Title Insurance 11-409 Reciprocal Insurer—Certificate of Authority Revocation 3-208 Rules and Regulations 2-109(f) Surplus Lines—Broker's Licenses 3-317 Surplus Lines—Evidence of Insurance—Misdemeanor 3-326 Unauthorized Insurers Premium Penalty For Late Payment 4-211 Unauthorized Insurers Act Violation 4-212 Unauthorized Insurers Premium Penalty 4-209 Undefined Unfair Trade Practices 27-104 Unfair Claim Settlement Practices 27-301—27-305 Unfair Trade Practices, Cease and Desist 27-103 Witnesses and Evidence, Failure to Comply With Subpoena, Inquiry 2-203</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 20, 1970</annotation> <annotation type="History" subtype="Administrative History">Appendix “B” amended effective March 6, 1989 (16:4 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.01 to COMAR 31.01.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 9, 2015 (42:22 Md. R. 1379)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective May 23, 2005 (32:10 Md. R. 926)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03H adopted effective January 1, 2003 (29:20 Md. R. 1591)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective May 23, 2005 (32:10 Md. R. 926); November 9, 2015 (42:22 Md. R. 1379)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective May 23, 2005 (32:10 Md. R. 926); November 9, 2015 (42:22 Md. R. 1379)</annotation> </annotations> </chapter> <chapter num="02" heading="Emergency Powers"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide safeguards to consumers with respect to their dealings with entities licensed or registered to transact insurance business in the State in the event of:</text> <paragraph num="A."> <text>A Governor-declared state of emergency;</text> </paragraph> <paragraph num="B."> <text>A Presidential declaration of a major disaster or emergency declaration under the Federal Stafford Act; or</text> </paragraph> <paragraph num="C."> <text>A national or public health emergency that within the Commissioner’s discretion affects the State that:</text> <paragraph num="(1)"> <text>Is issued:</text> <paragraph num="(a)"> <text>By the President of the United States under §201, 202(d) or 301 of the Federal National Emergencies Act; or</text> </paragraph> <paragraph num="(b)"> <text>By the Secretary of Health and Human Services under the Federal Public Health Service Act; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Is based on a serious threat to health resulting from the existence of a deadly agent as defined in Public Safety Article, §14-3A-01, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <paragraph num="A."> <text>This chapter applies to:</text> <paragraph num="(1)"> <text>Each insurer, nonprofit health service plan, health maintenance organization, and dental plan organization licensed to do business in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Each premium finance company registered to do business in Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>Each pharmacy benefits manager registered to do business in Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter also applies to the Maryland Automobile Insurance Fund (MAIF) and the Joint Insurance Association (JIA).</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>All Other Lines.</text> <paragraph num="(a)"> <text>“All other lines” means any line of business or coverage that is not included in any of the line/coverage definitions under this chapter for which claims attributable to a disaster subject to a data call were reported.</text> </paragraph> <paragraph num="(b)"> <text>“All other lines” does not include mortgage/financial guaranty, title, fidelity, surety, medical malpractice, or professional liability insurance lines of business.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Business interruption insurance” means insurance that covers the loss of income, continuing fixed expenses, or extra expenses a business suffers after a disaster while its facility is either closed because of the disaster or in the process of being rebuilt after the disaster.</text> </paragraph> <paragraph num="(3)"> <text>Case Incurred Loss.</text> <paragraph num="(a)"> <text>“Case incurred loss” means indemnity case reserves plus payments to date.</text> </paragraph> <paragraph num="(b)"> <text>“Case incurred loss” does not include estimates of incurred but not reported (IBNR) losses.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Casualty insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>Claims Closed with Payment.</text> <paragraph num="(a)"> <text>“Claims closed with payment” means all claims closed where a loss payment was made regardless of the date of loss or when the claim was received.</text> </paragraph> <paragraph num="(b)"> <text>“Claims closed with payment” does not include claims closed where loss adjustment expense was incurred but no payment to the insured was made.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Claims Closed without Payment.</text> <paragraph num="(a)"> <text>“Claims closed without payment” means all claims closed where no loss payment was made regardless of the date of loss or when the claim was received.</text> </paragraph> <paragraph num="(b)"> <text>“Claims closed without payment” includes claims closed where loss adjustment expense was incurred but no payment to the insured was made.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Claims reported” means all claims reported regardless of whether a payment was made.</text> </paragraph> <paragraph num="(8)"> <text>“Closed claim” means a claim:</text> <paragraph num="(a)"> <text>That has been settled and the claimant has received a payment even if the claimant may receive additional payment or payments from the insurer if the claimant provides additional information to the insurer regarding replacement or other costs as they are incurred;</text> </paragraph> <paragraph num="(b)"> <text>For which the claimant has not received a payment because the amount is less than the deductible;</text> </paragraph> <paragraph num="(c)"> <text>That has been withdrawn by the insured; or</text> </paragraph> <paragraph num="(d)"> <text>That has been denied.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Commercial auto insurance” means liability and physical damage insurance that covers vehicles used for commercial purposes.</text> </paragraph> <paragraph num="(10)"> <text>“Commercial property” means all property not categorized as residential property.</text> </paragraph> <paragraph num="(11)"> <text>“Copayment” means a specified charge that a covered person pays each time services of a particular type or in a designated setting are received.</text> </paragraph> <paragraph num="(12)"> <text>“Deductible” means the amount of allowable charges that are incurred by an individual or family per year before a carrier begins payment.</text> </paragraph> <paragraph num="(13)"> <text>“Eligible individual” means an individual who:</text> <paragraph num="(a)"> <text>Enrolled in Medicare Part B while enrolled in the Maryland Medical Assistance Program;</text> </paragraph> <paragraph num="(b)"> <text>Remained in the Maryland Medical Assistance Program due to a suspension of terminations by the Maryland Medical Assistance Program during a state of emergency, and was not disenrolled until or terminated until at least 6 months following the effective date of enrollment in Part B of Medicare;</text> </paragraph> <paragraph num="(c)"> <text>Seeks to enroll in a Medicare supplement policy during the 63-day period following the later of notice of termination or disenrollment or the date of termination from the Maryland Medical Assistance Program; and</text> </paragraph> <paragraph num="(d)"> <text>Submits evidence of the date of termination or disenrollment from the Maryland Medical Assistance Program with the application for a Medicare supplement policy.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Farm owner's insurance” means insurance that provides liability coverage and coverage for damage to physical structures and other property located on a farm.</text> </paragraph> <paragraph num="(15)"> <text>“Health benefits” means a policy or certificate that includes benefits for hospital or medical services issued by a carrier.</text> </paragraph> <paragraph num="(16)"> <text>“Health carrier” means:</text> <paragraph num="(a)"> <text>An insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization; and</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Health insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(18)"> <text>“Homeowner's insurance” means insurance for residential property provided under:</text> <paragraph num="(a)"> <text>A homeowner's policy;</text> </paragraph> <paragraph num="(b)"> <text>A condominium owner's policy;</text> </paragraph> <paragraph num="(c)"> <text>A mobile homeowner's policy;</text> </paragraph> <paragraph num="(d)"> <text>A renter's policy; or</text> </paragraph> <paragraph num="(e)"> <text>A noncommercial farm owner's policy.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“Loss payment” means the portion of an incurred loss that is paid by the insurer.</text> </paragraph> <paragraph num="(21)"> <text>“Percentage of claims closed” means a percentage calculated as (claims closed with payment + claims closed without payment)/(claims reported).</text> </paragraph> <paragraph num="(22)"> <text>“Premium finance company” has the meaning stated in Insurance Article, §23-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(23)"> <text>Private Passenger Auto Insurance.</text> <paragraph num="(a)"> <text>“Private passenger auto insurance” means liability and physical damage insurance that covers a vehicle driven for personal use.</text> </paragraph> <paragraph num="(b)"> <text>“Private passenger auto insurance” includes automobiles, motorcycles, and recreational vehicles.</text> </paragraph> </paragraph> <paragraph num="(24)"> <text>“Privately issued flood insurance” means specific insurance coverage against property loss from flooding under any policy or endorsement, issued by any entity other than the National Flood Insurance Program (NFIP).</text> </paragraph> <paragraph num="(25)"> <text>“Property insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(26)"> <text>“Specified illness” means an illness, disease, virus, or infection for which:</text> <paragraph num="(a)"> <text>The Governor has declared or has renewed a declaration of a state of emergency for the State or an area within the State under Public Safety Article, §14-107, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>The President of the United States has issued a major disaster or emergency declaration for the State or an area within the State under the federal Stafford Act; or</text> </paragraph> <paragraph num="(c)"> <text>A national or public health emergency that within the Commissioner’s discretion affects the State and is:</text> <paragraph num="(i)"> <text>Issued by the President of the United States under §201, 202(d), or 301 of the Federal National Emergencies Act or by the Secretary of Health and Human Services under the Federal Public Health Service Act; and</text> </paragraph> <paragraph num="(ii)"> <text>Based on a serious threat to health resulting from the existence of a deadly agent as defined in Public Safety Article, §14-3A-01, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(27)"> <text>Workers' Compensation Insurance.</text> <paragraph num="(a)"> <text>“Workers' compensation insurance” means insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue the employee's employer for the tort of negligence.</text> </paragraph> <paragraph num="(b)"> <text>“Workers” compensation insurance" includes associated employer's liability coverage.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Disaster Contact Personnel."> <paragraph num="A."> <text>Each insurer, nonprofit health service plan, and dental plan organization authorized to issue insurance contracts that provide health insurance, life insurance, property insurance, or casualty insurance in Maryland shall provide primary and backup contact information for individuals the Commissioner may contact in the event of a disaster or catastrophic event.</text> </paragraph> <paragraph num="B."> <text>The information required under §A of this regulation shall also be provided by:</text> <paragraph num="(1)"> <text>Health maintenance organizations licensed to operate in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The Maryland Automobile Insurance Fund;</text> </paragraph> <paragraph num="(3)"> <text>The Joint Insurance Association; and</text> </paragraph> <paragraph num="(4)"> <text>Premium finance companies.</text> </paragraph> </paragraph> <paragraph num="C."> <text>By April 15 of each year, each entity subject to §A or B of this regulation shall complete a questionnaire as specified by bulletin to provide the information required under §A or B of this regulation and information about the entity's disaster preparedness plans.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Activation of Regulations."> <paragraph num="A."> <text>If an event described in Regulation .01 of this chapter occurs, the Commissioner may activate one or more of the requirements specified in this chapter adopted under this regulation by issuing a bulletin specifying:</text> <paragraph num="(1)"> <text>That a specific requirement of the chapter is activated;</text> </paragraph> <paragraph num="(2)"> <text>The line or lines of business to which the activated requirement described in §A(1) of this regulation applies;</text> </paragraph> <paragraph num="(3)"> <text>The geographic areas to which the activated requirement described in §A(1) of this regulation applies; and</text> </paragraph> <paragraph num="(4)"> <text>The period of time for which the activated requirement described in §A(1) of this regulation applies.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A requirement activated under §A or E of this regulation may not:</text> <paragraph num="(1)"> <text>Apply beyond the geographic area included within the Governor's or President's declaration of a state of emergency or disaster; or</text> </paragraph> <paragraph num="(2)"> <text>Apply, except as otherwise authorized by §C of this regulation or by Insurance Article, §12-210 or 19-112, Annotated Code of Maryland, beyond the duration of the Governor’s or President’s declaration or renewal of a state of emergency.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A requirement activated under Regulation .01C of this chapter may not apply beyond the duration of the President’s or Secretary of Health and Human Services’ declaration of a national or public health emergency.</text> </paragraph> <paragraph num="D."> <text>If a presidential disaster declaration is not accompanied by a declaration of a state of emergency by the Governor, a requirement activated under §A or E of this regulation may not remain in effect for more than 30 days of the presidential disaster declaration.</text> </paragraph> <paragraph num="E."> <text>The Commissioner:</text> <paragraph num="(1)"> <text>Shall provide a copy of the bulletin to the disaster contact personnel identified pursuant to Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>Shall, to the extent possible, post a copy of the bulletin on the Administration's website.</text> </paragraph> </paragraph> <paragraph num="F."> <text>In addition to actions specifically set forth in this chapter, in the event of a state of emergency or emergency declaration, the Commissioner may take any other activity he considers necessary to protect the residents of the State.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Life and Health."> <paragraph num="A."> <text>The bulletin issued by the Commissioner under Regulation .05 of this chapter may require health carriers to:</text> <paragraph num="(1)"> <text>Suspend health benefit cancellations and nonrenewals;</text> </paragraph> <paragraph num="(2)"> <text>Allow a provider in the geographic area to which the regulation applies to submit a claim for service provided 30 calendar days prior to the effective date of the regulation, up to 240 calendar days after the date the service was rendered;</text> </paragraph> <paragraph num="(3)"> <text>Waive any time restrictions on prescription medication refills and authorize payment to pharmacies for at least a 30-day supply of any prescription medication, regardless of the date upon which the prescription medication had most recently been filled by a pharmacist;</text> </paragraph> <paragraph num="(4)"> <text>Waive any restrictions on the time frame for the replacement of durable medical equipment or supplies, eyeglasses, and dentures;</text> </paragraph> <paragraph num="(5)"> <text>Except as provided in §§J and K of this regulation, waive any cost-sharing, including copayments, coinsurance, and deductibles, for any visit to diagnose or test for a specified illness, regardless of the setting of the testing (for example, an emergency room, urgent care center, or primary physician’s office);</text> </paragraph> <paragraph num="(6)"> <text>Except as provided in §§J and K of this regulation, waive any cost-sharing, including copayments, coinsurance, and deductibles, for laboratory fees to diagnose or test for a specified illness;</text> </paragraph> <paragraph num="(7)"> <text>Except as provided in §§J and K of this regulation, waive any cost-sharing, including copayments, coinsurance, and deductibles, for vaccination for a specified illness; and</text> </paragraph> <paragraph num="(8)"> <text>Except as provided in §§J and K of this regulation, waive any cost-sharing, including copayments, coinsurance, and deductibles, for treatment for a specified illness.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A health carrier may cancel or refuse to renew any health benefits if all premiums due are not paid within 60 calendar days following the date the bulletin issued pursuant to Regulation .05D of this chapter expires.</text> </paragraph> <paragraph num="C."> <text>The effective date of cancellation or refusal to renew pursuant to §B of this regulation is the date the health carrier was originally permitted to take such action after the expiration of any applicable grace period.</text> </paragraph> <paragraph num="D."> <text>The Commissioner may extend any time frames required for processing claims for a health carrier if the health carrier requests an extension in writing and demonstrates the legitimate reason for the business disruption to the Commissioner.</text> </paragraph> <paragraph num="E."> <text>The Commissioner may suspend the requirement to pay interest on claims as required by Insurance Article, §15-1005, Annotated Code of Maryland, if the health carrier requests such suspension in writing and demonstrates to the Commissioner a legitimate reason for the suspension of the requirement to pay interest.</text> </paragraph> <paragraph num="F."> <text>The Commissioner may require a health carrier to make a claims payment for treatment for a specified illness that the health carrier has denied as experimental or investigational.</text> </paragraph> <paragraph num="G."> <text>A health carrier shall evaluate a request to use an out-of-network provider to perform diagnostic testing of a specified illness solely on the basis of whether the use of the out-of-network provider is medically necessary or appropriate.</text> </paragraph> <paragraph num="H."> <text>Subject to §M of this regulation, the only prior authorization requirements a health carrier may utilize relating to testing for a specified illness shall relate to the medical necessity of that testing.</text> </paragraph> <paragraph num="I."> <text>An adverse decision on a request for coverage of diagnostic services for a specified illness shall be considered an emergency case for which an expedited grievance procedure is required under Insurance Article, §15-10A-02, Annotated Code of Maryland.</text> </paragraph> <paragraph num="J."> <text>The requirements of §A(5)—(8) of this regulation do not apply to a Medicare supplement policy as defined by Insurance Article, §15-901(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="K."> <text>A carrier is not required to waive the deductible for an insured covered under a high deductible health plan, as defined in 26 U.S.C. §223, if the waiver of the deductible would disqualify the plan from being considered a high deductible health plan under federal law.</text> </paragraph> <paragraph num="L."> <text>The Commissioner may require pharmacy benefits managers and health carriers to suspend random audits, including but not limited to in-person or “desk” audits, of pharmacies unless there is a reasonable suspicion of fraud.</text> </paragraph> <paragraph num="M."> <text>The Commissioner may require health carriers to suspend, waive, or modify requirements related to prior authorizations, concurrent review, retrospective review, and notification of inpatient acute care, post-discharge care, and facility transfers.</text> </paragraph> <paragraph num="N."> <text>With respect to an eligible individual, a carrier may not:</text> <paragraph num="(1)"> <text>Deny or place a condition on the issuance or effectiveness of a Medicare supplement policy that is offered and is available for issuance to new enrollees by the issuer;</text> </paragraph> <paragraph num="(2)"> <text>Discriminate in the pricing of a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition; or</text> </paragraph> <paragraph num="(3)"> <text>Impose an exclusion of benefits based on a preexisting condition under a Medicare supplement policy.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Property and Casualty."> <paragraph num="A."> <text>The bulletin issued by the Commissioner under Regulation .05 of this chapter may require insurers authorized in the State who write property and casualty insurance, the Maryland Automobile Insurance Fund, and the Joint Insurance Association to:</text> <paragraph num="(1)"> <text>Suspend policy cancellations and nonrenewals;</text> </paragraph> <paragraph num="(2)"> <text>Extend the time periods for completion of repairs to an affected property in the event that repairs necessitated by the disaster or catastrophic event cannot be completed within the time period required under the policy;</text> </paragraph> <paragraph num="(3)"> <text>Provide any or all of the data listed in §C of this regulation in a manner required by the Commissioner in the bulletin;</text> </paragraph> <paragraph num="(4)"> <text>Implement a grace period of up to 60 days for the receipt of premium payments from customers prior to cancellation of policies;</text> </paragraph> <paragraph num="(5)"> <text>Suspend the obligation of title insurers to conduct on-site reviews of each of its title insurance producers appointed as principal agents within the calendar year pursuant to COMAR 31.04.22.04, provided that the process and procedures for conducting virtual audits are submitted to, and deemed adequate by, the Commissioner;</text> </paragraph> <paragraph num="(6)"> <text>Suspend the requirements under Insurance Article, §8-210, Annotated Code of Maryland, for an insurer to conduct an on-site review of the underwriting and claims processing operations of its managing general agent;</text> </paragraph> <paragraph num="(7)"> <text>Suspend the requirement under Insurance Article, §8-520, Annotated Code of Maryland, for a reinsurer to conduct on-site review of the underwriting and claims processing operations of the reinsurance manager; and</text> </paragraph> <paragraph num="(8)"> <text>On request of the Commissioner, provide any additional information that the Commissioner determines is necessary because of the nature of the emergency.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a company is unable to provide all of the information required by the Commissioner under this regulation, the company shall provide the Commissioner with a detailed explanation of why it is unable to provide the information and state what information the company can provide.</text> </paragraph> <paragraph num="C."> <text>By a bulletin issued under Regulation .05 of this chapter, the Commissioner may require authorized insurers, the Maryland Automobile Insurance Fund, and the Joint Insurance Association to provide any or all of the following information:</text> <paragraph num="(1)"> <text>NAIC group number and group name, or in the alternative, NAIC company number and company name (list all companies that are included in the group);</text> </paragraph> <paragraph num="(2)"> <text>Name of person to contact with any questions;</text> </paragraph> <paragraph num="(3)"> <text>Mailing address of contact person;</text> </paragraph> <paragraph num="(4)"> <text>Email address of contact person;</text> </paragraph> <paragraph num="(5)"> <text>Phone number of contact person;</text> </paragraph> <paragraph num="(6)"> <text>For each line of insurance defined in Regulation .03 of this chapter and all other lines, the following information by zip code or by county:</text> <paragraph num="(a)"> <text>Number of claims received;</text> </paragraph> <paragraph num="(b)"> <text>Amount paid on claims to date (indicate whether this amount includes amounts reserved for claims);</text> </paragraph> <paragraph num="(c)"> <text>Number of claims closed with payment;</text> </paragraph> <paragraph num="(d)"> <text>Number of claims closed without payment;</text> </paragraph> <paragraph num="(e)"> <text>Case incurred loss;</text> </paragraph> <paragraph num="(f)"> <text>Percentage of claims closed; and</text> </paragraph> <paragraph num="(g)"> <text>Average time it took to close a claim (aging should begin the date the claim is reported);</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>For each line of insurance defined in Regulation .03 of this chapter and all other lines, the following information on a Statewide basis:</text> <paragraph num="(a)"> <text>Total number of Maryland claims received;</text> </paragraph> <paragraph num="(b)"> <text>Amount paid on Maryland claims to date (indicate whether this amount includes amounts reserved for claims);</text> </paragraph> <paragraph num="(c)"> <text>Number of Maryland claims closed with payment;</text> </paragraph> <paragraph num="(d)"> <text>Number of Maryland claims closed without payment;</text> </paragraph> <paragraph num="(e)"> <text>Maryland case incurred loss; and</text> </paragraph> <paragraph num="(f)"> <text>Percentage of Maryland claims closed; or</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Specify what lines the company has included in all other lines.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Reporting Instructions.</text> <paragraph num="(1)"> <text>Losses under business interruption insurance shall be reported under “business interruption insurance” and not under “commercial property insurance”.</text> </paragraph> <paragraph num="(2)"> <text>Experience for vehicles covered by commercial auto insurance shall be consistent with data reported on lines 19.3, 19.4, and 21.2 of the P&C annual statement.</text> </paragraph> <paragraph num="(3)"> <text>Experience for flood coverage provided as an additional peril without endorsement under a residential or commercial property policy may be included with the associated property policy.</text> </paragraph> <paragraph num="(4)"> <text>Experience for vehicles covered by private passenger auto insurance shall be consistent with data reported on lines 19.1, 19.2, and 21.1 of the P&C annual statement.</text> </paragraph> <paragraph num="(5)"> <text>Experience for workers’ compensation insurance shall be consistent with data reported on line 16 of the P&C annual statement.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If the Commissioner requires suspension of policy cancellations and nonrenewals, a property and casualty insurer, the Maryland Automobile Insurance Fund, or the Joint Insurance Association may cancel or refuse to renew any policy, after proper notice is issued, if:</text> <paragraph num="(1)"> <text>All premiums due are not paid within 60 calendar days after the date of the expiration of the bulletin enacted pursuant to Regulation .05 of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>The policy would have been lawfully cancelled or nonrenewed for reasons other than nonpayment of premium if not for the suspension of all policy cancellations or nonrenewals.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Data supplied to the Commissioner under §A(3) of this regulation is confidential commercial data protected under State Government Article, §10-617(d), Annotated Code of Maryland, except when aggregated with data from all other insurers in a manner that does not permit any individual company information to be identified.</text> </paragraph> <paragraph num="G."> <text>A property and casualty insurer, the Maryland Automobile Insurance Fund, or the Joint Insurance Association may deduct any premium payments past due from a claim payment made to the insured under the insurance policy from the effective date of the bulletin issued pursuant to Regulation .05 of this chapter until 60 calendar days after the expiration of the bulletin.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Premium Finance Companies."> <paragraph num="A."> <text>The bulletin issued by the Commissioner under Regulation .05 of this chapter may require every premium finance company registered to do business in this State to:</text> <paragraph num="(1)"> <text>Suspend cancellations of insurance policies for nonpayment of funds due under the premium finance agreement;</text> </paragraph> <paragraph num="(2)"> <text>Grant affected persons an extension of any and all contractual provisions or other requirements that impose a time limit for an insured to perform any act including the payment of funds; and</text> </paragraph> <paragraph num="(3)"> <text>Waive additional interest, penalties, fees, or other charges accrued or assessed as the result of the extension required herein.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A premium finance company may cancel prospectively, after appropriate notice is issued, any policy if all payments due under the premium finance agreement are not paid within 60 calendar days after the date of the expiration of the bulletin issued pursuant to Regulation .05 of this chapter.</text> </paragraph> <paragraph num="C."> <text>A premium finance company may not cancel any insurance policy for failure of the insured to pay interest, penalties, or other charges until 60 calendar days after the date of the expiration of the bulletin issued pursuant to Regulation .05 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Notification of Actions Taken to Implement Regulations."> <paragraph num="A."> <text>To the extent that an entity subject to Regulation .04A or B of this chapter establishes procedures specific to a disaster or emergency event for consumers to use, such as specific contact phone numbers, the entity may use alternative forms of communication to notify consumers of these procedures.</text> </paragraph> <paragraph num="B."> <text>Examples of alternative forms of communication referenced in §A of this regulation include, but are not limited to:</text> <paragraph num="(1)"> <text>Press releases;</text> </paragraph> <paragraph num="(2)"> <text>Public service announcements;</text> </paragraph> <paragraph num="(3)"> <text>Placing information in local newspapers; and</text> </paragraph> <paragraph num="(4)"> <text>Posting information on the carrier's website.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Deadlines."> <paragraph num="A."> <text>The bulletin issued by the Commissioner under Regulation .05 of this chapter may extend the statutorily imposed deadline for submissions to the Administration by up to 30 days. These submissions may include:</text> <paragraph num="(1)"> <text>Requests for hearings;</text> </paragraph> <paragraph num="(2)"> <text>Premium increase protests;</text> </paragraph> <paragraph num="(3)"> <text>Other complaints;</text> </paragraph> <paragraph num="(4)"> <text>Exceptions to Office of Administration Hearing opinions; or</text> </paragraph> <paragraph num="(5)"> <text>Responses to Insurance Article, §27-1001, Annotated Code of Maryland, complaints.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner may extend statutory deadlines imposed on the Administration as deemed necessary by the Commissioner during the state of emergency provided the Governor has agreed to extend such statutory requirements and provided the Commissioner affords notice of the extension consistent with this chapter.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §19-706; Insurance Article, §2-115; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 16, 2009 (36:14 Md. R. 985)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective December 12, 2022 (49:25 Md. R. 1052)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended as an emergency provision effective April 28, 2020 (47:11 Md. R. 557); emergency provision expired August 31, 2020</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended as an emergency provision effective September 1, 2020 (47:20 Md. R. 872); adopted permanently effective December 28, 2020 (47:26 Md. R. 1108)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective July 1, 2016 (43:5 Md. R. 387)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective July 1, 2016 (43:5 Md. R. 387)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended as an emergency provision affective March 9, 2020 (47:7 Md. R. 382); emergency provision expired August 31, 2020</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended as an emergency provision affective September 1, 2020 (47:20 Md. R. 872); adopted permanently effective December 28, 2020 (47:26 Md. R. 1108)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective December 12, 2022 (49:25 Md. R. 1052)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective July 1, 2016 (43:5 Md. R. 387)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective December 12, 2022 (49:25 Md. R. 1052)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision affective March 9, 2020 (47:7 Md. R. 382); emergency provision expired April 27, 2020</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision effective April 28, 2020 (47:11 Md. R. 557); emergency provision expired August 31, 2020</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision effective September 1, 2020 (47:20 Md. R. 872); adopted permanently effective December 28, 2020 (47:26 Md. R. 1108)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06F amended effective November 29, 2021 (48:24 Md. R. 1025)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective July 1, 2016 (43:5 Md. R. 387)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective November 29, 2021 (48:24 Md. R. 1025)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 adopted effective November 29, 2021 (48:24 Md. R. 1025)</annotation> </annotations> </chapter> </subtitle> <subtitle num="02" heading="Powers and Duties — Hearings"> <chapter num="01" heading="Hearings"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>In General. This chapter applies to all contested case hearings:</text> <paragraph num="(1)"> <text>Heard by the Administration; or</text> </paragraph> <paragraph num="(2)"> <text>Delegated by the Administration to the Office of Administrative Hearings under State Government Article, §10-205, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Except as provided in this chapter, COMAR 28.02.01 governs the conduct of a hearing before the Office of Administrative Hearings.</text> </paragraph> <paragraph num="C."> <text>Exclusions. This chapter does not apply to the consideration of rates or contracts, the adoption of regulations, or other quasi-legislative hearings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Administrative complaint” means a document that:</text> <paragraph num="(a)"> <text>Is received by the Commissioner from any person; and</text> </paragraph> <paragraph num="(b)"> <text>Alleges a violation of:</text> <paragraph num="(i)"> <text>A law or regulation enforced by the Commissioner; or</text> </paragraph> <paragraph num="(ii)"> <text>An order issued by the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Contested Case.</text> <paragraph num="(a)"> <text>“Contested case” has the meaning stated in State Government Article, §10-202(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Contested case” includes a proceeding:</text> <paragraph num="(i)"> <text>Arising out of a determination made by the Commissioner;</text> </paragraph> <paragraph num="(ii)"> <text>Arising out of a charging document, order, or notice issued by the Commissioner;</text> </paragraph> <paragraph num="(iii)"> <text>Regarding a license, certificate, registration, or special permit;</text> </paragraph> <paragraph num="(iv)"> <text>On a proposed examination report; or</text> </paragraph> <paragraph num="(v)"> <text>Arising out of any other act of, threatened act of, or failure to act by the Commissioner that aggrieves a person.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Contested case” does not include:</text> <paragraph num="(i)"> <text>A hearing on the approval or disapproval of a rate filing or a form filing; or</text> </paragraph> <paragraph num="(ii)"> <text>Any other quasi-legislative hearing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Determination.</text> <paragraph num="(a)"> <text>“Determination” means a decision by the Commissioner that requires the Commissioner to provide the opportunity for a hearing to a person aggrieved by the decision under Insurance Article, §2-210, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Determination” includes:</text> <paragraph num="(i)"> <text>A decision as to whether a person against whom an administrative complaint has been received violated a law, regulation, or order; and</text> </paragraph> <paragraph num="(ii)"> <text>An order issued under Insurance Article, §2-204, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>Examination Report.</text> <paragraph num="(a)"> <text>“Examination report” means a report of the examination of:</text> <paragraph num="(i)"> <text>An authorized insurer, management company of an authorized insurer, subsidiary owned or controlled by an authorized insurer, rating organization, or authorized health maintenance organization that is subject to examination under Insurance Article, §2-205, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>An insurance producer, surplus lines broker, general agent, adjuster, public adjuster, adviser, or other person that is subject to examination under Insurance Article, §2-206, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(iii)"> <text>An accredited reinsurer that is subject to examination under Insurance Article, Title 5, Subtitle 9, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(iv)"> <text>A third party administrator that is subject to examination under Insurance Article, §8-319, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(v)"> <text>A fraternal benefit society that is subject to examination under Insurance Article §8-461 or 8-462, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(vi)"> <text>An accepted fronting reinsurer that is subject to examination under Insurance Article, §13-116, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(vii)"> <text>A nonprofit health service plan that is subject to examination under Insurance Article, §14-125, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(viii)"> <text>A dental plan organization that is subject to examination under Insurance Article, §14-411, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ix)"> <text>A private review agent that is subject to examination under Insurance Article, §15-10B-19, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(x)"> <text>A premium finance company that is subject to examination under Insurance Article, §23-103, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(xi)"> <text>A managed care organization that is subject to examination under Health-General Article, §15-102.3, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(xii)"> <text>A provider-sponsored organization that is subject to examination under Health-General Article, Title 19, Subtitle 7A, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(xiii)"> <text>The Chesapeake Employers’ Insurance Company, which is subject to examination under Insurance Article, §24-304(e)(1), Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(xiv)"> <text>Any other person that is subject to examination by the Commissioner under any other provision of law.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Examination report” includes:</text> <paragraph num="(i)"> <text>A financial examination report; and</text> </paragraph> <paragraph num="(ii)"> <text>A market conduct examination report.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Hearing officer” means:</text> <paragraph num="(a)"> <text>The Maryland Insurance Commissioner or the Commissioner's authorized designee under Insurance Article, §2-210(d), Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>An administrative law judge.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Licensee” means a person holding a certificate of authority, license, registration, or special permit issued by the Administration or who has other similar authority to operate under the regulatory authority of the Administration.</text> </paragraph> <paragraph num="(8)"> <text>“Office” means the Office of Administrative Hearings.</text> </paragraph> <paragraph num="(9)"> <text>“Proposed examination report” means an examination report that:</text> <paragraph num="(a)"> <text>The Commissioner mails to the person examined:</text> <paragraph num="(i)"> <text>At the conclusion of an examination; and</text> </paragraph> <paragraph num="(ii)"> <text>Before filing the examination report; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Informs the person being examined of the person's right to request a hearing pursuant to Regulation .04C of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Request for a Hearing — In General."> <paragraph num="A."> <text>Scope. This regulation applies to all requests for a hearing except a request for a hearing on a proposed examination report.</text> </paragraph> <paragraph num="B."> <text>A person may request a hearing under Insurance Article, §2-210(a)(2), Annotated Code of Maryland, by submitting a written statement to the Commissioner, signed by the requesting person.</text> </paragraph> <paragraph num="C."> <text>Request to be Received Within 30 Days.</text> <paragraph num="(1)"> <text>The request shall be received by the Commissioner within 30 days of the date of the letter notifying the party of the Commissioner's action, intention to act, or failure to act.</text> </paragraph> <paragraph num="(2)"> <text>In calculating the 30-day period, the date of the letter notifying the party of the Commissioner's action, intention to act, or failure to act is not included.</text> </paragraph> <paragraph num="(3)"> <text>The end of a day is considered to be 11:59 p.m. Eastern Time.</text> </paragraph> <paragraph num="(4)"> <text>The last day of the 30-day period is included unless it is a Saturday, Sunday, legal holiday, or a day that the Administration is closed for a part of the day.</text> </paragraph> <paragraph num="(5)"> <text>If the last day of the 30-day period is a Saturday, Sunday, legal holiday, or a day that the Administration is closed for a part of the day, the 30-day period runs until the end of the next day which is not a Saturday, Sunday, legal holiday, or a day that the Administration is closed for a part of the day.</text> </paragraph> <paragraph num="(6)"> <text>Intermediate Saturdays, Sundays, legal holidays, and days that the Administration is closed for a part of the day shall be counted toward the 30-day period.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The request shall include the following information:</text> <paragraph num="(1)"> <text>The action or non-action of the Commissioner causing the person requesting the hearing to be aggrieved;</text> </paragraph> <paragraph num="(2)"> <text>The facts related to the incident or incidents about which the person requests the Commissioner to act or not to act; and</text> </paragraph> <paragraph num="(3)"> <text>The ultimate relief requested.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Upon receipt of a proper request, the Commissioner shall grant a hearing unless:</text> <paragraph num="(1)"> <text>In viewing the facts set forth by the person making the request, in the light most favorable to that person, the Commissioner has no authority to take action;</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner determines that the request is frivolous or made in bad faith;</text> </paragraph> <paragraph num="(3)"> <text>The request does not contain the information required by these regulations;</text> </paragraph> <paragraph num="(4)"> <text>The request is untimely; or</text> </paragraph> <paragraph num="(5)"> <text>At the end of the Commissioner's review, the request is moot.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Request for a Hearing — Proposed Examination Reports."> <paragraph num="A."> <text>Scope. This regulation applies to a request for a hearing on a proposed examination report.</text> </paragraph> <paragraph num="B."> <text>Proposed Examination Report.</text> <paragraph num="(1)"> <text>At least 30 days before filing a proposed examination report, the Commissioner shall mail a copy of the proposed examination report to the person that was examined.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner intends to impose a fine or other penalty or require restitution or other remedy as a result of the findings of the proposed examination report, the Commissioner may include with the proposed examination report:</text> <paragraph num="(a)"> <text>The amount of the fine;</text> </paragraph> <paragraph num="(b)"> <text>The amount or nature of the restitution; and</text> </paragraph> <paragraph num="(c)"> <text>The nature of any other penalty or remedy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Request for Hearing. The person being examined may request a hearing on a proposed examination report by submitting a written request to the Commissioner within 30 days after the proposed examination report is received by the person.</text> </paragraph> <paragraph num="D."> <text>Contents of Hearing Request. The hearing request shall include exceptions to the proposed examination report that:</text> <paragraph num="(1)"> <text>Specifically identify:</text> <paragraph num="(a)"> <text>The factual assertions in the proposed examination report that the person is challenging; and</text> </paragraph> <paragraph num="(b)"> <text>Any errors of law that the person contends are contained in the proposed examination report;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>State the nature of the relief that the person is demanding; and</text> </paragraph> <paragraph num="(3)"> <text>State the grounds for relief that the person is demanding.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Procedure Following Hearing Request. If the Commissioner receives a request for a hearing on a proposed examination report within the 30-day period, the Commissioner:</text> <paragraph num="(1)"> <text>Shall grant a hearing on the exceptions to the proposed examination report; and</text> </paragraph> <paragraph num="(2)"> <text>May not file the proposed examination report until after:</text> <paragraph num="(a)"> <text>The hearing is held; and</text> </paragraph> <paragraph num="(b)"> <text>The Commissioner makes any modifications to the proposed examination report that the Commissioner considers proper.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04-1" heading="Delegation of Authority."> <paragraph num="A."> <text>The Commissioner may, on a case-by-case basis, delegate to the Office the authority to:</text> <paragraph num="(1)"> <text>Conduct a contested case hearing; and</text> </paragraph> <paragraph num="(2)"> <text>Issue:</text> <paragraph num="(a)"> <text>Proposed or final findings of fact;</text> </paragraph> <paragraph num="(b)"> <text>Proposed or final conclusions of law;</text> </paragraph> <paragraph num="(c)"> <text>Proposed or final findings of fact and conclusions of law; or</text> </paragraph> <paragraph num="(d)"> <text>A proposed or final order.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner may revoke all or part of a delegation of authority to the Office to preside over a hearing if:</text> <paragraph num="(1)"> <text>The case:</text> <paragraph num="(a)"> <text>Involves novel or unanticipated factual or legal issues;</text> </paragraph> <paragraph num="(b)"> <text>Has significant social, fiscal, or legal issues;</text> </paragraph> <paragraph num="(c)"> <text>Involves policy issues of general applicability; or</text> </paragraph> <paragraph num="(d)"> <text>Requires further investigation; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Commissioner determines that revocation of all or part of the delegation of authority is otherwise in the public interest.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Procedure for Revocation.</text> <paragraph num="(1)"> <text>The Commissioner shall provide written notice of a revocation of hearing authority to all parties and the Office.</text> </paragraph> <paragraph num="(2)"> <text>The written notice shall contain a brief statement of the reason for the revocation.</text> </paragraph> <paragraph num="(3)"> <text>Delegation of authority to hear a contested case may be revoked at any time before the earlier of the:</text> <paragraph num="(a)"> <text>Issuance of a ruling by the administrative law judge on a substantive issue; or</text> </paragraph> <paragraph num="(b)"> <text>Taking of oral testimony from the first witness.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Commissioner shall specify whether all or part of the delegation to hear a contested case has been revoked.</text> </paragraph> <paragraph num="(5)"> <text>If only part of the delegation has been revoked, the Commissioner shall specify in the written notice of revocation the portions of the contested case for which the delegation has been revoked.</text> </paragraph> <paragraph num="(6)"> <text>On revocation of the delegation, the Commissioner shall:</text> <paragraph num="(a)"> <text>Refer the contested case for further investigation;</text> </paragraph> <paragraph num="(b)"> <text>Set the contested case for a hearing with the Commissioner or the Commissioner's designee acting as the hearing officer; or</text> </paragraph> <paragraph num="(c)"> <text>Dismiss the contested case.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Service of Notices, Decisions, Orders, and Other Documents."> <paragraph num="A."> <text>The Administration or the Office shall provide notice of a hearing pursuant to State Government Article, §10-209, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Notices, decisions, orders, and other documents issued by the Administration or the Office may be served on a person by:</text> <paragraph num="(1)"> <text>Personal delivery to the person;</text> </paragraph> <paragraph num="(2)"> <text>Mailing a copy of the document, first class, postage prepaid, to the person's address of record on file with the Administration;</text> </paragraph> <paragraph num="(3)"> <text>Mailing a copy of the document, first class, postage prepaid, to the person's last known address if different from the person's address of record on file with the Administration;</text> </paragraph> <paragraph num="(4)"> <text>Mailing a copy of the document by certified mail to the person's address of record on file with the Administration or last known address; or</text> </paragraph> <paragraph num="(5)"> <text>Delivering or mailing a copy of the document, first class, postage prepaid, to the person's attorney, if the person is represented by counsel.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Notice of a hearing is sufficient:</text> <paragraph num="(1)"> <text>If the initial notice of a hearing is sent by regular mail to a party at the party's business and resident addresses on file with the Commissioner in accordance with Insurance Article, §§10-111(a)(4) and 10-117, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Upon a satisfactory showing that the notice was sent not less than 30 calendar days before the hearing, unless a different time period is required by law.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A record shall be maintained stating:</text> <paragraph num="(1)"> <text>To whom the initial notice was sent;</text> </paragraph> <paragraph num="(2)"> <text>The address to which the initial notice was sent;</text> </paragraph> <paragraph num="(3)"> <text>The date the initial notice was sent;</text> </paragraph> <paragraph num="(4)"> <text>The manner of service; and</text> </paragraph> <paragraph num="(5)"> <text>The name of the person who sent the initial notice.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05-1" heading="Discovery."> <paragraph num="A."> <text>By written request served on other parties and filed with the hearing officer not later than 20 days before the scheduled hearing, a party may require any other party to produce, within 15 days, for inspection or copying, any file, memorandum, correspondence, document, object, or tangible thing:</text> <paragraph num="(1)"> <text>Relevant to the subject matter of the case; and</text> </paragraph> <paragraph num="(2)"> <text>Not privileged.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Unless provided by agreement of the parties, no other discovery procedure is allowed.</text> </paragraph> <paragraph num="C."> <text>Copies.</text> <paragraph num="(1)"> <text>Copies of requested documents and records shall be made at the expense of the party making the request.</text> </paragraph> <paragraph num="(2)"> <text>The charge for copies of requested documents and records may be waived by the custodian of the documents in accordance with State Government Article, §10-621(e), Annotated Code of Maryland, or other applicable law.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Objection to Production.</text> <paragraph num="(1)"> <text>A party may object to the production of a file, memorandum, correspondence, document, object, or tangible thing by filing a motion to quash discovery or for other relief.</text> </paragraph> <paragraph num="(2)"> <text>The hearing officer, for cause shown, may issue any order that justice requires to protect the party from annoyance, embarrassment, oppression, or undue burden or expense.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A party who has responded to a request for production and who obtains or discovers, before the hearing, additional files, memoranda, correspondence, documents, objects, or tangible things that are relevant to the request for production shall supplement the response to the request promptly.</text> </paragraph> <paragraph num="F."> <text>As sanction against a party that fails to comply with a request for production, the hearing officer, either on the hearing officer's own motion or by motion of the party requesting the production, may issue an order:</text> <paragraph num="(1)"> <text>Refusing to allow the party to support or oppose designated claims or defenses;</text> </paragraph> <paragraph num="(2)"> <text>Prohibiting the party from introducing designated matters into evidence;</text> </paragraph> <paragraph num="(3)"> <text>Striking any allegations or charges made by the party failing to produce;</text> </paragraph> <paragraph num="(4)"> <text>Staying further proceedings until the discovery is provided; or</text> </paragraph> <paragraph num="(5)"> <text>Dismissing the action or any part of it.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Subpoenas."> <paragraph num="A."> <text>On request of a party, the Administration may issue subpoenas requiring the attendance and testimony of witnesses and the production, at the hearing, of any tangible items in the possession or under the control of a witness.</text> </paragraph> <paragraph num="B."> <text>Subpoena Requests.</text> <paragraph num="(1)"> <text>A request for a subpoena shall:</text> <paragraph num="(a)"> <text>Be made, in writing, to the Administration; and</text> </paragraph> <paragraph num="(b)"> <text>Specify the:</text> <paragraph num="(i)"> <text>Name and full address of the person to be subpoenaed; and</text> </paragraph> <paragraph num="(ii)"> <text>Name, full address, and telephone number of the party requesting the subpoena.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A subpoena that requests the production of tangible items, books, papers, or other documents shall describe those items with particularity.</text> </paragraph> <paragraph num="(3)"> <text>A subpoena request need not be served on all parties.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Service of Subpoenas.</text> <paragraph num="(1)"> <text>The party requesting the subpoena shall be responsible for proper service of the subpoena.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §C(3) of this regulation, subpoenas shall be served by hand delivery by an individual 18 years old or older who is not a party to the proceeding by delivering a copy to the person named or to an agent authorized by appointment or by law to receive service for the person named or as permitted by Rule 2-121(a)(3)of the Maryland Rules of Civil Procedure. Service of a subpoena upon a party represented by an attorney may be made by service upon the attorney under Rule 1-321(a) of the Maryland Rules of Civil Procedure.</text> </paragraph> <paragraph num="(3)"> <text>In a case where the licensee to be served resides out of Maryland, the subpoena may be served by certified mail.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Return of service shall be made by:</text> <paragraph num="(1)"> <text>Affidavit, if hand delivered; or</text> </paragraph> <paragraph num="(2)"> <text>Return receipt, if mailed.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A person may object to a subpoena by filing a motion to quash or for other relief.</text> </paragraph> <paragraph num="F."> <text>If a request for a subpoena was filed less than 15 days before the hearing date, the hearing officer may refuse to postpone the hearing based on the party's inability to serve the subpoena.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Conduct of Hearing — In General."> <paragraph num="A."> <text>Scope. This regulation applies to all hearings except a hearing on a proposed examination report.</text> </paragraph> <paragraph num="B."> <text>A hearing conducted under this chapter shall be open to the public.</text> </paragraph> <paragraph num="C."> <text>Parties to Contested Case Proceeding.</text> <paragraph num="(1)"> <text>The necessary parties to a contested case proceeding are:</text> <paragraph num="(a)"> <text>The Administration;</text> </paragraph> <paragraph num="(b)"> <text>A person against whom the Commissioner has:</text> <paragraph num="(i)"> <text>Received an administrative complaint; or</text> </paragraph> <paragraph num="(ii)"> <text>Issued a charging document, order, or notice; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A person who requests a hearing due to being aggrieved by:</text> <paragraph num="(i)"> <text>A determination made by the Commissioner; or</text> </paragraph> <paragraph num="(ii)"> <text>Any other act of, threatened act of, or failure to act by the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A person who is not a necessary party under §C(1) of this regulation, including a person who submitted an administrative complaint to the Commissioner, may become a party by intervention in accordance with Insurance Article, §2-213(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Election by Administration Not to Participate.</text> <paragraph num="(a)"> <text>The Administration may elect not to participate in all or part of a contested case proceeding by filing a notice with the hearing officer or final decision maker at any time.</text> </paragraph> <paragraph num="(b)"> <text>The Administration may revoke an election not to participate in all or part of a contested case proceeding by filing a notice with the hearing officer or final decision maker at any time.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The hearing officer shall conduct the hearing and may allow the case to proceed in a manner necessary to ensure the fair resolution of the issues including, but not limited to:</text> <paragraph num="(1)"> <text>Placing reasonable limitations on the number of witnesses a party may call;</text> </paragraph> <paragraph num="(2)"> <text>Excluding evidence which is repetitive, irrelevant, immaterial, or otherwise not probative; and</text> </paragraph> <paragraph num="(3)"> <text>Ruling on all procedural matters, including motions, objections, and offers of proof.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Formal rules of pleading or evidence need not be observed at a hearing under the provisions of this regulation.</text> </paragraph> <paragraph num="F."> <text>Representation of the Administration.</text> <paragraph num="(1)"> <text>The Commissioner may designate an attorney to represent the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Once the record is closed by the hearing officer, the attorney who represented the Administration may not have a further role in the decision process of the Administration.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Motion for Summary Decision.</text> <paragraph num="(1)"> <text>A party may move for summary decision on any appropriate issue in the case.</text> </paragraph> <paragraph num="(2)"> <text>A hearing officer may grant a proposed or final summary decision if the hearing officer finds that:</text> <paragraph num="(a)"> <text>There is no genuine issue of material fact; and</text> </paragraph> <paragraph num="(b)"> <text>A party is entitled to prevail as a matter of law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>The Maryland Rules of Civil Procedure may be used as a guide for resolving issues regarding the conduct of the hearing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Conduct of Hearing — Proposed Examination Reports."> <paragraph num="A."> <text>Scope. This regulation applies to a hearing on a proposed examination report.</text> </paragraph> <paragraph num="B."> <text>Burden of Proof. At a hearing under this regulation:</text> <paragraph num="(1)"> <text>The proposed examination report is part of the record; and</text> </paragraph> <paragraph num="(2)"> <text>The party that requested the hearing on the proposed examination report has the burden of going forward and the burden of proving its exceptions to the proposed examination report.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Rights of Parties.</text> <paragraph num="(1)"> <text>Subject to §C(2) of this regulation, the hearing officer shall allow a party to a hearing under this regulation to:</text> <paragraph num="(a)"> <text>Appear in person and be represented by counsel;</text> </paragraph> <paragraph num="(b)"> <text>Be present while evidence is given;</text> </paragraph> <paragraph num="(c)"> <text>Have reasonable opportunity to:</text> <paragraph num="(i)"> <text>Inspect all documentary evidence that is offered for introduction into the record; and</text> </paragraph> <paragraph num="(ii)"> <text>Examine witnesses during the course of the hearing; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Present evidence.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The hearing officer shall conduct the hearing and allow the case to proceed in a manner necessary to ensure the fair resolution of the issues including, but not limited to:</text> <paragraph num="(a)"> <text>Placing reasonable limitations on the number of witnesses a party may call;</text> </paragraph> <paragraph num="(b)"> <text>Excluding evidence that is repetitive, irrelevant, immaterial, or otherwise not probative; and</text> </paragraph> <paragraph num="(c)"> <text>Ruling on all procedural matters, including motions, objections, and offers of proof.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Formal rules of pleading or evidence need not be observed at a hearing under provisions of this regulation.</text> </paragraph> <paragraph num="E."> <text>Representation of the Administration.</text> <paragraph num="(1)"> <text>The Commissioner may designate an attorney to represent the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Once the record is closed by the hearing officer, the attorney who represented the Administration may not have a further role in the decision process of the Administration.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Motion for Summary Decision.</text> <paragraph num="(1)"> <text>A party may move for summary decision on any appropriate issue in the case.</text> </paragraph> <paragraph num="(2)"> <text>A hearing officer may grant a proposed or final summary decision if the hearing officer finds that:</text> <paragraph num="(a)"> <text>There is no genuine issue of material fact; and</text> </paragraph> <paragraph num="(b)"> <text>A party is entitled to prevail as a matter of law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>The Maryland Rules of Civil Procedure may be used as a guide for resolving issues regarding the conduct of the hearing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Postponements."> <paragraph num="A."> <text>At the discretion of the hearing officer, a hearing may be postponed if a written request for postponement is filed with the Administration or the Office not later than 15 days before the date of the hearing.</text> </paragraph> <paragraph num="B."> <text>A hearing may not be postponed, except for good cause, when the request for postponement is filed within 15 days of the date of the hearing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09-1" heading="Decision by an Administrative Law Judge."> <paragraph num="A."> <text>Scope. This regulation applies to a contested case where the Office has been delegated authority to conduct a contested case hearing under Regulation .04-1A of this chapter.</text> </paragraph> <paragraph num="B."> <text>Contents. The administrative law judge who hears a case shall submit to the Commissioner a decision that contains whichever of the following were authorized in the Commissioner's delegation of authority to the Office for the case:</text> <paragraph num="(1)"> <text>Proposed or final findings of fact;</text> </paragraph> <paragraph num="(2)"> <text>Proposed or final conclusions of law;</text> </paragraph> <paragraph num="(3)"> <text>Proposed or final findings of fact and conclusions of law; or</text> </paragraph> <paragraph num="(4)"> <text>A proposed or final order.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Effect of Regulations, Bulletins, Final Orders, and Preexisting Policies. Except as provided in Regulation .10-2H of this chapter, in making a decision, the administrative law judge is bound by any regulation, bulletin, final order, or settled and preexisting policy of the Commissioner to the same extent that the Commissioner is or would have been bound if the Commissioner were hearing the case.</text> </paragraph> <paragraph num="D."> <text>Distribution of Decision. The Office shall send the administrative law judge's decision directly to the parties and the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Default Orders."> <paragraph num="A."> <text>This regulation does not apply to unauthorized insurers.</text> </paragraph> <paragraph num="B."> <text>A hearing officer may issue a default order against a party other than the Administration that, after receiving proper notice, fails to appear at a hearing if:</text> <paragraph num="(1)"> <text>In a hearing arising out of a charging document, order, or notice issued by the Commissioner, the party failing to appear is the person against whom the charging document, order, or notice was issued;</text> </paragraph> <paragraph num="(2)"> <text>In a hearing arising out of a determination involving an administrative complaint, the party failing to appear is a necessary party under Regulation .07C of this chapter; or</text> </paragraph> <paragraph num="(3)"> <text>In any other contested case hearing, the party failing to appear is the person that requested the hearing.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In a hearing arising out of a charging document, order, or notice issued by the Administration, the default order shall:</text> <paragraph num="(1)"> <text>State the facts supporting the finding of proper notice to the person against whom the charging document, order, or notice was issued;</text> </paragraph> <paragraph num="(2)"> <text>Adopt the facts and violations of law as alleged by the Administration in its charging document, order, or notice as if by admission of the person against whom the charging document, order or notice was issued; and</text> </paragraph> <paragraph num="(3)"> <text>Adopt the sanction requested by the Administration at the hearing.</text> </paragraph> </paragraph> <paragraph num="D."> <text>In a hearing arising out of a determination, including a determination involving an administrative complaint, the hearing officer shall:</text> <paragraph num="(1)"> <text>If the nondefaulting party is requesting that the determination be upheld, issue a default order that:</text> <paragraph num="(a)"> <text>States the facts supporting the finding of proper notice to the party failing to appear; and</text> </paragraph> <paragraph num="(b)"> <text>Upholds the determination; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the nondefaulting party is requesting that the determination be reversed or modified:</text> <paragraph num="(a)"> <text>Allow the party to present its case as to why the determination should be reversed or modified; and</text> </paragraph> <paragraph num="(b)"> <text>Issue a default order that:</text> <paragraph num="(i)"> <text>States the facts supporting the finding of proper notice to the party failing to appear;</text> </paragraph> <paragraph num="(ii)"> <text>Makes any appropriate findings of fact or law; and</text> </paragraph> <paragraph num="(iii)"> <text>Orders relief as appropriate under the relevant provisions of the Health-General Article or Insurance Article, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>In a hearing on a proposed examination report, the default order shall:</text> <paragraph num="(1)"> <text>State the facts supporting the finding of proper notice to the person that was examined;</text> </paragraph> <paragraph num="(2)"> <text>Adopt the facts and violations of law as alleged by the Administration in the proposed examination report as if by admission of the person that was examined; and</text> </paragraph> <paragraph num="(3)"> <text>Adopt the sanctions included with the proposed examination report.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The hearing officer shall serve the default order directly on the parties by certified mail.</text> </paragraph> <paragraph num="G."> <text>Within 15 days after service of a default order, the party in default may submit to the hearing officer a written motion:</text> <paragraph num="(1)"> <text>Requesting that the default order be vacated or modified; and</text> </paragraph> <paragraph num="(2)"> <text>Stating the grounds for the request.</text> </paragraph> </paragraph> <paragraph num="H."> <text>If the hearing officer finds that there is:</text> <paragraph num="(1)"> <text>Good cause to excuse the default, the hearing officer may:</text> <paragraph num="(a)"> <text>Vacate or modify the default order, and</text> </paragraph> <paragraph num="(b)"> <text>Schedule the case for further appropriate proceedings; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Not good cause to excuse the default, the Commissioner shall:</text> <paragraph num="(a)"> <text>Deny the motion, and</text> </paragraph> <paragraph num="(b)"> <text>Affirm the default order as the final order.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10-1" heading="Exceptions."> <paragraph num="A."> <text>Scope. This regulation applies to a contested case where the Office has been delegated authority to issue proposed findings of fact, proposed conclusions of law, or a proposed order.</text> </paragraph> <paragraph num="B."> <text>On receipt of a decision that contains proposed findings of fact, proposed conclusions of law, or a proposed order, the parties affected have:</text> <paragraph num="(1)"> <text>20 days after receipt to file exceptions to the proposed findings of fact, proposed conclusions of law, or proposed order with the Commissioner; or</text> </paragraph> <paragraph num="(2)"> <text>10 days to:</text> <paragraph num="(a)"> <text>File a written request for a transcript with the Commissioner in order to file exceptions; or</text> </paragraph> <paragraph num="(b)"> <text>File with the Commissioner a copy of that party's written request to its private stenographer for the party's preparation of a transcript based on its own record of the testimony in order to file exceptions.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Receipt under §B of this regulation is presumed to occur 3 days after the mailing of the proposed findings of fact, proposed conclusions of law, or a proposed order.</text> </paragraph> <paragraph num="D."> <text>Filing Exceptions After Receipt of Transcript.</text> <paragraph num="(1)"> <text>If a party requests a transcript under §B(2) of this regulation, the party shall have 30 days after the filing of the transcript to file exceptions with the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>Unless extended by order of the Commissioner, the party requesting the transcript shall file the transcript with the Commissioner within 60 days after the date on which the transcript was requested.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Exceptions shall be in writing unless specified otherwise by the final decision maker.</text> </paragraph> <paragraph num="F."> <text>If a party elects not to file exceptions, another party may not raise the defense of failure to exhaust this administrative remedy on appeal to circuit court.</text> </paragraph> <paragraph num="G."> <text>The record before the Commissioner for the exceptions shall consist of:</text> <paragraph num="(1)"> <text>The administrative law judge's findings and conclusions, including the findings of fact, conclusions of law, and proposed order;</text> </paragraph> <paragraph num="(2)"> <text>Any exceptions filed by a party;</text> </paragraph> <paragraph num="(3)"> <text>Any response to exceptions filed by a party;</text> </paragraph> <paragraph num="(4)"> <text>Any evidence submitted by a party;</text> </paragraph> <paragraph num="(5)"> <text>Notice to the parties of the hearing;</text> </paragraph> <paragraph num="(6)"> <text>Any documentary evidence admitted into evidence by the administrative law judge; and</text> </paragraph> <paragraph num="(7)"> <text>The transcript of the hearing before the administrative law judge, if requested and filed by one of the parties or the Commissioner.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Transcripts.</text> <paragraph num="(1)"> <text>A party who desires to have the transcript made part of the record shall, at the party's own expense, file three copies of the transcript, or its relevant portions, with the Commissioner on receipt of the transcript.</text> </paragraph> <paragraph num="(2)"> <text>If a transcript has already been prepared, the Commissioner shall make the transcript part of the record in the contested case.</text> </paragraph> <paragraph num="(3)"> <text>If a transcript is prepared based on the Office's record of the testimony and a transcript is prepared based on a party's own record of the testimony, the transcript based on the Office's record of the testimony is:</text> <paragraph num="(a)"> <text>The official transcript; and</text> </paragraph> <paragraph num="(b)"> <text>Controlling in the event of any conflict between the two transcripts.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the transcript is not filed or otherwise made part of the record in the contested case, parties may not refer in their exceptions to any testimony before the administrative law judge not incorporated into the administrative law judge's findings and conclusions.</text> </paragraph> <paragraph num="(5)"> <text>If all parties agree that the questions presented for review to the final decision maker can be determined without an examination of the entire transcript, the parties may file a statement showing how the questions arose and setting forth the facts or allegations that are essential to a determination of those issues.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10-2" heading="Final Order following Proposed Decision."> <paragraph num="A."> <text>Scope. This regulation applies to a contested case where the Office has been delegated authority to issue proposed findings of fact, proposed conclusions of law, or a proposed order.</text> </paragraph> <paragraph num="B."> <text>Issuance. After consideration of the administrative law judge's proposed findings of fact, proposed conclusions of law, or proposed order, and any exceptions filed by the parties, the Commissioner shall issue a final order or a remand order.</text> </paragraph> <paragraph num="C."> <text>Effect of Proposed Findings of Fact, Proposed Conclusions of Law, and Proposed Order. In reviewing the administrative law judge's proposed findings of fact, proposed conclusions of law, or proposed order, the Commissioner is:</text> <paragraph num="(1)"> <text>Bound by the findings of fact that are supported by competent, material, and substantial evidence; and</text> </paragraph> <paragraph num="(2)"> <text>Not bound by any legal analysis, proposed conclusions of law, or proposed order.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Types of Action by the Commissioner. The Commissioner may affirm, reverse, or modify the proposed findings of fact, proposed conclusions of law, or proposed order, or remand the case to the Office for further proceedings by setting forth, with particularity, the basis for the Commissioner's reversal, modification, or remand.</text> </paragraph> <paragraph num="E."> <text>Procedure When Case Remanded. If the Commissioner remands the case for further proceedings, the Commissioner may:</text> <paragraph num="(1)"> <text>Refer the case back to the Office; or</text> </paragraph> <paragraph num="(2)"> <text>Retain the case to be heard by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Rehearing. The Commissioner may, on the Commissioner's own motion, hold a rehearing.</text> </paragraph> <paragraph num="G."> <text>Service of Order. The Commissioner shall serve a copy of the final order or remand order on the parties, the parties' attorneys of record, and the Office by first-class mail.</text> </paragraph> <paragraph num="H."> <text>Effect of Summary Affirmance.</text> <paragraph num="(1)"> <text>If the Commissioner issues a final order that summarily affirms the proposed order of an administrative law judge without discussing the facts and legal issues and without expressly adopting the administrative law judge's legal analysis and proposed conclusions of law, neither the final order nor the proposed order is precedent within the rule of stare decisis.</text> </paragraph> <paragraph num="(2)"> <text>Notwithstanding §H(1) of this regulation, a final order of the Commissioner that summarily affirms the proposed order of an administrative law judge without discussing the facts and legal issues and without expressly adopting the administrative law judge's legal analysis and proposed conclusions of law may be cited and relied on in a proceeding before the Commissioner, the Office, or a court:</text> <paragraph num="(a)"> <text>When relevant under the doctrine of the law of the case, res judicata, or collateral estoppel; or</text> </paragraph> <paragraph num="(b)"> <text>In any subsequent disciplinary proceeding involving a party to the final order.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Subject to Insurance Article, §2-215(g), Annotated Code of Maryland, if a party appeals from a final order of the Commissioner that summarily affirms the proposed order of an administrative law judge, in addition to filing the final order of the Commissioner with the court in which the appeal is pending, the Commissioner also shall file a copy of the proposed order of the administrative law judge.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Relief Granted in the Final Order."> <paragraph num="A."> <text>A licensee may not be subject to an administrative penalty or to the suspension or revocation of any certificate, license, registration, or special permit held by the licensee unless a notice of agency action under State Government Article, §10-207, Annotated Code of Maryland, is issued by the Administration to the licensee.</text> </paragraph> <paragraph num="B."> <text>In the final order issued pursuant to a hearing arising out of a determination involving an administrative complaint, the hearing officer may order relief as appropriate under the relevant provisions of Health-General Article or Insurance Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>A final order from a hearing arising out of a determination involving an administrative complaint that results in a finding against a licensee does not bar the Commissioner from subsequently issuing a notice of agency action against the licensee for the purpose of imposing an administrative penalty or suspending or revoking any certificate, license, registration, or special permit held by the licensee.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Decisions."> <text>The hearing officer shall sign the final order following a hearing. The final order is effective when issued, unless a different date is specified in the decision. A copy of the final order shall be filed with the Administration and served on all parties to the hearing.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Rehearings."> <paragraph num="A."> <text>A request for a rehearing shall be made in writing to:</text> <paragraph num="(1)"> <text>The Commissioner in a contested case heard by the Administration;</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner in a contested case where the Office has been delegated authority to hear the contested case but the Commissioner has retained authority to issue the final order; or</text> </paragraph> <paragraph num="(3)"> <text>The administrative law judge in a contested case where the Office has been delegated authority to issue a final order.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the request is made:</text> <paragraph num="(1)"> <text>Within 10 days after the issuance of the final order, the request may be granted by the Commissioner or administrative law judge for any reason;</text> </paragraph> <paragraph num="(2)"> <text>More than 10 days after the issuance of the final order, the request may be granted only on a determination by the Commissioner or administrative law judge that the final order was a result of fraud, mistake, or inadvertence; or</text> </paragraph> <paragraph num="(3)"> <text>More than 30 days after the issuance of the final order, the request may not be granted.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Mistake or Error in the Final Order."> <text>The Administration or the Office may correct an order if, upon review, the final order was issued as a result of fraud, mistake, or inadvertence or contains a clerical error.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 2-205—2-215; State Government Article, §10-206; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 2, 1997 (24:11 Md. R. 793)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective July 1, 1997 (24:17 Md. R. 1213); amended permanently effective November 17, 1997 (24:23 Md. R. 1610)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended as an emergency provision effective April 13, 1998 (25:10 Md. R. 742); emergency status expired October 10, 1998</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.18 to COMAR 31.02.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective February 4, 2002 (29:2 Md. R. 95)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05-1 adopted effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective May 8, 2006 (33:9 Md. R. 797)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 1, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective October 9, 2006 (33:20 Md. R. 1618)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 29, 2007 (34:2 Md. R. 139)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective October 21, 2019 (46:21 Md. R. 894)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective October 21, 2019 (46:21 Md. R. 894)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective October 21, 2019 (46:21 Md. R. 894)</annotation> </annotations> </chapter> <chapter num="02" heading="Hearings Conducted by Administrative Law Judges" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 2, 1997 (24:11 Md. R. 793)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective July 1, 1997 (24:17 Md. R. 1213); amended permanently effective November 17, 1997 (24:23 Md. R. 1610)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended as an emergency provision effective April 13, 1998 (25:10 Md. R. 742); emergency status expired October 10, 1998</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.19 to COMAR 31.02.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended as an emergency provision effective September 14, 1999 (26:21 Md. R. 1627); emergency status expired March 11, 2000</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective April 3, 2000 (27:6 Md. R. 644)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended as an emergency provision effective September 14, 1999 (26:21 Md. R. 1627); emergency status expired March 11, 2000</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective April 3, 2000 (27:6 Md. R. 644)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective February 4, 2002 (29:2 Md. R. 95)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective May 30, 2003 (30:12 Md. R. 786); revised permanently effective October 13, 2003 (30:20 Md. R. 1448)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B, C amended effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B amended effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12E amended effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14H amended effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective May 8, 2006 (33:9 Md. R. 797)</annotation> </annotations> </chapter> <chapter num="03" heading="Hearings Arising from Cancellation, Nonrenewal, Increase in Premium, or Reduction of Coverage under a Motor Vehicle Liability Insurance Policy"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies only to hearings arising from the cancellation, nonrenewal, reduction of coverage, or increase in premium that is not consistent with the insurer's surcharge plan under a motor vehicle liability insurance policy as provided in Insurance Article, §27-605, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Delegation of Authority."> <paragraph num="A."> <text>In hearings arising under this chapter, subject to Regulation .03 of this chapter, the Commissioner may delegate to the Office of Administrative Hearings the authority to:</text> <paragraph num="(1)"> <text>Conduct hearings;</text> </paragraph> <paragraph num="(2)"> <text>Issue final findings of fact and conclusions of law; and</text> </paragraph> <paragraph num="(3)"> <text>Issue final orders.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Hearings arising under this chapter and heard by the Office of Administrative Hearings shall be governed by COMAR 28.02.01.</text> </paragraph> <paragraph num="C."> <text>Hearings arising under this chapter and heard by the Maryland Insurance Administration shall be governed by COMAR 31.02.01.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Revocation of Delegation of Authority."> <paragraph num="A."> <text>The Commissioner may revoke all or part of a delegation of authority to the Office of Administrative Hearings to preside over a hearing if the case:</text> <paragraph num="(1)"> <text>Involves novel or unanticipated factual or legal issues;</text> </paragraph> <paragraph num="(2)"> <text>Has significant social, fiscal, or legal issues;</text> </paragraph> <paragraph num="(3)"> <text>Involves policy issues of general applicability; or</text> </paragraph> <paragraph num="(4)"> <text>Requires further investigation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Procedures for Revocation.</text> <paragraph num="(1)"> <text>The Commissioner shall provide written notice of a revocation of hearing authority to all parties and the Office of Administrative Hearings. The written notice shall contain a brief statement of the reason for the revocation.</text> </paragraph> <paragraph num="(2)"> <text>Delegation of authority to hear a contested case may be revoked at any time before the earlier of the:</text> <paragraph num="(a)"> <text>Issuance of a ruling by the administrative law judge on a substantive issue; or</text> </paragraph> <paragraph num="(b)"> <text>Taking of oral testimony from the first witness.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Commissioner shall specify whether all or part of the delegation to hear a contested case has been revoked. If only part of the delegation has been revoked, the Commissioner shall specify in the written notice of revocation the portions of the contested case for which the delegation has been revoked.</text> </paragraph> <paragraph num="(4)"> <text>Upon the revocation of the delegation, the Commissioner shall:</text> <paragraph num="(a)"> <text>Refer the case for further investigation;</text> </paragraph> <paragraph num="(b)"> <text>Set the case for a hearing with the Commissioner or the Commissioner's designee acting as the hearing officer; or</text> </paragraph> <paragraph num="(c)"> <text>Dismiss the case.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 2-210—2-215, and 27-605; State Government Article, Title 10, Subtitle 2; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 2, 1997 (24:11 Md. R. 793)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended as an emergency provision effective October 1, 1997 (24:22 Md. R. 1550); amended permanently effective March 23, 1998 (25:6 Md. R. 487)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.20 to COMAR 31.02.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="04" heading="Penalties"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>These regulations apply in any instance in which the Insurance Commissioner intends to impose a financial penalty.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Requirements."> <text>In determining the amount of the financial penalty to be imposed, the Commissioner shall consider the following:</text> <paragraph num="A."> <text>The seriousness of the violation;</text> </paragraph> <paragraph num="B."> <text>The good faith of the violator;</text> </paragraph> <paragraph num="C."> <text>The violator's history of previous violations;</text> </paragraph> <paragraph num="D."> <text>The deleterious effect of the violation on the public and the insurance industry; and</text> </paragraph> <paragraph num="E."> <text>The assets of the violator.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108, 2-109, and 2-201, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 24, 1987 (14:17 Md. R. 1871)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.81 to COMAR 31.02.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="05" heading="Public Information Act Requests"> <regulation prefix="Regulation" num=".01" heading="General."> <text>These regulations set out procedures for filing requests with the Maryland Insurance Administration for the inspection and copying of records under General Provisions Article, Title 4, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means the Public Information Act, General Provisions Article, Title 4, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(3)"> <text>“Applicant” means a person or governmental unit that asks to inspect a public record.</text> </paragraph> <paragraph num="(4)"> <text>“Custodian” means:</text> <paragraph num="(a)"> <text>The official custodian; or</text> </paragraph> <paragraph num="(b)"> <text>An authorized person who has physical custody and control of a public record of the Administration.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Official custodian” means the Insurance Commissioner of the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(6)"> <text>“Public record” means:</text> <paragraph num="(a)"> <text>The original or any copy of any documentary material that is made or received by State government in connection with the transaction of public business and is in any form, including a:</text> <paragraph num="(i)"> <text>Card;</text> </paragraph> <paragraph num="(ii)"> <text>Computerized record;</text> </paragraph> <paragraph num="(iii)"> <text>Correspondence;</text> </paragraph> <paragraph num="(iv)"> <text>Drawing;</text> </paragraph> <paragraph num="(v)"> <text>Film or microfilm;</text> </paragraph> <paragraph num="(vi)"> <text>Form;</text> </paragraph> <paragraph num="(vii)"> <text>Map;</text> </paragraph> <paragraph num="(viii)"> <text>Photograph or photostat;</text> </paragraph> <paragraph num="(ix)"> <text>Recording; or</text> </paragraph> <paragraph num="(x)"> <text>Tape; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A document that lists the salary of an employee of the Administration.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Working day” means a day other than Saturday, Sunday, or State holiday.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applications."> <paragraph num="A."> <text>A person or governmental unit may request to the Insurance Commissioner, in writing, to inspect or copy public records of the Administration.</text> </paragraph> <paragraph num="B."> <text>A written request shall contain:</text> <paragraph num="(1)"> <text>The applicant’s name;</text> </paragraph> <paragraph num="(2)"> <text>The applicant’s mailing address or electronic mail address; and</text> </paragraph> <paragraph num="(3)"> <text>A brief description of the record sought.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Response to Written Request."> <paragraph num="A."> <text>If the custodian grants a written request, the custodian shall produce the record for inspection immediately, or within a reasonable period needed to retrieve the public record, not to exceed 30 days after receipt of the written request.</text> </paragraph> <paragraph num="B."> <text>If the custodian denies the written request, the custodian shall do so promptly, but not later than 30 days after receipt of the written request. Within 10 working days, the custodian shall provide to the applicant a written statement that gives:</text> <paragraph num="(1)"> <text>The reason for the denial and, if the denial is based on General Provisions Article, §4-343, Annotated Code of Maryland, a brief explanation of why the denial is necessary;</text> </paragraph> <paragraph num="(2)"> <text>The legal authority for the denial;</text> </paragraph> <paragraph num="(3)"> <text>Without disclosing the protected information, a brief description of the denied public record that will enable the applicant to assess the applicability of the legal authority for the denial; and</text> </paragraph> <paragraph num="(4)"> <text>Notice of the remedies as stated in General Provisions Article, §§4-1A-04, 4-1B-04, and 4-362, Annotated Code of Maryland, for review of the denial.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the custodian reasonably believes that it will take more than 10 working days to produce the public record, the custodian shall indicate in writing or by electronic mail within 10 working days after receipt of the request:</text> <paragraph num="(1)"> <text>The amount of time anticipated to produce the public record;</text> </paragraph> <paragraph num="(2)"> <text>An estimate of the range of fees that may be charged to produce the requested public record; and</text> </paragraph> <paragraph num="(3)"> <text>The reason for the delay.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If the custodian denies the written request, the custodian shall permit inspection of any part of the record that is subject to inspection.</text> </paragraph> <paragraph num="E."> <text>The custodian shall deny inspection of all or any part of a public record as provided in General Provisions Article, Title 4, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>With the consent of the applicant, any time limit imposed by §§A and B of this regulation may be extended for an additional period not to exceed 30 days.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Records Temporarily Unavailable."> <text>If a requested public record is in the custody and control of the custodian but is not immediately available for inspection or copying, within 10 working days after mailing the notification of the grant of a written request, the custodian shall notify the applicant and set a date and hour within a reasonable time for inspection or copying, or both.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Review of the Denial."> <text>If the custodian denies a written request, the applicant may file an action with the circuit court pursuant to General Provisions Article, §4-362, Annotated Code of Maryland, without exhausting the administrative remedy under State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Disclosure Against Public Interest."> <paragraph num="A."> <text>The official custodian may temporarily deny the request in writing, if the official custodian believes the inspection of the public record would cause substantial injury to the public interest.</text> </paragraph> <paragraph num="B."> <text>Within 10 working days of the denial, the official custodian shall petition the appropriate circuit court for an order permitting continued denial or restriction of access.</text> </paragraph> <paragraph num="C."> <text>Notice of the application filed with the circuit court shall be served on the applicant as provided for service of process by the Maryland Rules of Procedure.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Inspection of Insurance Licensing Data for Compelling Public Purpose."> <paragraph num="A."> <text>If a compelling public purpose exists under General Provisions Article, §4-333(c)(1), Annotated Code of Maryland, the custodian may permit inspection of insurance licensing data, including the application record, on individuals other than that data specified under General Provisions Article, §4-333(b), Annotated Code of Maryland, as set forth in this regulation.</text> </paragraph> <paragraph num="B."> <text>Complaints, including the number, nature, and administrative status of the complaints, against the individual who is the subject of the insurance licensing record may be disclosed if the person requesting the disclosure:</text> <paragraph num="(1)"> <text>Has entered into a contract or is employing the services of the insurance licensee who is the subject of the request;</text> </paragraph> <paragraph num="(2)"> <text>Contemplates entering into a contract or employing the services of the insurance licensee who is the subject of the request;</text> </paragraph> <paragraph num="(3)"> <text>Has filed a complaint against the individual who is the subject of the insurance licensing record and the request is limited to those documents relating to this complaint.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A document relating to insurance licensing data, including the application record, on the individual who is the subject of the insurance licensing record may be disclosed if the person requesting the disclosure is affiliated with:</text> <paragraph num="(1)"> <text>A federal, state, local, or other law enforcement agency, and has requested the inspection for law enforcement or prosecutorial purposes; or</text> </paragraph> <paragraph num="(2)"> <text>An out-of-State insurance department where the insurance licensee is licensed, has sought licensure, or is believed to be conducting an insurance business without a license.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Fees."> <paragraph num="A."> <text>The fee schedule for copies of records is as follows:</text> <paragraph num="(1)"> <text>Copies. The fee for each copy is 20 cents per page if reproduction is made by a photocopying machine within the Administration. If records are not susceptible to photocopying (for example, punch cards, magnetic tape, blueprints, and microfilm), the fee for copies is based on the actual cost of reproduction.</text> </paragraph> <paragraph num="(2)"> <text>Diskettes. The fee for each reproduction made on compact disc or other type of diskette is $5.</text> </paragraph> <paragraph num="(3)"> <text>Minimum Fee Charged. Except as provided in §A(2) of this regulation, if the total amount of the fee is $5 or less, there is no charge.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the official custodian is unable to copy a record within the Administration:</text> <paragraph num="(1)"> <text>The official custodian shall make arrangements for the reproduction of the record at facilities outside the Administration; and</text> </paragraph> <paragraph num="(2)"> <text>The custodian shall either collect from the applicant a fee to cover the actual cost of reproduction, or direct the applicant to pay the cost of reproduction directly to the facility making the copy.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Before copying a record, the official custodian shall estimate the cost of reproduction and either obtain the agreement of the applicant to pay the cost or demand prepayment of any estimated fee before reproducing the record.</text> </paragraph> <paragraph num="D."> <text>Except as provided in §E of this regulation, the official custodian may charge reasonable fees for the search for, preparation of, and reproduction of a public record prepared, on request of the applicant, in customized format; and the actual costs of the search for, preparation, and reproduction of a public record in standard format, including media and mechanical processing costs. The staff and attorney review costs included in the calculation of such actual costs shall be prorated to reflect each individual’s salary and actual time attributable to the search for and preparation of a public record under this section.</text> </paragraph> <paragraph num="E."> <text>The official custodian may not charge any search or preparation fee for the first 2 hours of official or employee time that is needed to respond to a request for information.</text> </paragraph> <paragraph num="F."> <text>Upon request, the official custodian may waive or reduce any fee charged pursuant to this regulation if the applicant asks for a waiver, is indigent, and files an affidavit of indigency; or, if after consideration of the ability of the applicant to pay the fee and other relevant factors, the official custodian determines that the waiver would be in the public interest.</text> </paragraph> <paragraph num="G."> <text>If the applicant requests that copies be mailed or delivered to the applicant, the official custodian may charge the applicant for the cost of postage or delivery to the applicant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Inspection."> <paragraph num="A."> <text>Time of Inspection. An applicant may inspect any public record that the applicant is entitled to inspect during the normal working hours of the Insurance Administration.</text> </paragraph> <paragraph num="B."> <text>Place of Inspection. The place of inspection shall be the place where the document is located unless the custodian, after taking into account the applicant's expressed wish, determines that another place of inspection is more suitable and convenient.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">General Provisions Article, Title 4; Insurance Article, §§2-109 and 2-112; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 22, 1995 (22:10 Md. R. 707)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective April 7, 1997 (24:7 Md. R. 553)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.09 to COMAR 31.02.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended as an emergency provision effective November 5, 2015 (42:24 Md. R. 1503); amended permanently effective February 1, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective November 5, 2015 (42:24 Md. R. 1503); amended permanently effective February 1, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended as an emergency provision effective November 5, 2015 (42:24 Md. R. 1503); amended permanently effective February 1, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective November 5, 2015 (42:24 Md. R. 1503); amended permanently effective February 1, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision effective November 5, 2015 (42:24 Md. R. 1503); amended permanently effective February 1, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended as an emergency provision effective November 5, 2015 (42:24 Md. R. 1503); amended permanently effective February 1, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective February 12, 2007 (34:3 Md. R. 302)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D, F amended as an emergency provision effective November 5, 2015 (42:24 Md. R. 1503); amended permanently effective February 1, 2016 (43:2 Md. R. 128)</annotation> </annotations> </chapter> <chapter num="06" heading="Procedures for Quasi-Legislative Hearings"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to quasi-legislative hearings that the Insurance Commissioner conducts to gather information before making a decision or taking an action.</text> </paragraph> <paragraph num="B."> <text>This chapter does not apply to contested case hearings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Relation to Other Laws."> <text>The procedural requirements of this chapter are in addition to the procedural requirements of any other applicable provision of law.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Notice of Hearing."> <text>A notice of a hearing held under this chapter shall include:</text> <paragraph num="A."> <text>The time and location of the hearing;</text> </paragraph> <paragraph num="B."> <text>The purpose of the hearing; and</text> </paragraph> <paragraph num="C."> <text>Any other information required by applicable law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Conduct and Control of Hearing."> <text>The Insurance Commissioner or a designee of the Insurance Commissioner shall determine the conduct of a hearing held under this chapter, including:</text> <paragraph num="A."> <text>The order of presentation; and</text> </paragraph> <paragraph num="B."> <text>Time limits for questions and testimony.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Testimony."> <paragraph num="A."> <text>The Insurance Commissioner or a designee of the Insurance Commissioner may:</text> <paragraph num="(1)"> <text>Request the attendance of persons to testify or the production of documents;</text> </paragraph> <paragraph num="(2)"> <text>Issue a subpoena requiring the attendance of persons to testify or the production of documents; and</text> </paragraph> <paragraph num="(3)"> <text>Require testimony to be given under oath.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Insurance Commissioner or a designee of the Insurance Commissioner shall give all persons present who wish to testify an opportunity to do so, but may limit repetitious testimony.</text> </paragraph> <paragraph num="C."> <text>The Insurance Commissioner or a designee of the Insurance Commissioner may:</text> <paragraph num="(1)"> <text>Ask questions of anyone present at a hearing;</text> </paragraph> <paragraph num="(2)"> <text>Take questions from the audience and redirect the questions to others present at the hearing; and</text> </paragraph> <paragraph num="(3)"> <text>Refer questions to employees of the Maryland Insurance Administration who may respond after the hearing.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The rules of evidence do not apply to a hearing held under this chapter.</text> </paragraph> <paragraph num="E."> <text>The Insurance Commissioner or designee of the Insurance Commissioner shall receive and mark all exhibits offered in testimony if they are relevant to the hearing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Transcript."> <paragraph num="A."> <text>At the discretion of the Maryland Insurance Administration and unless otherwise required by law, the Administration or a court reporter service shall stenographically record verbatim or tape record a hearing held under this chapter.</text> </paragraph> <paragraph num="B."> <text>If a court reporter service records the hearing, a person who desires a copy of a transcript of the recording may purchase a copy from the court reporter service.</text> </paragraph> <paragraph num="C."> <text>If an employee of the Maryland Insurance Administration records the hearing:</text> <paragraph num="(1)"> <text>The Maryland Insurance Administration shall keep the tape recording or stenographic recording with the original record of the hearing; and</text> </paragraph> <paragraph num="(2)"> <text>A person who desires a copy of the transcript of the recording, if one is made, may purchase a copy from the Maryland Insurance Administration for a reasonable cost in accordance with COMAR 31.02.05.09.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Record."> <paragraph num="A."> <text>The Insurance Commissioner or a designee of the Insurance Commissioner controls the record of a hearing held under this chapter.</text> </paragraph> <paragraph num="B."> <text>The Insurance Commissioner or a designee of the Insurance Commissioner shall assemble a record that consists of:</text> <paragraph num="(1)"> <text>The notice of the hearing;</text> </paragraph> <paragraph num="(2)"> <text>Exhibits and documents entered into the record;</text> </paragraph> <paragraph num="(3)"> <text>The register of all persons who attended the hearing including their names, addresses, and any affiliations relevant to the hearing;</text> </paragraph> <paragraph num="(4)"> <text>In accordance with Regulation .06 of this chapter, any:</text> <paragraph num="(a)"> <text>Full or partial transcript of the hearing made or purchased by the Maryland Insurance Administration; and</text> </paragraph> <paragraph num="(b)"> <text>Tape or stenographic recording of the hearing made by the Maryland Insurance Administration; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>If applicable, the final decision of the Insurance Commissioner or a designee of the Insurance Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Postponement and Continuance."> <text>The Insurance Commissioner or a designee of the Insurance Commissioner has sole discretion to:</text> <paragraph num="A."> <text>Postpone or continue a hearing; and</text> </paragraph> <paragraph num="B."> <text>Keep the record open beyond the date of the hearing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Judicial Review."> <text>Unless otherwise required by law, a party who is aggrieved by a final decision issued by the Insurance Commissioner, or a designee of the Insurance Commissioner, at the conclusion of a hearing held under this chapter, may file a petition for judicial review in the Circuit Court for Baltimore City within 30 days after the date of the final decision.</text> </regulation> <annotations> <annotation type="Authority">Health-General Article, §19-713; Insurance Article, §§2-109, 2-203, 4-309, 11-502, 12-203, 12-204, 12-205, 13-110, 13-111, and 4-126; State Government Article, §§6.5-103 and 6.5-203; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 15, 2001 (28:20 Md. R. 1785)</annotation> </annotations> </chapter> </subtitle> <subtitle num="03" heading="Insurance Producers and Other Insurance Professionals"> <chapter num="01" heading="Temporary Licensees"> <regulation prefix="Regulation" num=".01" heading="Individual Business Continuation Cases."> <paragraph num="A."> <text>If a qualified and licensed resident insurance producer should die, become mentally or physically disabled, or enter upon active service in the armed forces of the United States of America, the Insurance Commissioner will give consideration to the issuance of temporary licenses to an individual who comes under one of the categories listed in Insurance Article, §10-120(a), Annotated Code of Maryland. Except in unusual circumstances, consideration will not be given to any nonresident applicant.</text> </paragraph> <paragraph num="B."> <text>The grant of authority given to an approved applicant will be restricted to the same kinds of insurance only for which the insurance producer whom the applicant is replacing was qualified and licensed.</text> </paragraph> <paragraph num="C."> <text>Any renewal application for a temporary license shall be stamped received in the Insurance Administration in advance of the expiration of the existing temporary license.</text> </paragraph> <paragraph num="D."> <text>If the insurance business of the original insurance producer is sold, transferred, or otherwise disposed of, any temporary license to continue that business shall be terminated and the licensee shall return the license or licenses to the Insurance Administration for cancellation. Further licenses will not be issued in that case.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Repealed." /> <regulation prefix="Regulation" num=".03" heading="Revocation of Temporary Licenses."> <text>A temporary license which has been issued under the provisions of the Insurance Article and this chapter may be revoked in accordance with provisions of the Insurance Article, §10-126, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Issuance of Temporary License."> <text>A temporary license for a life or health insurance producer may not be issued to any applicant affiliated or to be affiliated with an appointing insurer if to do so would increase the appointing insurer's proportion of resident insurance producers temporarily licensed to resident insurance producers permanently licensed to 10 percent or more, based upon statistics for the previous calendar year.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Issuance of Appointments."> <paragraph num="A."> <text>An insurer may not issue an appointment to act as a temporary life or health insurance producer if to do so would increase the proportion of resident insurance producers temporarily licensed by the insurer to resident insurance producers permanently licensed to 10 percent or more, based upon statistics for the previous calendar year.</text> </paragraph> <paragraph num="B."> <text>The Insurance Commissioner may, at the discretion of the Insurance Commissioner, allow an insurer to exceed the 10 percent limitation stated in §A of this regulation if the Insurance Commissioner reasonably believes that the limitation would impose an undue burden on the conduct of the insurer's business in Maryland.</text> </paragraph> <paragraph num="C."> <text>In determining whether to allow an insurer to exceed the 10 percent limitation stated in §A of this regulation, the Insurance Commissioner shall consider the total number of resident insurance producers appointed by the insurer and the length of time the insurer has been doing business in Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 10-115, 10-120, and 10-126, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 1, 1964</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective September 5, 1988 (15:18 Md. R. 2146)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 repealed effective September 5, 1988 (15:18 Md. R. 2146)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 recodified to Regulation .03 effective September 5, 1988 (15:18 Md. R. 2146)</annotation> <annotation type="History" subtype="Administrative History">Regulations .05 and .06 adopted effective May 5, 1986 (13:9 Md. R. 1027)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 recodified to Regulation .04 and amended effective September 5, 1988 (15:18 Md. R. 2146)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 recodified to Regulation .05 and amended effective September 5, 1988 (15:18 Md. R. 2146)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.18 to COMAR 31.03.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> </annotations> </chapter> <chapter num="02" heading="Insurance Producers — Continuing Education Requirements"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to an individual licensed resident or nonresident insurance producer who seeks to renew a license under Insurance Article, Annotated Code of Maryland, but does not apply to an individual holding the type of license described in Insurance Article, §10-116(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>The following types of courses are not considered to be continuing education courses and are outside the scope of this chapter:</text> <paragraph num="(1)"> <text>A course that is designed for preparing an applicant for the examination given to obtain an initial license as an insurance producer; and</text> </paragraph> <paragraph num="(2)"> <text>A course designed to prepare a person for an examination in a kind or subdivision of insurance that the insurance producer seeks to add to the insurance producer's existing license.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Advisory board” means a group of individuals appointed by the Insurance Commissioner pursuant to Insurance Article, §10-110, Annotated Code of Maryland, to review continuing education courses for insurance producers and to make recommendations regarding the courses.</text> </paragraph> <paragraph num="(2)"> <text>“Bail bondsman services” means any conduct relating to the sale, solicitation, negotiation, or procurement of a bail bond, and includes the posting of a bail bond.</text> </paragraph> <paragraph num="(3)"> <text>“Commissioner" means the Insurance Commissioner of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Course” means a presentation of information delivered in person, in print, electronically, or via teleconference, the successful completion of which is measured by verifiable attendance or by examination, or both.</text> </paragraph> <paragraph num="(5)"> <text>“Course completion date” means the date when a student has submitted all necessary information to the education provider and, when applicable, successfully met the course attendance requirements or passed the final examination, or both.</text> </paragraph> <paragraph num="(6)"> <text>“Course completion roster” means a listing of candidates who have completed a continuing education course, provided in a format determined by the Commissioner, which includes the following:</text> <paragraph num="(a)"> <text>The course name, the designated course number, and the course completion date;</text> </paragraph> <paragraph num="(b)"> <text>The provider’s identification number;</text> </paragraph> <paragraph num="(c)"> <text>The instructor’s license number, if applicable; and</text> </paragraph> <paragraph num="(d)"> <text>For each student who completes the course:</text> <paragraph num="(i)"> <text>The student’s name;</text> </paragraph> <paragraph num="(ii)"> <text>The student’s national producer number or the student’s license number, or both; and</text> </paragraph> <paragraph num="(iii)"> <text>The number of hours of continuing education earned by the student.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Course coordinator” means an individual who is responsible for organizing a continuing education course, getting it approved by the Insurance Commissioner, and supervising the administration of the course after its approval.</text> </paragraph> <paragraph num="(8)"> <text>“Expiration date” means the date the license expires as stated on the license.</text> </paragraph> <paragraph num="(9)"> <text>“Hour of continuing education” means 50 minutes of work in a course that has been approved by the Commissioner to receive continuing education credit.</text> </paragraph> <paragraph num="(10)"> <text>“Instructor” means a subject matter expert, approved by the Commissioner, presenting course activities or information in a course approved by the Commissioner.</text> </paragraph> <paragraph num="(11)"> <text>“License” has the meaning stated in Insurance Article, §10-101(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Licensed insurance producer” has the meaning stated in Insurance Article, §1-101(w), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“National examination” means an examination given as part of a nationally recognized designation awarded by a national insurance organization, including the:</text> <paragraph num="(a)"> <text>Life Underwriter Training Council (LUTC) course curricula;</text> </paragraph> <paragraph num="(b)"> <text>American College diploma curriculum for Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Employee Benefits Specialist (CEBS) or Registered Health Underwriter (RHU);</text> </paragraph> <paragraph num="(c)"> <text>College of Financial Planning diploma curriculum for Chartered Financial Planning (CFP) program;</text> </paragraph> <paragraph num="(d)"> <text>Insurance Institute of America curriculum for:</text> <paragraph num="(i)"> <text>Program in General Insurance (INS);</text> </paragraph> <paragraph num="(ii)"> <text>Associate in Claims Program (AIC);</text> </paragraph> <paragraph num="(iii)"> <text>Associate in Risk Management Program (ARM);</text> </paragraph> <paragraph num="(iv)"> <text>Associate in Underwriting Program (AIU);</text> </paragraph> <paragraph num="(v)"> <text>Associate in Loss Control Management Program (ALCM);</text> </paragraph> <paragraph num="(vi)"> <text>Accredited Advisor in Insurance Program (AAI);</text> </paragraph> <paragraph num="(vii)"> <text>Associate Premium Auditing Program (APA); and</text> </paragraph> <paragraph num="(viii)"> <text>Associate in Research and Planning Program (ARP);</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>American Institute for Property and Liability Underwriters Chartered Property and Casualty Underwriter (CPCU) program;</text> </paragraph> <paragraph num="(f)"> <text>Health Insurance Association of America Program (HIAA);</text> </paragraph> <paragraph num="(g)"> <text>Academy of Life Underwriting Education Council curriculum for LUEC program; or</text> </paragraph> <paragraph num="(h)"> <text>Certified Insurance Counselor program (CIC).</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Preneed insurance contract” has the meaning stated in COMAR 31.05.03.03B.</text> </paragraph> <paragraph num="(15)"> <text>“Provider” means an entity that has been approved by the Commissioner to offer continuing education courses to licensed insurance producers in the State.</text> </paragraph> <paragraph num="(16)"> <text>“Renewal period” means the period from the issuance or renewal of a license until the day before the expiration date of the license.</text> </paragraph> <paragraph num="(17)"> <text>“Renewal year” means the 12-month period from January 1 until December 31 in which a license renewal occurs.</text> </paragraph> <paragraph num="(18)"> <text>“Self-study course” means a course that is not presented in a classroom, is not delivered in person, and does not require interaction with an instructor.</text> </paragraph> <paragraph num="(19)"> <text>“Successfully complete” means to complete and meet all requirements of an approved course for which a valid certificate of course completion has been issued.</text> </paragraph> <paragraph num="(20)"> <text>“Teleconference” means the live exchange of information among several persons who are separately located but linked by audio or video, or both, that provides for opportunities for interactions between student and instructor.</text> </paragraph> <paragraph num="(21)"> <text>“Viatical settlement broker” has the meaning stated in Insurance Article, §8-601(k), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="General Continuing Education Requirements."> <paragraph num="A."> <text>Except as set forth in this regulation, in order to renew a license, a licensed insurance producer shall successfully complete in each renewal period at least 24 hours of continuing education.</text> </paragraph> <paragraph num="B."> <text>A licensed insurance producer who, as of October 1, 2008, has held a license for 25 or more consecutive years shall successfully complete 8 hours of continuing education in each renewal period in order to renew the license.</text> </paragraph> <paragraph num="C."> <text>A licensed insurance producer shall obtain at least 3 hours of continuing education in Ethics.</text> </paragraph> <paragraph num="D."> <text>A licensed insurance producer shall obtain hours of continuing education in the kind or subdivision of insurance for which they hold a license, as follows:</text> <paragraph num="(1)"> <text>Except for the required hours of continuing education in Ethics, if the licensed insurance producer has only a license for property insurance, casualty insurance, or any of the subdivisions of property or casualty insurance, the licensed insurance producer shall obtain all necessary hours of continuing education in courses designated by the Commissioner as “Property/Casualty” or “PC”;</text> </paragraph> <paragraph num="(2)"> <text>Except for the required hours of continuing education in Ethics, if the licensed insurance producer has only a license for life insurance, health insurance, or any of the subdivisions of life or health insurance, the licensed insurance producer shall obtain all necessary hours of continuing education in courses designated by the Commissioner as “Life/Health” or “LH”;</text> </paragraph> <paragraph num="(3)"> <text>If the licensed insurance producer has a license for property or casualty, or any subdivision of property or casualty, and life or health, or any subdivision of life or health, then the licensed insurance producer shall complete:</text> <paragraph num="(a)"> <text>24 hours of continuing education with a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Property/Casualty” and a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Life/Health”; or</text> </paragraph> <paragraph num="(b)"> <text>For licensed insurance producers who meet the requirements of §B of this regulation,8 hours of continuing education with a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Property/Casualty” and a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Life/Health”;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In addition to the required hours of continuing education in Ethics, if the licensed insurance producer holds a title insurance producer license only, the licensed insurance producer shall obtain 13 hours of continuing education in one or more courses designated by the Commissioner as “Title” in each renewal period in order to renew the license;</text> </paragraph> <paragraph num="(5)"> <text>If the licensed insurance producer has a license for title and property or casualty, or any subdivision of property or casualty, then the licensed insurance producer shall complete:</text> <paragraph num="(a)"> <text>24 hours of continuing education with a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Title” and a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Property/Casualty”; or</text> </paragraph> <paragraph num="(b)"> <text>For licensed insurance producers who meet the requirements of §B of this regulation, 8 hours of continuing education with a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Title” and a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Property/Casualty”;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>If the licensed insurance producer has a license for title and life or health, or any subdivision of life or health, then the licensed insurance producer shall complete:</text> <paragraph num="(a)"> <text>24 hours of continuing education with a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Title” and a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Life/Health”; or</text> </paragraph> <paragraph num="(b)"> <text>For licensed insurance producers who meet the requirements of §B of this regulation, 8 hours of continuing education with a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Title” and a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Life/Health”;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>If the licensed insurance producer has a license for title, property, or casualty, or any subdivision of property or casualty, and life or health, or any subdivision of life or health, then the licensed insurance producers shall complete:</text> <paragraph num="(a)"> <text>24 hours of continuing education with a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Title”, a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Property/Casualty”, and a minimum of 6 hours of continuing education in one or more courses designated by the Commissioner as “Life/Health”; or</text> </paragraph> <paragraph num="(b)"> <text>For licensed insurance producers who meet the requirements of §B of this regulation, 8 hours of continuing education with a minimum of 1 hour of continuing education in a course designated by the Commissioner as “Title”, a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Property/Casualty”, and a minimum of 2 hours of continuing education in one or more courses designated by the Commissioner as “Life/Health”; or</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>A licensed insurance producer who has only a license for life insurance and also is a licensed funeral director or a licensed mortician and sells only life insurance policies or annuity contracts that fund preneed insurance contracts and is not a viatical settlement broker shall complete at least 16 hours of continuing education courses designated by the Commissioner as “Life/Health” in each renewal period in order to renew the license.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Sales of Long-Term Care Insurance.</text> <paragraph num="(1)"> <text>A licensed insurance producer with authority to sell health insurance who also sells long-term care insurance shall obtain at least 2 hours of continuing education in a course designated “Long Term Care” or “LH-LTC” in order to renew the license.</text> </paragraph> <paragraph num="(2)"> <text>These hours of continuing education may be considered a part of the required hours of continuing education under §A or B of this regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A licensed insurance producer who possesses a license to sell property and casualty insurance and who sells flood insurance, homeowners insurance, or commercial property insurance shall obtain at least 2 hours of continuing education that directly relates to flood insurance as part of the required hours of continuing education.</text> </paragraph> <paragraph num="G."> <text>A licensed insurance producer who possesses a license to sell property and casualty insurance and provides bail bondsman services shall obtain at least 4 hours of continuing education that directly relates to bail bond insurance.</text> </paragraph> <paragraph num="H."> <text>Hours of Continuing Education — Passing Scores.</text> <paragraph num="(1)"> <text>A licensee who receives a passing score on a national examination and has been awarded a nationally recognized designation as listed in Regulation .02B(13)of this chapter may request that the Commissioner apply towards the requirement stated in §D of this regulation:</text> <paragraph num="(a)"> <text>Up to 24 hours of continuing education credits approved by the Commissioner towards the hours of continuing education required for the next renewal period; and</text> </paragraph> <paragraph num="(b)"> <text>Up to 9 hours of any remaining continuing education hours approved by the Commissioner for the renewal period immediately thereafter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The licensee shall submit to the Administration the examination results issued by the nationally recognized designation organization that clearly identifies the national designation name, the licensee name, and the date the examination was passed with the renewal application.</text> </paragraph> <paragraph num="(3)"> <text>The hours of continuing education granted from earning the following designations shall be applied as Life/Health course credits to the continuing education requirement of licensees who hold the Life and/or Health lines of authority:</text> <paragraph num="(a)"> <text>Life Underwrite Training Council (LUTC);</text> </paragraph> <paragraph num="(b)"> <text>American College diploma curriculum for Chartered Life Underwriter (CLU);</text> </paragraph> <paragraph num="(c)"> <text>Chartered Financial Consultant (ChFC);</text> </paragraph> <paragraph num="(d)"> <text>Certified Employee Benefits Specialist (CEBS);</text> </paragraph> <paragraph num="(e)"> <text>Registered Health Underwriter (RHU);</text> </paragraph> <paragraph num="(f)"> <text>College of Financial Planning diploma curriculum for Chartered Financial Planning (CFP);</text> </paragraph> <paragraph num="(g)"> <text>Health Insurance Association of America Program (HIAA); or</text> </paragraph> <paragraph num="(h)"> <text>Academy of Life Underwriting Education Council curriculum for LUEC program.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The hours of continuing education granted from earning the following designations shall be applied as Property/Casualty course credits to the continuing education requirement of licensees who hold the Property and/or Casualty lines of authority:</text> <paragraph num="(a)"> <text>Associate in Risk Management Program (ARM);</text> </paragraph> <paragraph num="(b)"> <text>Accredited Advisor in Insurance Program (AAI); or</text> </paragraph> <paragraph num="(c)"> <text>American Institute for Property and Liability Underwriters Chartered Property and Casualty Underwriter (CPCU).</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The hours of continuing education granted from the following designations shall be applied as Life/Health/Property/Casualty course credits to the continuing education requirement of licensees who hold the Life, Health, Property and/or Casualty lines of authority:</text> <paragraph num="(a)"> <text>Program in General Insurance (INS);</text> </paragraph> <paragraph num="(b)"> <text>Associate in Claims Program (AIC);</text> </paragraph> <paragraph num="(c)"> <text>Associate in Underwriting Program (AIU);</text> </paragraph> <paragraph num="(d)"> <text>Associate Premium Auditing Program (APA);</text> </paragraph> <paragraph num="(e)"> <text>Associate in Research and Planning Program (ARP); or</text> </paragraph> <paragraph num="(f)"> <text>Certified Insurance Counselor Program (CIC).</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A licensee may not apply any hours of continuing education granted by the Commissioner pursuant to this section towards the 3 hours of continuing education in Ethics requirement.</text> </paragraph> <paragraph num="(7)"> <text>Hours of continuing education received for a passing score on a national examination are in addition to any hours of continuing education received for completing a course that is required in order to take the national examination and that has been approved by the Commissioner under this chapter.</text> </paragraph> </paragraph> <paragraph num="I."> <text>A course instructor shall earn 1-1/2 hours of continuing education for each approved hour of instruction of an approved course.</text> </paragraph> <paragraph num="J."> <text>A licensed insurance producer or a course instructor may not earn hours of continuing education:</text> <paragraph num="(1)"> <text>For attending or instructing a subsequent offering of the same course in the same renewal period; or</text> </paragraph> <paragraph num="(2)"> <text>If the same course was taken in two different renewal periods but within 6 months.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Holders of Expired Licenses Who Seek Reinstatement."> <paragraph num="A."> <text>The holder of an expired license who seeks reinstatement of the license under Insurance Article, §10-116.1, Annotated Code of Maryland, shall fulfill the continuing education requirements for the renewal period that concluded on the day before the immediately preceding expiration date of the licensed insurance producer’s license in order to qualify for reinstatement.</text> </paragraph> <paragraph num="B."> <text>A licensed insurance producer who does not have sufficient hours of continuing education on the day before the most recent expiration date of the license will have all hours of continuing education earned on or after the expiration date credited toward the requirement for the renewal period that concluded on the day before the license expired.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Nonresident Licensed Insurance Producers."> <paragraph num="A."> <text>A nonresident licensed insurance producer whose state of residence has a continuing education requirement shall fulfill all of the requirements of the state of residence, and the continuing education requirements of Maryland may not be applicable to the licensed insurance producer.</text> </paragraph> <paragraph num="B."> <text>A nonresident licensed insurance producer whose state of residence does not have a continuing education requirement shall fulfill Maryland continuing education requirements, which may be fulfilled entirely through correspondence courses.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Licensed Insurance Producer Responsibilities."> <paragraph num="A."> <text>A licensed insurance producer shall:</text> <paragraph num="(1)"> <text>Maintain a record of the certificate of course completion received for 4 years following the date that the course was completed; and</text> </paragraph> <paragraph num="(2)"> <text>Upon request, submit with the renewal application each certificate of course completion needed to fulfill the licensed insurance producer’s hours of continuing education for the renewal period.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Under Insurance Article, §10-126, Annotated Code of Maryland, the Commissioner may suspend or revoke a license if a licensed insurance producer is found to have knowingly:</text> <paragraph num="(1)"> <text>Falsified a certificate of course completion; or</text> </paragraph> <paragraph num="(2)"> <text>Submitted a falsified certificate of course completion.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Approval of Courses."> <paragraph num="A."> <text>A continuing education course shall be submitted to the Commissioner for approval. The Commissioner may approve a course only if the course imparts substantive and procedural knowledge relating to the insurance field.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may not approve a course covering any of the following subject areas:</text> <paragraph num="(1)"> <text>A course in office or business skills, including typing, speed reading, or the use of computers, calculators, or other machines or equipment;</text> </paragraph> <paragraph num="(2)"> <text>A course in office management, client relations, or other matters aimed at improving the operation of the person's business; or</text> </paragraph> <paragraph num="(3)"> <text>A course in salesmanship or product promotion, stress management, time management, psychology, motivation, or written or oral communications.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Except for a self-study course, a course submitted to the Commissioner for approval does not need to require a textbook or an examination in order to receive approval.</text> </paragraph> <paragraph num="D."> <text>The Commissioner shall assign to each approved course:</text> <paragraph num="(1)"> <text>The number of hours of continuing education that an individual taking the course may receive for successful completion of the course;</text> </paragraph> <paragraph num="(2)"> <text>A designated course number that is provided on all certificates of course completion, all correspondence relating to the course, and on all forms filed with the Commissioner relating to the course;</text> </paragraph> <paragraph num="(3)"> <text>A designation of “Property/Casualty”, “Life/Health”, “Long Term Care”, or “Ethics”; and</text> </paragraph> <paragraph num="(4)"> <text>A course expiration date.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Submission of Courses for Approval."> <paragraph num="A."> <text>A provider shall submit to the Commissioner:</text> <paragraph num="(1)"> <text>A fully completed course approval package consisting of the following forms provided by the Commissioner;</text> <paragraph num="(a)"> <text>Request for approval of continuing education course,</text> </paragraph> <paragraph num="(b)"> <text>Course coordinator information,</text> </paragraph> <paragraph num="(c)"> <text>Course instructor information and approval form,</text> </paragraph> <paragraph num="(d)"> <text>Certificate of course completion, and</text> </paragraph> <paragraph num="(e)"> <text>Checklist of items that must accompany the course approval package;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A statement of the educational objectives;</text> </paragraph> <paragraph num="(3)"> <text>A full and detailed description of the course content including the amount of time allotted to each subject covered by the course on an hour-by-hour basis;</text> </paragraph> <paragraph num="(4)"> <text>All course materials, including textbooks, written materials in place of textbooks, course syllabus, policy forms, and any other items used by the instructor;</text> </paragraph> <paragraph num="(5)"> <text>Promotional materials; and</text> </paragraph> <paragraph num="(6)"> <text>A statement of the refund policy, which shall include:</text> <paragraph num="(a)"> <text>Full refund of course fees due to cancellation by the sponsor; and</text> </paragraph> <paragraph num="(b)"> <text>The refund policy when the licensed insurance producer:</text> <paragraph num="(i)"> <text>Withdraws from the course before commencement, and</text> </paragraph> <paragraph num="(ii)"> <text>Fails to complete the course after it has commenced; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>If the Commissioner contracts with a vendor to review continuing education courses, the fee charged by the vendor.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The provider shall submit a course approval package to the Commissioner as follows:</text> <paragraph num="(1)"> <text>A course previously approved in another state or jurisdiction that has adopted the “NAIC Uniform Declaration Regarding Continuing Education Reciprocity Course Approval Guidelines” shall be submitted using the NAIC Uniform Continuing Education Reciprocity Course Filing Form at least 30 days before the first date on which the course is to be taught; or</text> </paragraph> <paragraph num="(2)"> <text>A course that has not been previously approved in a state that has adopted the “NAIC Uniform Declaration Regarding Continuing Education Reciprocity Course Approval Guidelines” shall be submitted at least 45 days before the first date on which the course is to be taught.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner shall notify the provider in writing of a course approval and the period of time of the approval, which shall be from the date of the approval until the second anniversary of the date the course was approved.</text> </paragraph> <paragraph num="D."> <text>A provider may offer only a course approved by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Submission of Courses for Renewal."> <paragraph num="A."> <text>At least 90 days prior to the expiration of a course’s approval, the Commissioner shall mail to the provider of the approved course a notice that states:</text> <paragraph num="(1)"> <text>The course name, the course content code, the course number, and the date on which the course approval expires;</text> </paragraph> <paragraph num="(2)"> <text>The date by which the Commissioner must receive the request to renew; and</text> </paragraph> <paragraph num="(3)"> <text>The fee charged for reviewing continuing education courses submitted for renewal.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In order to renew a course, a provider must comply with the provisions of COMAR 31.03.02.08.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Providers."> <paragraph num="A."> <text>A provider shall:</text> <paragraph num="(1)"> <text>Comply with this chapter for each of the provider’s approved courses;</text> </paragraph> <paragraph num="(2)"> <text>Use in all communication with the Commissioner or the Commissioner’s designee the provider identification number assigned by the Commissioner;</text> </paragraph> <paragraph num="(3)"> <text>Use a course coordinator who meets the qualifications specified in this chapter;</text> </paragraph> <paragraph num="(4)"> <text>Use an approved instructor; and</text> </paragraph> <paragraph num="(5)"> <text>Notify the Commissioner of the replacement of a course coordinator.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A provider who is an insurer authorized to do business in Maryland may not require an appointed insurance producers to obtain hours of continuing education by attending an approved course that the insurer is providing.</text> </paragraph> <paragraph num="C."> <text>Within 10 days of the completion of a course, the provider shall report a course completion roster to the Commissioner or the Commissioner’s designee in an electronic format specified by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Course Coordinators."> <paragraph num="A."> <text>The provider shall ensure that each approved continuing education course has at least one course coordinator who is responsible for:</text> <paragraph num="(1)"> <text>Supervising the administration of the course; and</text> </paragraph> <paragraph num="(2)"> <text>Compliance with this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A course coordinator shall possess one or more of the following qualifications:</text> <paragraph num="(1)"> <text>A minimum of 5 years experience as an actively licensed insurance producer;</text> </paragraph> <paragraph num="(2)"> <text>A minimum of 3 years experience as an administrator of an education program;</text> </paragraph> <paragraph num="(3)"> <text>A degree in education and at least 2 years experience as a licensed insurance producer; or</text> </paragraph> <paragraph num="(4)"> <text>Full-time employment in the insurance education field as a coordinator with at least 6 months experience.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A course coordinator shall:</text> <paragraph num="(1)"> <text>Assure compliance with this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Notify the Commissioner of:</text> <paragraph num="(a)"> <text>Any change in the instructor for an approved course;</text> </paragraph> <paragraph num="(b)"> <text>The date, time, and location of a course offering and the name of the instructor not less than 14 calendar days in advance of the date that the course offering is scheduled to begin; and</text> </paragraph> <paragraph num="(c)"> <text>The cancellation of a course offering as soon as reasonably possible;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Assure that students are provided with current and accurate information;</text> </paragraph> <paragraph num="(4)"> <text>Create an accurate record of student attendance and successful course completion for each offering of an approved course;</text> </paragraph> <paragraph num="(5)"> <text>Supervise and evaluate courses and instructors;</text> </paragraph> <paragraph num="(6)"> <text>Investigate complaints relating to course offerings and instructors;</text> </paragraph> <paragraph num="(7)"> <text>Maintain accurate records relating to course offerings, instructors, student attendance, and student course completion for a minimum of 4 years following the date of the course offering; and</text> </paragraph> <paragraph num="(8)"> <text>Within 15 days of the student’s completion of the course, provide each student with a certificate of course completion on a form approved by the Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Instructors."> <paragraph num="A."> <text>The provider shall ensure that each continuing education course approved by the Commissioner is taught by an instructor who has been approved by the Commissioner as meeting the qualifications specified in this chapter.</text> </paragraph> <paragraph num="B."> <text>The provider shall submit to the Commissioner a course instructor information and approval form for each instructor of an approved course.</text> </paragraph> <paragraph num="C."> <text>An instructor shall possess one or more of the following qualifications:</text> <paragraph num="(1)"> <text>A minimum of 2 years experience in the subject matter being taught;</text> </paragraph> <paragraph num="(2)"> <text>A degree in the subject matter being taught; or</text> </paragraph> <paragraph num="(3)"> <text>A minimum of 2 years recent experience as a licensed insurance producer and a minimum of 6 months practical experience in the subject matter being taught.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Commissioner may not approve as an instructor a licensed insurance producer:</text> <paragraph num="(1)"> <text>Who has been fined; or</text> </paragraph> <paragraph num="(2)"> <text>Whose license has been suspended or revoked.</text> </paragraph> </paragraph> <paragraph num="E."> <text>An instructor shall:</text> <paragraph num="(1)"> <text>Comply with this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Provide students with:</text> <paragraph num="(a)"> <text>Current and accurate information on the subject matter of the course; and</text> </paragraph> <paragraph num="(b)"> <text>A course syllabus that shall contain at least the following information:</text> <paragraph num="(i)"> <text>Course title and designated course number assigned by the Commissioner;</text> </paragraph> <paragraph num="(ii)"> <text>Times and dates of the course offering;</text> </paragraph> <paragraph num="(iii)"> <text>Names, addresses, and telephone numbers of each course coordinator; and</text> </paragraph> <paragraph num="(iv)"> <text>Detailed outline of the subject matter of the course.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>The Commissioner may revoke the approval of any course that is not taught by an approved instructor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Advertising of Approved Courses."> <paragraph num="A."> <text>Except as provided in §D of this regulation, a provider may not advertise or distribute promotional materials unless the course has been approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Advertisements and promotional materials may not be deceptive or misleading and shall, at a minimum, clearly identify the number of hours of continuing education for which a course has been approved and the fee for taking the course.</text> </paragraph> <paragraph num="C."> <text>A provider of an approved course who advertises or promotes a course that has not been approved or a course that is not eligible for approval shall prominently state that no hours of continuing education can be earned by taking the course.</text> </paragraph> <paragraph num="D."> <text>A provider may request, in writing, permission to advertise a course before approval is obtained from the Commissioner by submitting:</text> <paragraph num="(1)"> <text>A letter specifically requesting permission to advertise the course before approval is obtained; and</text> </paragraph> <paragraph num="(2)"> <text>With the course approval package, all advertisements or promotional materials that will be used before approval and which shall prominently include the words “approval from the Insurance Administration pending”.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Commissioner shall issue the provider a written response either granting or denying the provider’s request. The provider may not advertise the course until the Commissioner has granted the request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Prohibited Practices."> <text>The following practices by a provider, course coordinator, or instructor are prohibited:</text> <paragraph num="A."> <text>Offering or teaching a course that is not approved or that is not in substantial conformity with the course completion package submitted to and approved by the Commissioner;</text> </paragraph> <paragraph num="B."> <text>Promoting a particular insurance agency or insurance company or products of the agency or company; and</text> </paragraph> <paragraph num="C."> <text>Requiring, as a condition of receiving a certificate of course completion, that students participate in other programs or services offered by the provider, course coordinator, or instructor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Powers of the Commissioner."> <paragraph num="A."> <text>The Commissioner, the Commissioner’s designee, or the members of an advisory board may audit all course offerings with or without notice to the provider, course coordinator, or instructor of the course.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may suspend or revoke the approval of a course for any of the following violations of this chapter:</text> <paragraph num="(1)"> <text>Failure of the instructor to follow the approved course content;</text> </paragraph> <paragraph num="(2)"> <text>Failure to use a course coordinator meeting the qualifications specified in this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Failure to use an approved instructor;</text> </paragraph> <paragraph num="(4)"> <text>Failure to notify the Commissioner of the date, time, location, and instructor of a course offering in accordance with Regulation .11C(2)(b) of this chapter; or</text> </paragraph> <paragraph num="(5)"> <text>Failure to report a course completion roster in accordance with Regulation .10C of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner may suspend or revoke all approved courses of a particular provider for a violation of this chapter or refuse to approve a course submitted by a specific provider if the Commissioner determines that a past course offering by that provider was not in compliance with this chapter.</text> </paragraph> <paragraph num="D."> <text>The Commissioner may suspend or revoke the approval of any instructor, course coordinator, or course provider who fails to comply with this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Waiver of the Continuing Education Requirement."> <paragraph num="A."> <text>Subject to §B of this regulation, the continuing education requirements may be waived for a licensed insurance producer who:</text> <paragraph num="(1)"> <text>Submits a written request for a waiver; and</text> </paragraph> <paragraph num="(2)"> <text>Is determined by the Commissioner, in the Commissioner's discretion, to warrant the waiver.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A waiver request shall be accompanied by supporting documentation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Advisory Boards."> <text>The Commissioner may appoint a life and health advisory board and a property and casualty advisory board as provided by Insurance Article, §10-110(b) and (c), Annotated Code of Maryland, for the purpose of reviewing the course approval packages submitted to the Commissioner and making recommendations on approval or disapproval of courses.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, , §§2-109, 10-115, and 10-116, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 16, 1987 (14:23 Md. R. 2424)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 repealed and new Regulations .01—.17 adopted as an emergency provision effective July 1, 1997 (24:17 Md. R. 1209); adopted permanently effective November 17, 1997 (24:23 Md. R. 1609)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.74 to COMAR 31.03.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03J adopted effective August 20, 2001 (28:16 Md. R. 1484)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective August 20, 2001 (28:16 Md. R. 1484)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective February 1, 2015 (41:20 Md. R. 1114)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective November 6, 2017 (44:22 Md. R. 1038)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective November 6, 2017 (44:22 Md. R. 1038)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D amended effective January 1, 2020 (46:19 Md. R. 816); ); February 1, 2023 (49:15 Md. R. 739)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03F amended effective October 1, 2023 (50:13 Md. R. 514)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03H amended effective December 14, 2020 (47:25 Md. R. 1067)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10C amended effective January 27, 2020 (47:2 Md. R. 62)</annotation> </annotations> </chapter> <chapter num="03" heading="Fiduciary Responsibility of Insurance Producers: Premium Accounts — Commingling of Funds"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means a person that is:</text> <paragraph num="(a)"> <text>An insurer that holds a certificate of authority in the State and provides insurance in the State;</text> </paragraph> <paragraph num="(b)"> <text>A health maintenance organization that is licensed to operate in the State;</text> </paragraph> <paragraph num="(c)"> <text>A nonprofit health service plan that is licensed to operate in the State; or</text> </paragraph> <paragraph num="(d)"> <text>Any other person or organization that provides insurance or health benefit plans subject to State insurance regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Operating account” means an account owned by an insurance producer containing monies that are utilized primarily for the day to day operation of the insurance producer’s business.</text> </paragraph> <paragraph num="(3)"> <text>“Personal account” means an account owned by an individual who is an insurance producer containing monies that are utilized primarily for the individual’s personal expenses.</text> </paragraph> <paragraph num="(4)"> <text>“Premium” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Premium account” means an account in a bank or banks authorized to do business in this State or subject to jurisdiction of this State containing premium monies or voluntary deposits, from which withdrawals may not be made except as specified in COMAR 31.03.03.02C.</text> </paragraph> <paragraph num="(6)"> <text>“Prompt remittance” means remittance of premium monies to carriers or insureds not later than the close of the fifth business day following receipt of the funds.</text> </paragraph> <paragraph num="(7)"> <text>“Voluntary deposit” means a deposit into a premium account in excess of aggregate net premiums, return premiums, and deposits received but not remitted, made for the purpose of maintaining a minimum balance, to guarantee the adequacy of the account, or to pay premium due but uncollected.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="General Requirements."> <paragraph num="A."> <text>Premium Account. An insurance producer that does not make prompt remittance of a carrier or insured’s premium shall maintain such premium in one or more premium accounts, which shall be separate from any operating accounts or personal accounts.</text> </paragraph> <paragraph num="B."> <text>Commingling of Premium.</text> <paragraph num="(1)"> <text>An insurance producer acting as such in this State may not commingle any premium account with any operating account or personal account.</text> </paragraph> <paragraph num="(2)"> <text>An insurance producer acting as such in this State may:</text> <paragraph num="(a)"> <text>Make voluntary deposits into the insurance producer’s premium account.</text> </paragraph> <paragraph num="(b)"> <text>Unless prohibited by the carrier, or by Regulation .04 of this chapter, commingle a single carrier’s premium with the premium of one or more other carriers into one or more premium accounts.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Withdrawals.</text> <paragraph num="(1)"> <text>Withdrawals from a premium account may not be made other than for the following purposes:</text> <paragraph num="(a)"> <text>Payment of premiums to carriers.</text> </paragraph> <paragraph num="(b)"> <text>Transfer to an operating account of bank interest, if the carrier has consented to it in writing.</text> </paragraph> <paragraph num="(c)"> <text>Transfer to an operating account of commissions either actual or average. If average commissions are used, the insurance producer shall maintain on file in the insurance producer's office at all times a letter from each carrier stating the percentage of the average commission.</text> </paragraph> <paragraph num="(d)"> <text>Withdrawal of voluntary deposits.</text> </paragraph> <paragraph num="(e)"> <text>Payment of return deposits to insureds.</text> </paragraph> <paragraph num="(f)"> <text>Payment of return premiums to insureds in the ordinary course of business when a written agreement with the carrier authorizing this practice exists.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A withdrawal may not be made if the balance remaining in the premium account thereafter is less than aggregate net premiums, return premiums, and deposits received but not remitted.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Deposit of a premium in a premium account may not be construed as a commingling of the net premium and of the commission portion of the premium.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Account Current System."> <text>In the case of an insurance producer operating under an account current system, maintenance at all times in one or more premium accounts of at least the net balance of premiums as determined by either actual or average commissions, return premiums, and deposits received but not remitted, shall be construed as compliance with this chapter, provided that the funds so held for each carrier are readily ascertainable from the insurance producer's records.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Substantial Interest."> <text>In those instances when the officers, directors, or principal management of a carrier have a substantial interest in either the conduct or operation of the agency or brokerage business, or when the officers, directors, or principal management of an agency or brokerage business have a substantial interest in the conduct or operation of the carrier, the agency or brokerage business shall maintain one or more premium accounts to be used exclusively for any premium collected from the carrier, which shall be separate from premium accounts for other carriers.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 10-126, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1967</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.20 to COMAR 31.03.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 2018 (44:20 Md. R. 947)</annotation> </annotations> </chapter> <chapter num="04" heading="Regulation Restricting Licensed Insurance Producers to Placing Maryland Risks for State Citizens with Authorized Insurers"> <regulation prefix="Regulation" num=".01" heading="Unfair Trade Practice."> <paragraph num="A."> <text>This regulation does not apply to:</text> <paragraph num="(1)"> <text>Reinsurance of the liability of an admitted insurer;</text> </paragraph> <paragraph num="(2)"> <text>Insurance against perils of navigation, transit, or transportation upon hulls, freights or disbursements, or other personal property and interest therein, in the course of exportation from or importation into any country, or transportation coastwise, including transportation by land or water from point of origin to final destination and including war risks; and marine builder's risks, dry docks, and marine railways, including insurance of ship repairer's liability, and protection and indemnity insurance, but excluding insurance covering:</text> <paragraph num="(a)"> <text>Bridges and tunnels,</text> </paragraph> <paragraph num="(b)"> <text>Pleasure craft that are under 60 feet in length and are owned and used for pleasure and not for business, hire, or other commercial use,</text> </paragraph> <paragraph num="(c)"> <text>Fishing vessels under 50 gross tons weight that are not part of a fleet of three or more vessels, or</text> </paragraph> <paragraph num="(d)"> <text>Charter or head boats under 50 gross tons that are not part of a fleet of three or more vessels;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Aircraft insurance;</text> </paragraph> <paragraph num="(4)"> <text>Insurance on property or operations of railroads engaged in interstate commerce;</text> </paragraph> <paragraph num="(5)"> <text>Insurance effectuated in accordance with the Surplus-Line Insurance Law, Insurance Article, Title 3, Subtitle 3, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(6)"> <text>Insurance effectuated in accordance with Article 83A, §§5-1035 and 5-1037, Annotated Code of Maryland, and State Finance and Procurement Article, §§13-207, 13-208, 13-216, and 17-104, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>It is deemed to be an unfair trade practice in the business of insurance for any insurance producer licensed both in Maryland and in another state or the District of Columbia to place insurance on risks located in Maryland for Maryland citizens with insurers not authorized to do business in this State.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-201, and 4-203, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 1, 1966</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective April 22, 1996 (23:8 Md. R. 604)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.23 to COMAR 31.03.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective December 29, 2008 (35:26 Md. R. 2250)</annotation> </annotations> </chapter> <chapter num="05" heading="Bail Bonds"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter does not apply to property bail bondsmen.</text> </paragraph> <paragraph num="B."> <text>Except as provided in Insurance Article, §10-309, Annotated Code of Maryland, this chapter does not apply to a bail bondsman who provides bail bondsman services under Criminal Procedure Article, §5-203, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affidavit” means a dated written or printed statement of facts, made voluntarily, and confirmed by oath or affirmation of the person making it, taken before an individual having authority to administer such oath or affirmation in connection with posting a bail bond pursuant to Maryland Rule 4-217.</text> </paragraph> <paragraph num="(2)"> <text>“Appointment” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Authorized insurer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Bail bond” has the meaning set forth in Insurance Article, §10-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Bail bond application” means a written request to a surety insurer for a bail bond that sets forth the required information to purchase a policy of surety insurance.</text> </paragraph> <paragraph num="(6)"> <text>“Bail bondsman” means a surety insurance producer who is appointed by a surety insurer to solicit, negotiate, or procure bail bonds on behalf of that surety insurer.</text> </paragraph> <paragraph num="(7)"> <text>“Bail bondsman services” means any conduct relating to the sale, solicitation, negotiation, or procurement of a bail bond, and includes the posting of a bail bond.</text> </paragraph> <paragraph num="(8)"> <text>“Balance amount” means the amount of premium owed by a person under an installment agreement after subtracting the down payment from the premium.</text> </paragraph> <paragraph num="(9)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(10)"> <text>“Indemnity agreement” means a written surety agreement that is entered into by a bail bondsman and a person who agrees to indemnify a bail bondsman or surety insurer.</text> </paragraph> <paragraph num="(11)"> <text>“Installment agreement” means a written agreement between a bail bondsman and a person in which the person agrees to pay, and the bail bondsman agrees to accept, the payment of a premium for a bail bond using installment payments.</text> </paragraph> <paragraph num="(12)"> <text>“Insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Licensed insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Property bail bondsman” has the meaning set forth in Criminal Procedure Article, §5-209, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Surety insurance” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Surety insurance producer” means a licensed insurance producer who, for compensation, sells, solicits, negotiates, or procures surety insurance contracts and is appointed by an authorized surety insurer to act as an insurance producer.</text> </paragraph> <paragraph num="(17)"> <text>“Surety insurer” has the meaning set forth in Insurance Article, §10-301, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Prohibited Actions."> <paragraph num="A."> <text>An insurer may not:</text> <paragraph num="(1)"> <text>Directly or indirectly pay any commission, fee, reward, or other consideration for the sale, solicitation, negotiation, or procurement, or for influencing the sale, solicitation, negotiation, or procurement of, a bail bond to any person unless that person is a bail bondsman, and is appointed by the surety insurer; or</text> </paragraph> <paragraph num="(2)"> <text>Delegate its authority to appoint a bail bondsman.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A person acting as a bail bondsman or a person acting on behalf of a bail bondsman may not in any manner sell, solicit, negotiate, or procure a bail bond for a surety insurer in this State unless that person is a bail bondsman and is appointed by the surety insurer.</text> </paragraph> <paragraph num="C."> <text>A bail bondsman may not submit to any clerk, District Court commissioner, or other person authorized by law to take a bail bond, a document representing consent by any person unless the document has been fully executed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Conduct of Business by a Bail Bondsman."> <text>The business of a bail bondsman may be conducted by an individual, partnership, or corporation, provided that an individual who sells, solicits, negotiates, or procures bail bonds shall be a bail bondsman.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Appointments."> <paragraph num="A."> <text>A bail bondsman shall:</text> <paragraph num="(1)"> <text>Before conducting business as a bail bondsman, be appointed by a surety insurer to provide bail bondsman services; and</text> </paragraph> <paragraph num="(2)"> <text>Comply with the requirements of Maryland Rule 4-217.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A surety insurer that terminates the appointment of a bail bondsman shall immediately file a written notice of the termination with the Commissioner and with the Chief Clerk of the District Court of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Suspension or Revocation."> <text>A bail bondsman who makes a misleading or false representation to a court or to a public official for the purpose of avoiding a forfeiture of bail, having a forfeiture set aside, or obtaining the release of a defendant on the defendant’s own recognizance, shall be in violation of Insurance Article, §10-126(a)(6), (13), and (14), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Rates."> <paragraph num="A."> <text>A bail bondsman shall issue a bail bond that complies with Insurance Article, §27-216, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Except as provided in §C of this regulation, it shall be an unfair trade practice and a violation of the Insurance Article, §27-216, Annotated Code of Maryland, for a bail bondsman to sell, solicit, procure, or negotiate a bail bond if:</text> <paragraph num="(1)"> <text>A surety insurer has an approved premium rate for both cash bail bonds and corporate surety bail bonds;</text> </paragraph> <paragraph num="(2)"> <text>The premium rates differ for cash bail bonds and corporate surety bail bonds; and</text> </paragraph> <paragraph num="(3)"> <text>A defendant is sold a bail bond with the higher premium rate.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If a surety insurer has approved premium rates for cash bail bonds and corporate surety bail bonds, a bail bondsman may sell a defendant a bail bond regardless of the approved premium rate if the court specifies a type of bail bond.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Indemnity Agreement."> <text>An indemnity agreement shall:</text> <paragraph num="A."> <text>Contain the signatures of the bail bondsman providing the bail bondsman services and the person signing the indemnity agreement;</text> </paragraph> <paragraph num="B."> <text>Be executed prior to the issuance of a bail bond;</text> </paragraph> <paragraph num="C."> <text>Contain the printed name and insurance producer license number of the bail bondsman providing the bail bondsman services;</text> </paragraph> <paragraph num="D."> <text>Require the person signing the indemnity agreement to pay, and the bail bondsman to collect, the premium for the bail bond that is issued:</text> <paragraph num="(1)"> <text>At the time the indemnity agreement for the bail bond is executed by the bail bondsman and the person signing the indemnity agreement; or</text> </paragraph> <paragraph num="(2)"> <text>Through installment payments pursuant to a written installment agreement that complies with the requirements set forth in Regulation .09 of this chapter; and</text> </paragraph> </paragraph> <paragraph num="E."> <text>Contain the following statement on the first page in capital and bold letters of at least 12-point font: “THE PERSON SIGNING THIS INDEMNITY AGREEMENT IS ENTITLED TO A REFUND OF 100% OF THE PREMIUM PAID IF THIS BAIL BOND IS NOT POSTED.”</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Installment Agreement."> <paragraph num="A."> <text>An installment agreement shall be signed by a bail bondsman and the person who has agreed to pay the additional premium in installments.</text> </paragraph> <paragraph num="B."> <text>The installment agreement shall be written in the form adopted under Regulation .15 of this chapter and shall contain the following information:</text> <paragraph num="(1)"> <text>The amount of the bail bond;</text> </paragraph> <paragraph num="(2)"> <text>The amount of the premium;</text> </paragraph> <paragraph num="(3)"> <text>The amount of the down payment;</text> </paragraph> <paragraph num="(4)"> <text>The amount of the balance owed;</text> </paragraph> <paragraph num="(5)"> <text>The total number of installment payments required to pay the balance;</text> </paragraph> <paragraph num="(6)"> <text>The amount and due date of each installment payment;</text> </paragraph> <paragraph num="(7)"> <text>The printed name and insurance producer license number of the bail bondsman executing the installment agreement;</text> </paragraph> <paragraph num="(8)"> <text>The printed name of the bail bond insurance producer firm and its insurance producer license number, if the bail bondsman is employed or otherwise engaged by a bail bond insurance producer firm; and</text> </paragraph> <paragraph num="(9)"> <text>The criminal case number for which bail was posted and the installment agreement entered.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The bail bondsman who signed the installment agreement shall maintain records demonstrating that the bail bondsman has taken all necessary steps to collect the amount owed.</text> </paragraph> <paragraph num="D."> <text>Evidence that a bail bondsman has taken all necessary steps to collect the amount owed under the installment agreement may include, but is not limited to:</text> <paragraph num="(1)"> <text>Copies of all correspondence;</text> </paragraph> <paragraph num="(2)"> <text>Meeting logs, including the date and time the bail bondsman met with the person who signed the installment agreement;</text> </paragraph> <paragraph num="(3)"> <text>Telephone logs including the date, time, and name of the person with whom the bail bondsman communicated;</text> </paragraph> <paragraph num="(4)"> <text>Evidence that the debt has been referred to a collection agency, including the date of the referral and the name of the collection agency; and</text> </paragraph> <paragraph num="(5)"> <text>A copy of a civil court action seeking the money owed by the person who signed the installment agreement to the bail bondsman, including the filing of a writ of garnishment.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A bail bondsman shall provide the person signing the installment agreement a copy of the installment agreement and a receipt containing the amount of down payment made.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Records."> <paragraph num="A."> <text>A bail bondsman shall maintain for a period of 5 years after termination of the surety liability all documentation collected, prepared, and produced by the bail bondsman in the course of providing bail bondsman services, which shall include, but is not limited to, the following:</text> <paragraph num="(1)"> <text>Evidence of the return of any security or collateral, including a receipt evidencing the return or repayment of the security or collateral;</text> </paragraph> <paragraph num="(2)"> <text>Copies of the affidavit made in connection with posting a bond or an indemnity agreement or collateral received; and</text> </paragraph> <paragraph num="(3)"> <text>Copies of all written representations made to any court or to any public official for the purpose of avoiding a forfeiture of bail, setting aside a forfeiture of bail, or causing a defendant to be released on the defendant’s own recognizance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In addition to the records set forth in §A of this regulation, a bail bondsman’s records shall include the following information:</text> <paragraph num="(1)"> <text>A copy of the power of attorney form;</text> </paragraph> <paragraph num="(2)"> <text>The date the bond was executed;</text> </paragraph> <paragraph num="(3)"> <text>The name of the person who signed the indemnity agreement;</text> </paragraph> <paragraph num="(4)"> <text>The amount of the bond;</text> </paragraph> <paragraph num="(5)"> <text>The premium charged;</text> </paragraph> <paragraph num="(6)"> <text>The premium reported to the surety insurer and the date reported;</text> </paragraph> <paragraph num="(7)"> <text>A description, including the date and amount, of any collateral received;</text> </paragraph> <paragraph num="(8)"> <text>A description, including the date and amount, of any collateral returned;</text> </paragraph> <paragraph num="(9)"> <text>The indemnity agreement;</text> </paragraph> <paragraph num="(10)"> <text>The disposition of the bond, including the date of disposition;</text> </paragraph> <paragraph num="(11)"> <text>A copy of any receipt for payment made to obtain an indemnity agreement or for an installment agreement;</text> </paragraph> <paragraph num="(12)"> <text>The bail bond application;</text> </paragraph> <paragraph num="(13)"> <text>A copy of the bail bond;</text> </paragraph> <paragraph num="(14)"> <text>The installment agreement, if any; and</text> </paragraph> <paragraph num="(15)"> <text>The information required under Regulation .09D of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Records required by this regulation shall be maintained in writing or by electronic means, provided that the records:</text> <paragraph num="(1)"> <text>Are clear and legible;</text> </paragraph> <paragraph num="(2)"> <text>Accurately reproduce an original document in its entirety, including any attachments to the document; and</text> </paragraph> <paragraph num="(3)"> <text>Preserve any signature contained on the document.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The certification required pursuant to Insurance Article, §10-309(e)(3), Annotated Code of Maryland, shall be submitted by December 31 on a form made available by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Premium Receipts."> <paragraph num="A."> <text>A bail bondsman who collects a premium shall provide a numbered receipt to the person paying the premium. A copy of the receipt shall be retained by the bail bondsman and maintained in accordance with Regulation .10 of this chapter.</text> </paragraph> <paragraph num="B."> <text>A receipt shall contain the following information:</text> <paragraph num="(1)"> <text>The name, place of business, address, and telephone number of the bail bondsman who collected the premium;</text> </paragraph> <paragraph num="(2)"> <text>An itemized statement of the amount of bail and the jurisdiction for which the bond is being written;</text> </paragraph> <paragraph num="(3)"> <text>An itemized statement of the premium charged;</text> </paragraph> <paragraph num="(4)"> <text>The amount collected by the surety insurance producer;</text> </paragraph> <paragraph num="(5)"> <text>The unpaid balance, if any;</text> </paragraph> <paragraph num="(6)"> <text>The amount, value, and description of any collateral received;</text> </paragraph> <paragraph num="(7)"> <text>The following statement, in capital and bold letters of at least 12-point font, at the bottom of the receipt: THE PERSON PAYING THE PREMIUM MUST RECEIVE A COPY OF THIS RECEIPT AT THE TIME OF MAKING A PAYMENT; and</text> </paragraph> <paragraph num="(8)"> <text>The insurance producer license number and the printed and signed name of the bail bondsman collecting the premium.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Forms."> <text>A bail bondsman shall:</text> <paragraph num="A."> <text>Ensure that each document provided to, or executed by, the person signing the indemnity agreement contains the name and insurance producer license number of the bail bondsman providing the bail bondsman services and the bail bond insurance producer firm, if any; and</text> </paragraph> <paragraph num="B."> <text>Provide the person to whom the bail bondsman services are provided with a copy of:</text> <paragraph num="(1)"> <text>A premium receipt at the time the premium is paid;</text> </paragraph> <paragraph num="(2)"> <text>A collateral receipt at the time the collateral is given; and</text> </paragraph> <paragraph num="(3)"> <text>An installment agreement or indemnity agreement at the time that any such document is signed.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Collateral."> <paragraph num="A."> <text>A bail bondsman shall, in an affidavit, describe in detail any collateral received in connection with the sale of a bail bond and the terms of an indemnity or collateral agreement; and</text> </paragraph> <paragraph num="B."> <text>A bail bondsman shall provide a copy of the affidavit to the person signing the indemnity agreement or the person signing the collateral agreement.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Return of Collateral."> <paragraph num="A."> <text>Immediately upon the discharge of a bail bond, the bail bondsman shall return any collateral held by the bail bondsman. Upon receiving a request for return of collateral, the bail bondsman shall promptly determine whether the bail bond has been discharged.</text> </paragraph> <paragraph num="B."> <text>The bail bondsman may deduct any unpaid premiums due on the bail bond from any collateral being returned.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Installment Agreement Form."> <text>FORM AT END OF CHAPTER</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108, 2-109(a)(1), 10-126, and 10-309, and Title 10, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 2, 1993 (19:26 Md. R. 2287)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.94 to COMAR 31.03.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective March 22, 2016 (43:2 Md. R. 128)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended February 12, 2018 (45:3 Md. R. 158)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 adopted February 12, 2018 (45:3 Md. R. 158)</annotation> </annotations> </chapter> <chapter num="06" heading="Surplus Lines"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish procedures for compliance with the Surplus Line Insurance Law, Insurance Article, Title 3, Subtitle 3, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".01-1" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Condominium” includes the common elements of a condominium.</text> </paragraph> <paragraph num="(2)"> <text>Home State.</text> <paragraph num="(a)"> <text>“Home State” means, except as provided in §B(2)(b) of this regulation, with respect to an insured:</text> <paragraph num="(i)"> <text>The state in which an insured maintains its principal place of business or, in the case of any individual, the individual’s principal residence; or</text> </paragraph> <paragraph num="(ii)"> <text>If 100 percent of the insured risk is located out of the state referred to in §B(2)(a)(i) if this regulation, the state to which the greatest percentage of the insured’s taxable premium for that insurance contract is allocated.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If more than 1 insured from an affiliated group are named insureds on a single nonadmitted insurance contract, the term “Home State” means the Home State, as determined pursuant to §B(2)(a) of this regulation, of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Qualified risk manager” means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:</text> <paragraph num="(a)"> <text>The person is an employee of, or third-party consultant retained by, the commercial policyholder;</text> </paragraph> <paragraph num="(b)"> <text>The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance; and</text> </paragraph> <paragraph num="(c)"> <text>The person meets at least one of the following criteria:</text> <paragraph num="(i)"> <text>The person has a bachelor’s degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the Commissioner to demonstrate minimum competence in risk management and has 3 years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance;</text> </paragraph> <paragraph num="(ii)"> <text>The person has a bachelor’s degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the Commissioner to demonstrate minimum competence in risk management, and holds:</text> <paragraph num="1."> <text>A designation as a Chartered Property and Casualty Underwriter (in this subparagraph referred to as “CPCU”) issued by the American Institute for CPCU/Insurance Institute of America;</text> </paragraph> <paragraph num="2."> <text>A designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America;</text> </paragraph> <paragraph num="3."> <text>A designation as a Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education and Research;</text> </paragraph> <paragraph num="4."> <text>A designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; or</text> </paragraph> <paragraph num="5."> <text>Any other designation, certification, or license determined by the Commissioner to demonstrate minimum competency in risk management;</text> </paragraph> </paragraph> <paragraph num="(iii)"> <text>The person has at least 7 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance, and has any one of the designations specified in §B(3)(c)(ii)1—5 of this regulation;</text> </paragraph> <paragraph num="(iv)"> <text>The person has at least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or</text> </paragraph> <paragraph num="(v)"> <text>The person has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the Commissioner to demonstrate minimum competence in risk management.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Residential Property.</text> <paragraph num="(a)"> <text>“Residential property” means a home, townhouse, or other habitable structure that is used principally as a residence.</text> </paragraph> <paragraph num="(b)"> <text>“Residential property” does not include:</text> <paragraph num="(i)"> <text>A vacant structure;</text> </paragraph> <paragraph num="(ii)"> <text>A structure with both commercial and residential use if more than 50 percent of the structure is devoted to commercial use;</text> </paragraph> <paragraph num="(iii)"> <text>An apartment building that contains more than four apartment units; or</text> </paragraph> <paragraph num="(iv)"> <text>A condominium.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Maryland Surplus Lines Brokers' Licenses."> <text>Before placing any surplus line or otherwise acting as a surplus lines broker, where Maryland is the Home State of the insured, it will be the responsibility of each individual so acting to acquire a valid Maryland surplus lines broker’s certificate of qualification. The broker will be held responsible for securing timely renewals of the broker’s certification of qualification in order to place new business and provide a continuity of service to clients for whom the broker has previously acted. Each original surplus lines broker’s certificate of qualification shall be issued for a term expiring every other year on the date stated on the certificate of qualification and may be renewed biennially thereafter.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Surplus Lines Affidavits."> <text>A surplus lines broker placing a surplus lines coverage shall execute the affidavit required by Insurance Article, §3-307, Annotated Code of Maryland, on a form provided by the Commissioner, or containing all of the information required by the Commissioner, and shall file the affidavit with the Commissioner on or before the 45th day after the last day of the quarter in which the insurance was placed.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Residential Property — Substantially Similar Renewal Offer."> <paragraph num="A."> <text>Presumption. For purposes of Insurance Article, §3-306(a)(5)(iii), Annotated Code of Maryland, a renewal offer by an authorized insurer for coverage on residential property is presumed to be made on substantially the same terms and conditions as the current coverage unless the renewal offer:</text> <paragraph num="(1)"> <text>Contains an increase in premium of 20 percent or more;</text> </paragraph> <paragraph num="(2)"> <text>Contains an increase in the deductible of 100 percent or more; or</text> </paragraph> <paragraph num="(3)"> <text>Contains or omits any other term or condition that the Commissioner has determined in writing to result in the terms and conditions of the renewal offer not being substantially similar to the terms and conditions of the current coverage.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Request for Determination.</text> <paragraph num="(1)"> <text>Upon written request from the originating insurance producer or a surplus lines broker, the Commissioner shall provide a written determination of whether the terms and conditions of a renewal offer are substantially similar to the current coverage which will be expiring.</text> </paragraph> <paragraph num="(2)"> <text>The request shall provide, at a minimum, the following information:</text> <paragraph num="(a)"> <text>A description of the insured risk and the type of coverage provided;</text> </paragraph> <paragraph num="(b)"> <text>A policy number for the expiring coverage and the date that the coverage expires;</text> </paragraph> <paragraph num="(c)"> <text>A full explanation of the terms and conditions which differ between the renewal offer and the current coverage;</text> </paragraph> <paragraph num="(d)"> <text>Copies of the relevant policies or specific policy terms, if needed to fully explain the differences;</text> </paragraph> <paragraph num="(e)"> <text>The name, address, phone number, and electronic mail address for the individual who can respond to any questions from the Commissioner's staff; and</text> </paragraph> <paragraph num="(f)"> <text>The name and address of the individual who is to receive the Commissioner's written determination.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Documentation. Whenever coverage provided by an authorized insurer on residential property is replaced with coverage provided by an unauthorized insurer, the surplus lines broker or the originating insurance producer shall state in the affidavit required by Insurance Article, §3-307, Annotated Code of Maryland, or on a form approved by the Commissioner and submitted with the affidavit:</text> <paragraph num="(1)"> <text>Whether the authorized insurer made a renewal offer; and</text> </paragraph> <paragraph num="(2)"> <text>If the authorized insurer did make a renewal offer, the reason why the terms and conditions of the renewal offer were not substantially similar to the terms and conditions of the coverage previously provided.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Surplus Lines Reports and Premium Receipts Tax."> <paragraph num="A."> <text>Each surplus lines broker that has transacted surplus lines business in the State during the preceding half calendar year shall file with the Commissioner a semiannual statement that reports on business subject to the tax imposed by Insurance Article, §3-324, Annotated Code of Maryland, during the preceding half calendar year. The report shall be made in accordance with the form prescribed by the Commissioner and available from the Commissioner’s office.</text> </paragraph> <paragraph num="B."> <text>The broker shall deliver the report to the office of the Commissioner on or before March 15 and September 15 of each year.</text> </paragraph> <paragraph num="C."> <text>The March 15 report shall cover the business placed between July 1 and December 31, inclusive, of the preceding calendar year. The September report shall cover the business placed between January 1 and June 30, inclusive, of the calendar year in which the report is made.</text> </paragraph> <paragraph num="D."> <text>The reports shall be open to public inspection and shall include:</text> <paragraph num="(1)"> <text>The gross amount of each kind of insurance business transacted and the aggregate gross premiums charged;</text> </paragraph> <paragraph num="(2)"> <text>The aggregate of returned premiums and taxes paid to insureds;</text> </paragraph> <paragraph num="(3)"> <text>The aggregate of net premiums; and</text> </paragraph> <paragraph num="(4)"> <text>Any additional information required by the form.</text> </paragraph> </paragraph> <paragraph num="E."> <text>All premiums and taxes, including additional and return premiums and taxes, may be reported and paid on a placed or written basis but shall be paid in any case for the full term of the policy, whether or not one or more installments of premium remain unearned and payable at some future date or dates during the term of policy. In computing the tax due, the broker may deduct the expense of any examination made in accordance with Insurance Article, §§2-208 and 3-325(d), Annotated Code of Maryland, during the period covered by the report.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Compliance with Filing and Premium Receipts Tax Payment Requirements."> <paragraph num="A."> <text>A report, affidavit, or return that must be filed under this chapter complies with the filing requirement if the report, affidavit, or return is:</text> <paragraph num="(1)"> <text>Mailed or postmarked by the United States Postal Service on or before the filing date;</text> </paragraph> <paragraph num="(2)"> <text>Delivered on or before the filing date to a private delivery service recognized by the Commissioner, if the delivery is evidenced by a receipt; or</text> </paragraph> <paragraph num="(3)"> <text>Transmitted electronically on or before the filing date in a manner approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Each broker shall remit the full amount of the premium receipts tax appearing on the report filed pursuant to Regulation .05 of this chapter at the time the report is filed.</text> </paragraph> <paragraph num="C."> <text>Each broker shall remit the full amount of the premium receipts tax in the manner directed by the Commissioner on the form prescribed by the Commissioner pursuant to Regulation .05 of this chapter.</text> </paragraph> <paragraph num="D."> <text>With respect to premium receipts tax due to the State, a surplus lines broker who fails to pay a tax when a report under Regulation .05 of this chapter is due, or fails to file a report, is subject to the provisions of Insurance Article, Title 6, Subtitle 1, Annotated Code of Maryland related to penalties, audits, assessments, limitations, appeals, and refunds.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Books and Records."> <paragraph num="A."> <text>Every surplus lines broker shall keep a separate record and account of all business transacted under the surplus lines broker's license, including a copy of each daily report, if any, and of each binder or cover note delivered by the surplus lines broker. The records shall be available for examination by the Commissioner at any reasonable time within 3 years after the issuance of the coverage to which the records relate.</text> </paragraph> <paragraph num="B."> <text>Every surplus lines broker shall maintain an adequate record of all return or additional premiums resulting from cancellations, adjustments made on deposit or minimum premiums, audit premiums, additional or return premiums as a result of endorsement to existing policies, additional or return premiums resulting from changes in the amount or type of coverage, and other changes resulting from any other cause.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Illegal Coverage."> <text>A surplus lines broker may not place with an unauthorized insurer any risk, whether individual or group, including any fictitious fleet or fictitious group, which is not eligible for placement with authorized insurers under the provisions of the Insurance Article, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Disclosure Form."> <paragraph num="A."> <text>Printing Specifications; Provision of Form to Insured. The written disclosure required by Insurance Article, §3-308, Annotated Code of Maryland, shall be:</text> <paragraph num="(1)"> <text>In the form set forth in §B of this regulation in at least 14-point type;</text> </paragraph> <paragraph num="(2)"> <text>On a separate piece of paper that:</text> <paragraph num="(a)"> <text>Contains only the disclosure; and</text> </paragraph> <paragraph num="(b)"> <text>Is attached to the insurance contract or binder; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Provided to the insured at the time of the initial purchase or delivery of an insurance contract or binder from a surplus lines insurer and at each renewal of the insurance contract.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Form.</text> </paragraph> <paragraph num="C."> <text>In addition to the disclosure required by §B of this regulation, the surplus lines broker shall:</text> <paragraph num="(1)"> <text>Provide a clear and conspicuous written disclosure to the prospective insured of:</text> <paragraph num="(a)"> <text>Any inspection fee;</text> </paragraph> <paragraph num="(b)"> <text>The total amount of the policy fee;</text> </paragraph> <paragraph num="(c)"> <text>The premium tax on the policy;</text> </paragraph> <paragraph num="(d)"> <text>Any financial interest of the person performing the inspection, if applicable;</text> </paragraph> <paragraph num="(e)"> <text>Whether the surplus lines broker will receive compensation from the person that performs the inspection; and</text> </paragraph> <paragraph num="(f)"> <text>Any charge for actual expenses incurred by the surplus lines broker for payment of the premium, policy fee, and any other fees and taxes relating to the policy by use of a credit card; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Notify the prospective insured of the option to obtain the inspection from another person who meets the requirements of or is approved by the surplus lines broker.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Signature of Insured on Disclosure Form for Policies Covering Residential Property or a Condominium.</text> <paragraph num="(1)"> <text>This section applies only to the written disclosure form for an insurance policy covering residential property or a condominium.</text> </paragraph> <paragraph num="(2)"> <text>In addition to the text required by §B of this regulation, the disclosure form for an insurance policy covering residential property or a condominium shall include blanks for the insured's signature, the insured's printed name, and the execution date.</text> </paragraph> <paragraph num="(3)"> <text>Whenever residential property or condominium insurance is placed or renewed with a surplus lines insurer, the originating insurance producer shall obtain the signature of the insured, the insured's printed name, and the execution date on the disclosure form.</text> </paragraph> <paragraph num="(4)"> <text>On execution, the originating insurance producer shall:</text> <paragraph num="(a)"> <text>Send the original copy of the disclosure form to the surplus lines broker;</text> </paragraph> <paragraph num="(b)"> <text>Provide a copy of the disclosure form to the insured; and</text> </paragraph> <paragraph num="(c)"> <text>Keep a copy of the disclosure form in the files of the originating insurance producer for at least 3 years after the date of execution by the insured.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The surplus lines broker shall:</text> <paragraph num="(a)"> <text>Retain the original copy of the disclosure form for at least 3 years after the date of execution by the insured; and</text> </paragraph> <paragraph num="(b)"> <text>Make the disclosure form available for inspection by the Commissioner on request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Disclosure Form Requirements for Policies Not Covering Residential Property or a Condominium.</text> <paragraph num="(1)"> <text>This section applies only to a written disclosure form for an insurance policy that does not cover residential property or a condominium.</text> </paragraph> <paragraph num="(2)"> <text>The surplus lines broker or the originating insurance producer shall provide the insured with the written disclosure required by §B of this regulation in the manner specified by §A of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The surplus lines broker or the originating insurance producer shall:</text> <paragraph num="(a)"> <text>Certify on a form approved by the Commissioner that the disclosure notice required by this regulation has been delivered to the insured with the insurance policy or binder; or</text> </paragraph> <paragraph num="(b)"> <text>Obtain from the insured written acknowledgment of receipt of the disclosure form.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the surplus lines broker or the originating insurance producer obtains written acknowledgement of receipt of the disclosure form, the surplus lines broker or the originating insurance producer shall:</text> <paragraph num="(a)"> <text>Retain for at least 3 years a copy of the written acknowledgment of receipt from the insured; and</text> </paragraph> <paragraph num="(b)"> <text>Make the acknowledgment available for inspection by the Commissioner on request.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Surplus Lines Exportable List."> <paragraph num="A."> <text>Diligent Search Not Required. In accordance with Insurance Article, §3-306.1(b)(1), Annotated Code of Maryland, a coverage that is listed in §C of this regulation may be placed with a surplus lines insurer without first conducting a diligent search as defined by Insurance Article, §3-306.1(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Affidavit Required. When a coverage that is listed in §C of this regulation is placed with a surplus lines insurer, the originating insurance producer shall execute and file an affidavit in accordance with Insurance Article, §3-307, Annotated Code of Maryland, and Regulation .03 of this chapter.</text> </paragraph> <paragraph num="C."> <text>The surplus lines exportable list is as follows:</text> <paragraph num="(1)"> <text>Amusement devices;</text> </paragraph> <paragraph num="(2)"> <text>Animal mortality;</text> </paragraph> <paragraph num="(3)"> <text>Armored cars;</text> </paragraph> <paragraph num="(4)"> <text>Auto racing and auto race tracks;</text> </paragraph> <paragraph num="(5)"> <text>Aviation—crop dusters;</text> </paragraph> <paragraph num="(6)"> <text>Billiard halls;</text> </paragraph> <paragraph num="(7)"> <text>Bowling alleys—property damage only;</text> </paragraph> <paragraph num="(8)"> <text>Builders risk—all risks form (non-Bureau form);</text> </paragraph> <paragraph num="(9)"> <text>Building demolition—including use of explosives;</text> </paragraph> <paragraph num="(10)"> <text>Carnivals and circuses;</text> </paragraph> <paragraph num="(11)"> <text>Child and adult care centers, convalescent homes, or community residence facilities;</text> </paragraph> <paragraph num="(12)"> <text>Difference in condition—parasol;</text> </paragraph> <paragraph num="(13)"> <text>Directors' and officers' liability for the following:</text> <paragraph num="(a)"> <text>Coverages:</text> <paragraph num="(i)"> <text>Employment practices liability;</text> </paragraph> <paragraph num="(ii)"> <text>Entity liability coverage;</text> </paragraph> <paragraph num="(iii)"> <text>Non-monetary damages;</text> </paragraph> <paragraph num="(iv)"> <text>Liability for prior acts; or</text> </paragraph> <paragraph num="(v)"> <text>Fiduciary liability; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Classes:</text> <paragraph num="(i)"> <text>Entities involved in initial public offerings of securities;</text> </paragraph> <paragraph num="(ii)"> <text>Nonprofit organizations with negative fund balances;</text> </paragraph> <paragraph num="(iii)"> <text>Entities in business for less than 3 years; or</text> </paragraph> <paragraph num="(iv)"> <text>Financially distressed risks, including risks in pending or threatened bankruptcy, risks operating under Chapter 11 of the Bankruptcy Code, or risks unable to meet their financial obligations out of current assets;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(14)"> <text>Employment practices liability for the following coverages:</text> <paragraph num="(a)"> <text>Family Medical Leave Act liability;</text> </paragraph> <paragraph num="(b)"> <text>False imprisonment;</text> </paragraph> <paragraph num="(c)"> <text>Intentional infliction of emotional distress;</text> </paragraph> <paragraph num="(d)"> <text>Interference with contractual relations;</text> </paragraph> <paragraph num="(e)"> <text>Negligent supervision or hiring;</text> </paragraph> <paragraph num="(f)"> <text>Damages for breach of express contract;</text> </paragraph> <paragraph num="(g)"> <text>Mergers;</text> </paragraph> <paragraph num="(h)"> <text>Prior acts;</text> </paragraph> <paragraph num="(i)"> <text>Punitive or liquidated damages; or</text> </paragraph> <paragraph num="(j)"> <text>Prior knowledge;</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>Environmental impairment liability;</text> </paragraph> <paragraph num="(16)"> <text>Excess automobile and motorcycle;</text> </paragraph> <paragraph num="(17)"> <text>Exercise and health clubs;</text> </paragraph> <paragraph num="(18)"> <text>Excess liability;</text> </paragraph> <paragraph num="(19)"> <text>Exterminators;</text> </paragraph> <paragraph num="(20)"> <text>False arrest liability;</text> </paragraph> <paragraph num="(21)"> <text>Fire and general liability on buildings occupied as auction markets or farmers' markets;</text> </paragraph> <paragraph num="(22)"> <text>Fire and general liability on buildings occupied as bars, restaurants, or night clubs, with or without entertainment;</text> </paragraph> <paragraph num="(23)"> <text>Fireworks displays;</text> </paragraph> <paragraph num="(24)"> <text>Flood and water damage — excess of federal flood insurance programs or primary coverage that is at least as broad as the coverage available through the federal flood insurance program;</text> </paragraph> <paragraph num="(25)"> <text>Golf driving ranges;</text> </paragraph> <paragraph num="(26)"> <text>Holdup, theft, and robbery coverages for:</text> <paragraph num="(a)"> <text>Automated teller machines;</text> </paragraph> <paragraph num="(b)"> <text>Check cashing businesses;</text> </paragraph> <paragraph num="(c)"> <text>Electronics stores;</text> </paragraph> <paragraph num="(d)"> <text>Taverns;</text> </paragraph> <paragraph num="(e)"> <text>Package stores;</text> </paragraph> <paragraph num="(f)"> <text>Carnivals;</text> </paragraph> <paragraph num="(g)"> <text>Fairs; and</text> </paragraph> <paragraph num="(h)"> <text>Exhibitions;</text> </paragraph> </paragraph> <paragraph num="(27)"> <text>House movers and house wreckers;</text> </paragraph> <paragraph num="(28)"> <text>Libel and slander;</text> </paragraph> <paragraph num="(29)"> <text>Liquor liability;</text> </paragraph> <paragraph num="(30)"> <text>Non-appearance, event cancellation, or weather insurance;</text> </paragraph> <paragraph num="(31)"> <text>Physical damage:</text> <paragraph num="(a)"> <text>Automobile physical damage for antique vehicles, high-value vehicles, kits, replicas, and custom-made vehicles; or</text> </paragraph> <paragraph num="(b)"> <text>Vehicle physical damage for vehicles with a gross vehicle weight classified by the Insurance Services Office (ISO) as medium or heavier;</text> </paragraph> </paragraph> <paragraph num="(32)"> <text>Pollutants—first and/or third-party coverages for existence or removal, or both, of a broad range of contaminants or pollutants;</text> </paragraph> <paragraph num="(33)"> <text>Prize indemnification;</text> </paragraph> <paragraph num="(34)"> <text>Professional liability—miscellaneous errors and omissions, except for those professions and occupations available in the admitted market, including architects, engineers, physicians, lawyers, travel agents, real estate brokers, and insurance producers;</text> </paragraph> <paragraph num="(35)"> <text>Riding academies and pony rides (on location or away from premises);</text> </paragraph> <paragraph num="(36)"> <text>Risks in bankruptcy;</text> </paragraph> <paragraph num="(37)"> <text>Securities Exchange Act liability;</text> </paragraph> <paragraph num="(38)"> <text>Short-term events;</text> </paragraph> <paragraph num="(39)"> <text>Short-term homeshare business multi-peril;</text> </paragraph> <paragraph num="(40)"> <text>Skating rinks—roller and ice;</text> </paragraph> <paragraph num="(41)"> <text>Space satellites or craft;</text> </paragraph> <paragraph num="(42)"> <text>Sporting events;</text> </paragraph> <paragraph num="(43)"> <text>Stop loss and excess aggregate over self-insured retention (S.I.R.)—all lines not excluded pursuant to Insurance Article, §3-302, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(44)"> <text>Substandard fire risks not eligible for Fair Plan;</text> </paragraph> <paragraph num="(45)"> <text>Swimming clubs, water skiing clubs, and swimming pools;</text> </paragraph> <paragraph num="(46)"> <text>Tanning beds or salons;</text> </paragraph> <paragraph num="(47)"> <text>Tattoo parlors;</text> </paragraph> <paragraph num="(48)"> <text>Umbrella liability:</text> <paragraph num="(a)"> <text>With no self-insured retention;</text> </paragraph> <paragraph num="(b)"> <text>With defense costs outside policy limits; or</text> </paragraph> <paragraph num="(c)"> <text>Written by the same non-admitted insurer that provides underlying liability insurance;</text> </paragraph> </paragraph> <paragraph num="(49)"> <text>Vacant or unoccupied buildings; and</text> </paragraph> <paragraph num="(50)"> <text>Warehousepersons' legal liability.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Exempt Commercial Purchaser — Waiver of Diligent Search Requirement."> <paragraph num="A."> <text>Scope. This regulation does not apply to:</text> <paragraph num="(1)"> <text>Professional liability insurance;</text> </paragraph> <paragraph num="(2)"> <text>Title insurance; or</text> </paragraph> <paragraph num="(3)"> <text>Workers' compensation insurance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In this regulation, “Exempt Commercial Purchaser” means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:</text> <paragraph num="(1)"> <text>The person employs or retains a qualified risk manager to negotiate insurance coverage;</text> </paragraph> <paragraph num="(2)"> <text>The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months; and</text> </paragraph> <paragraph num="(3)"> <text>The person meets at least 1 of the following criteria:</text> <paragraph num="(a)"> <text>The person possesses a net worth in excess of $20,000,000, as such amount is adjusted pursuant to §C of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>The person generates annual revenues in excess of $50,000,000, as such amount is adjusted pursuant to §C of this regulation;</text> </paragraph> <paragraph num="(c)"> <text>The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate;</text> </paragraph> <paragraph num="(d)"> <text>The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000, as such amount is adjusted pursuant to §C of this regulation; or</text> </paragraph> <paragraph num="(e)"> <text>The person is a municipality with a population in excess of 50,000 persons.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Effective on the fifth January 1 occurring after July 21, 2011, and each fifth January 1 occurring thereafter, the amounts in §B(3)(a), (b), and (d) of this regulation shall be adjusted to reflect the percentage change for the 5-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.</text> </paragraph> <paragraph num="D."> <text>Waiver of Diligent Search Requirement.</text> <paragraph num="(1)"> <text>An Exempt Commercial Purchaser may waive the diligent search requirement of Insurance Article, §3-306, Annotated Code of Maryland, for the procurement of a surplus lines insurance policy if:</text> <paragraph num="(a)"> <text>The surplus lines broker has disclosed to the Exempt Commercial Purchaser that the insurance may or may not be available from admitted insurers that may be subject to greater protection and regulatory oversight; and</text> </paragraph> <paragraph num="(b)"> <text>The Exempt Commercial Purchaser subsequently has requested the surplus lines broker in writing to procure nonadmitted insurance from or place the nonadmitted insurance with a nonadmitted insurer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The surplus lines broker shall:</text> <paragraph num="(a)"> <text>Retain for at least 3 years a copy of the written request document signed by the Exempt Commercial Purchaser; and</text> </paragraph> <paragraph num="(b)"> <text>Make the written request document available for inspection by the Commissioner on request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Procurement That Is Not Authorized By Regulation. This regulation does not authorize an Exempt Commercial Purchaser to procure surplus lines insurance:</text> <paragraph num="(1)"> <text>Solely to obtain a lower premium rate than would be accepted by an authorized insurer;</text> </paragraph> <paragraph num="(2)"> <text>Solely to obtain more favorable terms of the insurance contract; or</text> </paragraph> <paragraph num="(3)"> <text>To replace coverage on residential property that is insured by an authorized insurer and for which a renewal offer has been made on substantially the same terms and conditions as the current coverage.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Premium Tax. This regulation does not exempt an Exempt Commercial Purchaser from payment of the premium tax on surplus lines insurance pursuant to Insurance Article, §3-324, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 3-304, 3-306—3-308, 3-311—3-313, 3-316, 3-325(c), 9-301(f), 9-303(5), 9-401(j)(1) and (2), 9-405(b), and 27-216, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Amended effective January 1, 1971</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 repealed effective June 1, 1983 (10:9 Md. R. 790)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted effective June 1, 1983 (10:9 Md. R. 790)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 repealed effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Appendix A repealed effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.22 to COMAR 31.03.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01-1 adopted effective January 7, 2002 (28:26 Md. R. 2275)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01-1 amended as an emergency provision effective November 3, 2005 (32:25 Md. R. 1938); amended permanently effective March 13, 2006 (33:5 Md. R. 523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01-1B amended effective February 20, 2012 (39:3 Md. R. 260)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective April 10, 2006 (33:7 Md. R. 675); February 20, 2012 (39:3 Md. R. 260); October 8, 2018 (45:20 Md. R. 920)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective December 15, 2007 (34:1 Md. R. 30); amended permanently effective February 12, 2007 (34:3 Md. R. 303)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 20, 2012 (39:3 Md. R. 260)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 adopted effective January 7, 2002 (28:26 Md. R. 2275)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective November 3, 2005 (32:25 Md. R. 1938); amended permanently effective March 13, 2006 (33:5 Md. R. 523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective February 20, 2012 (39:3 Md. R. 260)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective April 10, 2006 (33:7 Md. R. 675); October 2, 2017 (44:19 Md. R. 898)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective April 10, 2006 (33:7 Md. R. 675); February 20, 2012 (39:3 Md. R. 260)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 adopted effective June 11, 2001 (28:11 Md. R. 1055)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective January 7, 2002 (28:26 Md. R. 2275)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended as an emergency provision effective November 3, 2005 (32:25 Md. R. 1938); amended permanently effective March 13, 2006 (33:5 Md. R. 523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective May 18, 2016 (43:6 Md. R. 412); June 18, 2018 (45:12 Md. R. 621)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C, D amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 adopted as an emergency provision effective June 29, 1999 (26:15 Md. R. 1146); emergency status expired December 25, 1999</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 adopted effective May 1, 2000 (27:8 Md. R. 806)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10B, C amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10C amended effective October 20, 2008 (35:21 Md. R. 1828); February 20, 2012 (39:3 Md. R. 260); February 27, 2017 (44:4 Md. R. 255); May 18, 2020 (47:10 Md. R. 520)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 adopted effective January 7, 2002 (28:26 Md. R. 2275)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended as an emergency provision effective November 3, 2005 (32:25 Md. R. 1938); amended permanently effective March 13, 2006 (33:5 Md. R. 523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective February 20, 2012 (39:3 Md. R. 260)</annotation> </annotations> </chapter> <chapter num="07" heading="Installment Vendors Doing Business In Maryland (Such as Auto Dealers, Boat Dealers, Appliance Dealers, Loan Companies)"> <regulation prefix="Regulation" num=".01" heading="Violations."> <text>It has come to the attention of the Insurance Administration that installment vendors may be selling insurance in conjunction with their retail installment sales without proper insurance producers' licenses. These sales or service of insurance are violations of the Insurance Article, Annotated Code of Maryland, and this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Requirements."> <text>Installment vendors shall comply with the requirements of Insurance Article, §§1-201, 10-103, 10-130, and 10-131, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Employees To Read this Chapter."> <text>Installment vendors should make certain that this chapter of regulations is read by all their employees that may be affected by it.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-201, 2-109, 10-103, 10-130, and 10-131, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 1, 1967</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.17 to COMAR 31.03.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 repealed effective May 18, 2016 (43:6 Md. R. 412)</annotation> </annotations> </chapter> <chapter num="08" heading="Licensing Services — Designation of Contractor — Payment for Services" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted as an emergency provision effective September 19, 1997 (24:21 Md. R. 1445); adopted permanently effective March 9, 1998 (25:5 Md. R. 368)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.29 to COMAR 31.03.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective October 5, 1998 (25:20 Md. R. 1534)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective April 10, 2006 (33:7 Md. R. 675)</annotation> </annotations> </chapter> <chapter num="09" heading="Staggered System for Renewal of Licenses"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“License” has the meaning stated in Insurance Article, §10-101(d), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Establishment of Staggered System of Renewals."> <paragraph num="A."> <text>In General. The Administration may establish a staggered system of renewal for licenses.</text> </paragraph> <paragraph num="B."> <text>Uniform Distribution of Renewal Dates.</text> <paragraph num="(1)"> <text>The Administration shall establish staggered renewal dates for licenses so that approximately the same number of licenses are renewed each day.</text> </paragraph> <paragraph num="(2)"> <text>From time to time, the Administration shall evaluate the monthly volume of license renewals for the purpose of maintaining relatively uniform workloads.</text> </paragraph> <paragraph num="(3)"> <text>The Administration may adjust the monthly volumes of license renewals by:</text> <paragraph num="(a)"> <text>Changing the month of expiration of a license;</text> </paragraph> <paragraph num="(b)"> <text>Prorating the renewal fee for the license and the fraud prevention fee in accordance with Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>Prorating the continuing education hours for renewal of the license in accordance with Regulation .05 of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Term and Renewal of Licenses."> <paragraph num="A."> <text>Term. The term of a license is 2 years from the date of issuance.</text> </paragraph> <paragraph num="B."> <text>Renewal. The Administration shall renew licenses for a term of 2 years from the date of renewal unless the Administration changes the expiration date under Regulation .02B(3) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Proration of Fees."> <paragraph num="A."> <text>Renewal Fees. If the Administration is required to charge a prorated renewal fee for a license, the Administration shall calculate the amount of the prorated fee by:</text> <paragraph num="(1)"> <text>Dividing the appropriate renewal fee listed in Insurance Article, §2-112, Annotated Code of Maryland, by 24;</text> </paragraph> <paragraph num="(2)"> <text>Multiplying the quotient obtained under §A(1) of this regulation by the number of months for which the license is issued or renewed; and</text> </paragraph> <paragraph num="(3)"> <text>Rounding the product obtained under §A(2) of this regulation to the nearest dollar, with amounts ranging from 1 cent to 50 cents rounded down to the next lower dollar and amounts ranging from 51 cents to 99 cents rounded up to the next higher dollar.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Fraud Prevention Fee. If the Administration is required to charge a prorated fraud prevention fee, the Administration shall calculate the amount of the prorated fee by:</text> <paragraph num="(1)"> <text>Dividing the fraud prevention fee listed in Insurance Article, §6-203, Annotated Code of Maryland, by 24;</text> </paragraph> <paragraph num="(2)"> <text>Multiplying the quotient obtained under §B(1) of this regulation by the number of months for which the license is issued or renewed; and</text> </paragraph> <paragraph num="(3)"> <text>Rounding the product obtained under §B(2) of this regulation to the nearest dollar, with amounts ranging from 1 cent to 50 cents rounded down to the next lower dollar and amounts ranging from 51 cents to 99 cents rounded up to the next higher dollar.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Proration of Continuing Education Credit Hours."> <paragraph num="A."> <text>General Continuing Education Requirements. Except as otherwise provided by Insurance Article, §10-116, Annotated Code of Maryland, the holder of a license shall complete 16 credit hours of continuing education before the holder may renew the license.</text> </paragraph> <paragraph num="B."> <text>Proration.</text> <paragraph num="(1)"> <text>The holder of a license whose date of expiration is changed by the Administration pursuant to Regulation .02B(3)(a) of this chapter, who has held a license for fewer than 25 consecutive years, shall successfully complete the following number of credit hours of continuing education before the holder may renew the license and receive a license with a 2-year term:</text> <paragraph num="(a)"> <text>For a license changed to a term of 1 year to 1 1/2 years, 8 credit hours;</text> </paragraph> <paragraph num="(b)"> <text>For a license changed to a term of more than 1 1/2 years but not more than 2 years, 12 credit hours;</text> </paragraph> <paragraph num="(c)"> <text>For a license changed to a term of more than 2 years but not more than 2 1/2 years, 16 credit hours; or</text> </paragraph> <paragraph num="(d)"> <text>For a license changed to a term of more than 2 1/2 years but not more than 3 years, 20 credit hours.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The holder of a license whose date of expiration is changed by the administration pursuant to Regulation .02B(3)(a) of this chapter, who has held a license for 25 or more consecutive years, beginning on the date of expiration, and counting back to the year that the license was first obtained, shall successfully complete 50 percent of the credit hours of continuing education required in §B(1) of this regulation before the holder may renew the license and receive a license with a 2-year term.</text> </paragraph> <paragraph num="(3)"> <text>If the holder of a license whose date of expiration is changed has a license for both property or casualty, or any subdivision of property or casualty, and life or health, or any subdivision of life or health, in order to renew the license, the holder of the license shall successfully complete a minimum of:</text> <paragraph num="(a)"> <text>25 percent of the required credit hours in one or more courses designated “Property/Casualty”; and</text> </paragraph> <paragraph num="(b)"> <text>25 percent of the required credit hours in one or more courses designated “Life/Health”.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>National Examination.</text> <paragraph num="(a)"> <text>If the holder of a license whose date of expiration is changed receives a passing score on a national examination on or before the day before the expiration date of the license, the holder of the license shall receive the number of continuing education credit hours that the Commissioner has approved for the examination towards the credit hours needed to renew the license.</text> </paragraph> <paragraph num="(b)"> <text>If the holder of a license whose date of expiration is changed receives a passing score on a national examination on or after the expiration date of the license, the holder of the license shall receive the number of continuing education credit hours that the Commissioner has approved for the examination towards the next license renewal.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108, 2-109, and 10-115, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 20, 2001 (28:16 Md. R. 1484)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 10, 2006 (33:7 Md. R. 675)</annotation> </annotations> </chapter> <chapter num="10" heading="Advisers"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Adviser” has the meaning stated in Insurance Article, §10-201(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Licensed insurance producer” has the meaning stated in Insurance Article, §1-101(w), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Representation by Member of Trade Association."> <paragraph num="A."> <text>In General. A person is not required to be licensed as an adviser under Insurance Article, §10-203, Annotated Code of Maryland, in order to represent to the public that the person is a member of a trade association or similar organization that uses the term “insurance adviser” or a similar term in the name of the association or organization if the person:</text> <paragraph num="(1)"> <text>Is a member in good standing of the trade association or similar organization at the time that the person makes the representation;</text> </paragraph> <paragraph num="(2)"> <text>Does not otherwise act as an adviser or represent that the person is an adviser; and</text> </paragraph> <paragraph num="(3)"> <text>Makes the representation in accordance with the requirements of §B of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Manner of Representation. A person who otherwise qualifies to make a representation under §A of this regulation may make the representation only if the person:</text> <paragraph num="(1)"> <text>Expressly qualifies the representation by use of a disclaimer such as “not a licensed insurance adviser” or, if the person is a licensed insurance producer, “licensed insurance producer only”; or</text> </paragraph> <paragraph num="(2)"> <text>Makes the representation:</text> <paragraph num="(a)"> <text>During a meeting of the trade association or similar organization held for the purpose of conducting the association's or organization's general business activities;</text> </paragraph> <paragraph num="(b)"> <text>In a newspaper, newsletter, e-mail, or similar publication or electronic communication that is intended to be distributed only to members of the trade association or similar organization;</text> </paragraph> <paragraph num="(c)"> <text>While soliciting a person to become a member of the trade association or similar organization; or</text> </paragraph> <paragraph num="(d)"> <text>During an approved continuing education class for licensed insurance producers.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Manner of Disclaimer. A person who is required to make a disclaimer under §B(1) of this regulation shall make the disclaimer:</text> <paragraph num="(1)"> <text>At the same time and in the same medium as the representation; and</text> </paragraph> <paragraph num="(2)"> <text>If the representation is made in writing, on the same document or screen close to the representation.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 10-202, and 10-203, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 21, 2002 (29:1 Md. R. 26)</annotation> </annotations> </chapter> <chapter num="11" heading="Motor Vehicle Rental Companies—Limited Lines License"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to motor vehicle rental companies that sell or offer any insurance coverage in this State to a motor vehicle renter in connection with, and incidental to, a motor vehicle rental agreement.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Franchisee” means a person to whom a franchise has been granted by a motor vehicle rental company under Business Regulation Article, Title 14, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Limited lines license” means a limited lines license to sell insurance in connection with, and incidental to, the rental of a vehicle.</text> </paragraph> <paragraph num="(3)"> <text>Motor Vehicle Rental Company.</text> <paragraph num="(a)"> <text>“Motor vehicle rental company” means a person that is in the business of providing motor vehicles to the public under a rental agreement for a period of 180 days or less.</text> </paragraph> <paragraph num="(b)"> <text>“Motor vehicle rental company” includes a franchisee or subsidiary that is in the business of providing motor vehicles to the public under a rental agreement for a period of 180 days or less.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Rental agreement” means a written agreement containing the terms and conditions that govern the use of a vehicle provided by a motor vehicle rental company under the provisions of Transportation Article, Title 18, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Renter” means a person obtaining the use of a vehicle from a motor vehicle rental company under the terms of a rental agreement.</text> </paragraph> <paragraph num="(6)"> <text>“Subsidiary” means a business entity that is directly or indirectly controlled by a motor vehicle rental company.</text> </paragraph> <paragraph num="(7)"> <text>“Vehicle” means a motor vehicle of the:</text> <paragraph num="(a)"> <text>Private passenger type, including passenger vans, minivans, and sport utility vehicles; or</text> </paragraph> <paragraph num="(b)"> <text>Cargo type, including cargo vans, pickup trucks, and trucks that do not require the operator to possess a commercial driver's license.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Limited Lines License and Appointment Required."> <text>Before a motor vehicle rental company or an employee of a motor vehicle rental company sells or offers any policies of insurance in this State to a renter in connection with, and incidental to, a rental agreement, the motor vehicle rental company shall:</text> <paragraph num="A."> <text>Hold a limited lines license issued by the Commissioner; and</text> </paragraph> <paragraph num="B."> <text>Have on file with the Commissioner an appointment from each authorized insurer that the motor vehicle rental company intends to represent.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Application for Limited Lines License."> <text>An applicant for a limited lines license shall:</text> <paragraph num="A."> <text>Submit an application to the Commissioner on the form approved by the Commissioner;</text> </paragraph> <paragraph num="B."> <text>Pay to the Commissioner the applicable fee required under Insurance Article, §2-212, Annotated Code of Maryland, for an insurance producer license;</text> </paragraph> <paragraph num="C."> <text>Submit with the application a disclosure as set out in Regulation .06 of this chapter, including any brochures or other written material;</text> </paragraph> <paragraph num="D."> <text>Submit with the application the filing required by Regulation .07C of this chapter that describes the training program that a motor vehicle rental company must have approved by the Commissioner;</text> </paragraph> <paragraph num="E."> <text>If applicable, submit a written agreement signed by an officer of each insurer represented by the motor vehicle rental company that the premiums collected from a renter for the insurance do not need to be segregated from other funds collected by the motor vehicle rental company in connection with the vehicle rental; and</text> </paragraph> <paragraph num="F."> <text>Submit any other information or documentation that the Commissioner requires, including any information or documentation to determine the professional competence, good character, and trustworthiness of the motor vehicle rental company.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Issuance, Term, and Renewal of Limited Lines License."> <paragraph num="A."> <text>Issuance. The Commissioner shall issue a limited lines license to each applicant who meets the requirements of Regulation .04 of this chapter and Insurance Article, §§10-603 and 10-604, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Term and Renewal. A limited lines license expires every other year on the anniversary date of the issuance of the license unless renewed as provided in Insurance Article, §10-115, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Disclosures."> <paragraph num="A."> <text>In General. Before the completion of a rental transaction, a motor vehicle rental company shall provide to a prospective renter who purchases any of the insurance coverages a disclosure that meets the requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Sale or Offer of Insurance on Business Premises. If a motor vehicle rental company sells or offers to sell insurance on any business premises of the motor vehicle rental company in connection with, and incidental to, a rental agreement, the motor vehicle rental company shall prominently display on the premises and make readily available to prospective renters a disclosure that meets the requirements of §F of this regulation.</text> </paragraph> <paragraph num="C."> <text>Sale or Offer of Insurance Over Telephone. If a motor vehicle rental company sells or offers to sell insurance over the telephone in connection with, and incidental to, a rental agreement, the motor vehicle rental company shall, if the prospective renter requests insurance coverage or information on insurance coverage or otherwise indicates an interest in insurance coverage, advise the prospective renter that the State of Maryland has a consumer disclosure relating to insurance coverage for rental vehicles and offer to read the prospective renter a disclosure that meets the requirements of §F of this regulation.</text> </paragraph> <paragraph num="D."> <text>Sale or Offer of Insurance Through a Web Site. If a motor vehicle rental company sells or offers to sell insurance through a web site in connection with, and incidental to, a rental agreement, the motor vehicle rental company shall include on the web site an electronic disclosure that meets the requirements of §F of this regulation:</text> <paragraph num="(1)"> <text>As part of any description of the insurance coverage that is included on the web site; and</text> </paragraph> <paragraph num="(2)"> <text>On the same screen in close proximity to any click-through process or other electronic process that allows a prospective renter to indicate that the prospective renter would like to purchase insurance.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Completion of Transaction.</text> <paragraph num="(1)"> <text>When a renter goes to the business premises of a motor vehicle rental company to take possession of a vehicle pursuant to a rental agreement, the renter may reject or select any insurance coverage offered in connection with, and incidental to, the rental agreement regardless of any previous decision that the renter made by telephone or over the internet regarding insurance coverage.</text> </paragraph> <paragraph num="(2)"> <text>An insurer, or a motor vehicle rental car company on behalf of an insurer, may not charge a renter a premium for any insurance coverage that the renter rejects when the renter takes possession of a vehicle regardless of any previous decision that the renter made by telephone or over the internet regarding insurance coverage.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Form and Content of Disclosure. The disclosures required by §§A—D of this regulation shall include the following:</text> <paragraph num="(1)"> <text>A summary that clearly and correctly describes the material terms of coverage offered to the renter, including any limitations or exclusions pertaining to that coverage;</text> </paragraph> <paragraph num="(2)"> <text>The name of the authorized insurer;</text> </paragraph> <paragraph num="(3)"> <text>A statement that the coverage offered by the motor vehicle rental company may provide duplication of coverage already provided by the renter's personal automobile insurance policy, homeowner's insurance policy, personal liability policy, or other source of coverage;</text> </paragraph> <paragraph num="(4)"> <text>A statement, if in writing in at least 10-point type, that:</text> </paragraph> <paragraph num="(5)"> <text>A description of the process through which the renter can file a claim, including the insurer's address, and where the claim should be filed.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Filing and Approval of Disclosure.</text> <paragraph num="(1)"> <text>Before providing the written disclosure required by §B of this regulation to a prospective renter, a motor vehicle rental company shall file with the Commissioner a copy of all written materials containing the disclosure.</text> </paragraph> <paragraph num="(2)"> <text>Before providing the oral disclosure required by §C of this regulation to a prospective renter over the telephone, a motor vehicle rental company shall file the text of the oral disclosure with the Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>Before providing the electronic disclosure required by §D of this regulation to a prospective renter through a web site, a motor vehicle rental company shall:</text> <paragraph num="(a)"> <text>Provide the Commissioner with access to an electronic prototype of the web site; or</text> </paragraph> <paragraph num="(b)"> <text>File with the Commissioner a printout of each screen that contains the disclosure.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Commissioner may disapprove a written, oral, or electronic disclosure at any time if the Commissioner determines that the disclosure does not comply with Insurance Article, §10-604, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>If the Commissioner does not disapprove a written or oral disclosure, the disclosure is deemed to be approved 60 days after filing.</text> </paragraph> <paragraph num="(6)"> <text>If the Commissioner does not disapprove an electronic disclosure through a web site, the disclosure is deemed to be approved 60 days after:</text> <paragraph num="(a)"> <text>The Commissioner is provided with access to an electronic prototype of the web site; or</text> </paragraph> <paragraph num="(b)"> <text>A printout of each screen that contains the disclosure is filed with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>The Commissioner may extend the time for review of a disclosure under §G(5) or (6) of this regulation for not more than 30 days.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Training Program."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>Each motor vehicle rental company shall have a training program for its employees who sell, solicit, or negotiate insurance coverage under this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Employees shall take the course, in person, before selling, soliciting, or negotiating insurance coverage.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The training program shall include instruction:</text> <paragraph num="(1)"> <text>About the kinds of insurance that motor vehicle rental companies may sell or offer under this chapter;</text> </paragraph> <paragraph num="(2)"> <text>That the trainee shall inform a renter that purchasing any insurance from the motor vehicle rental company is not required in order to rent a vehicle;</text> </paragraph> <paragraph num="(3)"> <text>That the trainee shall inform a renter that the purchase of insurance may be a duplication of coverage already provided by the renter's personal automobile insurance policy, homeowner's insurance policy, liability policy, or other source of coverage; and</text> </paragraph> <paragraph num="(4)"> <text>About all the other requirements of Insurance Article, §§10-605 and 10-606, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Approval of Training Program.</text> <paragraph num="(1)"> <text>The training program shall be approved by the Commissioner before it is implemented.</text> </paragraph> <paragraph num="(2)"> <text>A motor vehicle rental company that proposes to conduct a training program shall file with the Commissioner:</text> <paragraph num="(a)"> <text>A description or outline of the course or video tapes of the course;</text> </paragraph> <paragraph num="(b)"> <text>Copies of all written materials to be used in the course or with the video tapes; and</text> </paragraph> <paragraph num="(c)"> <text>A list of instructors and their qualifications.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109, and Title 10, Subtitle 6; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 1, 2002 (29:11 Md. R. 890)</annotation> </annotations> </chapter> <chapter num="12" heading="Procedures — Written Consent — Federal Law"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish procedures and requirements for individuals who are required by 18 U.S.C. §1033 to obtain written consent from the Commissioner before the individuals may engage in the business of insurance in the State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Application counselor” has the meaning stated in Insurance Article, §31-101(a-1), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Application Form.</text> <paragraph num="(a)"> <text>“Application form” means a standardized application form developed by the Insurance Administration for submission by individuals applying for a written consent to engage in the business of insurance in the State under this chapter.</text> </paragraph> <paragraph num="(b)"> <text>“Application form” includes the short application form and the comprehensive application form.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Business of Insurance.</text> <paragraph num="(a)"> <text>“Business of insurance” means writing insurance or reinsuring risks.</text> </paragraph> <paragraph num="(b)"> <text>“Business of insurance” includes:</text> <paragraph num="(i)"> <text>All acts necessary or incidental to writing insurance or reinsuring risks;</text> </paragraph> <paragraph num="(ii)"> <text>The activities of an individual who acts as, or is, an officer, director, agent, or employee of an insurer; and</text> </paragraph> <paragraph num="(iii)"> <text>The activities of any other individual who is authorized to act on behalf of an officer, director, agent, or employee of an insurer.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>“Felony involving breach of trust” includes any felony constituting or involving misuse, misapplication, or misappropriation of anything of value that:</text> <paragraph num="(a)"> <text>Is held as a fiduciary; or</text> </paragraph> <paragraph num="(b)"> <text>Belongs to any public, private, or charitable organization.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Felony involving dishonesty” includes any felony constituting or involving:</text> <paragraph num="(a)"> <text>Perjury;</text> </paragraph> <paragraph num="(b)"> <text>Bribery;</text> </paragraph> <paragraph num="(c)"> <text>Forgery;</text> </paragraph> <paragraph num="(d)"> <text>Counterfeiting;</text> </paragraph> <paragraph num="(e)"> <text>False or misleading oral or written statements;</text> </paragraph> <paragraph num="(f)"> <text>Deception;</text> </paragraph> <paragraph num="(g)"> <text>Fraud;</text> </paragraph> <paragraph num="(h)"> <text>Schemes or artifices to deceive or defraud;</text> </paragraph> <paragraph num="(i)"> <text>Material misrepresentation; and</text> </paragraph> <paragraph num="(j)"> <text>Failure to disclose material facts.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Fiduciary” includes an individual acting as:</text> <paragraph num="(a)"> <text>A trustee;</text> </paragraph> <paragraph num="(b)"> <text>An administrator;</text> </paragraph> <paragraph num="(c)"> <text>An executor;</text> </paragraph> <paragraph num="(d)"> <text>A conservator;</text> </paragraph> <paragraph num="(e)"> <text>A receiver;</text> </paragraph> <paragraph num="(f)"> <text>A guardian;</text> </paragraph> <paragraph num="(g)"> <text>An agent;</text> </paragraph> <paragraph num="(h)"> <text>An employee;</text> </paragraph> <paragraph num="(i)"> <text>A partner;</text> </paragraph> <paragraph num="(j)"> <text>An officer;</text> </paragraph> <paragraph num="(k)"> <text>A director; or</text> </paragraph> <paragraph num="(l)"> <text>A public servant.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Individual Exchange” has the meaning stated in Insurance Article, §31-101(h), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Individual Exchange navigator” has the meaning stated in Insurance Article, §31-101(i), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Interstate commerce” means commerce:</text> <paragraph num="(a)"> <text>Within the District of Columbia or any territory or possession of the United States;</text> </paragraph> <paragraph num="(b)"> <text>Between any point in a state, territory, possession, or the District of Columbia and any point outside the state, territory, possession, or the District of Columbia;</text> </paragraph> <paragraph num="(c)"> <text>Between points within the same state through any place outside the state; or</text> </paragraph> <paragraph num="(d)"> <text>Over which the United States has jurisdiction.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“NAIC” means the National Association of Insurance Commissioners.</text> </paragraph> <paragraph num="(12)"> <text>“SHOP Exchange” has the meaning stated in Insurance Article, §31-101(w), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“SHOP Exchange navigator” has the meaning stated in Insurance Article, §31-101(x), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“State” means:</text> <paragraph num="(a)"> <text>Any state;</text> </paragraph> <paragraph num="(b)"> <text>The District of Columbia;</text> </paragraph> <paragraph num="(c)"> <text>The Commonwealth of Puerto Rico;</text> </paragraph> <paragraph num="(d)"> <text>The Northern Mariana Islands;</text> </paragraph> <paragraph num="(e)"> <text>The Virgin Islands;</text> </paragraph> <paragraph num="(f)"> <text>American Samoa; and</text> </paragraph> <paragraph num="(g)"> <text>The Trust Territory of the Pacific Islands.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Written Consent Required."> <paragraph num="A."> <text>Scope. This regulation applies to the following individuals:</text> <paragraph num="(1)"> <text>An officer, director, or employee of a domestic insurer;</text> </paragraph> <paragraph num="(2)"> <text>An individual who performs substantial insurance-related activities for a domestic insurer or a resident licensee, including:</text> <paragraph num="(a)"> <text>An insurance producer;</text> </paragraph> <paragraph num="(b)"> <text>A third-party administrator;</text> </paragraph> <paragraph num="(c)"> <text>An independent contractor;</text> </paragraph> <paragraph num="(d)"> <text>An actuary;</text> </paragraph> <paragraph num="(e)"> <text>A reinsurer;</text> </paragraph> <paragraph num="(f)"> <text>An underwriter; and</text> </paragraph> <paragraph num="(g)"> <text>An adjuster; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An individual who maintains a resident license or certificate of qualification in Maryland, including:</text> <paragraph num="(a)"> <text>An insurance producer;</text> </paragraph> <paragraph num="(b)"> <text>A managing general agent;</text> </paragraph> <paragraph num="(c)"> <text>An adjuster;</text> </paragraph> <paragraph num="(d)"> <text>A SHOP exchange navigator;</text> </paragraph> <paragraph num="(e)"> <text>An individual exchange navigator; and</text> </paragraph> <paragraph num="(f)"> <text>An application counselor.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Consent Required. If an individual to whom this regulation applies has been convicted of a felony involving dishonesty, a felony involving breach of trust, or a violation of the federal Violent Crime Control and Law Enforcement Act of 1994, the individual may not engage in the business of insurance affecting interstate commerce in Maryland unless the individual obtains the written consent of the Insurance Commissioner.</text> </paragraph> <paragraph num="C."> <text>Exceptions. Notwithstanding §B of this regulation, an individual is not required to obtain the written consent of the Insurance Commissioner if:</text> <paragraph num="(1)"> <text>The conviction of the individual has been expunged; or</text> </paragraph> <paragraph num="(2)"> <text>The individual has been pardoned for the conviction.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Application for Written Consent."> <paragraph num="A."> <text>In General. An individual who is required to obtain written consent to engage in the business of insurance shall comply with the requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Application Form.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, an applicant for written consent shall submit the short application form to the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>An applicant for written consent shall submit the comprehensive application form to the Commissioner if:</text> <paragraph num="(a)"> <text>The applicant intends to act as an insurance producer; or</text> </paragraph> <paragraph num="(b)"> <text>Following review of the applicant's short application form, the Commissioner:</text> <paragraph num="(i)"> <text>Determines that the applicant may be a threat to the public; and</text> </paragraph> <paragraph num="(ii)"> <text>Requests the applicant to submit a comprehensive application form.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>An applicant shall attach two recent 2 inch by 2 inch photographs of the applicant to the upper right hand corner of the application form.</text> </paragraph> <paragraph num="(4)"> <text>The application form shall include a notarized signature of the applicant affirming that the information provided in the application form is truthful and complete.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Credit Report. An applicant shall submit to the Commissioner a credit report prepared within 30 days of the date of application and certified by a credit bureau.</text> </paragraph> <paragraph num="D."> <text>Request for Criminal Records Check.</text> <paragraph num="(1)"> <text>An applicant shall apply for a records check for the existence of criminal convictions in the criminal history records information maintained by the Criminal Justice Information System Central Repository of the Department of Public Safety and Correctional Services and received from the Federal Bureau of Investigation by:</text> <paragraph num="(a)"> <text>Completing and submitting, in a manner approved by the Director of the Central Repository, an application containing identifying information, including the applicant's Social Security number, to verify identity and preserve the security of the record maintained by the Central Repository;</text> </paragraph> <paragraph num="(b)"> <text>Submitting two complete sets of legible fingerprints taken on forms approved by the Director and the Federal Bureau of Investigation; and</text> </paragraph> <paragraph num="(c)"> <text>Paying the applicable processing fees.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The applicant shall submit a copy of the application for a criminal records check to the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Character References.</text> <paragraph num="(1)"> <text>An application shall be accompanied by at least three letters of reference addressed to the Commissioner, attesting to the character and reputation of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>An individual who provides a letter of reference may not be related to the applicant by blood or marriage.</text> </paragraph> <paragraph num="(3)"> <text>A letter of reference shall:</text> <paragraph num="(a)"> <text>Indicate the length of time and the capacity in which the individual writing the letter has known the applicant;</text> </paragraph> <paragraph num="(b)"> <text>Describe the applicant's character traits as they relate to the employment, position, or duties for which written consent is sought; and</text> </paragraph> <paragraph num="(c)"> <text>State that the individual writing the letter is aware that the letter of reference is being provided in connection with a request for written consent to engage in the business of insurance despite the existence of a felony conviction.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Additional Information. An applicant may submit any additional documents or information that the applicant would like the Commissioner to consider.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Review of Application."> <paragraph num="A."> <text>In General. On receipt of an application for written consent and the required accompanying information, the Commissioner shall review the application and information in accordance with this regulation to determine if the applicant should be granted written consent to engage in the business of insurance in the State.</text> </paragraph> <paragraph num="B."> <text>Notification of NAIC Members.</text> <paragraph num="(1)"> <text>On receipt of an application for written consent, the Commissioner shall notify all other members of the NAIC that an application for written consent has been filed, identifying:</text> <paragraph num="(a)"> <text>The name, address, and Social Security number of the applicant; and</text> </paragraph> <paragraph num="(b)"> <text>The types of insurance activities to be conducted by the applicant.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Commissioner shall allow at least 30 days for other members of the NAIC to respond with any relevant information about the applicant.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Standard of Review.</text> <paragraph num="(1)"> <text>The Commissioner shall determine if:</text> <paragraph num="(a)"> <text>The applicant has been fully rehabilitated and no longer poses a risk or threat to insurance consumers or insurers; and</text> </paragraph> <paragraph num="(b)"> <text>The issuance of written consent to the applicant is consistent with the public interest, federal and Maryland law, and any applicable court orders.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The Commissioner may grant written consent only if the mitigating circumstances clearly and substantially outweigh the seriousness of the applicant's criminal history together with any other aggravating circumstances.</text> </paragraph> <paragraph num="(3)"> <text>In reviewing an application for written consent, the factors considered by the Commissioner shall include:</text> <paragraph num="(a)"> <text>The interest in protecting property and the safety and welfare of consumers, businesses, and the general public;</text> </paragraph> <paragraph num="(b)"> <text>The nature and severity of the act for which the applicant was convicted;</text> </paragraph> <paragraph num="(c)"> <text>The date of the conviction;</text> </paragraph> <paragraph num="(d)"> <text>The injury or loss caused by the act for which the applicant was convicted;</text> </paragraph> <paragraph num="(e)"> <text>Whether the conviction is related to the business of insurance;</text> </paragraph> <paragraph num="(f)"> <text>Whether the applicant completed a parole or probation;</text> </paragraph> <paragraph num="(g)"> <text>Whether the applicant has been charged with, indicted for, or convicted of any other crimes;</text> </paragraph> <paragraph num="(h)"> <text>Any evidence of the applicant's rehabilitation, including:</text> <paragraph num="(i)"> <text>Good conduct in prison or in the community;</text> </paragraph> <paragraph num="(ii)"> <text>Counseling or psychiatric treatment received;</text> </paragraph> <paragraph num="(iii)"> <text>Acquisition of additional academic or vocational training;</text> </paragraph> <paragraph num="(iv)"> <text>Successful participation in correctional work-release programs; and</text> </paragraph> <paragraph num="(v)"> <text>The recommendation of individuals who have had the applicant under their supervision;</text> </paragraph> </paragraph> <paragraph num="(i)"> <text>The nature and strength of any character references;</text> </paragraph> <paragraph num="(j)"> <text>The applicant's business and personal record before and after commission of the crime;</text> </paragraph> <paragraph num="(k)"> <text>Whether and to what extent the applicant has made material false statements in an application, renewal, or other document filed with the Commissioner; and</text> </paragraph> <paragraph num="(l)"> <text>Whether and to what extent the applicant has made material false statements in applications or other documents filed with other state or federal agencies.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Additional Information.</text> <paragraph num="(1)"> <text>The Commissioner may request any additional documents or information that the Commissioner considers necessary to determine if an applicant should be granted written consent to engage in the business of insurance in Maryland.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner requests additional documents or information, the applicant shall submit the documents or information to the Commissioner within 30 days after receiving the request.</text> </paragraph> <paragraph num="(3)"> <text>If an applicant fails to submit the requested documents or information to the Commissioner within 30 days, the application of the applicant shall be considered withdrawn.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Verification of Duties. The Commissioner may verify with the applicant's employer or prospective employer the duties that the applicant will be performing for the employer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Grant of Written Consent."> <paragraph num="A."> <text>In General. If the Commissioner decides to grant the applicant's request for written consent, the Commissioner shall issue a written consent to the applicant.</text> </paragraph> <paragraph num="B."> <text>Scope of Written Consent.</text> <paragraph num="(1)"> <text>The written consent shall be:</text> <paragraph num="(a)"> <text>Specific as to job duties; and</text> </paragraph> <paragraph num="(b)"> <text>Conditioned on the individual remaining in a position with substantially similar duties.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an individual who holds a written consent wishes to engage in additional duties within the business of insurance, the individual shall obtain a new written consent that includes those duties.</text> </paragraph> <paragraph num="(3)"> <text>If an individual who holds a written consent assumes significantly different job duties without obtaining a new written consent, the written consent of the individual is immediately invalidated.</text> </paragraph> <paragraph num="(4)"> <text>An individual who holds a written consent and changes employers is not required to obtain a new written consent if the individual's job duties with the new employer are substantially similar to the individual's job duties with the individual's former employer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Truth and Veracity of Information.</text> <paragraph num="(1)"> <text>A written consent shall be conditioned on the truth and veracity of the documents and information submitted by or on behalf of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>If the applicant has made materially false or misleading statements or has failed to disclose material information, the written consent is void ab initio.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Temporary Written Consent. The Commissioner may grant temporary written consent.</text> </paragraph> <paragraph num="E."> <text>Notification of NAIC Members. If the Commissioner grants a request for written consent, the Commissioner shall notify all other members of the NAIC.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Denial of Written Consent."> <paragraph num="A."> <text>Order. If the Commissioner denies the applicant's request for written consent, the Commissioner shall issue an order that:</text> <paragraph num="(1)"> <text>States that the request is denied; and</text> </paragraph> <paragraph num="(2)"> <text>Explains the reasons for the denial.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Licensing Prohibited. An applicant who has been denied a written consent may not be granted or continue to hold a license or certificate of qualification to engage in the business of insurance in Maryland.</text> </paragraph> <paragraph num="C."> <text>Notification of NAIC Members. If the Commissioner denies an applicant's request for written consent, the Commissioner shall notify all other members of the NAIC.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Hearing."> <text>The Commissioner shall hold a hearing in accordance with Insurance Article, §2-210, Annotated Code of Maryland, on the demand of any applicant who is aggrieved by:</text> <paragraph num="A."> <text>The denial of written consent by the Commissioner; or</text> </paragraph> <paragraph num="B."> <text>The scope of a written consent issued by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Subsequent Conviction."> <paragraph num="A."> <text>Written Consent Invalidated Immediately. If an individual who has been granted written consent is subsequently convicted of a felony, the written consent of the individual is invalidated immediately without the necessity of any further action by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Notification. An individual who has been granted written consent and is subsequently convicted of a felony shall:</text> <paragraph num="(1)"> <text>Immediately notify the Commissioner, the individual's employer, and any insurers with which the individual holds an appointment; and</text> </paragraph> <paragraph num="(2)"> <text>Provide to the Commissioner all relevant documents and information about the felony conviction.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109(e), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 24, 2002 (29:12 Md. R. 934)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 15, 2013 (40:7 Md. R. 613)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective October 11, 2013 (40:22 Md. R. 1875); amended permanently effective January 6, 2014 (40:26 Md. R. 2166)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective April 15, 2013 (40:7 Md. R. 613)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended as an emergency provision effective October 11, 2013 (40:22 Md. R. 1875); amended permanently effective January 6, 2014 (40:26 Md. R. 2166)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended effective October 8, 2018 (45:20 Md. R. 920)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> </annotations> </chapter> <chapter num="13" heading="Producer Registers and Documentation of Appointments"> <regulation prefix="Regulation" num=".01" heading="Definition."> <paragraph num="A."> <text>In this chapter, the following term has the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Term Defined. “Producer register” means a register of appointed insurance producers who are authorized to sell, solicit, or negotiate contracts of insurance on behalf of an insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Producer Register."> <paragraph num="A."> <text>Required. An insurer authorized to transact the business of insurance in the State shall maintain a producer register.</text> </paragraph> <paragraph num="B."> <text>Form and Content.</text> <paragraph num="(1)"> <text>Within 30 days after appointing an insurance producer, an insurer shall add the following information to the insurer's producer register:</text> <paragraph num="(a)"> <text>The Maryland license number of the insurance producer;</text> </paragraph> <paragraph num="(b)"> <text>If the insurance producer is an individual, the first and last name and residence or business address of the individual;</text> </paragraph> <paragraph num="(c)"> <text>If the insurance producer is a business entity:</text> <paragraph num="(i)"> <text>The tax ID number of the insurance producer;</text> </paragraph> <paragraph num="(ii)"> <text>The name of the business entity; and</text> </paragraph> <paragraph num="(iii)"> <text>The address of the business entity; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The date that the insurance producer was appointed.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Within 30 days after the effective date of an insurer's termination of an appointment of an insurance producer, the insurer shall add the following information to the insurer's producer register:</text> <paragraph num="(a)"> <text>The effective date of the termination of the appointment; and</text> </paragraph> <paragraph num="(b)"> <text>An identifier that indicates if the termination was wholly or partly the result of a belief that the insurance producer engaged or is engaging in any of the activities set forth in Insurance Article, §10-126, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Each item that an insurer is required to include in its producer register under §B(1) and (2) of this regulation shall be entered:</text> <paragraph num="(a)"> <text>On a separate line or space; or</text> </paragraph> <paragraph num="(b)"> <text>If the producer register is maintained electronically, in a separate searchable field.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If an insurer maintains its producer register electronically, the insurer shall maintain the producer register in a manner that allows the information in the producer register to be retrieved within 10 working days after a request from the Insurance Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Updating and Maintaining Producer Register."> <paragraph num="A."> <text>At least once every 31 days, an insurer shall determine whether the license of any insurance producer who currently is appointed by the insurer has been suspended or revoked.</text> </paragraph> <paragraph num="B."> <text>After determining that the license of an insurance producer who currently is appointed by an insurer has been suspended or revoked, the insurer shall:</text> <paragraph num="(1)"> <text>Within 5 business days after making the determination, terminate the appointment of the insurance producer; and</text> </paragraph> <paragraph num="(2)"> <text>Within 30 days after the effective date of the termination, update the insurer's producer register to reflect the termination of the appointment in accordance with Regulation .02B(2) of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An insurer shall maintain its producer register for as long as the insurer acts as an insurer in the State.</text> </paragraph> <paragraph num="D."> <text>If an insurer ceases to act as an insurer in the State due to a sale, merger, consolidation, or other transaction:</text> <paragraph num="(1)"> <text>The insurer shall transfer its producer register to the successor insurer that acquires the business of the insurer; and</text> </paragraph> <paragraph num="(2)"> <text>The successor insurer shall maintain the producer register for as long as the successor insurer acts as an insurer in the State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Documentation of Appointment."> <paragraph num="A."> <text>Within 30 days after appointing an insurance producer, an insurer shall provide the insurance producer with written documentation of the appointment that contains, at a minimum:</text> <paragraph num="(1)"> <text>The name of the insurer;</text> </paragraph> <paragraph num="(2)"> <text>The date that the documentation was provided to the insurance producer;</text> </paragraph> <paragraph num="(3)"> <text>The Maryland license number of the insurance producer;</text> </paragraph> <paragraph num="(4)"> <text>If the insurance producer is an individual, the first and last name of the individual;</text> </paragraph> <paragraph num="(5)"> <text>If the insurance producer is a business entity, the name of the business entity;</text> </paragraph> <paragraph num="(6)"> <text>The date that the insurance producer was appointed; and</text> </paragraph> <paragraph num="(7)"> <text>The following statement, prominently displayed on the written documentation: “This document shall be retained while your appointment is in effect and for at least 5 years after the termination of your appointment.”</text> </paragraph> </paragraph> <paragraph num="B."> <text>An insurer may provide the written documentation to an insurance producer electronically if the insurance producer agrees to receive the written documentation electronically.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Maintenance of Information by Insurance Producer."> <paragraph num="A."> <text>A licensed insurance producer that has received written documentation of an appointment from an insurer shall maintain:</text> <paragraph num="(1)"> <text>The documentation of the insurer's appointment that is provided by the insurer under Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>A list of insurers that have appointed the insurance producer.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If an insurance producer maintains the information required to be maintained by §A of this regulation electronically, the insurance producer shall maintain the information in a manner that allows the information to be retrieved within 10 working days after a request from the Insurance Commissioner.</text> </paragraph> <paragraph num="C."> <text>With respect to a particular appointment, the insurance producer shall maintain the information required to be maintained by §A of this regulation:</text> <paragraph num="(1)"> <text>While the appointment is in effect; and</text> </paragraph> <paragraph num="(2)"> <text>For at least 5 years after the termination of the appointment.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Producer Action on Behalf of Insurer."> <text>On appointment by an insurer, a licensed producer that has written documentation of the appointment pursuant to Regulation .04 of this chapter may act on behalf of the insurer before the insurer adds the producer to its register.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 10-103(c), and 10-118(j), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 adopted as an emergency provision effective January 1, 2004 (31:1 Md. R. 29); adopted permanently effective June 21, 2004 (31:12 Md. R. 915)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 26, 2007 (34:4 Md. R. 403); February 25, 2019 (46:4 Md. R. 191); February 21, 2022 (49:4 Md. R. 302)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective February 25, 2019 (46:4 Md. R. 191); February 21, 2022 (49:4 Md. R. 302)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 adopted effective August 14, 2006 (33:16 Md. R. 1366)</annotation> </annotations> </chapter> <chapter num="14" heading="Notice of Payment Options When Premium Financing is Offered"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>The purpose of this chapter is to assure fair disclosure of availability of alternative payment plans and financing options when consumers purchase property and casualty insurance.</text> </paragraph> <paragraph num="B."> <text>This chapter is also designed to aid consumers by creating an industry standard with regard to required disclosure of insurers' alternative payment plans and premium financing agreements.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter does not apply to life insurance, health insurance, or annuities.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Casualty insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Policy” means an individual or group policy, contract, or certificate issued by an insurer.</text> </paragraph> <paragraph num="(4)"> <text>“Premium finance agreement” has the meaning stated in Insurance Article, §23-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Premium finance company” has the meaning stated in Insurance Article, §23-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Property insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Notice of Payment Options."> <paragraph num="A."> <text>With respect to property and casualty insurance policies, an insurance producer may not finance an insurance premium unless the insurance producer first makes a disclosure to the applicant or insured that:</text> <paragraph num="(1)"> <text>Provides the applicant or insured with a comparison of the costs and terms of the premium finance agreement with the insurer's alternative payment plan or plans, if the insurer offers an alternative; and</text> </paragraph> <paragraph num="(2)"> <text>Is signed by the applicant or insured.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The disclosure required by §A of this regulation shall:</text> <paragraph num="(1)"> <text>State the total amount to be paid by the applicant or insured under the premium finance agreement during the policy term, including premium, any down payment, and all interest, fees, and charges incident to the premium finance agreement and resulting extension of credit; and</text> </paragraph> <paragraph num="(2)"> <text>State the total amount to be paid by the applicant or insured under the insurer's alternative payment plan or plans during the policy term, including premium, any down payment, and all fees and charges incident to the alternative payment plan or plans.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Retention of Signed Disclosure Forms."> <paragraph num="A."> <text>An insurance producer that has provided an insured or applicant for property and casualty insurance with the various payment options available shall maintain the signed disclosure form required under Regulation .04 of this chapter, for a period of at least 5 years after the date the disclosure form is signed.</text> </paragraph> <paragraph num="B."> <text>If an insurance producer maintains the signed disclosure form required to be maintained under §A of this regulation electronically, the insurance producer shall maintain the signed disclosure form in a manner that allows the form to be retrieved within 10 working days after a request from the Insurance Commissioner.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 10-104(c), and 10-126(a)(5) and (6), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 16, 2009 (36:14 Md. R. 985)</annotation> </annotations> </chapter> <chapter num="15" heading="Senior or Retiree Designations and Credentials"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to protect seniors and retirees as purchasers of health insurance, life insurance, and annuity contracts, against the use of sales methods which are misleading.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>This chapter applies to advisors and insurance producers.</text> </paragraph> <paragraph num="B."> <text>Under this chapter it is a violation of Insurance Article, Title 27, Annotated Code of Maryland, to use a senior specific designation or certification in a way that misleads or would mislead any person to indicate that the user has special certification or training in advising or serving senior citizens or retirees:</text> <paragraph num="(1)"> <text>When advising about life insurance, health insurance, or annuities; or</text> </paragraph> <paragraph num="(2)"> <text>In connection with the offer, sale, or purchase of life insurance, health insurance, or annuities.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Advisor” has the meaning stated in Insurance Article, §10-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Annuity” means annuity as defined in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>“Financial services regulatory agency” includes, for the purposes of this chapter, an agency that regulates broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940.</text> </paragraph> <paragraph num="(5)"> <text>“Health insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Prohibited Use of Certification or Professional Designation."> <text>The prohibited use of a certification or professional designation includes the following:</text> <paragraph num="A."> <text>Use of certification or professional designation by a person who has not actually earned or is ineligible to use the certification or designation;</text> </paragraph> <paragraph num="B."> <text>Use of nonexistent or self-conferred certification or professional designation;</text> </paragraph> <paragraph num="C."> <text>Use of certification or professional designation that indicates a level of occupational qualifications obtained through education, training, or experience that the user does not have; and</text> </paragraph> <paragraph num="D."> <text>Use of a certification or professional designation that was obtained from a designating or certifying organization that:</text> <paragraph num="(1)"> <text>Is primarily engaged in the business of instruction in sales, marketing, or sales and marketing;</text> </paragraph> <paragraph num="(2)"> <text>Does not have reasonable standards or procedures for assuring the competency of its designees or certificate holders;</text> </paragraph> <paragraph num="(3)"> <text>Does not have reasonable standards or procedures for monitoring and disciplining it designees or certificate holders for improper or unethical conduct; or</text> </paragraph> <paragraph num="(4)"> <text>Does not have reasonable continuing education requirements for its designees or certificate holders in order to maintain the designation or certification.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Rebuttable Presumption."> <paragraph num="A."> <text>There is a rebuttable presumption that a designating or certifying organization is not disqualified solely for purposes of this chapter if:</text> <paragraph num="(1)"> <text>The organization has been accredited by:</text> <paragraph num="(a)"> <text>The American National Standards Institute or The National Commission for Certifying Agencies; or</text> </paragraph> <paragraph num="(b)"> <text>The organization is on the United States Department of Education’s list entitled “Accrediting Agencies Recognized for Title IV Purposes” and the issued designation or credential does not primarily apply to sales, marketing, or sales and marketing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The following factors shall be considered when determining whether a combination of words, or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing senior citizens or retirees:</text> <paragraph num="(1)"> <text>Use, in the name of the certification or professional designation, of one or more words such as “senior”, “retirement,” “elder”, or similar terms, combined with one or more words such as “certified”, “registered”, “chartered”, “adviser”, “specialist”, “consultant”, “planner”, or similar terms; and</text> </paragraph> <paragraph num="(2)"> <text>The manner in which the words described in §B(1) of this regulation are combined.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Exceptions."> <text>For purposes of this chapter, a certification or professional designation does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when that job title:</text> <paragraph num="A."> <text>Indicates seniority or standing within the organization; or</text> </paragraph> <paragraph num="B."> <text>Specifies an individuals’ area of specialization within the organization.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Enforcement."> <text>Nothing in this chapter shall limit the Commissioner’s authority to enforce existing provisions of law.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 10-212, 27-201, and 27-223, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 4, 2011 (38:7 Md. R. 433)</annotation> </annotations> </chapter> <chapter num="16" heading="SHOP Exchange Navigators — Licensing"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish certain requirements that must be satisfied in order to qualify for a SHOP Exchange navigator license.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter applies to any person seeking to act as a SHOP Exchange navigator.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means a person who is applying for a SHOP Exchange navigator license.</text> </paragraph> <paragraph num="(3)"> <text>“Application” means a written request for a license in a form approved by the Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>“Effective Date” means the date on which a license takes effect.</text> </paragraph> <paragraph num="(6)"> <text>“Examination” means the written pre-licensing examination given under the authority of the Commissioner pursuant to Insurance Article, §31-112(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“License” means a SHOP Exchange navigator license.</text> </paragraph> <paragraph num="(8)"> <text>“Licensee” means a SHOP Exchange navigator.</text> </paragraph> <paragraph num="(9)"> <text>“Maryland Health Benefit Exchange” means the public corporation established under Insurance Article, §31-102, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“SHOP Exchange” has the meaning set forth in Insurance Article, §31-101(w), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“SHOP Exchange navigator” has the meaning set forth in Insurance Article, §31-101(x), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“SHOP Exchange navigator license” has the meaning set forth in Insurance Article, §31-101(y), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Training Program” means the educational program offered to an applicant by the SHOP Exchange that must be completed subject to Insurance Article, §31-112(c)(2)(v), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Licensing Requirements."> <paragraph num="A."> <text>Before a person may act as a SHOP Exchange navigator in the State, the person shall obtain a license issued by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>To qualify for a license, an applicant:</text> <paragraph num="(1)"> <text>Shall be at least 18 years of age;</text> </paragraph> <paragraph num="(2)"> <text>Shall successfully complete the training program;</text> </paragraph> <paragraph num="(3)"> <text>Shall complete and pass both sections of the examination;</text> </paragraph> <paragraph num="(4)"> <text>Shall submit an application and any additional information the Commissioner deems necessary to the Administration;</text> </paragraph> <paragraph num="(5)"> <text>Shall pay to the Administration initial license and application fees if permitted by law;</text> </paragraph> <paragraph num="(6)"> <text>Shall be of good character and trustworthy; and</text> </paragraph> <paragraph num="(7)"> <text>May not have committed any act the Commissioner finds would warrant suspension or revocation of a license under Insurance Article, §31-112(e), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Examination."> <paragraph num="A."> <text>To qualify to take the examination, an applicant must submit evidence of successful completion of the training program.</text> </paragraph> <paragraph num="B."> <text>The examination shall be:</text> <paragraph num="(1)"> <text>Divided into a State-specific section and a general section;</text> </paragraph> <paragraph num="(2)"> <text>Based on a content outline that is approved by the Commissioner in consultation with the Maryland Health Benefit Exchange;</text> </paragraph> <paragraph num="(3)"> <text>Reviewed by the Commissioner on a periodic basis, in consultation with the Maryland Health Benefit Exchange, to ensure that it accurately measures an applicant’s competency in the required areas of knowledge;</text> </paragraph> <paragraph num="(4)"> <text>In writing, but may be administered electronically to an applicant;</text> </paragraph> <paragraph num="(5)"> <text>Conducted in specified locations throughout the State which have been approved by the Commissioner;</text> </paragraph> <paragraph num="(6)"> <text>Conducted in facilities that comply with the Americans with Disabilities Act of 1990 as amended by 42 U.S.C. §12101, et seq.; and</text> </paragraph> <paragraph num="(7)"> <text>Administered quarterly, or more frequently if deemed appropriate by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each section of the examination shall be scored separately.</text> </paragraph> <paragraph num="D."> <text>The Commissioner shall establish a minimum passing score, in consultation with the Maryland Health Benefit Exchange, for each section of the examination.</text> </paragraph> <paragraph num="E."> <text>An applicant who fails a single section of the examination may retake the failed section of the examination within 1 year of the initial examination date. If the applicant does not pass the failed section within that time, the applicant must retake both sections of the examination to be eligible to pass the examination. The examination may be taken no more than three times in a 6-week period.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Changes to Information in the Application."> <paragraph num="A."> <text>Within 30 days after a change to any information in an initial or renewal application, a licensee shall file with the Commissioner, in a form required by the Commissioner, the change in information.</text> </paragraph> <paragraph num="B."> <text>If a licensee fails to timely file with the Commissioner a change to the information specified in §A of this regulation, the licensee is in violation of Insurance Article, §31-112(e)(1)(i), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="License Term."> <paragraph num="A."> <text>An initial license expires on the last day of the licensee’s birth month following the second anniversary of the effective date of the initial license.</text> </paragraph> <paragraph num="B."> <text>A renewal license expires on the second anniversary of its effective date.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="License Renewal."> <paragraph num="A."> <text>To qualify to renew a license, a licensee:</text> <paragraph num="(1)"> <text>Shall submit to the Commissioner a renewal application approved by the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>Shall pay a license renewal fee if permitted by law;</text> </paragraph> <paragraph num="(3)"> <text>Shall submit to the Commissioner any additional information the Commissioner deems necessary;</text> </paragraph> <paragraph num="(4)"> <text>Shall complete the continuing education requirements as set forth in §A(7) of this regulation;</text> </paragraph> <paragraph num="(5)"> <text>Shall be of good character and trustworthy;</text> </paragraph> <paragraph num="(6)"> <text>May not have committed any act the Commissioner finds would warrant suspension or revocation of a license under Insurance Article, §31-112(e), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(7)"> <text>Shall complete 16 credit hours of continuing education during the prior license period as approved by the Administration in consultation with the Maryland Health Benefit Exchange. The credit hours shall include the following:</text> <paragraph num="(a)"> <text>A minimum of 9 credit hours in health insurance; and</text> </paragraph> <paragraph num="(b)"> <text>A minimum of 3 credit hours in ethics;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Shall have paid all undisputed taxes and unemployment insurance contributions payable to the Comptroller of Maryland and the Secretary of Labor or have provided for payment in a manner satisfactory to the unit responsible for collection; and</text> </paragraph> <paragraph num="(9)"> <text>Shall have paid any amount in arrears on an applicant’s child support obligation, if any, or have provided for payment in a manner satisfactory to the unit responsible for collection.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A renewal application is considered timely filed if:</text> <paragraph num="(1)"> <text>The application contains all of the required information;</text> </paragraph> <paragraph num="(2)"> <text>The renewal license fee, if permitted by law, has been received by the Administration; and</text> </paragraph> <paragraph num="(3)"> <text>The application is:</text> <paragraph num="(a)"> <text>Mailed and postmarked on or before the expiration date of the license; or</text> </paragraph> <paragraph num="(b)"> <text>Submitted electronically and received by an information processing system that the Administration has designated for the purpose of receiving electronic applications prior to the expiration date of the license.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>If, at least 2 calendar weeks before a license expires, the licensee makes sufficient application for renewal of the license, the license shall not expire until:</text> <paragraph num="(1)"> <text>The Administration takes final action on the renewal application; and</text> </paragraph> <paragraph num="(2)"> <text>The time for seeking judicial review of the action expires or any judicial stay of the Administration’s final action expires.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Expired License Reinstatement."> <paragraph num="A."> <text>An individual whose license has expired:</text> <paragraph num="(1)"> <text>Is prohibited from acting as a SHOP Exchange navigator in the State; and</text> </paragraph> <paragraph num="(2)"> <text>For up to 1 year after the expiration date of the license, may obtain reinstatement of the expired license by:</text> <paragraph num="(a)"> <text>Submitting to the Commissioner a reinstatement application approved by the Commissioner;</text> </paragraph> <paragraph num="(b)"> <text>Meeting all of the renewal requirements under Regulation .08(A) and (B) of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>Paying to the Administration the reinstatement fee, if permitted by law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>An individual who does not qualify for reinstatement under §A(2) of this regulation may apply for an initial license as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may waive the reinstatement procedures for a SHOP Exchange navigator who is unable to comply with the renewal and reinstatement procedures due to:</text> <paragraph num="(1)"> <text>Military service; or</text> </paragraph> <paragraph num="(2)"> <text>Other extenuating circumstances, including a long-term medical disability.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 31-112, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 4, 2013 (40:4 Md. R. 348)</annotation> </annotations> </chapter> <chapter num="17" heading="Consolidated Services Center — SHOP Exchange Enrollment Permits"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish certain requirements that shall be satisfied in order to qualify for a SHOP Exchange enrollment permit.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter applies to any employee of the Consolidated Services Center seeking to provide the services set forth in Insurance Article, §31-112(c)(1), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means a person who is applying for a SHOP Exchange enrollment permit.</text> </paragraph> <paragraph num="(3)"> <text>“Application” means a written request for a permit in a form approved by the Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>“Consolidated Services Center” has the meaning set forth in Insurance Article, §31-101(c-2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Effective date” means the date on which a permit takes effect.</text> </paragraph> <paragraph num="(7)"> <text>“Examination” means the examination given under the authority of the Commissioner pursuant to Insurance Article, §31-112(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Maryland Health Benefit Exchange” means the public corporation established under Insurance Article, §31-102, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Permit” means a SHOP Exchange enrollment permit.</text> </paragraph> <paragraph num="(10)"> <text>“SHOP Exchange” has the meaning set forth in Insurance Article, §31-101(w), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“SHOP Exchange Enrollment Permit” means a permit issued by the Commissioner to Consolidated Services Center employees, as required under Insurance Article, §31-113.1(b)(3), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“SHOP Exchange Navigator License” has the meaning set forth in Insurance Article, §31-101(y), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Training program” means the educational program offered to an applicant by the SHOP Exchange that must be completed subject to Insurance Article, §31-112(2)(v), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Permit Requirements."> <paragraph num="A."> <text>Before an employee of the Consolidated Services Center may provide the services set forth in Insurance Article, §31-112(c)(1), Annotated Code of Maryland, the person shall obtain a permit issued by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>To qualify for a permit, an applicant shall:</text> <paragraph num="(1)"> <text>Be at least 18 years of age;</text> </paragraph> <paragraph num="(2)"> <text>Successfully complete the training program;</text> </paragraph> <paragraph num="(3)"> <text>Complete and pass both sections of the examination;</text> </paragraph> <paragraph num="(4)"> <text>Submit an application and any additional information the Commissioner deems necessary to the Administration;</text> </paragraph> <paragraph num="(5)"> <text>Pay to the Administration initial permit and application fees if permitted by law;</text> </paragraph> <paragraph num="(6)"> <text>Be of good character and trustworthy;</text> </paragraph> <paragraph num="(7)"> <text>Not have committed any act the Commissioner finds would warrant suspension or revocation of a permit under Insurance Article, §31-113.1(b)(4), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(8)"> <text>Be engaged by the Consolidated Services Center and receive compensation only through the Consolidated Services Center.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Examination."> <paragraph num="A."> <text>For an applicant to qualify to take the examination, the Maryland Health Benefit Exchange, or its designee, must submit evidence of the applicant’s successful completion of the training program to the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The examination shall be the same examination administered by the Commissioner to those individuals seeking a SHOP Exchange Navigator License.</text> </paragraph> <paragraph num="C."> <text>An applicant who fails a single section of the examination may retake the failed section of the examination within 1 year of the initial examination date. If the applicant does not pass the failed section within that time, the applicant shall retake both sections of the examination to be eligible to pass the examination. The examination may not be taken more than three times in a 6-week period.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Changes to Information in the Application."> <paragraph num="A."> <text>Within 30 days after a change to any information in an initial or renewal application, a permit holder shall file with the Commissioner, in a form required by the Commissioner, the change in information.</text> </paragraph> <paragraph num="B."> <text>If a permit holder fails to timely file with the Commissioner a change to the information specified in §A of this regulation, the permit holder is in violation of Insurance Article, §31-112(e)(1)(i), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Permit Term."> <paragraph num="A."> <text>An initial permit expires on the last day of the permit holder’s birth month following the second anniversary of the effective date of the initial permit.</text> </paragraph> <paragraph num="B."> <text>A renewal permit expires on the second anniversary of its effective date.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Permit Renewal."> <paragraph num="A."> <text>To qualify to renew a permit, a permit holder shall:</text> <paragraph num="(1)"> <text>Submit to the Commissioner a renewal application approved by the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>Pay a permit renewal fee if permitted by law;</text> </paragraph> <paragraph num="(3)"> <text>Submit to the Commissioner any additional information the Commissioner deems necessary;</text> </paragraph> <paragraph num="(4)"> <text>Complete the continuing education requirements as set forth in §A(7) of this regulation;</text> </paragraph> <paragraph num="(5)"> <text>Be of good character and trustworthy;</text> </paragraph> <paragraph num="(6)"> <text>Not have committed any act the Commissioner finds would warrant suspension or revocation of a SHOP Exchange enrollment permit under Insurance Article, §31-113.1(b)(4), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(7)"> <text>Complete 16 credit hours of continuing education during the prior permit period as approved by the Administration in consultation with the Maryland Health Benefit Exchange which shall include the following:</text> <paragraph num="(a)"> <text>A minimum of nine credit hours in health insurance; and</text> </paragraph> <paragraph num="(b)"> <text>A minimum of three credit hours in ethics;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Have paid all undisputed taxes and unemployment insurance contributions payable to the Comptroller of Maryland and the Secretary of Labor or has provided for payment in a manner satisfactory to the unit responsible for collection;</text> </paragraph> <paragraph num="(9)"> <text>Have paid any amount in arrears on an applicant’s child support obligation, if any, or has provided for payment in a manner satisfactory to the unit responsible for collection; and</text> </paragraph> <paragraph num="(10)"> <text>Be engaged by the Consolidated Services Center and receive compensation only through the Consolidated Services Center.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A renewal application is considered timely filed if:</text> <paragraph num="(1)"> <text>The application contains all of the required information;</text> </paragraph> <paragraph num="(2)"> <text>The renewal permit fee, if permitted by law, has been received by the Administration; and</text> </paragraph> <paragraph num="(3)"> <text>The application is:</text> <paragraph num="(a)"> <text>Mailed and postmarked on or before the expiration date of the permit; or</text> </paragraph> <paragraph num="(b)"> <text>Submitted electronically and received by an information processing system that the Administration has designated for the purpose of receiving electronic applications prior to the expiration date of the permit.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>If, at least 2 calendar weeks before a permit expires, the permit holder makes sufficient application for renewal of the permit, the permit shall not expire until:</text> <paragraph num="(1)"> <text>The Administration takes final action on the renewal application; and</text> </paragraph> <paragraph num="(2)"> <text>The time for seeking judicial review of the action expires or any judicial stay of the Administration’s final action expires.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Expired Permit Reinstatement."> <paragraph num="A."> <text>An individual whose permit has expired:</text> <paragraph num="(1)"> <text>Is prohibited from providing the services set forth in the Insurance Article, §31-112(c)(1), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>For up to 1 year after the expiration date of the permit, may obtain reinstatement of the expired permit by:</text> <paragraph num="(a)"> <text>Submitting to the Commissioner a reinstatement application approved by the Commissioner;</text> </paragraph> <paragraph num="(b)"> <text>Meeting all of the renewal requirements under Regulation .08A—B(1), (2) and (3)(b) of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>Paying to the Administration the reinstatement fee, if permitted by law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>An individual who does not qualify for reinstatement under §A(2) of this regulation may apply for an initial permit as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may waive the reinstatement procedures for a Consolidated Services Center employee who is unable to comply with the renewal and reinstatement procedures due to:</text> <paragraph num="(1)"> <text>Military service; or</text> </paragraph> <paragraph num="(2)"> <text>Other extenuating circumstances, including a long-term medical disability.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 31-113.1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.09 adopted as an emergency provision effective September 19, 2013 (40:21 Md. R. 1772); adopted permanently effective November 11, 2013 (40:22 Md. R. 1878)</annotation> </annotations> </chapter> <chapter num="18" heading="Public Adjusters"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter does not apply to:</text> <paragraph num="A."> <text>An adjuster for or an insurance producer or employee of an insurer or group of insurers under common control or ownership that, as representative of the insurer or group, adjusts losses or damages under policies issued by the insurer or group;</text> </paragraph> <paragraph num="B."> <text>An insurance producer that acts as an adjuster without compensation for an insured for whom the insurance producer is acting as an insurance producer; or</text> </paragraph> <paragraph num="C."> <text>An attorney at law who does not:</text> <paragraph num="(1)"> <text>Regularly act as a public adjuster; and</text> </paragraph> <paragraph num="(2)"> <text>Represent to the public by sign, advertisement, or otherwise that the attorney at law acts as a public adjuster.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter the following words have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Business entity” has the meaning stated in Insurance Article, §10-101(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Course” means a presentation of information delivered in person, in print, electronically, or via teleconference, which is measured by verifiable attendance or examination, or both.</text> </paragraph> <paragraph num="(4)"> <text>“Course completion date” means the date when a student has submitted all necessary information to the education provider and, when applicable, successfully met the course attendance requirements or passed the final examination, or both.</text> </paragraph> <paragraph num="(5)"> <text>“Course completion roster” means a listing of candidates who have completed a continuing education course, provided in a format determined by the Commissioner, which includes the following:</text> <paragraph num="(a)"> <text>The course name, the designated course number, and the course completion date;</text> </paragraph> <paragraph num="(b)"> <text>The provider’s identification number;</text> </paragraph> <paragraph num="(c)"> <text>The instructor’s license number, if applicable; and</text> </paragraph> <paragraph num="(d)"> <text>For each student who completes the course:</text> <paragraph num="(i)"> <text>The student’s name;</text> </paragraph> <paragraph num="(ii)"> <text>The student’s national producer number or the student’s license number, or both; and</text> </paragraph> <paragraph num="(iii)"> <text>The number of hours of continuing education earned by the student.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Course coordinator” means an individual who is responsible for organizing a continuing education course, getting it approved by the Insurance Commissioner, and supervising the administration of the course after its approval.</text> </paragraph> <paragraph num="(7)"> <text>“Expiration date” means the date the license expires as stated on the license.</text> </paragraph> <paragraph num="(8)"> <text>“Hours of continuing education” means 50 minutes of work in a course that has been approved by the Commissioner to receive continuing education credit.</text> </paragraph> <paragraph num="(9)"> <text>“Instructor” means a subject matter expert, approved by the Commissioner, presenting course activities or information in a course approved by the Commissioner.</text> </paragraph> <paragraph num="(10)"> <text>“License” means a license issued by the Commissioner to act as a public adjuster.</text> </paragraph> <paragraph num="(11)"> <text>“Licensed insurance producer” has the meaning stated in Insurance Article, §1-101(w), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Provider” means an entity that has been approved by the Commissioner to offer continuing education courses to licensed insurance producers in the State.</text> </paragraph> <paragraph num="(13)"> <text>“Public adjuster” has the meaning stated in Insurance Article, §10-401(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Renewal period” means the period from the issuance or renewal of a license until the day before the expiration date of the license.</text> </paragraph> <paragraph num="(15)"> <text>“Renewal year” means the 12-month period from January 1 until December 31 in which a license renewal occurs.</text> </paragraph> <paragraph num="(16)"> <text>“Self-study course” means a course that is not presented in a classroom, is not delivered in person, and does not require interaction with an instructor.</text> </paragraph> <paragraph num="(17)"> <text>“Successfully complete” means to complete and meet all requirements of an approved course for which a valid certificate of course completion has been issued.</text> </paragraph> <paragraph num="(18)"> <text>“Teleconference” means the live exchange of information among several persons who are separately located but linked by audio or video, or both, that provides for opportunities for interactions between student and instructor.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="General Continuing Education Requirements."> <paragraph num="A."> <text>Except as provided in §§B and C of this regulation, in order to renew a license, a licensed public adjuster who is not a business entity shall successfully complete in each renewal period at least 24 hours of continuing education as follows:</text> <paragraph num="(1)"> <text>At least 3 hours in Ethics; and</text> </paragraph> <paragraph num="(2)"> <text>21 hours shall be in courses designated by the Commissioner as “Public Adjuster” or “Property/Casualty”.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the licensed public adjuster is also a licensed insurance producer and has only a producer license for property insurance, casualty insurance, or a subdivision of property or casualty insurance, the licensee shall obtain necessary hours in courses designated by the Commissioner as “Public Adjuster” or “Property/Casualty”.</text> </paragraph> <paragraph num="C."> <text>If the licensed public adjuster is also a licensed insurance producer and has a producer license for property insurance or casualty insurance, or a subdivision of property or casualty insurance, and life insurance or health insurance, or a subdivision of life or health insurance, then the licensee shall complete:</text> <paragraph num="(1)"> <text>A minimum of 6 hours in one or more courses designated Public Adjuster;</text> </paragraph> <paragraph num="(2)"> <text>A minimum of 6 hours in one or more courses designated Property/Casualty;</text> </paragraph> <paragraph num="(3)"> <text>A minimum of 6 hours in one or more courses designated Life/Health; and</text> </paragraph> <paragraph num="(4)"> <text>Three additional hours of continuing education in any course or courses designated for areas specified in §C(1)—(3) of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Course of Continuing Education—Passing Scores. Passing scores received on or after the expiration date for the public adjuster’s license shall result in hours of continuing education that may be used for the next renewal period.</text> </paragraph> <paragraph num="E."> <text>A course instructor shall earn 1-1/2 hours of continuing education for each approved hour of instruction of an approved course.</text> </paragraph> <paragraph num="F."> <text>A public adjuster or a course instructor may not earn hours of continuing education for attending or instructing a subsequent offering of the same course in the same renewal period.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Holders of Expired Licenses Who Seek Reinstatement."> <paragraph num="A."> <text>The holder of an expired license who seeks reinstatement of the license under Insurance Article, §10-408.1, Annotated Code of Maryland, shall fulfill the continuing education requirements for the renewal period that concluded on the day before the immediately preceding expiration date of the licensed public adjuster’s license in order to qualify for reinstatement.</text> </paragraph> <paragraph num="B."> <text>A licensed public adjuster who does not have sufficient hours of continuing education on the day before the most recent expiration date of the license will have all hours of continuing education earned on or after the expiration date credited toward the requirement for the renewal period that concluded on the day before the license expired.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Nonresident Licensed Public Adjusters."> <paragraph num="A."> <text>A nonresident licensed public adjuster whose state or residence has a continuing education requirement shall fulfill all of the requirements of the state of residence, and the continuing education requirements of Maryland may not be applicable to the licensed public adjuster.</text> </paragraph> <paragraph num="B."> <text>A nonresident licensed public adjuster whose state of residence does not have a continuing education requirement shall fulfill Maryland continuing education requirements, which may be fulfilled entirely through correspondence courses.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Licensed Public Adjuster Responsibilities."> <paragraph num="A."> <text>A licensed public adjuster shall:</text> <paragraph num="(1)"> <text>Maintain a record of the certificate of course completion received for 4 years following the date that the course was completed; and</text> </paragraph> <paragraph num="(2)"> <text>Upon request, submit with the renewal application each certification of course completion needed to fulfill the licensed public adjuster’s hours of continuing education for the renewal period.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Under Insurance Article, §10-410, Annotated Code of Maryland, the Commissioner may suspend or revoke a license if a licensed public adjuster is found to have knowingly:</text> <paragraph num="(1)"> <text>Falsified a certification of course completion; or</text> </paragraph> <paragraph num="(2)"> <text>Submitted a falsified certification of course completion.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Approval of Courses."> <paragraph num="A."> <text>A continuing education course shall be submitted to the Commissioner for approval. The Commissioner may approve a course only if the course imparts substantive and procedural knowledge relating to the insurance field.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may not approve a course covering any of the following subject areas:</text> <paragraph num="(1)"> <text>A course in office or business skills, including typing, speed reading, or the use of computers, calculators, or other machines or equipment;</text> </paragraph> <paragraph num="(2)"> <text>A course in office management, client relations, or other matters aimed at improving the operating of the person’s business; or</text> </paragraph> <paragraph num="(3)"> <text>A course in salesmanship or product promotion, stress management, time management, psychology, motivation, or written or oral communications.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Except for a self-study course, a course submitted to the Commissioner for approval does not need to require a textbook or an examination in order to receive approval.</text> </paragraph> <paragraph num="D."> <text>The Commissioner shall assign to each approved course:</text> <paragraph num="(1)"> <text>The number of hours of continuing education that an individual taking the course may receive for successful completion of the course;</text> </paragraph> <paragraph num="(2)"> <text>A designated course number that is provided on all certificates of course completion, all correspondence relating to the course, and on all forms filed with the Commissioner relating to the course;</text> </paragraph> <paragraph num="(3)"> <text>A designation of “Public Adjuster”, “Property/Casualty” or “Ethics”; and</text> </paragraph> <paragraph num="(4)"> <text>A course expiration date.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Submission of Courses for Approval."> <paragraph num="A."> <text>A provider shall submit to the Commissioner:</text> <paragraph num="(1)"> <text>A fully completed course approval package consisting of the following forms provided by the Commissioner:</text> <paragraph num="(a)"> <text>Request for approval of continuing education course;</text> </paragraph> <paragraph num="(b)"> <text>Course coordinator information;</text> </paragraph> <paragraph num="(c)"> <text>Course instructor information and approval form;</text> </paragraph> <paragraph num="(d)"> <text>Certificate of course completion; and</text> </paragraph> <paragraph num="(e)"> <text>Checklist of items that must accompany the course approval package;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A statement of the educational objectives;</text> </paragraph> <paragraph num="(3)"> <text>A full and detailed description of the course content including the amount of time allotted to each subject covered by the course on an hour-by-hour basis;</text> </paragraph> <paragraph num="(4)"> <text>All course materials, including textbooks, written materials in place of textbooks, course syllabus, policy forms, and any other items used by the instructor;</text> </paragraph> <paragraph num="(5)"> <text>Promotional materials; and</text> </paragraph> <paragraph num="(6)"> <text>A statement of the refund policy, which shall include:</text> <paragraph num="(a)"> <text>Full refund of course fees due to cancellation by the sponsor; and</text> </paragraph> <paragraph num="(b)"> <text>The refund policy when the licensed insurance producer:</text> <paragraph num="(i)"> <text>Withdraws from the course before commencement; and</text> </paragraph> <paragraph num="(ii)"> <text>Fails to complete the course after it has commenced.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The provider shall submit a course approval package to the Commissioner as follows:</text> <paragraph num="(1)"> <text>A course previously approved in another state or jurisdiction that has adopted the “NAIC Uniform Declaration Regarding Continuing Education Reciprocity Course Approval Guidelines” shall be submitted using the NAIC Uniform Continuing Education Reciprocity Course Filing Form at least 30 days before the first date on which the course is to be taught; or</text> </paragraph> <paragraph num="(2)"> <text>A course that has not been previously approved in a state that has adopted the “NAIC Uniform Declaration Regarding Continuing Education Reciprocity Course Approval Guidelines” shall be submitted at least 45 days before the first date on which the course is to be taught.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner shall notify the provider in writing of a course approval and the period of time of the approval, which shall be from the date of the approval until the second anniversary of the date the course was approved.</text> </paragraph> <paragraph num="D."> <text>A provider may offer only a course approved by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Submission of Courses for Renewal."> <paragraph num="A."> <text>At least 90 days prior to the expiration of a course’s approval, the Commissioner shall mail to the provider of the approved course a notice that states:</text> <paragraph num="(1)"> <text>The course name, the course content code, the course number, and the date on which the course approval expires;</text> </paragraph> <paragraph num="(2)"> <text>The date by which the Commissioner must receive the request to renew; and</text> </paragraph> <paragraph num="(3)"> <text>The fee charged for reviewing continuing education courses submitted for renewal.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In order to renew a course, a provider shall comply with the provisions of Regulation .08 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Providers."> <paragraph num="A."> <text>A provider shall:</text> <paragraph num="(1)"> <text>Comply with this chapter for each of the provider’s approved courses;</text> </paragraph> <paragraph num="(2)"> <text>Use in all communication with the Commissioner or the Commissioner’s designee the provider identification number assigned by the Commissioner;</text> </paragraph> <paragraph num="(3)"> <text>Use a course coordinator who meets the qualifications specified in Regulation .11 of this chapter;</text> </paragraph> <paragraph num="(4)"> <text>Use an approved instructor; and</text> </paragraph> <paragraph num="(5)"> <text>Notify the Commissioner of the replacement of a course coordinator.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A provider who is an insurer authorized to do business in Maryland may not require an appointed insurance producer to obtain hours of continuing education by attending an approved course that the insurer is providing.</text> </paragraph> <paragraph num="C."> <text>Within 15 days of the completion of a course, the provider shall submit a course completion roster to the Commissioner or the Commissioner’s designee in an electronic format specified by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Course Coordinators."> <paragraph num="A."> <text>The provider shall ensure that each approved continuing education course has at least one course coordinator who is responsible for:</text> <paragraph num="(1)"> <text>Supervising the administration of the course; and</text> </paragraph> <paragraph num="(2)"> <text>Compliance with this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A course coordinator shall possess one or more of the following qualifications:</text> <paragraph num="(1)"> <text>A minimum of 5 years experience as an actively licensed public adjuster;</text> </paragraph> <paragraph num="(2)"> <text>A minimum of 3 years experience as an administrator of an education program;</text> </paragraph> <paragraph num="(3)"> <text>A degree in education and at least 2 years experience as a licensed public adjuster; or</text> </paragraph> <paragraph num="(4)"> <text>Full-time employment in the insurance education field as a coordinator with at least 6 months experience.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A course coordinator shall:</text> <paragraph num="(1)"> <text>Assure compliance with this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Notify the Commissioner of:</text> <paragraph num="(a)"> <text>Any change in the instructor for an approved course;</text> </paragraph> <paragraph num="(b)"> <text>The date, time, and location of a course offering and the name of the instructor not less than 14 calendar days in advance of the date that the course offering is scheduled to begin; and</text> </paragraph> <paragraph num="(c)"> <text>The cancellation of a course offering as soon as reasonably possible;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Assure that students are provided with current and accurate information;</text> </paragraph> <paragraph num="(4)"> <text>Create an accurate record of student attendance and successful course completion for each offering of an approved course;</text> </paragraph> <paragraph num="(5)"> <text>Supervise and evaluate courses and instructors;</text> </paragraph> <paragraph num="(6)"> <text>Investigate complaints relating to course offerings and instructors;</text> </paragraph> <paragraph num="(7)"> <text>Maintain accurate records relating to course offerings, instructors, student attendance, and student course completion for a minimum of 4 years following the date of the course offering; and</text> </paragraph> <paragraph num="(8)"> <text>Within 15 days of the student’s completion of the course, provide each student with a certificate of course completion on a form approved by the Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Instructors."> <paragraph num="A."> <text>The provider shall ensure that each continuing education course approved by the Commissioner is taught by an instructor who has been approved by the Commissioner as meeting the qualifications specified in this chapter.</text> </paragraph> <paragraph num="B."> <text>The provider shall submit to the Commissioner a course instructor information and approval form for each instructor of an approved course.</text> </paragraph> <paragraph num="C."> <text>An instructor shall possess one or more of the following qualifications:</text> <paragraph num="(1)"> <text>A minimum of 2 years experience in the subject matter being taught;</text> </paragraph> <paragraph num="(2)"> <text>A degree in the subject matter being taught; or</text> </paragraph> <paragraph num="(3)"> <text>A minimum of 2 years recent experiences as a licensed public adjuster and a minimum of 6 months practical experience in the subject matter being taught.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Commissioner may not approve as an instructor a licensed public adjuster:</text> <paragraph num="(1)"> <text>Who has been fined; or</text> </paragraph> <paragraph num="(2)"> <text>Whose license has been suspended or revoked.</text> </paragraph> </paragraph> <paragraph num="E."> <text>An instructor shall:</text> <paragraph num="(1)"> <text>Comply with the requirements of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>Provide students with:</text> <paragraph num="(a)"> <text>Current and accurate information on the subject matter of the course; and</text> </paragraph> <paragraph num="(b)"> <text>A course syllabus that shall contain at least the following information:</text> <paragraph num="(i)"> <text>Course title and designated course number assigned by the Commissioner;</text> </paragraph> <paragraph num="(ii)"> <text>Times and dates of the course offering;</text> </paragraph> <paragraph num="(iii)"> <text>Names, addresses, and telephone numbers of each course coordinator; and</text> </paragraph> <paragraph num="(iv)"> <text>Detailed outline of the subject matter of the course.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>The Commissioner may revoke the approval of any course that is not taught by an approved instructor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Advertising of Approved Courses."> <paragraph num="A."> <text>Except as provided in §D of this regulation, a provider may not advertise or distribute promotional materials unless the course has been approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Advertisements and promotional materials may not be deceptive or misleading and shall, at a minimum, clearly identify the number of hours of continuing education for which a course has been approved and the fee for taking the course.</text> </paragraph> <paragraph num="C."> <text>A provider of an approved course who advertises or promotes a course that has not been approved or a course that is not eligible for approval shall prominently state that no hours of continuing education can be earned by taking the course.</text> </paragraph> <paragraph num="D."> <text>A provider may request, in writing, permission to advertise a course before approval is obtained from the Commissioner by submitting:</text> <paragraph num="(1)"> <text>A letter specifically requesting permission to advertise the course before approval is obtained; and</text> </paragraph> <paragraph num="(2)"> <text>With the course approval package, all advertisements or promotional materials that will be used before approval and which shall prominently include the words “approval from the Insurance Administration pending”.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Commissioner shall issue the provider a written response either granting or denying the provider’s request for course approval. The provider may not advertise the course until the Commissioner has granted the request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Prohibited Practices."> <text>The following practices by a provider, course coordinator, or instructor are prohibited:</text> <paragraph num="A."> <text>Offering or teaching a course that is not approved or that is not in substantial conformity with the course completion package submitted to and approved by the Commissioner;</text> </paragraph> <paragraph num="B."> <text>Promoting a particular public adjuster, insurance agency or insurance company or products of the agency or company; and</text> </paragraph> <paragraph num="C."> <text>Requiring, as a condition of receiving a certificate of course completion, that students participate in other programs or services offered by the provider, course coordinator, or instructor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Powers of the Commissioner."> <paragraph num="A."> <text>The Commissioner, or the Commissioner’s designee, may audit all course offerings with or without notice to the provider, course coordinator, or instructor of the course.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may suspend or revoke the approval of a course for any of the following violations of this chapter:</text> <paragraph num="(1)"> <text>Failure of the instructor to follow the approved course content;</text> </paragraph> <paragraph num="(2)"> <text>Failure to use a course coordinator meeting the qualifications specified in this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Failure to use an approved instructor;</text> </paragraph> <paragraph num="(4)"> <text>Failure to notify the Commissioner of the date, time, location, and instructor of a course offering in accordance with Regulation .11C(2)(b) of this chapter; or</text> </paragraph> <paragraph num="(5)"> <text>Failure to submit a course completion roster in accordance with Regulation .10C of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner may suspend or revoke all approved courses of a particular provider for a violation of this chapter or refuse to approve a course submitted by a specific provider if the Commissioner determines that a past course offering by that provider was not in compliance with this chapter.</text> </paragraph> <paragraph num="D."> <text>The Commissioner may suspend or revoke the approval of any instructor, course coordinator, or course provider who fails to comply with this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Waiver of the Continuing Education Requirement."> <paragraph num="A."> <text>Subject to §B of this regulation, the continuing education requirements may be waived for a licensed insurance producer who:</text> <paragraph num="(1)"> <text>Submits a written request for a waiver; and</text> </paragraph> <paragraph num="(2)"> <text>Is determined by the Commissioner, in the Commissioner’s discretion, to warrant a waiver.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A waiver request shall be accompanied by supporting documentation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Protections after Loss or Damage to Property."> <paragraph num="A."> <text>The term “business day”, as it is used in Insurance Article, §§10–411(h) and 10-414(f), Annotated Code of Maryland means any day other than a Saturday, Sunday, or State holiday.</text> </paragraph> <paragraph num="B."> <text>In enforcing Insurance Article, §10-414(f), Annotated Code of Maryland, the Commissioner shall determine the date of a loss giving rise to an insurance claim as follows:</text> <paragraph num="(1)"> <text>If the insurance claim resulted from a hurricane, then the date of loss giving rise to the insurance claim is the date that the hurricane made landfall in the State of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>If the insurance claim resulted from a tornado, windstorm, severe rain, or other weather-related event that is not a hurricane, then the date of loss giving rise to the insurance claim is the date that the tornado, windstorm, severe rain, or other weather-related event is verified to have occurred in Maryland by the National Oceanic and Atmospheric Administration; or</text> </paragraph> <paragraph num="(3)"> <text>If the insurance claim is not within the scope of §B(1) or (2) of this regulation, then the date of loss giving rise to the insurance claim is the date that the loss was discovered.</text> </paragraph> </paragraph> <paragraph num="C."> <text>To comply with §10-414(f), a public adjuster who enters into a contract for public adjuster services during or within 72 hours after a loss giving rise to an insurance claim shall electronically submit the Public Adjuster Contract Submission Form that is published to the Administration’s website, together with any attachments required therein, within one business day after entering into the contract.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 2-209 and 10-408, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 1, 2017 (44:6 Md. R. 328)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective July 30, 2018 (45:15 Md. R. 728); January 6, 2025 (51:26 Md. R. 1187)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D—F adopted effective July 30, 2018 (45:15 Md. R. 728)</annotation> <annotation type="History" subtype="Administrative History">New Regulations .04—.16 adopted effective July 30, 2018 (45:15 Md. R. 728)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 adopted effective January 6, 2025 (51:26 Md. R. 1187)</annotation> </annotations> </chapter> <chapter num="19" heading="Managing General Agents"> <regulation prefix="Regulation" num=".01" heading="Bond and Errors and Omissions Coverage Requirement."> <paragraph num="A."> <text>A managing general agent shall obtain and maintain:</text> <paragraph num="(1)"> <text>A fidelity bond for the protection of the insurer and policyholder equal to or greater than 10 percent of the maximum annual premium volume as stated in the underwriting guidelines in the contract required by Insurance Article, §8-209, Annotated Code of Maryland, but no less than $100,000; and</text> </paragraph> <paragraph num="(2)"> <text>An errors and omissions policy for the protection of the insurer and policyholder with limits of at least $1,000,000.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A managing general agent shall provide evidence of bond and errors and omissions coverage on the initial or renewal application.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§8-201(c), 8-207 and 8-209, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 14, 2020 (47:25 Md. R. 1067)</annotation> </annotations> </chapter> </subtitle> <subtitle num="04" heading="Insurers"> <chapter num="01" heading="Examination of Insurers"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <paragraph num="A."> <text>Regulation .02 of this chapter is applicable to a person who acts as an insurer in this State, including dental plan organizations, fraternal benefit societies, health maintenance organizations, and nonprofit health service plans.</text> </paragraph> <paragraph num="B."> <text>Regulations .03 and .04 of this chapter are applicable to a person who acts as an insurer in this State, including dental plan organizations, fraternal benefit societies, health maintenance organizations, nonprofit health service plans, and accredited reinsurers.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Examination of Foreign Authorized Insurers and Alien Authorized Insurers."> <paragraph num="A."> <text>In this regulation, “accreditated state” means a state in which its insurance regulatory agency meets the accreditation requirements of the National Association of Insurance Commissioners in accordance with its Financial Regulation Standards and Accreditation Program.</text> </paragraph> <paragraph num="B."> <text>Except as provided in §C of this regulation, the Commissioner shall examine each foreign authorized insurer or alien authorized insurer whenever the Commissioner considers advisable and at least once every 5 years.</text> </paragraph> <paragraph num="C."> <text>Exception.</text> <paragraph num="(1)"> <text>Instead of conducting an examination of the foreign authorized insurer or the alien authorized insurer, the Commissioner may accept a full report of the last examination made of the insurer and certified by the insurance supervisory official of the state of domicile of a foreign authorized insurer or the state of entry of an alien authorized insurer.</text> </paragraph> <paragraph num="(2)"> <text>On and after January 1, 1994, the Commissioner may accept the report of examination only from an accreditated state whose insurance regulatory agency conducted the examination.</text> </paragraph> <paragraph num="(3)"> <text>If the report of examination is from an insurance regulatory agency of a nonaccreditated state, the Commissioner may accept the report only if the examination:</text> <paragraph num="(a)"> <text>Is performed under the supervision of an insurance regulatory agency of an accreditated state; or</text> </paragraph> <paragraph num="(b)"> <text>Is performed with the participation of one or more examiners who:</text> <paragraph num="(i)"> <text>Are employed by the insurance regulatory agency of an accreditated state, and</text> </paragraph> <paragraph num="(ii)"> <text>After a review of the work papers and report of the examination, state under oath that the examination is performed in accordance with the standards and procedures required by the accreditated state of the examiner.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Conduct of Examination; Filing of Examination Report."> <paragraph num="A."> <text>This regulation applies to:</text> <paragraph num="(1)"> <text>A person subject to examination under Insurance Article, §2-205, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>A nonprofit health service plan subject to examination under Insurance Article, §14-125, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>A fraternal benefit society subject to examination under Insurance Article, §8-461 or 8-462, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(4)"> <text>A fronting reinsurer subject to examination under Insurance Article, §13-116, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(5)"> <text>An accredited reinsurer subject to examinationunder Insurance Article, Title 5, Subtitle 9, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(6)"> <text>A dental plan organization subject to examination under Insurance Article, §14-411, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(7)"> <text>A health maintenance organization subject to examination under Insurance Article, §2-205(b)(1)(v), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner, or an examiner designated by the Commissioner, shall conduct an examination authorized under Insurance Article, Annotated Code of Maryland, or Health-General Article, Annotated Code of Maryland, in accordance with the Examiners' Handbook adopted by the National Association of Insurance Commissioners and any other guidelines or procedures considered necessary by the Commissioner.</text> </paragraph> <paragraph num="C."> <text>Time Period for Completion and Filing Report.</text> <paragraph num="(1)"> <text>Within 60 days after the completion of an examination conducted under Insurance Article, Annotated Code of Maryland, or Health-General Article, Annotated Code of Maryland, each examiner in charge of the examination shall prepare for filing with the Commissioner a verified written report of the examination.</text> </paragraph> <paragraph num="(2)"> <text>At least 30 days before filing the report in the office of the Commissioner, the Commissioner shall give a copy of the report to the person that was examined.</text> </paragraph> <paragraph num="(3)"> <text>If the person requests a hearing, in writing, within the 30-day period, the Commissioner shall grant a hearing on the report.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Accounting Practices and Procedures."> <text>A person who is required under Insurance Article, Annotated Code of Maryland, or Health-General Article, Annotated Code of Maryland, to file an annual financial statement, interim financial statement, audited financial report, or annual actuarial opinion shall prepare the documents in accordance with the Annual Statement Instructions and the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners.</text> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-717 and 19-718; Insurance Article, §§2-109, 2-205, 2-207, 2-208, 2-209, 3-303, 3-318, 3-319, 4-116, 5-201, 5-903, 5-904, 8-461, 8-462, 13-116, 14-125, and 14-411; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted as an emergency provision effective June 17, 1993 (20:14 Md. R. 1164); adopted permanently effective October 11, 1993 (20:20 Md. R. 1570)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.58 to COMAR 31.04.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective June 20, 2016 (43:12 Md. R. 668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective June 20, 2016 (43:12 Md. R. 668)</annotation> </annotations> </chapter> <chapter num="02" heading="Examination of Principal Management or Controllers of Insurers"> <regulation prefix="Regulation" num=".01" heading="Purpose and Scope."> <text>The purpose of this chapter is to ensure protection of the public interest by providing for the evaluation of the suitability of certain individuals who exercise control of any substantial portion of certain entities that do insurance business in the State, including an insurer, health maintenance organization, managed care organization, fraternal benefit society, nonprofit health service plan, and dental plan organization. This chapter does not apply to workers’ compensation self-insurance groups organized pursuant to Insurance Article, Title 25, Subtitle 3, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affiant” means an individual who certifies to the accuracy of statements made in a biographical affidavit.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means a person who submits a biographical affidavit pursuant to Regulation .03A of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Approved independent third party” means an independent third party as defined in §B(12) of this regulation that is on the currently approved independent third party list published by the NAIC on the Uniform Certificate of Authority website.</text> </paragraph> <paragraph num="(4)"> <text>“Background report” means documentation provided by an approved independent third party that complies with NAIC’s “Best Practices for NAIC Background Investigations” and details information verified or discovered in the course of the background investigation, or both.</text> </paragraph> <paragraph num="(5)"> <text>“Biographical affidavit” means the current NAIC Form 11, “Biographical Affidavit”, of the NAIC Uniform Certificate of Authority Application and must include a completed, state-specific “Disclosure and Authorization Concerning Background” form.</text> </paragraph> <paragraph num="(6)"> <text>“Certificate of authority” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Control” has the meaning stated in Insurance Article, §7-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Dental plan organization” has the meaning stated in Insurance Article, §14-401(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Entity” includes an insurer, health maintenance organization, managed care organization, fraternal benefit society, nonprofit health service plan, and dental plan organization.</text> </paragraph> <paragraph num="(10)"> <text>“Fraternal benefit society” has the meaning stated in Insurance Article, §8-402(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Independent third party” means a consumer reporting agency regulated by the Federal Trade Commission and, therefore, subject to the Fair Credit Reporting Act:</text> <paragraph num="(a)"> <text>That is able to verify information contained in the biographical affidavit through the use of domestic and international resources;</text> </paragraph> <paragraph num="(b)"> <text>Whose officers, directors, or both, have stock ownership amounting to 1 percent or less of the applicant’s outstanding stock, unless the Commissioner grants written approval of an entity in which the officers, directors, or both, have more than 1 percent stock ownership; and</text> </paragraph> <paragraph num="(c)"> <text>That is at all times compliant with the “NAIC Background Investigation Guidelines” and Regulations .06 and .07 of this chapter relevant to the preparation of the background report and its submission to the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Managed care organization” has the meaning stated in Health-General Article, §15-101(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“NAIC” means the National Association of Insurance Commissioners.</text> </paragraph> <paragraph num="(16)"> <text>“Nonprofit health service plan” has the meaning stated in Insurance Article, §14-102, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Person” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(18)"> <text>“Principal management” means any person, regardless of title, who exercises control of any substantial portion of the general business of the insurer and may include the:</text> <paragraph num="(a)"> <text>Chairman of the board;</text> </paragraph> <paragraph num="(b)"> <text>President;</text> </paragraph> <paragraph num="(c)"> <text>Vice president;</text> </paragraph> <paragraph num="(d)"> <text>Secretary;</text> </paragraph> <paragraph num="(e)"> <text>Treasurer;</text> </paragraph> <paragraph num="(f)"> <text>Controller or comptroller;</text> </paragraph> <paragraph num="(g)"> <text>Actuary;</text> </paragraph> <paragraph num="(h)"> <text>Directors; and</text> </paragraph> <paragraph num="(i)"> <text>Members of the executive committee.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Provider sponsored organization” has the meaning stated in Health-General Article, §19-7A-01(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“Uniform Certificate of Authority Expansion Application” means the NAIC’s uniform process, adopted by the Commissioner, for use by an entity that wishes to expand its operations into one or more states.</text> </paragraph> <paragraph num="(21)"> <text>“Uniform Certificate of Authority Primary Application” means the NAIC’s uniform process, adopted by the Commissioner, for use in the formation of a new insurer to be domiciled in Maryland in order to obtain a certificate of authority, or for a foreign entity to use in making application to redomesticate to Maryland from another state.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Biographical Affidavit."> <paragraph num="A."> <text>Biographical affidavits shall be submitted on the individuals required by the applicable filing when:</text> <paragraph num="(1)"> <text>An entity files an application for a certificate of authority using the NAIC Uniform Certificate of Authority Primary Application;</text> </paragraph> <paragraph num="(2)"> <text>A foreign entity files an application for a certificate of authority using the Uniform Certificate of Authority Expansion Application;</text> </paragraph> <paragraph num="(3)"> <text>A foreign entity files an application to redomesticate to Maryland using the Uniform Certificate of Authority Primary Application;</text> </paragraph> <paragraph num="(4)"> <text>A person files a registration statement pursuant to Insurance Article, §7-603, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(5)"> <text>Any person seeking to acquire control of an insurer or other entity files a statement pursuant to Insurance Article, §7-304, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Upon written request of the Commissioner and within 30 days of such a request, a foreign entity holding a current certificate of authority in this State that had a change in principal management shall provide a biographical affidavit for the affiant listed in the request.</text> </paragraph> <paragraph num="C."> <text>For any change in principal management of a domestic entity, a person shall submit a biographical affidavit for the affiant within 30 days of the date of change.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Biographical Affidavit and Disclosure Authorization Format."> <paragraph num="A."> <text>Form. Each biographical affidavit required by this chapter shall be submitted to the Commissioner and the approved independent third party in a legible format, in the most recent form made available by the NAIC.</text> </paragraph> <paragraph num="B."> <text>Contents. The biographical affidavit requires an affiant to provide information, including the affiant’s employment history, education, personal information, and character.</text> </paragraph> <paragraph num="C."> <text>Date. Biographical affidavits must be certified by the affiant, notarized, and dated no earlier than 1 year prior to the date of submission of the application or statement, or management change.</text> </paragraph> <paragraph num="D."> <text>NAIC Disclosure and Authorization Concerning Background Form.</text> <paragraph num="(1)"> <text>Consent to Release Information. By completing the NAIC “Disclosure and Authorization Concerning Background” form, the affiant consents to:</text> <paragraph num="(a)"> <text>The release of the information in the biographical affidavit to the approved independent third party;</text> </paragraph> <paragraph num="(b)"> <text>The background investigation conducted by the approved independent third party; and</text> </paragraph> <paragraph num="(c)"> <text>The approved independent third party’s release of the results of its background report to the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An affiant may revoke the authorization at any time by delivering a written revocation to the applicant.</text> </paragraph> <paragraph num="(3)"> <text>The applicant shall, upon an affiant’s action pursuant to §D(2) of this regulation, forward such revocation promptly to any approved independent third party that either prepared or is preparing a background report under the “NAIC Disclosure and Authorization Concerning Background” form.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Considerations Regarding Independent Third Parties."> <paragraph num="A."> <text>The applicant is responsible for selecting an independent third party to perform the verification of the information contained in all submitted biographical affidavits.</text> </paragraph> <paragraph num="B."> <text>When selecting the independent third party, the applicant:</text> <paragraph num="(1)"> <text>Must select an approved independent third party; and</text> </paragraph> <paragraph num="(2)"> <text>Is responsible for ensuring that the independent third party it selects is able to perform a complete investigation in the applicable jurisdictions.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The applicant is responsible for the payment of the services provided by the approved independent third party for the preparation and submission of the background report to the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Background Report."> <paragraph num="A."> <text>Contents. A background report shall conform to the NAIC Background Investigation Guidelines and the Best Practices for NAIC Background Investigations for the preparation and content of the response from an approved independent third party.</text> </paragraph> <paragraph num="B."> <text>Submission Requirements.</text> <paragraph num="(1)"> <text>The background report shall be prepared by an approved independent third party.</text> </paragraph> <paragraph num="(2)"> <text>Background reports must be submitted directly to the Commissioner by the approved independent third party.</text> </paragraph> <paragraph num="(3)"> <text>The applicant is responsible for ensuring that the background report has been provided to the Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Review of Submitted Information."> <text>The information contained in the biographical affidavit, the background report, and any other information deemed relevant by the Commissioner will be reviewed by the Commissioner to evaluate the suitability, competency, character, and integrity of the affiant. The review will also evaluate whether discrepancies or inconsistencies exist between information disclosed in the biographical affidavit and the background report and whether follow-up action should be taken.</text> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§15-102.6, 19-705, 19-708, 19-7A-03, and 19-7A-04;Insurance Article, §§2-109, 2-205(c), 4-108, 4-113(a)(7)—(9), 7-304, 7-603, 8-412, 8-417, 14-109(3), and 14-405; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 12, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective October 23, 1995 (22:21 Md. R. 1615)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 adopted and Appendix A repealed effective October 23, 1995 (22:21 Md. R. 1615)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.03 to COMAR 31.04.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective November 5, 2007 (34:22 Md. R. 1979)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 1, 2016 (43:18 Md. R. 1018)</annotation> </annotations> </chapter> <chapter num="03" heading="Home and Executive Offices"> <regulation prefix="Regulation" num=".01" heading="Authority and Purpose."> <text>This chapter is considered necessary as an aid to the effectuation of the provisions of Insurance Article, §§2-112 and 4-115, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter is applicable to all domestic insurers.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Home and Executive Offices."> <text>An insurer's home office or executive office is the location at which significant aspects of the insurer's business operations are performed, and at which the insurer's books and records are prepared and maintained on a day-to-day basis and where a full-scope financial examination shall be made.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 2-112, 4-113(a)(7)—(9), and 4-115, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 16, 1992 (19:5 Md. R. 576)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective December 18, 1995 (22:25 Md. R. 1961)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.62 to COMAR 31.04.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="04" heading="Annual Statements and Participation in National Association of Insurance Commissioners Information System"> <regulation prefix="Regulation" num=".01" heading="Required Financial Filings."> <paragraph num="A."> <text>Annual Statements.</text> <paragraph num="(1)"> <text>Each domestic and foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration is required to annually file an annual statement with the Administration in paper or electronic format as specified in Regulation .02 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Unless the Commissioner extends the time for good cause, the annual statements shall be filed:</text> <paragraph num="(a)"> <text>For insurance companies and nonprofit health service plans, on or before March 1 of each year;</text> </paragraph> <paragraph num="(b)"> <text>For health maintenance organizations:</text> <paragraph num="(i)"> <text>On or before March 1 of each year; or</text> </paragraph> <paragraph num="(ii)"> <text>If approved by the Commissioner, within 60 days after the end of their fiscal year; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>For dental plan organizations, April 1 of each year.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The annual statements shall be:</text> <paragraph num="(a)"> <text>Prepared in accordance with the Annual Statement Instructions and Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners (NAIC);</text> </paragraph> <paragraph num="(b)"> <text>Supplemented by such related filings as shall be required by the Annual Statement Instructions.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A domestic company’s annual statement shall be prepared under oath and signed by at least two executive officers. The executive officers authorized to sign the oath shall include:</text> <paragraph num="(a)"> <text>The president, vice-president, or chief financial officer; and</text> </paragraph> <paragraph num="(b)"> <text>The secretary, treasurer, CEO, or other officer approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A foreign company’s annual statement shall be prepared and executed in accordance with the laws and regulations of the company’s home state.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Quarterly Statements.</text> <paragraph num="(1)"> <text>Each domestic insurance company, health maintenance organization, dental plan organization and nonprofit health service plan that has been issued a certificate of authority by the Administration is required to file quarterly statements with the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Unless the Commissioner extends the time for good cause, the quarterly statements shall be filed:</text> <paragraph num="(a)"> <text>For insurance companies, dental plan organizations and nonprofit health service plans, on or before May 15, August 15, and November 15 of each year; and</text> </paragraph> <paragraph num="(b)"> <text>For health maintenance organizations, May 15, August 15, and November 15 of each year, or if approved by the Commissioner, 45 days after the end of each quarter other than the quarter in which its fiscal year ends.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The quarterly statements shall be prepared in accordance with the Annual Statement Instructions and Accounting Practices and Procedures Manual adopted by the NAIC.</text> </paragraph> <paragraph num="(4)"> <text>A domestic company’s quarterly statement shall be prepared under oath and signed by at least two executive officers. The executive officers authorized to sign the oath shall include:</text> <paragraph num="(a)"> <text>The president, vice-president, or chief financial officer; and</text> </paragraph> <paragraph num="(b)"> <text>The secretary, treasurer, CEO, or other officer approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A foreign company’s quarterly statement shall be prepared and executed in accordance with the laws and regulations of the company’s home state.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Annual Audited Financial Statements.</text> <paragraph num="(1)"> <text>Each domestic and foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration to engage in business in this State is required to annually file annual audited financial statements with the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Unless the Commissioner extends the time for good cause, the annual audited financial statements shall be filed:</text> <paragraph num="(a)"> <text>For insurance companies, on or before June 1 of each year;</text> </paragraph> <paragraph num="(b)"> <text>For nonprofit health service plans, on or before March 1 of each year;</text> </paragraph> <paragraph num="(c)"> <text>For dental plan organizations, on or before April 1 of each year; and</text> </paragraph> <paragraph num="(d)"> <text>For health maintenance organizations, June 1 of each year, or if approved by the Commissioner, within 150 days after the date their fiscal year ends.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Form of Financial Filings."> <paragraph num="A."> <text>Definition.</text> <paragraph num="(1)"> <text>In this regulation, the following term has the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>“Required related annual filings” means, but is not limited to, the Statement of Actuarial Opinion, Risk-Based Capital Report, and Management's Discussion and Analysis.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Filings. The filings required by §§C and D of this regulation shall be made in accordance with the Annual Statement Instructions adopted by the NAIC.</text> </paragraph> <paragraph num="C."> <text>Domestic Companies.</text> <paragraph num="(1)"> <text>Each domestic insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that is required to file an annual statement and required related annual filings, quarterly statements, and annual audited financial statements, as well as all amendments and addenda to these filings, shall make those filings on paper with the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Each domestic insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan shall also file its annual statements, required related annual filings, quarterly statements, and annual audited financial statements, as well as all amendments and addenda to these filings, in both a paper and an electronic format with the NAIC.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Foreign Companies</text> <paragraph num="(1)"> <text>Each foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration shall file its annual statements, required related annual filings, and annual audited financial statements, as well as all amendments and addenda to these filings, in an electronic format with the NAIC.</text> </paragraph> <paragraph num="(2)"> <text>Foreign companies shall file the documents required by §D(1) of this regulation with the NAIC on or before the due dates specified in Maryland law. These filings shall be considered to have been filed with the Administration when they are received by the NAIC.</text> </paragraph> <paragraph num="(3)"> <text>The Administration shall use the dates the documents are received by the NAIC in order to determine compliance with Maryland filing requirements, and for imposing any fines or penalties specified in Maryland law for failing to file these documents on or before their due dates.</text> </paragraph> <paragraph num="(4)"> <text>Each foreign insurance company, health maintenance organization, dental plan organization, and nonprofit health service plan that has been issued a certificate of authority by the Administration shall annually, on or before the filing due dates specified in this regulation, provide the administration with an annual statement jurat page, signed by appropriate officers of the company, and affirming that the electronic filing made by the company with the NAIC is, except for formatting differences, an exact copy of the Annual Statement.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-705, 19-717, and 19-728; Insurance Article, §§2-109(a)(1), 4-116, 14-121, 14-411(a), and 14-413; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 31, 1953</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 adopted as an emergency provision effective October 26, 1993 (20:23 Md. R. 1799); adopted permanently effective January 31, 1994 (21:2 Md. R. 98)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.09 to COMAR 31.04.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01 and .02 repealed and new Regulations .01 and .02 adopted effective February 26, 2007 (34:4 Md. R. 403)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective October 1, 2019 (46:13 Md. R. 590)</annotation> </annotations> </chapter> <chapter num="05" heading="Period of Organization or Proof of Financial Worth Before Admission of Foreign Stock and Mutual Insurance Companies"> <regulation prefix="Regulation" num=".01" heading="Application."> <paragraph num="A."> <text>An application of a foreign stock or mutual insurance company for a license to transact the insurance business in Maryland may not be considered until it has met the requirements of either §B or C of this regulation.</text> </paragraph> <paragraph num="B."> <text>The foreign stock or mutual insurance company shall have continuously, actively, and successfully transacted the business of insurance for at least 2 years immediately before the making of the application. However, the Commissioner may waive the 2-year requirement, if the Commissioner considers it in the public interest. In the case of reorganization, merger, or consolidation of stock or mutual insurance companies, the surviving company or new company may, in the discretion of the Commissioner, be considered as having the age of the eldest company which is a party to the reorganization, merger, or consolidation for the purpose of complying with the requirements of this regulation.</text> </paragraph> <paragraph num="C."> <text>In the case of a foreign stock company making application within the 2-year period in §B of this regulation, the company shall have a capital of at least $3,000,000 and a surplus of at least $4,000,000 (in excess of its capital stock), and, in the case of a foreign mutual company making application within the 2-year period in §B of this regulation, a surplus of at least $7,000,000 if the company's assets are invested substantially in accordance with the Insurance Laws of Maryland governing investments, and will be maintained on the same basis.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-102, 4-103, and 4-104, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 22, 1966</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective October 23, 1995 (22:21 Md. R. 1615)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.05 to COMAR 31.04.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="06" heading="Conflict of Interests"> <regulation prefix="Regulation" num=".01" heading="Interrogatory."> <text>In order to assure disclosure of possible conflict of interests, foreign and domestic companies shall be able to answer in the affirmative the following interrogatory which is contained in the “General Interrogatories” section of the National Association of Insurance Commissioners (NAIC) annual statement:</text> <text>“Has the reporting entity an established procedure for disclosure to its board of directors or trustees of any material interest or affiliation on the part of any of its officers, directors, trustees, or responsible employees which is in, or is likely to, conflict with the official duties of such persons?”</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Company Policy and Statements."> <paragraph num="A."> <text>All companies, both foreign and domestic, shall have ready for convenient inspection by examiners from this Administration both of the following:</text> <paragraph num="(1)"> <text>A board of directors' or trustees' resolution or bylaw setting forth the company's policy as to disclosure of a possible conflict of interest;</text> </paragraph> <paragraph num="(2)"> <text>Questionnaires completed and signed annually by officers, directors, trustees, and responsible employees.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The following two samples meet Insurance Administration requirements and should be followed closely by domestic companies, though they may pass additional board of directors' or trustees' resolutions or bylaws or require additional information on their questionnaires.</text> </paragraph> <paragraph num="C."> <text>Foreign companies will be allowed sufficient latitude in the forms they use, so that they will not be obliged to use a special form merely to satisfy Maryland requirements. However, they should be substantially equivalent or more than equivalent in their breadth of coverage and the strictness of their requirements. The variances should not have the effect of lessening or weakening the requirements of the samples.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Sample Board of Directors' or Trustees' Resolution or Bylaw."> <paragraph num="(1)"> <text>Be It Resolved That all Officers, Directors, Trustees and Employees of the Company in their transactions with others are expected to act in the best interests of the Company and not for their own advantage.</text> </paragraph> <paragraph num="(2)"> <text>Resolved Further, That this policy requires that—</text> <paragraph num="(a)"> <text>Officers, Directors, Trustees and Responsible Employees and members of their families must have no relationships nor engage in any activities that might impair their independence of judgment concerning Company business of such Officers, Directors, Trustees or Responsible Employees.</text> </paragraph> <paragraph num="(b)"> <text>They must have no personal financial interests that might impair their independence of judgment or influence their decisions or actions on Company business in the direction of such personal financial interests.</text> </paragraph> <paragraph num="(c)"> <text>They must not accept gifts, benefits, or unusual hospitality that might tend to influence them in the performance of their duties.</text> </paragraph> <paragraph num="(d)"> <text>If any possible conflict of interest exists, the individual concerned must disclose the facts by completing the attached questionnaire and returning it to the secretary of the Company or an officer of the Company superior to the Secretary.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Resolved Further, That the officer of the Company to whom the questionnaires are returned must refer any conflict, disclosed to him, to the Board for review and appropriate action on or before ___________ 20__, and that a similar questionnaire shall be completed and returned in each succeeding year.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Sample Questionnaire."> <paragraph num="(1)"> <text>Do you or does any member of your family have any relationships or engage in any activities that might impair your independence of judgment concerning Company business?</text> </paragraph> <paragraph num="(2)"> <text>Do you or does any member of your family have any personal financial interests that might impair your independence of judgment or influence your decisions or actions concerning Company business in the direction of such personal financial interests?</text> </paragraph> <paragraph num="(3)"> <text>Have you accepted gifts, benefits, or unusual hospitality that might tend in any way to impair your independence of judgment or affect your decisions or actions concerning Company business?</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-113(a)(7)—(9), and 4-116, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 30, 1968</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.08 to COMAR 31.04.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective June 20, 2016 (43:12 Md. R. 668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 12, 2007 (34:3 Md. R. 303)</annotation> </annotations> </chapter> <chapter num="07" heading="Proxies, Consents, and Authorizations of Domestic Stock Insurers"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <paragraph num="A."> <text>This chapter does not apply to any insurer if 95 percent or more of its equity securities is owned or controlled by a parent or an affiliated insurer and the remaining securities are held of record by less than 500 persons. A domestic stock insurer which files with the Securities and Exchange Commission with respect to any class of securities forms of proxies, consents, and authorizations complying with the requirements of the Securities Exchange Act of 1934, as amended, and its applicable regulations, is exempt from the provisions of this chapter with respect to that class of securities.</text> </paragraph> <paragraph num="B."> <text>A domestic stock insurer that has any class of equity securities held of record by 300 or more persons, or any director, officer, or employee of that insurer, or any other person, may not solicit, or permit the use of the person's name to solicit, by mail or otherwise, any proxy, consent, or authorization in respect to any class of equity securities in contravention of this regulation and Schedules A and B in Regulations .14 and .15 of this chapter.</text> </paragraph> <paragraph num="C."> <text>Unless proxies, consents, or authorizations with respect to any class of equity securities of a domestic insurer subject to §B of this regulation are solicited by or on behalf of the management of the insurer from the holders of record of the securities in accordance with this chapter and its schedules prior to any annual or other meeting of the security holders, the insurer shall file with the Commissioner and transmit to every security holder who is entitled to vote in regard to any matter to be acted upon at the meeting and from whom a proxy is not solicited a written information statement containing the information specified in Schedule C of Regulation .16 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.</text> </paragraph> <paragraph num="(2)"> <text>“Associate” means:</text> <paragraph num="(a)"> <text>A corporation or organization (other than the issuer or a majority owned subsidiary of the issuer) of which the person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities;</text> </paragraph> <paragraph num="(b)"> <text>A trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity; and</text> </paragraph> <paragraph num="(c)"> <text>A relative or spouse of that person, or any relative of the spouse, who has the same home as the person or who is a director or officer of the issuer or any of its parents or subsidiaries.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Beneficial owner” means a person who, directly or indirectly, through a contract, arrangement, understanding, relationship, or otherwise, has or shares:</text> <paragraph num="(a)"> <text>Voting power including the power to vote, or the power to direct voting of, a security; or</text> </paragraph> <paragraph num="(b)"> <text>Investment power which includes the power to dispose of, or to direct the disposition of, the security.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.</text> </paragraph> <paragraph num="(5)"> <text>“Issuer” means the issuer of the securities in respect of which a proxy is solicited.</text> </paragraph> <paragraph num="(6)"> <text>“Last fiscal year” means the last fiscal year of the issuer ending before the date of the meeting for which proxies are to be solicited.</text> </paragraph> <paragraph num="(7)"> <text>“Officer” means the president, secretary, treasurer, any vice president in charge of a principal business function (such as sales, administration, or finance), and any other individual who performs similar policy-making functions for the insurer.</text> </paragraph> <paragraph num="(8)"> <text>“Parent” means an affiliate controlling the person directly or indirectly through one or more intermediaries.</text> </paragraph> <paragraph num="(9)"> <text>“Person” means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, or a government or political subdivision of a government.</text> </paragraph> <paragraph num="(10)"> <text>“Proxy statement” means the statement required by Regulation .04 of this chapter, whether or not contained in a single document.</text> </paragraph> <paragraph num="(11)"> <text>Solicitation.</text> <paragraph num="(a)"> <text>“Solicitation” means:</text> <paragraph num="(i)"> <text>A request for a proxy, whether or not accompanied by or included in a form of proxy;</text> </paragraph> <paragraph num="(ii)"> <text>A request to execute or not to execute, or to revoke, a proxy; or</text> </paragraph> <paragraph num="(iii)"> <text>The furnishing of a form of proxy or other communication to security holders under circumstances reasonably calculated to result in the procurement, withholding, or revocation of a proxy.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Solicitation” does not apply, however, to:</text> <paragraph num="(i)"> <text>The furnishing of a form of proxy to a security holder upon the unsolicited request of the security holder;</text> </paragraph> <paragraph num="(ii)"> <text>The performance by the issuer of acts required by Regulation .08 of this chapter; or</text> </paragraph> <paragraph num="(iii)"> <text>The performance by any person of ministerial acts on behalf of a person soliciting a proxy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Trust” includes only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Solicitations to Which Chapter Applies."> <paragraph num="A."> <text>Regulation .10 of this chapter applies to every solicitation that is subject to Regulation .01 of this chapter.</text> </paragraph> <paragraph num="B."> <text>Regulations .02—.09 and Regulation .11 of this chapter apply to every solicitation that is subject to Regulation .01 except the following:</text> <paragraph num="(1)"> <text>A solicitation made otherwise than on behalf of the issuer where the total number of persons solicited is not more than ten;</text> </paragraph> <paragraph num="(2)"> <text>A solicitation by a person with respect to securities carried in the person's name or in the name of the person's nominee (otherwise than as voting trustee), or held in the person's custody, if the person:</text> <paragraph num="(a)"> <text>Receives no commission or remuneration for the solicitation, directly or indirectly, other than reimbursement of reasonable expenses;</text> </paragraph> <paragraph num="(b)"> <text>Furnishes promptly to the solicited person a copy of all soliciting material with respect to the same subject matter or meeting received from all persons who shall furnish copies for that purpose and who shall, if requested, defray the reasonable expenses to be incurred in forwarding the material; and</text> </paragraph> <paragraph num="(c)"> <text>In addition, does no more than impartially instruct the person solicited to forward a proxy to the person, if any, to whom the person solicited desires to give a proxy, or impartially request from the person solicited instructions as to the authority to be conferred by the proxy and state that a proxy will be given if no instructions are received by a certain date;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A solicitation by a person with respect to securities of which it is the beneficial owner;</text> </paragraph> <paragraph num="(4)"> <text>A solicitation through the medium of a newspaper advertisement which informs security holders of a source from which they may obtain copies of a proxy statement, form of proxy, and any other soliciting material, and does no more than:</text> <paragraph num="(a)"> <text>Name the issuer;</text> </paragraph> <paragraph num="(b)"> <text>State the reason for the advertisement; and</text> </paragraph> <paragraph num="(c)"> <text>Identify the proposal or proposals to be acted upon by security holders; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Any solicitation which the Commissioner finds for good cause should be exempted from this chapter or any part of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Information to be Furnished Security Holders."> <paragraph num="A."> <text>A solicitation subject to this chapter may not be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in Schedule A.</text> </paragraph> <paragraph num="B."> <text>Annual Report.</text> <paragraph num="(1)"> <text>If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected, each proxy statement furnished pursuant to §A of this regulation shall be accompanied or preceded by an annual report to security holders as decided in this section.</text> </paragraph> <paragraph num="(2)"> <text>The report shall contain, in comparative columnar form, such financial statements for the last 2 fiscal years, prepared on a consistent basis, as will in the opinion of the management adequately reflect the financial position of the issuer at the end of each year, and the results of its operations for each year. Consolidated financial statements of the issuer and its subsidiaries shall be included in the report if they are necessary to reflect the financial position and results of operations of the issuer and its subsidiaries, but in that case the individual statements of the issuer may be omitted. The Commissioner may, upon the request of the issuer, permit the omission of financial statements for the earlier of the 2 fiscal years upon a showing of good cause.</text> </paragraph> <paragraph num="(3)"> <text>The financial statements for the last 2 fiscal years required by §B(2) of this regulation shall be prepared in a manner acceptable to the Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>The report shall include, in comparative columnar form, a summary of issuer's operations, or the operations of the issuer and its subsidiaries consolidated, or both as appropriate, for each of the last 5 fiscal years of the issuer (or the life of the issuer and its predecessors, if less).</text> </paragraph> <paragraph num="(5)"> <text>The report shall contain a brief description of the business or businesses done by the issuer and its subsidiaries during the most recent fiscal year which will, in the opinion of management, indicate the general nature and scope of the business of the issuer and its subsidiaries.</text> </paragraph> <paragraph num="(6)"> <text>The report shall identify each of the issuer's directors and officers and shall indicate the principal occupation or employment of each person and the name and principal business of any organization by which the person is so employed.</text> </paragraph> <paragraph num="(7)"> <text>The report shall identify the principal market in which securities of any class entitled to vote at the meeting are traded, stating the range of bid and asked quotations for each quarterly period during the issuer's 2 most recent fiscal years, and shall set forth each dividend paid during the 2-year period.</text> </paragraph> <paragraph num="(8)"> <text>Subject to the foregoing requirements, the report may be in any form considered suitable by management, and the information required by §B(4)—(7) of this regulation may be presented in an appendix or other separate section of the report, if the attention of security holders is called to the presentation.</text> </paragraph> <paragraph num="(9)"> <text>This section does not apply, however, to solicitations made on behalf of the management before the financial statements are available if solicitation is being made at the time in opposition to the management and if the management's proxy statement includes an undertaking in bold face type to furnish the annual report to all persons being solicited, at least 20 days before the date of the meeting.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Two copies of the report sent to security holders pursuant to this regulation shall be mailed to the Commissioner not later than the date on which the report was first sent or given to security holders, or the date on which preliminary copies of solicitation material are filed pursuant to Regulation .07 of this chapter, whichever date is later.</text> </paragraph> <paragraph num="D."> <text>If the issuer knows that securities of any class entitled to vote at a meeting with respect to which the issuer intends to solicit proxies, consents, or authorizations are held of record by a broker, dealer, bank, or voting trustee, or their nominees, the issuer shall inquire of the record holder at least 10 days before the record date for the meeting of security holders whether other persons are the beneficial owners of the securities and, if so, the number of copies of the proxy and other soliciting material and, in the case of an annual meeting at which directors are to be elected, the number of copies of the annual report to security holders, necessary to supply these materials to beneficial owners. The issuer shall supply the record holder in a timely manner with additional copies assembled in a form and at a place the record holder may reasonably request, in order to address and send one copy to each beneficial owner of securities so held and shall, upon the request of the record holder, pay its reasonable expenses for mailing the materials to security holders to whom the material is sent.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Requirements as to Proxy."> <paragraph num="A."> <text>Form of Proxy.</text> <paragraph num="(1)"> <text>The form of proxy shall:</text> <paragraph num="(a)"> <text>Indicate in bold face type whether or not the proxy is solicited on behalf of the insurer's board of directors, or, if not, by whom it is solicited;</text> </paragraph> <paragraph num="(b)"> <text>Provide a specifically designated blank space for dating the proxy; and</text> </paragraph> <paragraph num="(c)"> <text>Identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the issuer or by security holders.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Reference need not be made to proposals as to which discretionary authority is conferred pursuant to §C of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Contents.</text> <paragraph num="(1)"> <text>Means shall be provided in the form of proxy by which the person solicited is afforded an opportunity to specify by ballot a choice between approval or disapproval of, or abstention with respect to, each matter or group of related matters referred to as intended to be acted upon, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not specified, if the form of proxy states in bold face type how it is intended to vote the shares represented by the proxy in each case.</text> </paragraph> <paragraph num="(2)"> <text>A form of proxy, which provides both for the election of directors and for action on other specified matters, shall be prepared clearly to provide, by a box or otherwise, a means by which the security holder may withhold authority to vote for any nominee for election as a director. The form of proxy, which is executed by the security holder in a manner as not to withhold authority to vote for the election of all nominees, shall be considered to grant authority for all nominees for which a vote is not withheld, if the form of proxy so states in bold face type.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A proxy may confer discretionary authority to vote with respect to any of the following matters:</text> <paragraph num="(1)"> <text>Matters which the persons making the solicitation do not know, a reasonable time before the solicitation, are to be presented at the meeting, if a specific statement to that effect is made in the proxy statement or form of proxy;</text> </paragraph> <paragraph num="(2)"> <text>Approval of the minutes of the prior meeting if the approval does not amount to ratification of the action taken at that meeting;</text> </paragraph> <paragraph num="(3)"> <text>The election of any individual to any office for which a bona fide nominee is named in the proxy statement and the nominee is unable to serve or for good cause will not serve;</text> </paragraph> <paragraph num="(4)"> <text>Any proposal omitted from the proxy statement and form of proxy pursuant to Regulation .09 or .10 of this chapter; and</text> </paragraph> <paragraph num="(5)"> <text>Matters incident to the conduct of the meeting.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A proxy may not confer authority to vote for the election of any individual to any office for which a bona fide nominee is not named in the proxy statement, or to vote at any annual meeting, other than the next annual meeting (or any adjournment of it), to be held after the date on which the proxy statement and form of proxy are first sent or given to security holders. A person is not considered to be a bona fide nominee and may not be named the bona fide nominee unless the individual has consented to being named in the proxy statement and to serve if elected.</text> </paragraph> <paragraph num="E."> <text>The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the securities represented by the proxy will be voted and that, if the person solicited specifies by means of a ballot provided pursuant to §B of this regulation a choice with respect to any matter to be acted upon, the securities will be voted in accordance with specifications so made.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Presentation of Information in Proxy Statement."> <paragraph num="A."> <text>The information included in the proxy statement shall be clearly presented, the statements made shall be divided into groups according to subject matter, and the various groups of statements shall be preceded by appropriate headings.</text> </paragraph> <paragraph num="B."> <text>All proxy statements shall disclose, under an appropriate caption, the date by which proposals of security holders intended to be presented at the next annual meeting shall be received by the issuer for inclusion in the issuer's proxy statement and form of proxy relating to that meeting. This date shall be calculated in accordance with the provisions of Regulation .09A of this chapter. If the date of the next annual meeting is subsequently advanced by more than 30 calendar days or delayed by more than 90 calendar days from the date of the annual meeting to which the proxy statement relates, the issuer shall, in a timely manner, inform security holders of the change, and the date by which proposals of security holders must be received, by any means reasonably calculated to so inform them.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Material Required to be Filed."> <paragraph num="A."> <text>Two preliminary copies of the proxy statement and form of proxy, and any other soliciting material to be furnished to security holders with the proxy (or the information statement pursuant to Schedule C), shall be filed with the Commissioner at least 10 days before the date final copies of the material are first sent or given to security holders, or a shorter period before that date as the Commissioner may authorize upon a showing of good cause.</text> </paragraph> <paragraph num="B."> <text>Two preliminary copies of any additional soliciting material relating to the same meeting or subject matter to be furnished to security holders after the proxy statement shall be filed with the Commissioner at least 2 days (exclusive of Saturdays, Sundays, and holidays) before the date copies of the material are first sent or given to security holders, or a shorter period before the date as the Commissioner may authorize upon a showing of good cause.</text> </paragraph> <paragraph num="C."> <text>Two definitive copies of the proxy statement, form of proxy, and all other soliciting material (or the information statement), in the form in which the material is furnished to security holders, shall be filed with, or mailed for filing to, the Commissioner not later than the date the material is first sent or given to any security holder.</text> </paragraph> <paragraph num="D."> <text>Copies of replies to inquiries from security holders requesting further information, and copies of communications that do no more than request that forms of proxy previously solicited be signed and returned, do not need to be filed pursuant to this regulation.</text> </paragraph> <paragraph num="E."> <text>Despite the provisions of §§A and B of this regulation and of Regulation .12E of this chapter, copies of soliciting material in the form of speeches, press releases, and radio or television scripts may, but need not, be filed with the Commissioner before use or publication. Definitive copies, however, shall be filed with or mailed for filing to the Commissioner as required by §C of this regulation not later than the date the material is used or published. The provisions of §§A and B of this regulation and of Regulation .12E of this chapter apply, however, to any reprints or reproductions of all or any part of this material.</text> </paragraph> <paragraph num="F."> <text>If any proxy statement, form of proxy, or other material filed pursuant to this regulation is amended or revised, one of the copies of the amended or revised material filed pursuant to this regulation shall be marked to indicate clearly and precisely the changes.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Mailing Communications for Security Holders."> <paragraph num="A."> <text>If the management of the issuer has made or intends to make any solicitation subject to this chapter, the issuer shall perform the acts in §§B—D of this regulation requested in writing with respect to the same subject matter or meeting by any security holder who is, or security holders who are, entitled to vote at least 1 percent of the votes entitled to be voted on the matter and who shall defray the reasonable expenses to be incurred by the issuer in the performance of the act or acts requested.</text> </paragraph> <paragraph num="B."> <text>The issuer shall mail or otherwise furnish to a security holder, as promptly as practicable after the receipt of the request:</text> <paragraph num="(1)"> <text>A statement of the approximate number of record owners and, to the extent known to the issuer, the approximate number of beneficial owners of any class of securities, any of whom have been or are to be solicited on behalf of the management, or any group of whom the security holder shall designate; and</text> </paragraph> <paragraph num="(2)"> <text>An estimate of the cost of mailing a specified proxy statement, form of proxy, or other communication to the owners.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Issuer Responsibilities.</text> <paragraph num="(1)"> <text>Copies of any proxy statement, form of proxy, or other communication furnished by the security holder shall be mailed by the issuer to any of the security owners specified in §B(1) of this regulation as the security holder designates.</text> </paragraph> <paragraph num="(2)"> <text>The material furnished by the security holder shall be mailed with reasonable promptness after receipt of the material to be mailed, envelopes or other containers, and postage or payment for postage. The issuer need not, however, mail any material before the first day that solicitation is made on behalf of the issuer.</text> </paragraph> <paragraph num="(3)"> <text>The issuer is not responsible for the proxy statement, form of proxy, or other communication.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Instead of performing the acts specified in §§B—C of this regulation, the issuer may, at its option, furnish promptly to a security holder:</text> <paragraph num="(1)"> <text>A reasonably current list of the names and addresses of the record owners and, to the extent known to the issuer, the beneficial owners the security holder designates; and</text> </paragraph> <paragraph num="(2)"> <text>A schedule of the handling and mailing costs if the schedule has been supplied to the issuer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Proposals of Security Holders."> <paragraph num="A."> <text>If any holder or holders of an issuer's securities (hereafter referred to as the “proponent”) notifies the issuer in writing not less than 90 days before the issuer's annual meeting of holder's intention to present a lawful proposal for action at an upcoming meeting of the issuer's security holders, and at the time of the notice the proponent is entitled to vote at least 1 percent of the votes entitled to be voted on the proposal, the issuer shall:</text> <paragraph num="(1)"> <text>Set forth the proposal in its proxy statement with the name and address of the proponent;</text> </paragraph> <paragraph num="(2)"> <text>Identify it in its form of proxy; and</text> </paragraph> <paragraph num="(3)"> <text>Provide for the specification of approval or disapproval of the proposal.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the issuer opposes any proposal received from a proponent, it shall also, at the request of the proponent, include in its proxy statement a statement by the proponent of not more than 200 words in support of the proposal.</text> </paragraph> <paragraph num="C."> <text>The issuer may omit a proposal and any statement in support from its proxy statement and form of proxy under any of the following circumstances:</text> <paragraph num="(1)"> <text>The proponent has submitted more than one proposal in connection with a particular meeting;</text> </paragraph> <paragraph num="(2)"> <text>The proposal is more than 300 words in length;</text> </paragraph> <paragraph num="(3)"> <text>The proposal or the supporting statement is contrary to any provision of this chapter or the schedules attached, including Regulation .10 of this chapter which prohibits false or misleading statements in proxy soliciting materials;</text> </paragraph> <paragraph num="(4)"> <text>The proposal relates to the enforcement of a personal claim or the redress of a personal grievance against the issuer, its management, or any other person;</text> </paragraph> <paragraph num="(5)"> <text>The proposal deals with a matter not significantly related to the issuer's business, a matter beyond the issuer's power to effectuate, a matter relating to the conduct of the ordinary business operations of the issuer, or an election to office;</text> </paragraph> <paragraph num="(6)"> <text>The proposal is counter to a proposal to be submitted by the issuer at the meeting, the proposal has been rendered moot, or the proposal relates to specific amounts of cash or stock dividends;</text> </paragraph> <paragraph num="(7)"> <text>The proposal is substantially duplicative of a proposal previously submitted to the issuer by another proponent, which proposal will be included in the management's proxy material for the meeting; or</text> </paragraph> <paragraph num="(8)"> <text>Substantially the same proposal has previously been submitted to security holders in the issuer's proxy statement and form of proxy relating to any annual or special meeting of security holders held within the preceding 5 calendar years, and received less than 5 percent of the total number of votes cast at the time of its most recent submission.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If the issuer intends to omit any proposal from its proxy statement or forms of proxy, or both, it shall notify the proponent in writing of its intention at least 10 days before the issuer's preliminary proxy material is filed pursuant to Regulation .07A of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="False or Misleading Statements."> <text>A proxy statement, form of proxy, notice of meeting, information statement, or other communication, written or oral, subject to this regulation may not contain any statement which, at the time and in the light of the circumstances under which it is made:</text> <paragraph num="A."> <text>Is false or misleading with respect to any material fact; or</text> </paragraph> <paragraph num="B."> <text>Omits to state any material fact necessary:</text> <paragraph num="(1)"> <text>In order to make the statements not false or misleading; or</text> </paragraph> <paragraph num="(2)"> <text>To correct any statement in any earlier communication with respect to the same meeting or subject matter which has become false or misleading.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Prohibition of Certain Solicitations."> <text>A person making a solicitation that is subject to this chapter may not solicit any undated or postdated proxy, or any proxy that provides that it shall be considered to be dated as of any date after the date on which it is signed by the security holder subject to this chapter.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Special Provisions Applicable to Election Contests."> <paragraph num="A."> <text>Solicitations to Which this Regulation Applies. This regulation applies to any solicitation by any person or group for the purpose of opposing a solicitation subject to this chapter by any other person or group with respect to the election or removal of directors at any annual or special meeting of security holders.</text> </paragraph> <paragraph num="B."> <text>Participant or Participant in a Solicitation.</text> <paragraph num="(1)"> <text>In this regulation, “participant” and “participant in a solicitation” include:</text> <paragraph num="(a)"> <text>The issuer;</text> </paragraph> <paragraph num="(b)"> <text>Any director of the issuer, and any nominee for whose election as a director proxies are solicited; or</text> </paragraph> <paragraph num="(c)"> <text>Any other person, acting alone or with one or more other persons, committees, or groups, in organizing, directing, or financing the solicitation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In this regulation, “participant” and “participant in a solicitation” do not include:</text> <paragraph num="(a)"> <text>A bank, broker, or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of securities, and who is not otherwise a participant;</text> </paragraph> <paragraph num="(b)"> <text>Any person or organization retained or employed by a participant to solicit security holders, or any person who merely transmits proxy soliciting material or performs ministerial or clerical duties;</text> </paragraph> <paragraph num="(c)"> <text>Any person employed in the capacity of attorney, accountant, advertising, public relations, or financial adviser, whose activities are limited to the performance of duties in the course of that employment;</text> </paragraph> <paragraph num="(d)"> <text>Any person regularly employed as an officer or employee of the issuer or any of its subsidiaries or affiliates who is not otherwise a participant; or</text> </paragraph> <paragraph num="(e)"> <text>Any officer or director of, or any person regularly employed by, any other participant, if the officer, director, or employee is not otherwise a participant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Filing of Information Required by Schedule B.</text> <paragraph num="(1)"> <text>A solicitation subject to this section may not be made by any person other than the issuer unless at least 5 business days prior, or a shorter period as the Commissioner may authorize upon a showing of good cause, there has been filed with the Commissioner, by or on behalf of each participant in the solicitation, a statement in duplicate containing the information specified by Schedule B and a copy of any material proposed to be distributed to security holders in furtherance of the solicitation.</text> </paragraph> <paragraph num="(2)"> <text>Within 5 business days after a solicitation subject to this regulation is made by the issuer, or a longer period the Commissioner may authorize upon showing of good cause, there shall be filed with the Commissioner, by or on behalf of each participant in the solicitation other than the issuer, a statement in duplicate containing the information specified by Schedule B.</text> </paragraph> <paragraph num="(3)"> <text>If any solicitation on behalf of the issuer or any other person has been made, or if proxy material is ready for distribution, before a solicitation subject to this regulation in opposition, a statement in duplicate containing the information specified in Schedule B shall be filed with the Commissioner, by or on behalf of each participant in the prior solicitation, other than the issuer, as soon as reasonably practicable after the commencement of the solicitation in opposition.</text> </paragraph> <paragraph num="(4)"> <text>If, after the filing of the statements required by §§A, B, and C of this regulation, additional persons become participants in a solicitation subject to this regulation, there shall be filed with the Commissioner, by or on behalf of these persons, a statement in duplicate containing the information specified by Schedule B, within 3 business days after the person becomes a participant, or a longer period the Commissioner may authorize upon a showing of good cause.</text> </paragraph> <paragraph num="(5)"> <text>If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to the statement shall be filed promptly with the Commissioner.</text> </paragraph> <paragraph num="(6)"> <text>Each statement and amendment filed pursuant to this section shall be part of the public files of the Commissioner.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Solicitations Before Furnishing Required Written Proxy Statement. Notwithstanding the provisions of Regulation .04A of this chapter, a solicitation subject to this regulation may be made before furnishing security holders a written proxy statement containing the information specified in Schedule A with respect to the solicitation, if:</text> <paragraph num="(1)"> <text>The statements required by §C of this regulation are filed by or on behalf of each participant in the solicitation;</text> </paragraph> <paragraph num="(2)"> <text>No form of proxy is furnished to security holders before the time the written proxy statement required by Regulation .04A of this chapter is furnished to these persons; however, §D(2) of this regulation does not apply if a proxy statement meeting the requirements of Schedule A has been furnished to security holders;</text> </paragraph> <paragraph num="(3)"> <text>At least the information specified in §C(2) and (3) of this regulation of the statements required by §C of this regulation to be filed by each participant, or an appropriate summary, are included in each communication sent or given to security holders in connection with the solicitation; and</text> </paragraph> <paragraph num="(4)"> <text>A written proxy statement containing the information specified in Schedule A with respect to a solicitation is sent or given to security holders at the earliest practicable date.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Solicitations Before Furnishing Required Written Proxy Statement-Filing Requirements. Two copies of any soliciting materials proposed to be sent or given to security holders before the furnishing of the written proxy statement required by Regulation .04A of this chapter shall be filed with the Commissioner in preliminary form at least 5 business days before the date definitive copies of the material are first sent or given to the persons, or a shorter period the Commissioner may authorize upon a showing of good cause.</text> </paragraph> <paragraph num="F."> <text>Notwithstanding the provisions of Regulation .04B of this chapter, two copies of any portion of the annual report referred to in Regulation .04B of this chapter which comments upon or refers to any solicitation subject to this regulation, or to any participant in any solicitation, other than the solicitation by the management, shall be filed with the Commissioner as proxy material subject to this chapter. This portion of the report shall be filed with the Commissioner, in preliminary form, at least 5 business days before the date copies of the report are first sent or given to security holders.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Solicitations and Materials Complying With NAIC Model Regulation and Schedules."> <text>Notwithstanding the foregoing regulations, the Commissioner may permit the solicitation of proxies, consents, or authorizations, if the manner of solicitation and the form of proxy, proxy statement, and other documents used in the solicitation comply with Regulations .14—.16 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Schedule A."> <text>Item 1. Revocability of Proxy.</text> <text>State whether or not the person giving the proxy has the power to revoke it. If the right of revocation before the proxy is exercised is limited, or is subject to compliance with any formal procedure, briefly describe the limitation or procedure.</text> <text>Item 2. Dissenters' Rights of Appraisal.</text> <text>Outline briefly any rights of appraisal or similar rights of dissenters with respect to any matter to be acted upon, and indicate any statutory procedure required to be followed by dissenting security holders in order to perfect their rights. When these rights may be exercised only within a limited time after the proposal's date of adoption, the filing of a charter amendment, or other similar act, indicate whether the person solicited will be notified of the date.</text> <text>Item 3. Persons Making the Solicitation.</text> <paragraph num="A."> <text>Solicitations not Subject to Regulation .12 of this Chapter.</text> <paragraph num="(1)"> <text>State if the solicitation is made by the issuer. Give the name of any director of the issuer who has informed the issuer in writing that the director intends to oppose an action intended to be taken by the issuer, and indicate the action which the director intends to oppose.</text> </paragraph> <paragraph num="(2)"> <text>If the solicitation is made by someone other than by the issuer, state the names of the persons by whom and on whose behalf it is made.</text> </paragraph> <paragraph num="(3)"> <text>If the solicitation is to be made by other than the use of the mails, describe the methods to be employed. If the solicitation is to be made by specially engaged employees or paid solicitors, state:</text> <paragraph num="(a)"> <text>The material features of any contract or agreement for the solicitation and identify the parties; and</text> </paragraph> <paragraph num="(b)"> <text>The cost or anticipated cost.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>State the names of the persons who will bear the cost of solicitation, directly or indirectly.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Solicitations Subject to Regulation .12 of this Chapter.</text> <paragraph num="(1)"> <text>State who will make the solicitation and describe the methods employed to solicit security holders.</text> </paragraph> <paragraph num="(2)"> <text>If regular employees of the issuer or any other participant in a solicitation have been or are to be employed to solicit security holders, describe the class or classes of employees to be so employed, and the manner and nature of their employment for this purpose.</text> </paragraph> <paragraph num="(3)"> <text>If specially engaged employees, representatives, or other persons have been or are to be employed to solicit security holders, state:</text> <paragraph num="(a)"> <text>The material features of any contract or arrangement for the solicitation, and identify the parties;</text> </paragraph> <paragraph num="(b)"> <text>The cost or anticipated cost; and</text> </paragraph> <paragraph num="(c)"> <text>The approximate number of employees or employees of another person (naming the other person) who will solicit security holders.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>State the total amount estimated to be spent and the total expenditures to date for, or in connection with, the solicitation of security holders.</text> </paragraph> <paragraph num="(5)"> <text>State who will bear the cost of the solicitation. If reimbursement will be sought from the issuer, state whether the question of reimbursement will be submitted to a vote of security holders.</text> </paragraph> <paragraph num="(6)"> <text>If a solicitation is terminated pursuant to a settlement between the issuer and another participant in the solicitation, describe the terms of the settlement, including the cost or anticipated cost to the issuer.</text> </paragraph> </paragraph> <text>Item 4. Interest of Certain Persons in Matters to be Acted Upon.</text> <paragraph num="A."> <text>Solicitations Not Subject to Regulation .12 of this Chapter. Describe briefly any substantial interest, direct or indirect, of each of the following persons in a matter to be acted upon, other than elections to office:</text> <paragraph num="(1)"> <text>If the solicitation is made on behalf of the issuer, each current director or officer of the issuer;</text> </paragraph> <paragraph num="(2)"> <text>If the solicitation is made for other than on the issuer's behalf, any person who would be a participant in a solicitation (except the issuer or an officer, director, or nominee of the issuer);</text> </paragraph> <paragraph num="(3)"> <text>Each nominee for election as a director of the issuer; and</text> </paragraph> <paragraph num="(4)"> <text>Each associate of the foregoing persons.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Solicitations Subject to Regulation .12 of this Chapter. Describe briefly any substantial interest, direct or indirect, of each participant (except the issuer) in any matter to be acted upon at the meeting. Include, with respect to each participant, the information required by Items 2A, 2D, 3, 4B, and 4C of Schedule B.</text> </paragraph> <text>Item 5. Voting Securities and Principal Holders of Voting Securities.</text> <paragraph num="A."> <text>State, for each class of voting securities of the issuer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled.</text> </paragraph> <paragraph num="B."> <text>Give the date that the record of security holders entitled to vote at the meeting will be determined. If the right to vote is not limited to security holders of record on that date, indicate the conditions under which other security holders may be entitled to vote.</text> </paragraph> <paragraph num="C."> <text>If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights:</text> <paragraph num="(1)"> <text>Make a statement that they have these rights;</text> </paragraph> <paragraph num="(2)"> <text>Describe the rights;</text> </paragraph> <paragraph num="(3)"> <text>State the conditions precedent to the exercise of these rights; and</text> </paragraph> <paragraph num="(4)"> <text>Indicate if discretionary authority to cumulate votes is solicited.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Furnish the following information as of the most practicable date, in substantially the tabular form indicated, with respect to:</text> <paragraph num="(1)"> <text>A person or group of persons who is known to be the beneficial owner of more than 5 percent of any class of securities; and</text> </paragraph> <paragraph num="(2)"> <text>All directors and nominees, naming them, and directors and officers of the issuer as a group, without naming them.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Change in Control.</text> <paragraph num="(1)"> <text>If, to the knowledge of the person on whose behalf the solicitation is made, a change in control of the issuer has occurred since the beginning of its last fiscal year, state:</text> <paragraph num="(a)"> <text>The name of the person or persons who acquired control;</text> </paragraph> <paragraph num="(b)"> <text>The amount and the source of the consideration used by the person or persons;</text> </paragraph> <paragraph num="(c)"> <text>The basis of the control;</text> </paragraph> <paragraph num="(d)"> <text>The date and a description of the transactions that resulted in the change of control;</text> </paragraph> <paragraph num="(e)"> <text>The percentage of voting securities of the issuer now beneficially owned directly or indirectly by the person or persons who acquired control; and</text> </paragraph> <paragraph num="(f)"> <text>The identity of the person or persons from whom control was assumed.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Describe any arrangements which may at a later date result in a change of control of the issuer.</text> </paragraph> </paragraph> <text>Item 6. Directors and Executive Officers.</text> <text>If action is to be taken with respect to the election of directors, furnish the following information, in tabular form to the extent practicable, about each person nominated for election as a director and each person whose term of office will continue after the meeting. However, if the solicitation is made on behalf of persons other than the issuer, the information required should only be furnished as to nominees of the persons making the solicitation.</text> <paragraph num="A."> <text>Identification of Directors and Officers. List the names and ages of all directors and officers of the issuer and all persons nominated or chosen to become directors or officers. Indicate all positions and offices with the issuer held by each person; state the term of office as director or officer, or both, and any period during which the person served. Briefly describe any arrangement or understanding between the person and any other person or persons (naming the persons) pursuant to which the person was or is to be selected as a director, officer, or nominee. The information regarding officers does not need to be furnished in proxy or information statements if the information is furnished in a separate item in the issuer's annual report to stockholders.</text> </paragraph> <paragraph num="B."> <text>Family Relationships. State the nature of a family relationship not more remote than first cousin between a director, officer, or person nominated or chosen by the issuer to become a director or officer. State the nature of any family relationship between any such person and an officer or director of any of the issuer's parent companies, subsidiaries, or other affiliates.</text> </paragraph> <paragraph num="C."> <text>Business Experience. State the principal occupations and employment during the past 5 years of each director and each person nominated or chosen to become a director or officer, and the name and principal business of any corporation or other organization in which the occupations and employment were carried on.</text> </paragraph> <paragraph num="D."> <text>Directorships. Indicate other directorships held by each director or person nominated or chosen to become a director.</text> </paragraph> <paragraph num="E."> <text>Involvement in Certain Legal Proceedings. Describe any legal proceedings that have occurred during the past 5 years or which are pending that are material to an evaluation of the ability or integrity of any director or nominee for director or officer of the issuer.</text> </paragraph> <paragraph num="F."> <text>Describe any of the following relationships that exist:</text> <paragraph num="(1)"> <text>If the nominee or director is, or has within the last 2 full fiscal years been, an officer, director, or employee of, or owns, or has within the last 2 fiscal years owned, directly or indirectly, an equity interest in, any firm, corporation, or other business in excess of a 1 percent:</text> <paragraph num="(a)"> <text>That has made payments to the issuer or its subsidiaries during the issuer's last full fiscal year, or that proposes to make payments to the issuer or its subsidiaries during the current fiscal year, in excess of 1 percent of the issuer's consolidated gross revenues for its last full fiscal year;</text> </paragraph> <paragraph num="(b)"> <text>To which the issuer or its subsidiaries were indebted at any time during the issuer's last fiscal year in an aggregate amount in excess of 1 percent of the issuer's total consolidated assets at the end of the fiscal year;</text> </paragraph> <paragraph num="(c)"> <text>To which the issuer or its subsidiaries have made payments during the entity's last fiscal year, or to which the issuer or its subsidiaries propose to make payments during the entity's current fiscal year, in excess of 1 percent of the entity's consolidated gross revenues for its last full fiscal year;</text> </paragraph> <paragraph num="(d)"> <text>In order to determine whether payments made or proposed to be made exceed 1 percent of the consolidated gross revenues of any entity other than the issuer for the entity's last full fiscal year, it is appropriate to rely on information provided by the nominee or director;</text> </paragraph> <paragraph num="(e)"> <text>In calculating payments for property and services, the following may be excluded:</text> <paragraph num="(i)"> <text>Payments where the rates or charges involved in the transaction are determined by competitive bids, or the transaction involves the rendering of services as a public utility at rates or charges fixed in conformity with law or governmental authority;</text> </paragraph> <paragraph num="(ii)"> <text>Payments that arise solely from the ownership of securities of the issuer, and no extra or special benefit not shared on a pro rata basis by all holders of the class of securities is received;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>In calculating indebtedness for purposes of §F(1)(b) above, debt securities that have been publicly offered, admitted to trading on a national securities exchange, or quoted on the automated quotation system of a registered securities association may be excluded;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The nominee or director is a member or employee of, or is associated with, a law firm which the issuer has retained in the last 2 full fiscal years or proposes to retain in the current fiscal year where fees paid or anticipated to be paid by the issuer are material to either the law firm, the issuer, or both;</text> </paragraph> <paragraph num="(3)"> <text>The nominee or director is a director, partner, officer, or employee of any investment banking firm that has performed services for the issuer, other than as a participating underwriter in a syndicate in the last 2 full fiscal years or which the issuer proposes to have perform services in the current year; or</text> </paragraph> <paragraph num="(4)"> <text>The nominee or director is a control person of the issuer (other than solely as a director of the issuer).</text> </paragraph> </paragraph> <paragraph num="G."> <text>Committees.</text> <paragraph num="(1)"> <text>State whether or not the issuer has standing audit, nominating, and compensation committees of the board of directors, or committees performing similar functions. If the issuer has these committees, however designated, identify each committee member, state the number of committee meetings held by each committee during the last fiscal year, and describe briefly the functions performed by the committees.</text> </paragraph> <paragraph num="(2)"> <text>If the issuer has a nominating or similar committee, state whether the committee will consider nominees recommended by shareholders. If so, describe the procedures to be followed by shareholders in submitting the recommendations.</text> </paragraph> </paragraph> <paragraph num="H."> <text>State the total number of meetings of the board of directors (including regularly scheduled and special meetings) that were held during the last full fiscal year. Name each incumbent director who, during the last full fiscal year, attended fewer than 75 percent of the aggregate of:</text> <paragraph num="(1)"> <text>The total number of meetings of the board of directors (held during the period for which he has been a director); and</text> </paragraph> <paragraph num="(2)"> <text>The total number of meetings held by all committees of the board on which he served (during the periods that he served).</text> </paragraph> </paragraph> <paragraph num="I."> <text>If a director has resigned or declined to stand for reelection to the board of directors since the date of the last annual meeting of shareholders because of a disagreement with the issuer on any matter relating to the issuer's operations, policies, or practices, and if the director has furnished the issuer with a letter describing that disagreement and requesting that the matter be disclosed, the issuer shall state the date of resignation or declination to stand for reelection and summarize the director's description of the disagreement. If the issuer believes that the description provided by the director is incorrect or incomplete, it may include a brief statement presenting its views of the disagreement.</text> </paragraph> <paragraph num="J."> <text>Classes of Voting Stock.</text> <paragraph num="(1)"> <text>With respect to those classes of voting stock that participated in the election of directors at the most recent meeting where directors were elected:</text> <paragraph num="(a)"> <text>State the percentage of shares present at the meeting and voting or withholding authority to vote in the election of directors; and</text> </paragraph> <paragraph num="(b)"> <text>Disclose, in tabular format, the percentage of total shares cast for and withheld from the vote for or, if applicable, cast against, each nominee, which, respectively, were voted for and withheld from the vote for, or voted against, the nominee.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>When groups of classes or series of classes vote together in the election of a director or directors, they shall be treated as a single class for the purpose of §J(1)(b).</text> </paragraph> </paragraph> <paragraph num="K."> <text>Instructions.</text> <paragraph num="(1)"> <text>Calculate the percentage of shares present at the meeting and voting or withholding authority to vote in the election of directors, referred to in §J(1)(a), by dividing the total shares cast for and withheld from the vote for or, if applicable, voted against, the director for whom the highest aggregate number of shares was cast by the total number of shares outstanding that were eligible to vote as of the record date for the meeting.</text> </paragraph> <paragraph num="(2)"> <text>No information need be given in response to Item 6J unless, with respect to any class of voting stock (or group of classes which voted together), 5 percent or more of the total shares cast for and withheld from the votes for or, if applicable, cast against any nominee were withheld from the vote for or cast against the nominee.</text> </paragraph> <paragraph num="(3)"> <text>If an issuer elects less than the entire board of directors annually, disclosure is required for all directors if 5 percent or more of the total shares cast for and withheld from, the vote for or, if applicable, cast against an incumbent director were withheld from, or cast against, the vote for the director at the meeting where the person was most recently elected.</text> </paragraph> <paragraph num="(4)"> <text>No information shall be given in response to Item 6J if the issuer has previously furnished to its security holders a report of the results of the most recent meeting of security holders where directors were elected which includes:</text> <paragraph num="(a)"> <text>A description of each matter voted upon at the meeting and a statement of the percentage of the shares voting that were voted for and against each matter; and</text> </paragraph> <paragraph num="(b)"> <text>The information that would be called for by this Item 6J.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>If an issuer has previously furnished the results to its security holders, this fact should be stated in a letter accompanying the filing of preliminary proxy materials with the Commissioner.</text> </paragraph> </paragraph> <text>Item 7. Remuneration of Directors and Officers.</text> <text>Furnish the following information if action is to be taken concerning:(i) the election of directors; (ii) any bonus, profit sharing or other remuneration plan, contract, or arrangement that a director, nominee for election as a director, or officer of the issuer will participate; (iii) a pension or retirement plan where a person will participate; or (iv) the granting or extension to a person of any options, warrants, or rights to purchase securities, other than warrants or rights issued to security holders on a pro rata basis. If the solicitation is made on behalf of persons other than the issuer, the information required need be furnished only as to nominees of the person making the solicitation and associates of the nominees.</text> <paragraph num="A."> <text>Current Remuneration. Furnish the information required in the table below, in substantially the tabular form specified, concerning all remuneration of the following persons and groups for services in all capacities to the issuer and its subsidiaries during the issuer's last fiscal year or, in specified instances, certain prior fiscal years:</text> <paragraph num="(1)"> <text>Five Officers or Directors. Name each of the five most highly compensated officers or directors of the issuer who have a total remuneration required to be disclosed in Columns C-1 and C-2 below that would exceed $50,000.</text> </paragraph> <paragraph num="(2)"> <text>All Officers or Directors. All officers and directors of the issuer as a group, stating the number of persons in the group without naming them.</text> </paragraph> <paragraph num="(3)"> <text>Specified Tabular Format.</text> </paragraph> <paragraph num="(4)"> <text>Information to be Included. Columns C-1, C-2, and D of the table should contain with respect to each person or group of persons specified in §A(1) and A(2) of this Item 7 a dollar amount that reflects the total of all items of remuneration described in the heading to that column including, but not necessarily limited to, those items set forth in the subparagraphs of that column.</text> </paragraph> <paragraph num="(5)"> <text>Transactions with Third Parties. Item 7A, among other things, includes transactions between the issuer and a third party when the primary purpose of the transaction is to furnish remuneration to the persons specified in Item 7A. Other transactions between the issuer and third parties in which persons specified in Item 7A have an interest, or may realize a benefit, generally are addressed by other disclosure requirements concerning the interest of management and others in certain transactions. Item 7A does not require disclosure of remuneration paid to a partnership in which any officer or director was a partner; these transactions should be disclosed pursuant to these other disclosure requirements, and not as a note to the remuneration table presented pursuant to Item 7A.</text> </paragraph> <paragraph num="(6)"> <text>Other Permitted Disclosure. The issuer may provide additional disclosure through a footnote to the table, through additional columns or otherwise, describing the components of aggregate remuneration in greater detail as is appropriate.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Proposed Remuneration.</text> <paragraph num="(1)"> <text>Briefly describe all remuneration payments proposed to be made in the future, pursuant to any existing plan or arrangement to the persons and groups specified in Item 7A. As to defined benefit or actuarial plans with respect to amounts not included in the table, include a separate table showing the estimated annual benefits payable upon retirement to persons in specified remuneration and years-of-service classifications.</text> </paragraph> <paragraph num="(2)"> <text>Information does not need to be furnished with respect to any group life, health, hospitalization, or medical reimbursement plans that do not discriminate in favor of officers or directors of the issuer and that are available generally to all salaried employees.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Remuneration of Directors. Describe any standard or special arrangements, stating amounts, by which directors of the issuer are compensated for services as a director.</text> </paragraph> <paragraph num="D."> <text>Options, Warrants, or Rights.</text> <paragraph num="(1)"> <text>Furnish the information required by the following table for all options to purchase securities from the issuer or its subsidiaries that were granted to or exercised by the persons and groups specified in Item 7A since the beginning of the issuer's last fiscal year, and as to all options held by these persons as of the latest practicable date.</text> <paragraph num="(a)"> <text>The amount of options granted since the beginning of the issuer's last full fiscal year;</text> </paragraph> <paragraph num="(b)"> <text>The amount of shares acquired since that date through the exercise of options;</text> </paragraph> <paragraph num="(c)"> <text>The amount of shares of the same class sold during the period; and</text> </paragraph> <paragraph num="(d)"> <text>The amount of shares subject to all unexercised options held as of the most recent practicable date.</text> </paragraph> </paragraph> <paragraph num="(1)"> <text>All figures should be adjusted, if applicable, in accordance with the terms of the options to reflect stock splits and to give effect to share dividends.</text> </paragraph> <paragraph num="(2)"> <text>Other tabular presentations are acceptable if they include the necessary data. Tabular presentation may not be needed if only a very few options have been granted.</text> </paragraph> <paragraph num="(3)"> <text>Total Market Value.</text> <paragraph num="(a)"> <text>If the total market value on the granting dates of the securities called for by all options granted during the period specified does not exceed $10,000 for any officer or director named in answer to Item 7A, or $40,000 for all officers and directors as a group, this item need not be answered with respect to options granted to a person or group.</text> </paragraph> <paragraph num="(b)"> <text>If the total market value on the dates of purchase of all securities purchased through the exercise of options during the period specified does not exceed $10,000 for a person or $40,000 for a group, this item does not need to be answered with respect to options exercised by a person or group.</text> </paragraph> <paragraph num="(c)"> <text>If the total market value as of the latest practicable date of the securities called for by all options held at the time does not exceed $10,000 for a person or $40,000 for a group, this item does not need to be answered with respect to options held as of the specified date by a person or group.</text> </paragraph> <paragraph num="(d)"> <text>The term “options”, as used in §D includes all options, warrants, or rights, other than those issued to security holders as such on a pro rata basis. If the average option price per share is called for, the weighted average price per share shall be given.</text> </paragraph> <paragraph num="(e)"> <text>The extension, regranting, or material amendment of options shall be considered the granting of options within the meaning of this subsection.</text> </paragraph> <paragraph num="(f)"> <text>If the options relate to more than one class of securities, the information shall be given separately for each class.</text> </paragraph> </paragraph> <aftertext>In addition, during the period employees were granted options for shares at an average price per share of $ .</aftertext> </paragraph> <paragraph num="E."> <text>Indebtedness of Management.</text> <paragraph num="(1)"> <text>State for each director or officer of the issuer, each nominee for election as a director, and each associate of a director, officer, or nominee who was indebted to the issuer or its subsidiaries at any time since the beginning of the last fiscal year of the registrant:</text> <paragraph num="(a)"> <text>The largest aggregate amount of indebtedness outstanding at any time during the period;</text> </paragraph> <paragraph num="(b)"> <text>The nature of the indebtedness outstanding and the transaction in which it was incurred;</text> </paragraph> <paragraph num="(c)"> <text>The amount outstanding as of the latest practicable date; and</text> </paragraph> <paragraph num="(d)"> <text>The rate of interest paid or charged.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Section E does not apply to:</text> <paragraph num="(a)"> <text>Any person whose aggregate indebtedness did not exceed $10,000 or 1 percent of the issuer's total assets, whichever is less, at any time during the period specified; or</text> </paragraph> <paragraph num="(b)"> <text>Indebtedness under an insurance policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Transactions with Management.</text> <paragraph num="(1)"> <text>Describe briefly any transaction since the beginning of the issuer's last fiscal year, or any presently proposed transactions, to which the issuer or any of its subsidiaries was or is to be a party, in which any of the following persons had or is to have a direct or indirect material interest, naming the person and stating the relationship to the issuer, the nature of the interest in the transaction, and, if practicable, the amount of the interest:</text> <paragraph num="(a)"> <text>A director of officer of the issuer;</text> </paragraph> <paragraph num="(b)"> <text>A nominee for election as a director;</text> </paragraph> <paragraph num="(c)"> <text>A security holder who is known to the issuer to own of record or beneficially more than 10 percent of any class of the issuer's voting securities; and</text> </paragraph> <paragraph num="(d)"> <text>A relative or spouse of any of the foregoing persons, or any relative of the spouse, who has the same home as the person or who is a director or officer of a parent or subsidiary of the issuer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Also, describe briefly any material legal proceedings in which a person is an adverse party to the issuer or any of its subsidiaries, or has an adverse material interest to the issuer or any of its subsidiaries.</text> </paragraph> <paragraph num="(3)"> <text>Information does not need to be given in response to this Item 7F as to any remuneration or other transaction reported in response to Item 7A, B, C, D, or E, or as to any transaction with respect to which information may be omitted pursuant to these items.</text> </paragraph> <paragraph num="(4)"> <text>Information does not need to be given in answer to this Item 7F for any transaction where:</text> <paragraph num="(a)"> <text>The rates or charges involved in the transaction are determined by competitive bids, or at rates or charges fixed in conformity with law or governmental authority;</text> </paragraph> <paragraph num="(b)"> <text>The transaction involves services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar services;</text> </paragraph> <paragraph num="(c)"> <text>The amount involved in the transaction or series of similar transactions, including all periodic installments in the case of any lease or other agreement providing for periodic payments or installments, does not exceed $40,000; or</text> </paragraph> <paragraph num="(d)"> <text>The interest of the specified person arises solely from the ownership of securities of the issuer, and the specified person receives no extra or special benefit not shared on a pro rata basis by all holders of securities of the class.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>It should be noted that this item calls for disclosure of indirect, as well as direct, material interests in transactions. A person who has a position or relationship with a firm, corporation, or other entity, that engages in a transaction with the issuer or its subsidiaries, may have an indirect interest in the transaction by reason of the position or relationship. However, a person shall be considered not to have a material indirect interest in a transaction within the meaning of this Item 7F if:</text> <paragraph num="(a)"> <text>The interest arises only from:</text> <paragraph num="(i)"> <text>The person's position as a director of another corporation or organization (other than a partnership) which is a party to the transaction;</text> </paragraph> <paragraph num="(ii)"> <text>The direct or indirect ownership by the person and all other persons specified in Item 7F of less than a 10 percent equity interest in another person (other than a partnership) which is a party to the transaction; or</text> </paragraph> <paragraph num="(iii)"> <text>Both the position and ownership;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The interest arises only from the person's position as a limited partner in a partnership in which the person and all other persons specified in Item 7F had an interest of less than 10 percent; or</text> </paragraph> <paragraph num="(c)"> <text>The interest of the person arises solely from the holding of an equity interest (including a limited partnership interest but excluding a general partnership interest) or a creditor interest in another person which is a party to the transaction with the issuer or any of its subsidiaries and the transaction is not material to the other person.</text> </paragraph> </paragraph> <paragraph num="(1)"> <text>In describing any transaction involving the purchase or sale of assets by or to the issuer or any of its subsidiaries, other than in the ordinary course of business, state the cost of the assets to the purchaser and, if acquired by the seller within 2 years before the transaction, the cost to the seller. Indicate the principle followed in determining the issuer's purchase or sale price, and the name of the person making the determination.</text> </paragraph> <paragraph num="(2)"> <text>Information shall be furnished in answer to this Item with respect to transactions not excluded above which involve remuneration from the issuer or its subsidiaries, directly or indirectly, to any of the specified persons for services in any capacity unless the interest of these persons arises solely from the ownership individually and in the aggregate of less than 10 percent of any class of equity securities of another corporation furnishing the services to the issuer or its subsidiaries.</text> </paragraph> <aftertext>Instructions:</aftertext> </paragraph> <paragraph num="G."> <text>Transactions with Pension or Similar Plans.</text> <paragraph num="(1)"> <text>Describe briefly any transactions since the beginning of the issuer's last fiscal year, or any presently proposed transactions, to which any pension, retirement, savings, or similar plan provided by the issuer, or any of its parents or subsidiaries, was or is to be a part, in which any of the persons specified in Item 7F or the issuer or any of its subsidiaries had or is to have a direct or indirect material interest naming the person and stating the person's relationship to the issuer, the nature of the person's interest in the transaction and, if practicable, the amount of the interest.</text> </paragraph> <paragraph num="(2)"> <text>Information does not need to be given in answer to §G(1) with respect to:</text> <paragraph num="(a)"> <text>Payments to the plan, or payments to beneficiaries, pursuant to the terms of the plan;</text> </paragraph> <paragraph num="(b)"> <text>Payment of remuneration for services not in excess of 5 percent of the aggregate remuneration received by the specified person during the issuer's last fiscal year from the issuer and its subsidiaries; or</text> </paragraph> <paragraph num="(c)"> <text>Any interest of the issuer or any of its subsidiaries that arises solely from its general interest in the success of the plan.</text> </paragraph> </paragraph> <paragraph num="(1)"> <text>Item 7F(3) applies to this Item 7G.</text> </paragraph> <paragraph num="(2)"> <text>Without limiting the general meaning of the term “transaction”, there shall be included in the answer to this item any remuneration received or any loans received or outstanding during the period, or proposed to be received.</text> </paragraph> <aftertext>Instructions:</aftertext> </paragraph> <text>Item 8. Matters Related to Accounting.</text> <text>If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected, or financial statements are included, furnish the following information:</text> <paragraph num="A."> <text>State if the issuer's financial statements are not certified by independent public or certified accountants.</text> </paragraph> <paragraph num="B."> <text>State if the board of directors has no audit or similar committee.</text> </paragraph> <paragraph num="C."> <text>If the issuer's financial statements are certified by independent public or certified accountants, state that fact and provide the following information:</text> <paragraph num="(1)"> <text>The name of the principal accountant selected or being recommended to shareholders for election, approval, or ratification for the current year. If no accountant has been elected or recommended, so state and briefly describe the reasons.</text> </paragraph> <paragraph num="(2)"> <text>The name of the principal accountant for the fiscal year most recently completed if different from the accountant selected or recommended for the current year, or if no accountant has been elected or recommended for the current year.</text> </paragraph> <paragraph num="(3)"> <text>State if a change or changes in accountants have taken place since the date of the proxy statement for the most recent annual meeting of shareholders. If, in connection with the change, a material disagreement in connection with financial disclosure between the accountant and issuer has occurred, the disagreement shall be described. Before filing the preliminary proxy materials with the Commissioner that contain or amend the description, the issuer shall furnish the description of the disagreement to an accountant with whom the disagreement has occurred. If that accountant believes that the description of the disagreement is incorrect or incomplete, the accountant may include a brief statement, not to exceed 200 words, in the proxy statement presenting the accountant's view of the disagreement. This statement shall be submitted to the issuer within 10 business days of the date the accountant receives the issuer's descriptions.</text> </paragraph> <paragraph num="(4)"> <text>The proxy statement shall indicate whether or not representatives of the principal accountants for the current year and for the most recently completed fiscal year are expected to be present at the stockholders' meeting with the opportunity to make a statement if they desire to do so and whether or not the representatives are expected to be available to respond to appropriate questions.</text> </paragraph> <paragraph num="(5)"> <text>If a change in accountants has taken place since the date of the proxy statement for the most recent annual meeting of shareholders, state whether the change was recommended or approved by:</text> <paragraph num="(a)"> <text>An audit or similar committee of the board of directors, if the issuer has this committee; or</text> </paragraph> <paragraph num="(b)"> <text>The board of directors, if the issuer has no committee.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>For the fiscal year most recently completed, describe each professional service provided by the principal accountant, state the percentage relationship that the aggregate of the fees for all nonaudit services bear to the audit fees, and, except as provided below, state the percentage relationship that the fee for each nonaudit service bears to the audit fees. Indicate whether, before each professional service provided by the principal accountant was rendered, it was approved by, and the possible effect on the independence of the accountant was considered by:</text> <paragraph num="(1)"> <text>An audit or similar committee of the board of directors; and</text> </paragraph> <paragraph num="(2)"> <text>The board of directors for a service not approved by an audit or similar committee.</text> </paragraph> <paragraph num="(1)"> <text>For purposes of this section, all fees for services provided in connection with the audit function (for example, reviews of quarterly reports) may be computed as part of the audit fees. Indicate which services are reflected in the audit fees computation.</text> </paragraph> <paragraph num="(2)"> <text>If the fee for any non-audit service is less than 3 percent of the audit fees, the percentage relationship does not need to be disclosed.</text> </paragraph> <paragraph num="(3)"> <text>Each service should be specifically described. Broad general categories such as “tax matters” or “management advisory services” are not sufficiently specific.</text> </paragraph> <paragraph num="(4)"> <text>Describe the circumstances and give details of any services provided by the issuer's independent accountant during the latest fiscal year that were furnished at rates or terms that were not customary.</text> </paragraph> <paragraph num="(5)"> <text>Describe any existing direct or indirect understanding or agreement that places a limit on current or future years' audit fees, including fee arrangements that provide fixed limits on fees that are not subject to reconsideration if unexpected issues involving accounting or auditing are encountered. Disclosure of fee estimates is not required.</text> </paragraph> <aftertext>Instructions:</aftertext> </paragraph> <text>Item 9. Bonus, Profit Sharing, and Other Remuneration Plans: Pension and Retirement Plans.</text> <text>If action is to be taken with respect to any bonus, profit sharing, or other remuneration plan, or any pension or retirement plan, furnish the following information:</text> <paragraph num="A."> <text>Describe briefly the material features of the plan, identify each class of persons who will participate, indicate the approximate number of persons in each class, and state the basis of the participation;</text> </paragraph> <paragraph num="B."> <text>Furnish the information, in addition to that required by this item and Item 7, as may be necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past 5 years, for:</text> <paragraph num="(1)"> <text>Each director or officer named in answer to Item 7A who may participate in the plan to be acted upon;</text> </paragraph> <paragraph num="(2)"> <text>All present directors and officers of the issuer as a group, if any director or officer may participate in the plan; and</text> </paragraph> <paragraph num="(3)"> <text>All employees, if employees may participate in the plan;</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the plan to be acted upon can be amended otherwise than by a vote of stockholders, to increase the cost to the issuer or to alter the allocation of the benefits as between the directors and officers on the one hand and employees on the other, state the nature of the amendments which can be made;</text> </paragraph> <paragraph num="D."> <text>With regard to any bonus, profit sharing, or other remuneration plan, on which action is to be taken, furnish the following information:</text> <paragraph num="(1)"> <text>State separately the amounts which would have been distributable under the plan during the last fiscal year of the issuer:</text> <paragraph num="(a)"> <text>To directors and officers; and</text> </paragraph> <paragraph num="(b)"> <text>To employees if the plan had been in effect;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>State the name and position with the issuer of each person specified in Item 7A who will participate in the plan and the amount each person would have received under the plan for the last fiscal year of the issuer if the plan had been in effect;</text> </paragraph> </paragraph> <paragraph num="E."> <text>With regard to any pension or retirement plan on which action is to be taken, furnish the following information:</text> <paragraph num="(1)"> <text>State:</text> <paragraph num="(a)"> <text>The approximate total amount necessary to fund the plan with respect to past services, the period over which the amount is to be paid, and the estimated annual payments necessary to pay the total amount over the period;</text> </paragraph> <paragraph num="(b)"> <text>The estimated annual payment to be made with respect to current services; and</text> </paragraph> <paragraph num="(c)"> <text>The amount of the annual payments to be made for the benefit of</text> <paragraph num="(i)"> <text>Directors and officers, and</text> </paragraph> <paragraph num="(ii)"> <text>Employees;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>State:</text> <paragraph num="(a)"> <text>The name and position with the issuer of each person specified in Item 7A who will be entitled to participate in the plan;</text> </paragraph> <paragraph num="(b)"> <text>The amount which would have been paid or set aside by the issuer and its subsidiaries for the benefit of the person for the last fiscal year of the issuer if the plan had been in effect; and</text> </paragraph> <paragraph num="(c)"> <text>The amount of the annual benefits estimated to be payable to the person in the event of retirement at normal retirement date.</text> </paragraph> </paragraph> <paragraph num="(1)"> <text>If action is to be taken with respect to the amendment or modification of an existing plan, the item shall be answered with respect to the plan as proposed to be amended or modified and shall indicate any material differences from the existing plan.</text> </paragraph> <paragraph num="(2)"> <text>The following instruction applies to §B:</text> <paragraph num="(a)"> <text>Information need only be given with respect to benefits received or set aside within the past 5 years.</text> </paragraph> <paragraph num="(b)"> <text>Information does not need to be included as to payments made for, or benefits to be received from, group life or accident insurance, group hospitalization, or similar group payments or benefits.</text> </paragraph> <paragraph num="(c)"> <text>If action is to be taken with respect to any plan in which directors or officers may participate, the information called for by Item 7D shall be furnished for the last 5 fiscal years of the issuer and any period after the end of the latest fiscal year, in aggregate amounts for the entire period for each person and group. If any named person, or any other director or officer, purchased securities through the exercise of options during the period, state the aggregate amount of securities of that class sold during the period by the named person, and by the named person and other directors and officers as a group. The information called for by this instruction is in lieu of the information since the beginning of the issuer's last fiscal year called for by Item 7D. If employees may participate in the plan to be acted upon, state the aggregate amount of securities called for by all options granted to employees during the 5-year period and, if the options were other than “restricted” or “qualified” stock options or options granted pursuant to an “employee stock purchase plan,” as the quoted terms are defined in Sections 422 through 424 of the Internal Revenue Code, state that fact and the weighted average option price per share. The information called for by this instruction may be furnished in the form of the table set forth in Item 7D.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the plan to be acted upon is set forth in a written document, three copies shall be filed with the Commissioner at the time preliminary copies of the proxy statement and form of proxy are filed.</text> </paragraph> <paragraph num="(4)"> <text>The information called for by §E(1)(c) or (2)(b) of Item 9 does not need to be given as to payments made on an actuarial basis pursuant to any group pension plan that provides for fixed benefits in the event of retirement at a specified age or after a specified number of years of service.</text> </paragraph> <aftertext>Instructions:</aftertext> </paragraph> <text>Item 10. Options, Warrants, or Rights.</text> <text>If action is to be taken with respect to the granting or extension of any options to purchase securities of the issuer or any subsidiary, furnish the following information:</text> <paragraph num="A."> <text>State:</text> <paragraph num="(1)"> <text>The title and amount of securities called for or to be called for by the options;</text> </paragraph> <paragraph num="(2)"> <text>The prices, expiration dates, and other material conditions upon which the options may be exercised;</text> </paragraph> <paragraph num="(3)"> <text>The consideration received or to be received by the issuer or subsidiary for the granting or extension of the options;</text> </paragraph> <paragraph num="(4)"> <text>The market value of the securities called for or to be called for by the options as of the latest practicable date; and</text> </paragraph> <paragraph num="(5)"> <text>In the case of options, the federal income tax consequences of the issuance and exercise of the option to the recipient and to the issuer;</text> </paragraph> </paragraph> <paragraph num="B."> <text>State:</text> <paragraph num="(1)"> <text>Separately the amount of options received or to be received by the following persons, naming each person:</text> <paragraph num="(a)"> <text>Each director or officer named in answer to Item 7A;</text> </paragraph> <paragraph num="(b)"> <text>Each nominee for election as a director of the issuer;</text> </paragraph> <paragraph num="(c)"> <text>Each associate of the directors, officers, or nominees; and</text> </paragraph> <paragraph num="(d)"> <text>Each other person who received or is to receive 10 percent or more of the options;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The total amount of the options received or to be received by all directors and officers of the issuer as a group, without naming them;</text> </paragraph> </paragraph> <paragraph num="C."> <text>Furnish the information, in addition to that required by this item and Item 7, necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past 5 years, for:</text> <paragraph num="(1)"> <text>Each director or officer named in answer to Item 7A who may participate in the plan to be acted upon;</text> </paragraph> <paragraph num="(2)"> <text>All present directors and officers of the issuer as a group, if any director or officer may participate in the plan; and</text> </paragraph> <paragraph num="(3)"> <text>All employees, if employees may participate in the plan.</text> </paragraph> <paragraph num="(1)"> <text>For the purpose of this Item 10, the term option includes any option, warrant, or right.</text> </paragraph> <paragraph num="(2)"> <text>Sections B and C do not apply to warrants or rights to be issued to security holders on a pro rata basis.</text> </paragraph> <paragraph num="(3)"> <text>Instruction 2 to Item 9 also applies to §C of this item.</text> </paragraph> <paragraph num="(4)"> <text>If the options described in answer to this item are issued pursuant to a plan which is set forth in a written document, three copies shall be filed with the Commissioner at the time preliminary copies of the proxy statement and form of proxy are filed.</text> </paragraph> <aftertext>Instructions:</aftertext> </paragraph> <text>Item 11. Authorization or Issuance of Securities Otherwise than for Exchange.</text> <text>If action is to be taken with respect to the authorization or issuance of any securities otherwise than for exchange for outstanding securities of the issuer, furnish the following information:</text> <paragraph num="A."> <text>State the title and amount of securities to be authorized or issued;</text> </paragraph> <paragraph num="B."> <text>If the securities are other than additional shares of common stock of a class outstanding, furnish a brief summary of the following, if applicable: dividend, voting, liquidation, preemptive and conversion rights, redemption and sinking fund provisions, interest rate, and date of maturity;</text> </paragraph> <paragraph num="C."> <text>Describe briefly the transaction in which the securities are to be issued, including a statement as to:</text> <paragraph num="(1)"> <text>The nature and approximate amount of consideration received or to be received by the issuer; and</text> </paragraph> <paragraph num="(2)"> <text>The approximate amount devoted to each purpose, as far as is determinable, for which the net proceeds have been or are to be used;</text> </paragraph> </paragraph> <paragraph num="D."> <text>If it is impracticable to describe the transaction in which the securities are to be issued, state the reason, indicate the purpose of the authorization of the securities, and state whether further authorization for the issuance of the securities by a vote of security holders will be solicited before issuance;</text> </paragraph> <paragraph num="E."> <text>If the securities are to be issued otherwise than in a general public offering for cash, state the reasons for the proposed authorization or issuance and the general effect upon the rights of existing security holders.</text> </paragraph> <text>Item 12. Modification or Exchange of Securities.</text> <text>If action is to be taken with respect to the modification of any class of securities of the issuer, or the issuance or authorization for issuance of securities of the issuer in exchange for outstanding securities of the issuer, furnish the following information:</text> <paragraph num="A."> <text>If outstanding securities are to be modified, state the title and amount. If securities are to be issued in exchange for outstanding securities, state the title and amount of securities to be so issued, the title and amount of outstanding securities to be exchanged, and the basis of the exchange.</text> </paragraph> <paragraph num="B."> <text>Describe any material differences between the outstanding securities and the modified or new securities.</text> </paragraph> <paragraph num="C."> <text>State the reasons for the proposed modification or exchange and the general effect upon the rights of existing security holders.</text> </paragraph> <paragraph num="D."> <text>Furnish a brief statement as to arrears in dividends or as to defaults in principal or interest with respect to the outstanding securities which are to be modified or exchanged and furnish other information appropriate in the particular case to disclose adequately the nature and effect of the proposed action.</text> </paragraph> <paragraph num="E."> <text>Outline briefly any other material features of the proposed modification or exchange. If the plan of proposed action is set forth in a written document, file copies it with the Commissioner at the time the preliminary proxy material is filed.</text> </paragraph> <text>Item 13. Mergers, Consolidations, Acquisitions, and Similar Matters.</text> <text>Furnish the following information if action is to be taken with respect to any plan for:(i) the merger or consolidation of the issuer into or with another person or of another person into or with the issuer; (ii) the acquisition by the issuer or any of its security holders of securities of another issuer; (iii) the acquisition by the issuer of another going business or of its assets; (iv) the sale or other transfer of all or any substantial part of the assets of the issuer; or (v) the liquidation or dissolution of the issuer:</text> <paragraph num="A."> <text>Outline briefly the material features of the plan. State the reasons for the plan and the general effect of the plan upon the rights of existing security holders. If the plan is set forth in a written document, file three copies with the Commissioner at the time preliminary copies of the proxy statement and form of proxy are filed.</text> </paragraph> <paragraph num="B."> <text>Furnish the following information as to the issuer and each person which is to be merged into the issuer, or into or with which the issuer is to be merged or consolidated, or the business or assets that are to be acquired, or which is the issuer of securities to be acquired by the issuer in exchange for all or a substantial part of its assets or to be acquired by security holders of the issuer. What is required is information essential to an investor's appraisal of the action proposed to be taken.</text> <paragraph num="(1)"> <text>Describe briefly the business of the person.</text> </paragraph> <paragraph num="(2)"> <text>State the location and describe the general character of the plants and other important physical properties of the person. The description is to be given from an economic and business standpoint, as distinguished from a legal standpoint. Portfolio or investment assets of an insurer do not need to be disclosed.</text> </paragraph> <paragraph num="(3)"> <text>Furnish a brief statement as to dividends in arrears or defaults in principal or interest in respect of any securities of the issuer or of the person, and as to the effect of the plan on the issuer and the person and other information as may be appropriate in the particular case to disclose adequately the nature and effect of the proposed action.</text> </paragraph> <paragraph num="(4)"> <text>Furnish a tabulation in columnar form showing the existing and the pro forma capitalization.</text> </paragraph> <paragraph num="(5)"> <text>Furnish in columnar form for each of the last 5 fiscal years a historical summary of earnings, and show per share amounts of net earnings, dividends declared for each year, and book value per share at the end of the latest period.</text> </paragraph> <paragraph num="(6)"> <text>Furnish in columnar form for each of the last 5 fiscal years a combined pro forma summary of earnings, as appropriate in the circumstances, indicating the aggregate and pre-share earnings for each year and the pro forma book value per share at the end of the latest period. If the transaction establishes a new basis of accounting for assets of any of the persons included, the pro forma summary of earnings shall be furnished only for the most recent fiscal year and interim period, and shall reflect appropriate pro forma adjustments resulting from the new basis of accounting.</text> </paragraph> <paragraph num="(7)"> <text>To the extent material for the exercise of prudent judgment in regard to the matter to be acted upon, furnish the historical and pro forma earnings data specified in §B(5) and (6) above for interim periods of the current and prior fiscal years, if available. Instructions: §B of this Item 13 does not apply if the plan described in answer to §A involves only the issuer and one or more of its totally held subsidiaries.</text> </paragraph> </paragraph> <paragraph num="C."> <text>As to each class of securities of the issuer, or of any person specified in §B, which is admitted to dealing on a national securities exchange or with respect to which a market otherwise exists, and that will be materially affected by the plan, state the high and low sale prices (or, in the absence of trading in a particular period, the range of the bid and asked prices) for each quarterly period within 2 years. This information may be omitted if the plan involves merely the liquidation or dissolution of the issuer.</text> </paragraph> <text>Item 14. Financial Statements.</text> <paragraph num="A."> <text>If action is to be taken with respect to any matter specified in Items 11, 12, or 13, furnish financial statements of the issuer and its subsidiaries complying with the requirements of Regulation .04B(1), (2) and (3) of the chapter, including schedules of supplementary profit and loss information. The statements may be omitted with respect to a plan described in answer to Item 13 if the plan involves only the issuer and one or more of its totally held subsidiaries.</text> </paragraph> <paragraph num="B."> <text>If action is to be taken with respect to any matter specified in Item 13B, furnish for each person specified, other than the issuer, financial statements complying with the requirements of Regulation .04B(1), (2), and (3) of the chapter.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may, upon the request of the issuer, permit the omission of any of the statements required where the statements are not necessary for the exercise of prudent judgment in regard to any matter to be acted upon, or may permit the filing in substitution of appropriate statements of comparable character. The Commissioner may also require the filing of other statements in addition to, or in substitution for, the statements required in any case where the statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise material for the exercise of prudent judgment in regard to any matter to be acted upon. In the usual case, financial statements are considered material to the exercise of prudent judgment where the matter to be acted upon is authorization or issuance of a material amount of senior securities, but are not considered material where the matter to be acted upon is the authorization or issuance of common stock, otherwise than in an exchange, merger or consolidation, acquisition, or similar transaction.</text> </paragraph> <paragraph num="D."> <text>The proxy statement may incorporate by reference any financial statements contained in an annual report sent to security holders with respect to the same meeting as that to which the proxy statement relates, if the financial statements substantially meet the requirements of this item.</text> </paragraph> <text>Item 15. Acquisition or Disposition of Property.</text> <text>If action is to be taken with respect to the acquisition or disposition of any property, furnish the following information:</text> <paragraph num="A."> <text>Describe briefly the general character and location of the property.</text> </paragraph> <paragraph num="B."> <text>State the nature and amount of consideration to be paid or received by the issuer or any subsidiary. To the extent practicable, outline briefly the facts bearing upon the question of the fairness of the consideration.</text> </paragraph> <paragraph num="C."> <text>State the name and address of the transferor or transferee, as the case may be, and the nature of any material relationship of the person to the issuer or an affiliate of the issuer.</text> </paragraph> <paragraph num="D."> <text>Outline briefly any other material features of the contract or transaction.</text> </paragraph> <text>Item 16. Restatement of Accounts.</text> <text>If action is to be taken with respect to the restatement of any asset, capital, or surplus account of the issuer, furnish the following information:</text> <paragraph num="A."> <text>State the nature of the restatement and the date as of which it is to be effective.</text> </paragraph> <paragraph num="B."> <text>Outline briefly the reasons for the restatement and for the selection of the particular effective date.</text> </paragraph> <paragraph num="C."> <text>State the name and amount of each account (including any reserve accounts) affected by the restatement and the effect of the restatement on the account. Tabular presentation of the amounts shall be made when appropriate, particularly in the case of recapitalizations.</text> </paragraph> <paragraph num="D."> <text>To the extent practicable, state whether and the extent, if any, to which the restatement will, as of the date of the restatement, alter the amount available for distribution to the holders of equity securities.</text> </paragraph> <text>Item 17. Action with Respect to Reports.</text> <text>If action is to be taken with respect to any report of the issuer, or of its directors, officers, or committees, or any minutes of meetings of its stockholders, furnish the following information:</text> <paragraph num="A."> <text>State whether or not the action is to constitute approval or disapproval of any of the matters referred to in the reports or minutes;</text> </paragraph> <paragraph num="B."> <text>Identify each of the matters which it is intended will be approved or disapproved, and furnish the information required by the appropriate item or items of this schedule with respect to each matter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Schedule B."> <text>INFORMATION TO BE INCLUDED IN STATEMENTS FILED BY OR ON BEHALF OF A PARTICIPANT (OTHER THAN THE ISSUER) IN A PROXY SOLICITATION IN AN ELECTION CONTEST</text> <text>Item 1. Issuer.</text> <text>State the name and address of the Issuer.</text> <text>Item 2. Identity and Background.</text> <paragraph num="A."> <text>State the following:</text> <paragraph num="(1)"> <text>Your name and business address;</text> </paragraph> <paragraph num="(2)"> <text>Your present principal occupation or employment and the name, principal business, and address of any corporation or other organization in which the employment is carried on.</text> </paragraph> </paragraph> <paragraph num="B."> <text>State the following:</text> <paragraph num="(1)"> <text>Your residence address;</text> </paragraph> <paragraph num="(2)"> <text>Information as to all material occupations, positions, offices, or employments during the last 10 years, giving starting and ending dates of each and the name, principal business and address of any business corporation, or other business organization in which each occupation, position, office, or employment was carried on.</text> </paragraph> </paragraph> <paragraph num="C."> <text>State whether or not you are or have been a participant in any other proxy contest involving this company or other companies within the past 10 years. If so, identify the principals, the subject matter, and your relationship to the parties, and the outcome.</text> </paragraph> <paragraph num="D."> <text>State whether or not, during the past 10 years, you have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) and, if so, give dates, nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative answer to this subitem does not need to be included in the proxy statement or other proxy soliciting material.</text> </paragraph> <text>Item 3. Interest in Securities of the Issuer.</text> <paragraph num="A."> <text>State the amount of each class of securities of the issuer that you own beneficially, directly or indirectly.</text> </paragraph> <paragraph num="B."> <text>State the amount of each class of securities of the issuer that you own of record but not beneficially.</text> </paragraph> <paragraph num="C."> <text>State, with respect to all securities of the issuer purchased or sold within the past 2 years, the dates when they were purchased or sold, and the amount purchased or sold on each date.</text> </paragraph> <paragraph num="D."> <text>State if any part of the purchase price or market value of any of the securities specified in §C is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding securities. Indicate the amount of the indebtedness as of the latest practicable date. If funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker, or dealer, briefly describe the transaction and state the names of the parties.</text> </paragraph> <paragraph num="E."> <text>State whether or not you are a party to any contracts, arrangements, or understandings with any person with respect to any securities of the issuer including but not limited to joint ventures, loan or option arrangements, puts or calls guarantees against losses or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so, name the persons with whom some contracts, arrangements, or understandings exist, and give the details of it.</text> </paragraph> <paragraph num="F."> <text>State the amount of securities of the issuer owned beneficially, directly or indirectly, by each of your associates, and the name and address of each associate.</text> </paragraph> <paragraph num="G."> <text>State the amount of each class of securities of any parent, subsidiary, or affiliate of the issuer that you own beneficially, directly or indirectly.</text> </paragraph> <text>Item 4. Further Matters.</text> <paragraph num="A."> <text>Describe the time and circumstances under which you became a participant in the solicitation, and state the nature and extent of your activities or proposed activities as a participant.</text> </paragraph> <paragraph num="B."> <text>Describe briefly, and if practicable state the approximate amount of any material interest, direct or indirect, of yourself and of each of your associates in any material transactions since the beginning of the company's last fiscal year, or in any material proposed transactions, to which the company or any of its subsidiaries or affiliates was or is to be a party.</text> </paragraph> <paragraph num="C."> <text>Arrangement or Understanding.</text> <paragraph num="(1)"> <text>State whether or not you or any of your associates have any arrangement or understanding with any person:</text> <paragraph num="(a)"> <text>With respect to any future employment by the issuer or its subsidiaries or affiliates; or</text> </paragraph> <paragraph num="(b)"> <text>With respect to any future transactions to which the issuer or any of its subsidiaries or affiliates will or may be a party.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If so, describe the arrangement or understanding, and state the names of the parties.</text> </paragraph> <aftertext>Item 5. Signature.</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Schedule C."> <text>INFORMATION REQUIRED IN INFORMATION STATEMENT</text> <text>Note: Where any item, other than Item 5, calls for information with respect to any matter to be acted upon at the meeting, the item need be answered only with respect to proposals to be made by the issuer.</text> <text>Item 1. Information Required by Items of Schedule 14A.</text> <text>Furnish the information called for by all of the items of Schedule A (other than Items 1, 3, and 4) that would be applicable to any matter to be acted upon at the meeting if proxies were to be solicited in connection with the meeting.</text> <text>Item 2. Statement That Proxies Are Not Solicited.</text> <text>The following statement shall be set forth on the first page of the information statement in bold face type:</text> <text>WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.</text> <text>Item 3. Date, Time, and Place of Meeting.</text> <text>State the date, time, and place of the meeting of security holders, unless the information is otherwise disclosed in material furnished to security holders with the information statement.</text> <text>Item 4. Interest of Certain Persons in or Opposition to Matters to Be Acted Upon.</text> <paragraph num="A."> <text>Describe briefly any substantial interest, direct or indirect, by security holdings or otherwise, of each of the following persons in any matter to be acted upon, other than elections to office:</text> <paragraph num="(1)"> <text>Each person who has been a director or officer of the issuer at any time since the beginning of the last fiscal year;</text> </paragraph> <paragraph num="(2)"> <text>Each nominee for election as a director of the issuer;</text> </paragraph> <paragraph num="(3)"> <text>Each associate of the foregoing persons.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Give the name of any director of the issuer who has informed the management in writing that he intends to oppose any action to be taken by the management at the meeting, and indicate the action that he intends to oppose.</text> </paragraph> <text>Item 5. Proposals by Security Holders.</text> <text>If any security holder entitled to vote at the meeting has, not less than 90 days before the issuer's annual meeting, submitted to the issuer a proposal that is accompanied by notice of the issuer's intention to present the proposal, and indicate the disposition proposed to be made of the proposal by the management at the meeting.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-113(a)(7)—(9), and 4-115, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Amended effective April 30, 1970</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.02 to COMAR 31.04.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.13 repealed and new Regulations .01—.16 adopted effective February 12, 2007 (34:3 Md. R. 303)</annotation> </annotations> </chapter> <chapter num="08" heading="Notification of Changes in Stock Ownership and Operating Management, Disclosures of Other Insurance Affiliations" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: March 1, 1966</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective May 9, 1983 (10:9 Md. R. 790)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.07 to COMAR 31.04.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective January 15, 2007 (34:1 Md. R. 32)</annotation> </annotations> </chapter> <chapter num="09" heading="Custody Agreements and the Use of Clearing Corporations"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Agent.</text> <paragraph num="(a)"> <text>“Agent” means:</text> <paragraph num="(i)"> <text>A qualified bank or qualified broker/dealer that maintains an account in its name in a clearing corporation or that is a member of the Federal Reserve System and through which a custodian participates in a clearing corporation; or</text> </paragraph> <paragraph num="(ii)"> <text>With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a corporation that is organized or existing under the laws of a foreign country and that is legally qualified under those laws to accept custody of securities.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Agent” includes a subcustodian.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>A domestic insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A dental plan organization;</text> </paragraph> <paragraph num="(d)"> <text>A health maintenance organization; or</text> </paragraph> <paragraph num="(e)"> <text>A managed care organization.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Clearing Corporation.</text> <paragraph num="(a)"> <text>“Clearing corporation” means:</text> <paragraph num="(i)"> <text>A corporation, as defined in Commercial Law Article, §8-102(a)(5), Annotated Code of Maryland, that is organized for the purpose of effecting transactions in securities by computerized book-entry; or</text> </paragraph> <paragraph num="(ii)"> <text>With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a corporation that is organized or existing under the laws of a foreign country and that is legally qualified under those laws to effect transactions in securities by computerized book-entry.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Clearing corporation” includes:</text> <paragraph num="(i)"> <text>Treasury Direct; and</text> </paragraph> <paragraph num="(ii)"> <text>The Treasury/Reserve Automated Debt Entry System.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Custodian” means a qualified bank, qualified broker/dealer, or clearing corporation that:</text> <paragraph num="(a)"> <text>Accepts deposits of securities from carriers; and</text> </paragraph> <paragraph num="(b)"> <text>Safeguards, holds, and reports on the securities under a written custodial agreement with the carrier.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Custodied securities” means securities held:</text> <paragraph num="(a)"> <text>By a custodian or its agent; or</text> </paragraph> <paragraph num="(b)"> <text>In a clearing corporation.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Qualified bank” means:</text> <paragraph num="(a)"> <text>A bank, trust company, or federal home loan bank that:</text> <paragraph num="(i)"> <text>At all times during which it acts as a custodian under this chapter is not less than adequately capitalized as determined by the standards adopted by United States banking regulators;</text> </paragraph> <paragraph num="(ii)"> <text>Is regulated by either state banking laws or is a member of the Federal Reserve System; and</text> </paragraph> <paragraph num="(iii)"> <text>Is legally qualified to accept custody of securities in accordance with this chapter; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a bank or trust company incorporated or organized under the laws of a country other than the United States that:</text> <paragraph num="(i)"> <text>Is regulated as a bank or trust company by that country's government or an agency of that country's government;</text> </paragraph> <paragraph num="(ii)"> <text>At all times during which it acts as a custodian under this chapter is not less than adequately capitalized as determined by the standards adopted by international banking authorities; and</text> </paragraph> <paragraph num="(iii)"> <text>Is legally qualified to accept custody of securities.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Qualified broker/dealer” means a securities firm that:</text> <paragraph num="(a)"> <text>Has a tangible net worth of at least $250,000,000 as evidenced by its most recent audited financial statement;</text> </paragraph> <paragraph num="(b)"> <text>Is registered with and subject to the jurisdiction of the Securities and Exchange Commission; and</text> </paragraph> <paragraph num="(c)"> <text>Maintains at all times Securities Investor Protection Corporation excess insurance coverage equal to or greater than the market value of the carriers' securities maintained with the broker/dealer.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Registered form” has the meaning stated in Commercial Law Article, §8-102(a)(13), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>Security.</text> <paragraph num="(a)"> <text>“Security” has the meaning stated in Commercial Law Article, §8-102(a)(15), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Security” includes:</text> <paragraph num="(i)"> <text>A certificated security as defined by Commercial Law Article, §8-102(a)(4), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>An uncertificated security as defined by Commercial Law Article, §8-102(a)(18), Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Treasury Direct” means the book-entry securities system:</text> <paragraph num="(a)"> <text>Established pursuant to 5 U.S.C. §301, 12 U.S.C. §391, and 31 U.S.C. Subtitle III, Chapter 31; and</text> </paragraph> <paragraph num="(b)"> <text>Governed by 31 CFR Part 357, Subpart C.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Treasury/Reserve Automated Debt Entry System (TRADES)” means the book-entry securities system:</text> <paragraph num="(a)"> <text>Established pursuant to 5 U.S.C. §301, 12 U.S.C. §391, and 31 U.S.C. Subtitle III, Chapter 31; and</text> </paragraph> <paragraph num="(b)"> <text>Governed by 31 CFR Part 357, Subpart B.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Custody Agreement; Filing with Commissioner."> <paragraph num="A."> <text>Custody Agreement.</text> <paragraph num="(1)"> <text>A carrier may not register securities in the name of a nominee or deposit securities with a custodian unless the carrier provides for the custody of the securities by entering into a written agreement with the custodian that:</text> <paragraph num="(a)"> <text>Is filed with the Commissioner pursuant to §B of this regulation; and</text> </paragraph> <paragraph num="(b)"> <text>Complies with Regulation .03 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The agreement shall be:</text> <paragraph num="(a)"> <text>In writing; and</text> </paragraph> <paragraph num="(b)"> <text>Authorized by a resolution of the board of directors of the carrier or of an authorized committee of the board.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The securities may be held:</text> <paragraph num="(a)"> <text>By the custodian or its agent; or</text> </paragraph> <paragraph num="(b)"> <text>In a clearing corporation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Filing Agreement with the Commissioner.</text> <paragraph num="(1)"> <text>A carrier that enters into a written agreement with a custodian shall file the agreement with the Commissioner within 30 days after the execution of the agreement.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner determines that a written agreement filed after execution does not comply with the requirements in Regulation .03 of this chapter, the carrier shall cure the noncompliance within:</text> <paragraph num="(a)"> <text>60 days after notification by the Commissioner; or</text> </paragraph> <paragraph num="(b)"> <text>An extended cure period authorized by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the written agreement is not cured within the time allowed by the Commissioner, the Commissioner may:</text> <paragraph num="(a)"> <text>Take any action authorized by Insurance Article, §4-113, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Require the carrier to report the securities held by the custodian in accordance with the terms of the noncompliant custody agreement as “Assets—Not Admitted”.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Terms of Custody Agreement."> <paragraph num="A."> <text>The terms of a custody agreement shall comply with the requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Certificated securities held by the custodian shall be held separate from the securities of the custodian and of all of its other customers.</text> </paragraph> <paragraph num="C."> <text>Identification of Securities on Custodian's Records.</text> <paragraph num="(1)"> <text>Securities held indirectly by the custodian and securities in a clearing corporation shall be separately identified on the custodian's official records as being owned by the carrier.</text> </paragraph> <paragraph num="(2)"> <text>The records shall identify which custodied securities are held by the custodian or its agent and which securities are in a clearing corporation or in the Federal Reserve book-entry system.</text> </paragraph> <paragraph num="(3)"> <text>If the securities are in a clearing corporation, the records also shall identify:</text> <paragraph num="(a)"> <text>Where the securities are;</text> </paragraph> <paragraph num="(b)"> <text>If in a clearing corporation, the name of the clearing corporation; and</text> </paragraph> <paragraph num="(c)"> <text>If through an agent, the name of the agent.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>All custodied securities that are in registered form shall be registered:</text> <paragraph num="(1)"> <text>In the name of the carrier or in the name of a nominee of the carrier;</text> </paragraph> <paragraph num="(2)"> <text>In the name of the custodian or a nominee of the custodian; or</text> </paragraph> <paragraph num="(3)"> <text>If in a clearing corporation, in the name of the clearing corporation or a nominee of the clearing corporation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Withdrawal of Securities.</text> <paragraph num="(1)"> <text>Except as provided in §E(2) of this regulation, custodied securities shall be:</text> <paragraph num="(a)"> <text>Held subject to the instructions of the carrier; and</text> </paragraph> <paragraph num="(b)"> <text>Withdrawable on demand of the carrier.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Custodied securities used to meet the deposit requirements set forth in Insurance Article, §4-106, Annotated Code of Maryland, shall be under the control of the Commissioner and may not be withdrawn by the carrier without the approval of the Commissioner.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The custodian shall:</text> <paragraph num="(1)"> <text>Send or cause to be sent to the carrier a confirmation of all transfers of custodied securities to or from the account of the carrier; and</text> </paragraph> <paragraph num="(2)"> <text>Furnish, not less than monthly, the carrier with reports of holdings of custodied securities at times and containing information reasonably requested by the carrier.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Provision of Information to the Commissioner.</text> <paragraph num="(1)"> <text>The custodian shall be authorized and instructed by the carrier to honor any requests made by the Commissioner for information concerning the carrier's custodied securities.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may, from time to time, request, and the custodian shall furnish, a detailed listing of the carrier's custodied securities.</text> </paragraph> <paragraph num="(3)"> <text>The custodian also shall provide an affidavit certifying the custodian's safekeeping responsibilities relative to the custodied securities.</text> </paragraph> <paragraph num="(4)"> <text>The custodian's response to a request for information from the Commissioner shall:</text> <paragraph num="(a)"> <text>Be made directly to the Commissioner; and</text> </paragraph> <paragraph num="(b)"> <text>Encompass all of the carrier's custodied securities.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>The custodian and its agents shall send to the carrier:</text> <paragraph num="(1)"> <text>All reports that they receive from a clearing corporation on their respective systems of internal accounting control; and</text> </paragraph> <paragraph num="(2)"> <text>Reports prepared by outside auditors on the custodian's or its agent's internal accounting control of custodied securities that the carrier reasonably may request.</text> </paragraph> </paragraph> <paragraph num="I."> <text>The custodian shall maintain:</text> <paragraph num="(1)"> <text>Records sufficient to demonstrate and verify information relating to custodied securities that may be reported in the carrier's annual statement; and</text> </paragraph> <paragraph num="(2)"> <text>Supporting schedules and information required in an audit of the financial statements of the carrier.</text> </paragraph> </paragraph> <paragraph num="J."> <text>On written request from an appropriate officer of the carrier, the custodian shall provide the appropriate affidavits, substantially in a form designated by the Commissioner, with respect to custodied securities.</text> </paragraph> <paragraph num="K."> <text>The custodian shall:</text> <paragraph num="(1)"> <text>Secure and maintain insurance protection at levels considered reasonable and customary for the custodian industry covering the custodian's duties and activities as custodian for the carrier's assets;</text> </paragraph> <paragraph num="(2)"> <text>Describe the nature and extent of the insurance protection; and</text> </paragraph> <paragraph num="(3)"> <text>Promptly disclose to the carrier any change in the insurance protection during the term of the custodial agreement.</text> </paragraph> </paragraph> <paragraph num="L."> <text>The custodian shall indemnify the carrier for any loss of custodied securities caused by the negligence or dishonesty of the custodian.</text> </paragraph> <paragraph num="M."> <text>If there is a loss of custodied securities for which the custodian is obligated to indemnify the carrier under §L of this regulation, the custodian promptly shall replace:</text> <paragraph num="(1)"> <text>The securities or the value of the securities; and</text> </paragraph> <paragraph num="(2)"> <text>The value of any loss of rights or privileges resulting from the loss of securities.</text> </paragraph> </paragraph> <paragraph num="N."> <text>The agreement may provide that the custodian is not liable for failure to take an action required under the agreement in the event and to the extent that the taking of the action is prevented or delayed by:</text> <paragraph num="(1)"> <text>War (whether declared or not and including existing wars), revolution, insurrection, riot, or civil commotion;</text> </paragraph> <paragraph num="(2)"> <text>Act of God, accident, fire, or explosion;</text> </paragraph> <paragraph num="(3)"> <text>Stoppage of labor, strikes, or other differences with employees;</text> </paragraph> <paragraph num="(4)"> <text>Laws, regulations, orders, or other acts of any governmental authority; or</text> </paragraph> <paragraph num="(5)"> <text>Any other cause beyond the custodian's reasonable control.</text> </paragraph> </paragraph> <paragraph num="O."> <text>Agreement between Custodian and Agent.</text> <paragraph num="(1)"> <text>Except as provided in §O(2) of this regulation, if the custodian gains entry in a clearing corporation through an agent, there shall be an agreement between the custodian and the agent under which the agent is subject to the same liability for loss of custodied securities as the custodian.</text> </paragraph> <paragraph num="(2)"> <text>If the agent is subject to regulation under the laws of a different jurisdiction than the custodian, the Commissioner may accept a standard of liability applicable to the agent that is different from the standard of liability applicable to the custodian.</text> </paragraph> </paragraph> <paragraph num="P."> <text>Notice of Termination or Withdrawal.</text> <paragraph num="(1)"> <text>The custodian shall provide written notification to the Commissioner if:</text> <paragraph num="(a)"> <text>The custodial agreement with the carrier has been terminated; or</text> </paragraph> <paragraph num="(b)"> <text>100 percent of the account assets in any one custody account have been withdrawn.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The notification shall be given to the Commissioner within 3 business days after:</text> <paragraph num="(a)"> <text>The receipt by the custodian of the carrier's written notice of termination; or</text> </paragraph> <paragraph num="(b)"> <text>The withdrawal of 100 percent of the account assets.</text> </paragraph> </paragraph> </paragraph> <paragraph num="Q."> <text>The agreement shall provide that the use of an agent by a custodian does not alter the custodian's obligations under the agreement and that the terms of the agreement may not be modified by the terms of any agreement between the custodian and the agent.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Existing Agreements."> <paragraph num="A."> <text>Compliance and Certification Required. For an existing custody agreement entered into before the effective date of this chapter, a carrier shall:</text> <paragraph num="(1)"> <text>Bring the existing custody agreement into compliance with the requirements of Regulation .03 of this chapter by the earlier of:</text> <paragraph num="(a)"> <text>The renewal date of the custody agreement; or</text> </paragraph> <paragraph num="(b)"> <text>12 months after the effective date of this chapter; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Certify to the Commissioner that the existing custody agreement has been brought into compliance with the requirements of Regulation .03 of this chapter by the earlier of:</text> <paragraph num="(a)"> <text>30 days after the renewal date of the custody agreement; or</text> </paragraph> <paragraph num="(b)"> <text>12 months after the effective date of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Form of Certification. The certification required by §A of this regulation shall be:</text> <paragraph num="(1)"> <text>Signed by an officer of the carrier; and</text> </paragraph> <paragraph num="(2)"> <text>In the following form:</text> </paragraph> <aftertext>Name _________________________</aftertext> </paragraph> <paragraph num="C."> <text>Failure to Comply.</text> <paragraph num="(1)"> <text>If the Commissioner determines that an existing custody agreement has not been brought into compliance with the requirements of Regulation .03 of this chapter within 12 months after the effective date of this chapter, the carrier shall cure the noncompliance within:</text> <paragraph num="(a)"> <text>60 days after notification by the Commissioner; or</text> </paragraph> <paragraph num="(b)"> <text>An extended cure period authorized by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the custody agreement is not cured within the time allowed by the Commissioner, the Commissioner may:</text> <paragraph num="(a)"> <text>Take any action authorized by Insurance Article, §4-113, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Require the carrier to report the securities held by the custodian in accordance with the terms of the noncompliant custody agreement as “Assets—Not Admitted”.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 4-115; Health-General Article, §§15-102.3 and 19-728; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 15, 1978</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 6, 1995 (22:22 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01 and .02 repealed and new Regulations .01—.03 adopted effective September 22, 1997 (24:19 Md. R. 1339)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.16 to COMAR 31.04.09 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03, Registration of Securities in the Names of Nominees and the Deposit of Securities in Depository Trust Company, repealed and Regulations .01—.04, Custody Agreements and the Use of Clearing Corporations and Federal Reserve Book-Entry System, adopted effective April 26, 2004 (31:8 Md. R. 648)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended as an emergency provision effective August 11, 2004 (31:18 Md. R. 1349); amended permanently effective November 8, 2004 (31:22 Md. R. 1598)</annotation> </annotations> </chapter> <chapter num="10" heading="Domestic Insurers—Insider Trading"> <regulation prefix="Regulation" num=".01" heading="General."> <text>The purchase and sale of equity securities issued by domestic stock insurance companies or their affiliates by the beneficial owners, directors, or officers of these companies are subject to regulation under these regulations. In respect of “short-swing” purchase and sale, or sale and purchase, of equity securities by persons regulated by Insurance Article, §3-119, Annotated Code of Maryland, the basic purpose is to prevent “insiders” from retaining profits realized on the equity securities, usually stocks, on the basis of information not available to others but Insurance Article, §3-119, Annotated Code of Maryland, is so worded as to apply whether or not in a particular transaction the “insider” has any “inside” information and without consideration of any intention he may have as to holding the security bought or repurchasing the security sold.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Conformity to Federal Rule."> <text>Any beneficial owners, directors, or officers of the insurer satisfying the requirements of the U.S. Securities & Exchange Commission on insider trading (see SEC reg. 240.16b-1 et seq.) will be considered to have complied with the “insider” provisions and requirements of this chapter and of Insurance Article, §3-119(e), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Certain Transactions Effected in Connection with a Distribution."> <paragraph num="A."> <text>Any transaction of purchase and sale, or sale and purchase, of a security which is effected in connection with the distribution of a substantial block of securities shall be exempt from the provisions of Insurance Article, §3-119(e), Annotated Code of Maryland, to the extent specified in this chapter, as not comprehended within the purpose of Insurance Article, §3-119(e), upon the following conditions:</text> <paragraph num="(1)"> <text>The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of this business, in the distribution of the block of securities;</text> </paragraph> <paragraph num="(2)"> <text>The security involved in the transaction is:</text> <paragraph num="(a)"> <text>A part of the block of securities and is acquired by the person effecting the transaction, with a view to distribution thereof, from the issuer or other person on whose behalf the securities are being distributed or from a person who is participating in good faith in the distribution of the block of securities; or</text> </paragraph> <paragraph num="(b)"> <text>A security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with the distribution: and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Other persons not within the purview of Insurance Article, §3-119(e), Annotated Code of Maryland, are participating in the distribution of the block of securities on terms at least as favorable as those on which the person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of Insurance Article, §3-119(e), by this section of this regulation. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing these functions may not preclude an exemption which would otherwise be available under this section of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The exemption of a transaction pursuant to this regulation with respect to the participation therein of one party thereto may not render the transaction exempt with respect to participation of any other party therein unless the other party also meets the conditions of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Acquisitions of Shares of Stock and Stock Options under Certain Stock Bonus, Stock Option, or Similar Plans."> <text>Any acquisition of shares of stock (other than stock acquired upon the exercise of an option, warrant, or right) pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings or similar plan, or any acquisition of a qualified or a restricted stock option plan, or a stock option pursuant to an employees' stock purchase plan, by a director or officer of the issuer of the stock or stock option shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland, if the plan meets the following conditions:</text> <paragraph num="A."> <text>The plan has been approved, directly or indirectly, by the affirmative votes of the holders of a majority of the securities of the issuer present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of Maryland, or by the written consent of the holders of a majority of the securities of the issuer entitled to vote. However, if the vote or written consent was not solicited substantially in accordance with the proxy rules and regulations prescribed by the National Association of Insurance Commissioners, if any, in effect at the time of the vote or written consent, the issuer shall furnish in writing to the holders of record of the securities entitled to vote for the plan substantially the same information concerning the plan which would be required by the rules and regulations so prescribed and in effect at the time the information is furnished, if proxies to be voted with respect to the approval or disapproval of the plan were then being solicited, on or before the date of the first annual meeting of security holders held subsequent to the later of the date Insurance Article, §3-119, Annotated Code of Maryland, first applies to the issuer, or the acquisition of an equity security for which exemption is claimed. The written information may be furnished by mail to the last known address of the security holders of record within 30 days before the date of mailing. Four copies of the written information shall be filed with, or mailed for filing to, the Insurance Commissioner not later than the date on which it is first sent or given to security holders of the issuer. For the purposes of this section, the term “issuer” includes a predecessor corporation if the plan or obligations to participate thereunder were assumed by the insurer in connection with the succession.</text> </paragraph> <paragraph num="B."> <text>If the selection of any director or officer of the issuer to whom stock may be allocated or to whom qualified, restricted, or employee stock purchase plan stock options may be granted pursuant to the plan, or the determination of the number or maximum number of shares of stock which may be allocated to the director or officer or which may be covered by qualified, restricted, or employee stock purchase plan stock options granted to the director or officer, is subject to the discretion of any person, then the discretion shall be exercised only as follows:</text> <paragraph num="(1)"> <text>With respect to the participation of directors:</text> <paragraph num="(a)"> <text>By the board of directors of the issuer, a majority of which board and a majority of the directors acting in the matter are disinterested persons;</text> </paragraph> <paragraph num="(b)"> <text>By, or only in accordance with the recommendation of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons; or</text> </paragraph> <paragraph num="(c)"> <text>Otherwise in accordance with the plan, if the plan:</text> <paragraph num="(i)"> <text>Specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted to directors and the terms upon which, and the times at which, or the periods within which, the stock may be acquired or the options may be acquired and exercised; or</text> </paragraph> <paragraph num="(ii)"> <text>Sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the issuer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>With respect to the participation of officers who are not directors:</text> <paragraph num="(a)"> <text>By the board of directors of the issuer or a committee of three or more directors; or</text> </paragraph> <paragraph num="(b)"> <text>By, or only in accordance with the recommendation of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>For the purpose of this section a director or committee member shall be deemed to be a disinterested person only if that person is not at the time the discretion is exercised eligible and has not at any time within 1 year prior thereto been eligible for selection as a person to whom stock may be allocated or to whom qualified, restricted, or employee stock purchase plan stock options may be granted pursuant to the plan or any other plan of the issuer or any of its affiliates entitling the participants in the plan to acquire stock or qualified, restricted, or employee stock purchase plan stock options of the issuer or any of its affiliates.</text> </paragraph> <paragraph num="(4)"> <text>The provisions of this section do not apply with respect to any option granted, or other equity security acquired, before the date that Insurance Article, §3-119, Annotated Code of Maryland, first became applicable with respect to any class of equity security of the issuer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>As to each participant or as to all participants, the plan effectively limits the aggregate dollar amount or the aggregate number of shares of stock which may be allocated, or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted, pursuant to the plan. The limitations may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date and may be determined either by fixed or maximum dollar amounts or fixed or maximum number of shares or by formulas based upon earnings of the issuer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages of shares outstanding from time to time, or similar factors which will result in an effective and determinable limitation. Limitations may be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding thereunder to prevent dilution or enlargement of rights.</text> </paragraph> <paragraph num="D."> <text>Unless the context otherwise requires, all terms used in this regulation shall have the same meaning as in Insurance Article, Annotated Code of Maryland. In addition, the following definitions apply:</text> <paragraph num="(1)"> <text>“Plan” includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one time.</text> </paragraph> <paragraph num="(2)"> <text>“Qualified stock option” and “employee stock purchase plan” that are set forth in §§422 and 423 of the Internal Revenue Code of 1954, as amended, are to be applied to those terms when used in this chapter. The term “restricted stock option” as defined in §424(b) of the Internal Revenue Code of 1954, as amended, shall be applied to that term as used in this chapter, provided, however, that for the purposes of this chapter an option which meets all of the conditions of that section other than the date of issuance shall be deemed to be a “restricted stock option.”</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Certain Transactions in which Securities Are Received by Redeeming Other Securities."> <text>Any acquisition of an equity security (other than a convertible security or right to purchase a security) by a director or officer of the issuer issuing the security shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland, upon condition that:</text> <paragraph num="A."> <text>The equity security is acquired by way of redemption of another security of an issuer substantially all of whose assets other than cash (or government bonds) consist of securities of the issuer of the equity security so acquired, and which:</text> <paragraph num="(1)"> <text>Represented substantially and in practical effect a stated or readily ascertainable amount of the equity security;</text> </paragraph> <paragraph num="(2)"> <text>Had a value which was substantially determined by the value of the equity security; and</text> </paragraph> <paragraph num="(3)"> <text>Conferred upon the holder the right to receive the equity security without the payment of any consideration other than the security redeemed;</text> </paragraph> </paragraph> <paragraph num="B."> <text>No security of the same class as the security redeemed was acquired by the director or officer within 6 months before the redemption or is acquired within 6 months after the redemption;</text> </paragraph> <paragraph num="C."> <text>The issuer of the equity security acquired has recognized the applicability of §A of this regulation by appropriate corporate action.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Long-Term Profits Incident to Sales within 6 Months of the Exercise of an Option."> <paragraph num="A."> <text>To the extent specified in §B of this regulation, the Insurance Commissioner hereby exempts as not comprehended within the purposes of Insurance Article, §3-119(e), Annotated Code of Maryland, any transaction or transactions involving the purchase and sale, or sale and purchase, of any equity security if the purchase is pursuant to the exercise of an option or similar right either acquired:</text> <paragraph num="(1)"> <text>More than 6 months before its exercise; or</text> </paragraph> <paragraph num="(2)"> <text>Pursuant to the terms of an employment contract entered into more than 6 months before its exercise.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In respect of transactions specified in §A of this regulation, the profits inuring to the issuer may not exceed the difference between the process of the sale and the lowest market price of any security of the same class within 6 months before or after the date of sale. Nothing in this section shall be deemed to enlarge the amount of profit which would inure to the issuer in the absence of this regulation.</text> </paragraph> <paragraph num="C."> <text>The Insurance Commissioner also hereby exempts, as not comprehended within the purposes of Insurance Article, §3-119(e), Annotated Code of Maryland, the disposition of a security, purchased in a transaction specified in §A of this regulation pursuant to a plan or agreement for merger or consolidation, or reclassification of the issuer's securities, or for the exchange of its securities for the securities of another person which has acquired its assets, or which is in control, as defined in §368(c) of the Internal Revenue Code of 1954, of a person which has acquired its assets, when the terms of the plan or agreement are binding upon all stockholders of the issuer except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings.</text> </paragraph> <paragraph num="D."> <text>The exemptions provided by this regulation may not apply to any transaction made unlawful by Insurance Article, §3-119(f), Annotated Code of Maryland, or by any regulations thereunder.</text> </paragraph> <paragraph num="E."> <text>The burden of establishing the market price of a security for the purpose of this regulation shall rest upon the person claiming the exemption.</text> </paragraph> <paragraph num="F."> <text>The exemption granted pursuant to this regulation shall apply to any liability under Insurance Article, §3-119(e), Annotated Code of Maryland, existing at or after the effective date of this regulation, but may not be deemed to affect judgments rendered before that date.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Certain Acquisitions and Dispositions of Securities Pursuant to Merger or Consolidations."> <paragraph num="A."> <text>The following transactions shall be exempt from the provisions of Insurance Article, §3-119(e), Annotated Code of Maryland, as not comprehended within the purpose of that statute:</text> <paragraph num="(1)"> <text>The acquisition of a security of an issuer pursuant to a merger or consolidation, in exchange for a security of a company which, before the merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except in the case of consolidation the resulting company;</text> </paragraph> <paragraph num="(2)"> <text>The disposition of a security, pursuant to a merger or consolidation of an issuer which, before the merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except in the case of consolidation, the resulting company;</text> </paragraph> <paragraph num="(3)"> <text>The acquisition of a security of an issuer pursuant to a merger or consolidation, in exchange for a security of a company which, before the merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values before the merger or consolidation as determined by reference to their most recent available financial statements for a 12-month period before the merger or consolidation; or</text> </paragraph> <paragraph num="(4)"> <text>The disposition of a security, pursuant to a merger or consolidation, of an issuer which, before the merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values before the merger or consolidation, as determined by reference to their most recent available financial statements for a 12-month period before the merger or consolidation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A merger within the meaning of this regulation shall include the sale or purchase of substantially all the assets of one issuer by another in exchange for stock which is then distributed to the security holders of the issuer which sold its assets.</text> </paragraph> <paragraph num="C."> <text>Notwithstanding the foregoing, if an officer, director, or stockholder shall make any purchase (other than a purchase exempted by this chapter or any other regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this chapter or any other regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, of a security in any other company involved in the merger or consolidation within any period of less than 6 months during which the merger or consolidation took place, the exemption provided by this regulation shall be unavailable to the officer, director, or stockholder to the extent of the purchase and sale.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Transactions Involving the Deposit or Withdrawal of Equity Securities under a Voting Trust or Deposit Agreement."> <text>Any acquisition or disposition of an equity security involved in the deposit of the security under, or the withdrawal of the security from, a voting trust or deposit agreement, and the acquisition or disposition in connection therewith of the certificate representing the security, shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland, if substantially all of the assets held under the voting trust or deposit agreement immediately after the deposit or immediately before the withdrawal, as the case may be, consisted of equity securities of the same class as the security deposited or withdrawn. However, this regulation does not apply to the extent that there shall have been either:</text> <paragraph num="A."> <text>A purchase of an equity security of the class deposited and a sale of any certificate representing an equity security of the class; or</text> </paragraph> <paragraph num="B."> <text>A sale of an equity security of the class deposited and a purchase of any certificate representing an equity security of the class (otherwise than in a transaction involved in the deposit or withdrawal or in a transaction exempted by any other section of any regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, within a period of less than 6 months which includes the date of the deposit or withdrawal.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Exemption from Insurance Article, §3-119(e), Annotated Code of Maryland, of Transactions Involving the Conversion of Equity Securities."> <paragraph num="A."> <text>Any acquisition or disposition of an equity security involved in the conversion of an equity security which, by its terms or pursuant to the terms of the corporate charter or other governing instruments, is convertible immediately or after a stated period of time into another equity security of the same issuer, shall be exempt from the operation of Insurance Article, §3-119(e), Annotated Code of Maryland. However, this regulation does not apply to the extent that there shall have been either:</text> <paragraph num="(1)"> <text>A purchase of any equity security of the class convertible (including any acquisition of or change in a conversion privilege) and a sale of any equity security of the class issuable upon conversion; or</text> </paragraph> <paragraph num="(2)"> <text>A sale of any equity security of the class convertible and any purchase of any equity security issuable upon conversion (otherwise than in a transaction involved in the conversion or in a transaction exempted by any other section of any regulation under Insurance Article, §3-119(e), Annotated Code of Maryland, within a period of less than 6 months which includes the date of conversion.</text> </paragraph> </paragraph> <paragraph num="B."> <text>For the purpose of this regulation an equity security is not deemed to be acquired or disposed of upon conversion of an equity security if the terms of the equity security converted require the payment or entail the receipt, in connection with the conversion, of cash or other property (other than equity securities involved in the conversion) equal in value at the time of conversion to more than 15 percent of the value of the equity security issued upon conversion.</text> </paragraph> <paragraph num="C."> <text>For the purpose of this regulation an equity security shall be deemed convertible if it is convertible at the option of the holder or of some other person or by operation of the terms of the security or the governing instrument.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 3-119, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 15, 1969</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.38 to COMAR 31.04.10 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="11" heading="Newspaper Advertisements by Unauthorized Insurers" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 9, 1969</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.24 to COMAR 31.04.11 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective January 15, 2007 (34:1 Md. R. 32)</annotation> </annotations> </chapter> <chapter num="12" heading="Insurer Transactions With Unappointed Persons—General Business Practices"> <regulation prefix="Regulation" num=".01" heading="Methodology."> <text>The methodology in Regulation .02 of this chapter shall be used to determine whether an insurer has engaged in accepting business from a person who does not have an appointment from the insurer with such frequency as to constitute a general business practice within the meaning of Insurance Article, §4-113(b)(11), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Frequency of Practice."> <text>It shall be considered prima facie evidence of a general business practice of violating Insurance Article, §4-113(b)(11), Annotated Code of Maryland, if in any 12-month period it is found that the number of transactions violating Insurance Article, §4-113(b)(11), by foreign insurers for policies issued to Maryland residents, or by domestic insurers for all policies written, equals or exceeds the following:</text> <paragraph num="A."> <text>Five transactions with a single person who does not have an appointment from the insurer; or</text> </paragraph> <paragraph num="B."> <text>One or more transactions with five or more people who do not have appointments from the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Overcoming the Presumption."> <text>An insurer may overcome the presumption that a general business practice of violating Insurance Article, §4-113(b)(11), Annotated Code of Maryland, exists by presenting evidence to the Commissioner relating to the insurer's intent, the nature of the violations, and any other relevant factors.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 4-113(b)(11) and (e), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 1, 1967</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter, Binders—Motor Vehicle Liability Insurance, repealed effective</annotation> <annotation type="History" subtype="Administrative History">December 26, 1988 (15:26 Md. R. 2982)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03, Insurer Transactions with Unappointed Persons—General Business Practices, adopted effective March 16, 1992 (19:5 Md. R. 576)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.47 to COMAR 31.04.12 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="13" heading="Insurance-Producer-Controlled Business"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>These regulations are applicable to the written contract provisions that are required within an insurance-producer-controlled holding company system involving a controlling insurance producer and a controlled authorized insurer that issues policies covered by the Property and Casualty Insurance Guaranty Corporation.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Comparable business” includes the same lines and kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business.</text> </paragraph> <paragraph num="(2)"> <text>“Control”, including the terms “controlling”, “controlled by”, and “under common control with”, has the meaning stated in Insurance Article, §8-101(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Insurance holding company system” has the meaning stated in Insurance Article, §7-101(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Insurer” means an insurer described in Insurance Article, §8-102, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Terms of Contract."> <paragraph num="A."> <text>The terms of the contract required under this regulation between a controlling insurance producer and a controlled insurer within an insurance-producer-controlled holding company system shall comply with §B of this regulation.</text> </paragraph> <paragraph num="B."> <text>The contract required under this regulation shall provide at a minimum that:</text> <paragraph num="(1)"> <text>The controlled insurer may:</text> <paragraph num="(a)"> <text>Terminate the contract for cause upon written notice to the controlling insurance producer; and</text> </paragraph> <paragraph num="(b)"> <text>Suspend immediately the authority of the controlling insurance producer to write business during the pendency of any dispute regarding the termination;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The controlled insurer shall provide the controlling insurance producer with its written underwriting and rate standards, rules and procedures, manuals, and conditions for accepting or rejecting rates;</text> </paragraph> <paragraph num="(3)"> <text>The controlling insurance producer shall:</text> <paragraph num="(a)"> <text>Provide accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by or owed to the controlling insurance producer;</text> </paragraph> <paragraph num="(b)"> <text>Hold in a fiduciary capacity all funds collected for the account of the controlled insurer in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System in compliance with:</text> <paragraph num="(i)"> <text>Any applicable provisions of the Insurance Article, Annotated Code of Maryland, or regulations promulgated under that article, or</text> </paragraph> <paragraph num="(ii)"> <text>The requirements of the domiciliary jurisdiction of the controlling insurance producer, if the controlling insurance producer does not engage in business as an insurance producer in this State and is not required to hold a license in the State;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Keep a separate identifiable record of business written for the controlled insurer; and</text> </paragraph> <paragraph num="(d)"> <text>Comply with the written underwriting and rates standards, rules and procedures, manuals, and conditions established by the controlled insurer;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The controlling insurance producer may not assign the contract in whole or in part;</text> </paragraph> <paragraph num="(5)"> <text>Subject to §B(6) of this regulation, the rates, terms, and purposes of commissions, charges, and other fees of the controlling insurance producer shall be stated;</text> </paragraph> <paragraph num="(6)"> <text>The rates of the commissions, charges, and other fees may not be greater than the rates charged for placing comparable business with the controlled insurer by an insurance producer other than the controlling insurance producer;</text> </paragraph> <paragraph num="(7)"> <text>The written underwriting and rates standards, rules and procedures, manuals, and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by an insurance producer other than the controlling insurance producer;</text> </paragraph> <paragraph num="(8)"> <text>If the contract provides for a sharing of the controlled insurer's profits by the controlling insurance producer, subject to §B(9) of this regulation, the profits may not be paid until at least:</text> <paragraph num="(a)"> <text>5 years after the premiums are earned on casualty insurance; or</text> </paragraph> <paragraph num="(b)"> <text>1 year after the premiums are earned on any other insurance;</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Any profits may not be paid until the adequacy of reserves on remaining claims is verified as provided in Insurance Article, §§8-105(f) and (g), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(10)"> <text>The controlled insurer shall establish a limit on the writing of the controlling insurance producer in relation to the insurer's surplus and total writing;</text> </paragraph> <paragraph num="(11)"> <text>In regard to the limit provided for in §B(10) of this regulation, the controlled insurer:</text> <paragraph num="(a)"> <text>May establish a different limit for each line or subline of business;</text> </paragraph> <paragraph num="(b)"> <text>Shall notify the controlling insurance producer when the applicable limit is approached; and</text> </paragraph> <paragraph num="(c)"> <text>May not accept business from the controlling insurance producer if the limit is reached;</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>In regard to the limit provided for in §B(10) of this regulation, the controlling insurance producer may not place business with the controlled insurer, if it has been notified by the controlled insurer that the limit has been reached.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-116(b), 7-605, 7-701—7-704, and 10-126, Title 7, Subtitle 1, and Title 8, Subtitle 1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted as an emergency provision effective September 15, 1993 (20:20 Md. R. 1557); adopted permanently effective December 20, 1993 (20:25 Md. R. 1945)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.98 to COMAR 31.04.13 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective January 15, 2007 (34:1 Md. R. 32)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective January 15, 2007 (34:1 Md. R. 32)</annotation> </annotations> </chapter> <chapter num="14" heading="Life and Health Insurance Guaranty Corporation Coverage — Notice Requirements"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to a member insurer.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Corporation” means the Life and Health Insurance Guaranty Corporation.</text> </paragraph> <paragraph num="(2)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §9-401(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Member Insurer.</text> <paragraph num="(a)"> <text>“Member insurer” means any person authorized in this State to transact:</text> <paragraph num="(i)"> <text>Direct nongroup life insurance, health insurance, annuities (including structured settlements), and supplemental policies or contracts, or health maintenance organization business to which Title 9, Subtitle 4 of the Insurance Article applies; or</text> </paragraph> <paragraph num="(ii)"> <text>Certificates under direct group policies or contracts.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Member insurer” does not include:</text> <paragraph num="(i)"> <text>A fraternal benefit society;</text> </paragraph> <paragraph num="(ii)"> <text>A mandatory state pooling plan;</text> </paragraph> <paragraph num="(iii)"> <text>A mutual assessment company or any entity that operates on an assessment basis;</text> </paragraph> <paragraph num="(iv)"> <text>An insurance exchange; or</text> </paragraph> <paragraph num="(v)"> <text>An organization which is permitted to issue charitable gift annuity agreements.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Resident” means a person who resides in this State at the time a member insurer is determined to be an impaired insurer or an insolvent insurer, and to whom a contractual obligation is owed.</text> </paragraph> <paragraph num="(5)"> <text>“Supplemental contract” means an agreement entered into for the distribution of policy or contract proceeds.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Notice."> <paragraph num="A."> <text>A member insurer or insurance producer may not deliver a life insurance policy, a health insurance policy, a health benefit plan (including a health maintenance organization contract or group master certificate), or an annuity contract which at the time of delivery exceeds the limitations imposed under Insurance Article, §9-407(k), Annotated Code of Maryland, or which is not subject to coverage under Insurance Article, §9-403, Annotated Code of Maryland, unless the member insurer or insurance producer before or at the time of delivery provides the policyholder or contract holder the notice described in §B of this regulation. This chapter does not prohibit a member insurer or insurance producer from delivering the notice to policyholders or contract holders who have full protection afforded by the corporation.</text> </paragraph> <paragraph num="B."> <text>The notice required in §A of this regulation shall be in at least 12-point type and shall read as follows:</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 9-414, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted as an emergency provision effective February 1, 1996 (23:4 Md. R. 270); adopted permanently effective July 1, 1996 (23:13 Md. R. 943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended as an emergency provision effective July 1, 1996 (23:14 Md. R. 1004); amended permanently effective November 4, 1996 (23:22 Md. R. 1496)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.11 to COMAR 31.04.14 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 1, 2021 (48:19 Md. R. 803)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective November 1, 2021 (48:19 Md. R. 803)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective May 1, 2007 (34:1 Md. R. 33); November 1, 2021 (48:19 Md. R. 803)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective October 18, 2010 (37:21 Md. R. 1438); July 16, 2015 (42:8 Md. R. 608)</annotation> </annotations> </chapter> <chapter num="15" heading="Antifraud Plans"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish minimum standards for antifraud plans as required by Insurance Article, §27-803, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter is applicable to every authorized insurer that conducts business and writes contracts of insurance in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Antifraud plan” means antifraud plans as provided for in Insurance Article, §27-803, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Commissioner” means the Insurance Commissioner of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>Insurer.</text> <paragraph num="(a)"> <text>“Insurer” means authorized insurers and includes dental plans, fraternal benefit societies, the Maryland Automobile Insurance Fund, health maintenance organizations, nonprofit health service plans, and third party administrators.</text> </paragraph> <paragraph num="(b)"> <text>“Insurer” does not include reinsurers.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Procedures and Requirements."> <paragraph num="A."> <text>Antifraud Plan.</text> <paragraph num="(1)"> <text>This section does not apply to an insurer that has filed an antifraud plan with the Administration, and the plan has been approved by the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>An insurer authorized to write insurance business that has in force policies or certificates of insurance in this State shall institute, implement, and maintain an insurance antifraud plan.</text> </paragraph> <paragraph num="(3)"> <text>An insurer shall submit an antifraud plan within 90 days of the insurer issuing or delivering a policy or certificate of insurance in the State.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Contents of Antifraud Plan. An antifraud plan shall:</text> <paragraph num="(1)"> <text>Contain provisions for educating and training an insurer's employees in the detection of insurance fraud;</text> </paragraph> <paragraph num="(2)"> <text>Provide for methods and procedures concerning the investigation of suspicious claims; and</text> </paragraph> <paragraph num="(3)"> <text>Apply to but not be limited to:</text> <paragraph num="(a)"> <text>Claims fraud,</text> </paragraph> <paragraph num="(b)"> <text>Application fraud,</text> </paragraph> <paragraph num="(c)"> <text>Insurance producer fraud,</text> </paragraph> <paragraph num="(d)"> <text>Third-party administrator fraud, and</text> </paragraph> <paragraph num="(e)"> <text>Internal fraud.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Amendments to Antifraud Plans. Within 30 days after modifying or amending an antifraud plan, an insurer shall:</text> <paragraph num="(1)"> <text>Notify the Commissioner in writing; and</text> </paragraph> <paragraph num="(2)"> <text>Provide a copy of the revised antifraud plan showing the amendments.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Approval of Antifraud Plans and Amendments.</text> <paragraph num="(1)"> <text>The Commissioner shall review each insurer's antifraud plan and any subsequent amendments to determine compliance with:</text> <paragraph num="(a)"> <text>The requirements of Insurance Article, §27-803, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>This chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the Commissioner has not disapproved an antifraud plan or amendment within 30 days of its filing, the plan shall be deemed approved.</text> </paragraph> <paragraph num="(3)"> <text>Under §D(1) of this regulation, if the Commissioner determines that an insurer's antifraud plan and any subsequent amendment is not in compliance, the Commissioner shall disapprove the plan or amendment and send a written notice of disapproval with the reasons for disapproval to the insurer.</text> </paragraph> <paragraph num="(4)"> <text>If the insurer's antifraud plan is disapproved by the Commissioner, the insurer shall submit a new plan to the Commissioner within 60 days after the date the plan was disapproved.</text> </paragraph> </paragraph> <paragraph num="E."> <text>This regulation does not apply to third party administrators (TPAs) that only participate in federal programs and are therefore required to file a federal antifraud plan provided that:</text> <paragraph num="(1)"> <text>Such a federal antifraud plan has been filed with the Centers for Medicare & Medicaid Services;</text> </paragraph> <paragraph num="(2)"> <text>The TPA provides the federal antifraud plan at the Commissioner's request; and</text> </paragraph> <paragraph num="(3)"> <text>The TPA files a written attestation stating:</text> <paragraph num="(a)"> <text>The name of the TPA;</text> </paragraph> <paragraph num="(b)"> <text>The name and title of the employee attesting who has authority to bind the TPA;</text> </paragraph> <paragraph num="(c)"> <text>That the TPA is required to file an antifraud plan with the federal government; and</text> </paragraph> <paragraph num="(d)"> <text>The date the TPA filed the antifraud plan with the federal government.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Plan Components."> <paragraph num="A."> <text>Education/Training.</text> <paragraph num="(1)"> <text>An antifraud plan shall contain procedures for the provision of education or training, or both, to the insurer's employees regarding the detection of insurance fraud.</text> </paragraph> <paragraph num="(2)"> <text>Training in the recognition and referral of suspicious claims shall be:</text> <paragraph num="(a)"> <text>Required of new and existing claims personnel, underwriters, auditors, insurance producers, and consumer service personnel; and</text> </paragraph> <paragraph num="(b)"> <text>Offered to independent insurance producers who have appointments with the company.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>At a minimum, the educational components of antifraud plans shall address the following:</text> <paragraph num="(a)"> <text>Courses of instruction shall be:</text> <paragraph num="(i)"> <text>Designed to address specific aspects of fraud associated with a company's product line, and</text> </paragraph> <paragraph num="(ii)"> <text>At least 2 hours in duration;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Personnel shall be presented with updated material at the entrance level and at least once every 2 years in conjunction with continuing education standards or as a company policy;</text> </paragraph> <paragraph num="(c)"> <text>A new employee shall receive the regulated education and training regarding the detection of fraud within 6 months of the effective date of employment; and</text> </paragraph> <paragraph num="(d)"> <text>Training programs may be developed and conducted either by internal personnel or by outside contractors.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Detection.</text> <paragraph num="(1)"> <text>An antifraud plan shall have provisions regarding the early detection of all areas of fraud including, but not limited to:</text> <paragraph num="(a)"> <text>Embezzlement and internal theft;</text> </paragraph> <paragraph num="(b)"> <text>Underwriting and application fraud;</text> </paragraph> <paragraph num="(c)"> <text>Theft and misappropriation of premiums by insurance producers;</text> </paragraph> <paragraph num="(d)"> <text>Claims fraud; and</text> </paragraph> <paragraph num="(e)"> <text>Application fraud.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The antifraud plan shall delineate the methods or approaches, or both, that will be utilized in detecting fraud.</text> </paragraph> <paragraph num="(3)"> <text>An authorized insurer shall:</text> <paragraph num="(a)"> <text>Designate an individual or individuals, or a specific unit, either in-house or outside, to be responsible for coordinating the detection, referral, and investigation of suspected fraudulent activity;</text> </paragraph> <paragraph num="(b)"> <text>Include the designation in the antifraud plan; and</text> </paragraph> <paragraph num="(c)"> <text>Submit amendments to the designation to the Administration.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Fraud detection guides shall be prepared, published, and maintained to assist claims personnel, underwriters, and insurance producers in the identification, detection, and handling of suspicious claims.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Investigation.</text> <paragraph num="(1)"> <text>An antifraud plan shall contain:</text> <paragraph num="(a)"> <text>Procedures for handling fraud complaints;</text> </paragraph> <paragraph num="(b)"> <text>Procedures that are to be followed when instances of suspected fraud have been detected, evaluated, and found to warrant a full investigation;</text> </paragraph> <paragraph num="(c)"> <text>The requirement that the company representative responsible for the conduct and oversight of fraud investigations assign the matter for investigation;</text> </paragraph> <paragraph num="(d)"> <text>The designation of the individuals responsible for conducting investigations on behalf of the insurer including the individuals responsible for providing the notifications required by §C(1)(g) of this regulation;</text> </paragraph> <paragraph num="(e)"> <text>Guidelines and procedures for conducting investigations and cooperating with the Insurance Fraud Division or other law enforcement agency which is conducting a criminal investigation if in-house staff is utilized;</text> </paragraph> <paragraph num="(f)"> <text>Written considerations as to work product and courtroom testimony; and</text> </paragraph> <paragraph num="(g)"> <text>Guidelines and procedures for notifying the appropriate law enforcement agency, including the Insurance Fraud Division of the Administration.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Investigators.</text> <paragraph num="(a)"> <text>A company may maintain an in-house staff of investigators or contract with an outside firm.</text> </paragraph> <paragraph num="(b)"> <text>If an outside firm is used, the firm shall comply with all Maryland licensing laws and regulations to the extent that they are applicable.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Auditing.</text> <paragraph num="(1)"> <text>An antifraud plan shall contain procedures regarding the auditing of insurance producers by the company.</text> </paragraph> <paragraph num="(2)"> <text>The auditing procedures shall provide for both routine auditing and random audits.</text> </paragraph> <paragraph num="(3)"> <text>If an irregularity is discovered during an audit, the antifraud plan shall require that the duly authorized company representative who conducts or oversees investigations be notified immediately.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Referral for Prosecution.</text> <paragraph num="(1)"> <text>If an insurer, in good faith, has cause to believe that insurance fraud has been or is being committed, the insurer shall report the suspected fraud to the Insurance Fraud Division or to the appropriate federal, State, or local law enforcement authority.</text> </paragraph> <paragraph num="(2)"> <text>The reporting policy shall be in writing and maintained in the offices of the company point of contact for fraud.</text> </paragraph> <paragraph num="(3)"> <text>The written policy shall be open for inspection by market conduct examiners of the Maryland Insurance Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Reporting of Fraud-Related Data."> <paragraph num="A."> <text>An insurer shall maintain appropriate records for the Commissioner to determine the effectiveness of its antifraud plan.</text> </paragraph> <paragraph num="B."> <text>A report shall be developed and provided to the Administration on an annual basis regarding the plan's effectiveness and the effectiveness of the investigative and prosecutorial efforts.</text> </paragraph> <paragraph num="C."> <text>The report shall be filed with the Administration by March 31 of each year, reporting the previous year's statistics. The report shall be limited to Maryland data. The following information shall be reported:</text> <paragraph num="(1)"> <text>Number of policies in force;</text> </paragraph> <paragraph num="(2)"> <text>Number of claims;</text> </paragraph> <paragraph num="(3)"> <text>Number of suspected fraud cases;</text> </paragraph> <paragraph num="(4)"> <text>Number of suspected fraud cases in which a claim was denied;</text> </paragraph> <paragraph num="(5)"> <text>Number of suspected fraud cases reported to the authorities;</text> </paragraph> <paragraph num="(6)"> <text>Number of suspected fraud cases by product line;</text> </paragraph> <paragraph num="(7)"> <text>Number of suspected fraud cases in which a claim was denied, by product line;</text> </paragraph> <paragraph num="(8)"> <text>Number of cases prosecuted by criminal authorities; and</text> </paragraph> <paragraph num="(9)"> <text>Breakdown by perpetrator, as follows:</text> <paragraph num="(a)"> <text>Insured,</text> </paragraph> <paragraph num="(b)"> <text>Claimant,</text> </paragraph> <paragraph num="(c)"> <text>Insurance producer/employee,</text> </paragraph> <paragraph num="(d)"> <text>Noninsurance professional, by category, and</text> </paragraph> <paragraph num="(e)"> <text>Other.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §19-706(e); Insurance Article, §§2-109, 8-321.1, and 27-803; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.06 adopted as an emergency provision effective October 1, 1996 (23:21 Md. R. 1465); adopted permanently effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.17 to COMAR 31.04.15 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 21, 2011 (38:6 Md. R. 397); February 27, 2017 (44:4 Md. R. 255)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective March 21, 2011 (38:6 Md. R. 397)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective April 22, 2019 (46:8 Md. R. 402)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, B amended effective January 15, 2007 (34:1 Md. R. 33)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A, B, D amended effective January 15, 2007 (34:1 Md. R. 33)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective January 15, 2007 (34:1 Md. R. 33)</annotation> </annotations> </chapter> <chapter num="16" heading="Filing of Underwriting Standards"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter applies to every insurer authorized to issue insurance policies which provide health, life, disability, property, or casualty coverage in this State and to insurers applying to engage in these kinds of insurance businesses in this State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definition."> <text>“Underwriting standards” means underwriting manuals, including any amendments or supplements to underwriting manuals, and those generally accepted practices of the insurer contained in written underwriting instructions, guidelines, and rules furnished by the insurer for use by its underwriters and insurance producers as standards for acceptance of risks.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing Underwriting Standards."> <paragraph num="A."> <text>The Commissioner may require an insurer to file its underwriting standards, or any portion of its underwriting standards pertaining to specific subjects.</text> </paragraph> <paragraph num="B."> <text>The insurer shall provide the Commissioner with the information requested within 30 days after receipt of the Commissioner's request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Confidentiality."> <text>When responding to the Commissioner, an insurer may request a finding that all or certain portions of its underwriting standards shall be considered confidential commercial information under State Government Article, §10-617(d), Annotated Code of Maryland. An insurer making this request shall state the reasons for considering the material confidential commercial information. The information furnished shall be regarded as confidential until the Commissioner rules otherwise.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Record Retention."> <text>An insurer shall retain for a period of at least 3 years all records pertaining to the establishment, implementation, and enforcement of its underwriting standards.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 16, 1962</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter, Insured Paying Less Than Premium Due Under the Contract, repealed effective March 6, 1989 (16:4 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05, Filing of Underwriting Standards, adopted effective</annotation> <annotation type="History" subtype="Administrative History">February 18, 1991 (18:3 Md. R. 304)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.30 to COMAR 31.04.16 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective January 15, 2007 (34:1 Md. R. 33)</annotation> </annotations> </chapter> <chapter num="17" heading="Filing of Forms for Approval"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>The submission of any form required to be filed under Insurance Article, §§8-433(a), 12-203, 13-110(a), 14-109(3)(iv), 14-110(a)(2)(iii), 14-126, 14-405(b)(8) and (9), or 14-410(c), Annotated Code of Maryland as amended to date, shall be in compliance with the regulations in this chapter, except to the extent that a regulation or portion of a regulation is not applicable to a particular form.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A dental plan organization; or</text> </paragraph> <paragraph num="(d)"> <text>A fraternal benefit society.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>Contract on an Insert Page Basis.</text> <paragraph num="(a)"> <text>“Contract on an insert page basis” means a contract that is composed of insert pages, with each insert page being identified with a unique form number.</text> </paragraph> <paragraph num="(b)"> <text>“Contract on an insert page basis” does not include a contract that contains an insert that is identified with a unique form number and is longer than one page.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Contract on a Sectional Basis.</text> <paragraph num="(a)"> <text>“Contract on a sectional basis” means a contract that is composed of sections, with each section being identified with a unique form number.</text> </paragraph> <paragraph num="(b)"> <text>“Contract on a sectional basis” includes a contract that contains sections that are only one page long.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Form” means:</text> <paragraph num="(a)"> <text>A policy;</text> </paragraph> <paragraph num="(b)"> <text>A contract;</text> </paragraph> <paragraph num="(c)"> <text>A certificate;</text> </paragraph> <paragraph num="(d)"> <text>A rider;</text> </paragraph> <paragraph num="(e)"> <text>An endorsement; or</text> </paragraph> <paragraph num="(f)"> <text>An application.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Guaranteed renewable contract” means a health insurance contract that:</text> <paragraph num="(a)"> <text>Permits the insured to renew the contract by timely payment of premiums:</text> <paragraph num="(i)"> <text>Until 65 years old or until eligibility for Medicare; or</text> </paragraph> <paragraph num="(ii)"> <text>In the case of a contract issued after 60 years old, for at least 5 years from its date of issue; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Does not permit the carrier to make any unilateral change in any provision of the contract during the guaranteed renewability period, except that the carrier may make changes in premium rates by class.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Health insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Insured” means an individual covered under a form.</text> </paragraph> <paragraph num="(9)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Noncancellable contract” means a health insurance contract that:</text> <paragraph num="(a)"> <text>Permits the insured to renew the contract by timely payment of premiums:</text> <paragraph num="(i)"> <text>Until 65 years old or eligibility for Medicare; or</text> </paragraph> <paragraph num="(ii)"> <text>In the case of a contract issued after 60 years old, for at least 5 years from its date of issue;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Does not permit the carrier to make any unilateral change in any provisions of the contract during the period the contract is in force; and</text> </paragraph> <paragraph num="(c)"> <text>Does not permit the carrier to change the premium rate during the period the contract is in force.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Policyholder” means the individual or entity to whom the contract is issued.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing of Forms for Approval."> <paragraph num="A."> <text>Duplicate Forms Required For Nonelectronic Form Submissions.</text> <paragraph num="(1)"> <text>A carrier shall submit duplicate copies of each form the carrier intends to use in Maryland to the Commissioner for approval.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner approves the form submitted by or on behalf of the carrier, the Commissioner shall:</text> <paragraph num="(a)"> <text>Retain one copy; and</text> </paragraph> <paragraph num="(b)"> <text>Return to the carrier one copy, with an appropriate notation indicating approval.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A carrier submitting forms for approval, or premiums for forms pending approval or previously approved, shall print or type in a conspicuous manner immediately below the name of the carrier on the letter of transmittal the carrier's National Association of Insurance Commissioners (NAIC) company code number.</text> </paragraph> <paragraph num="C."> <text>A carrier shall submit the following with each form filing:</text> <paragraph num="(1)"> <text>A current transmittal form developed by:</text> <paragraph num="(a)"> <text>The Maryland Insurance Administration; or</text> </paragraph> <paragraph num="(b)"> <text>The National Association of Insurance Commissioners (NAIC);</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A filing fee in accordance with Insurance Article, §2-112, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Except for electronic form filings, a self-addressed stamped envelope; and</text> </paragraph> <paragraph num="(4)"> <text>A cover letter listing the forms submitted for approval by form number, with a brief description of each form filed for approval.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Each form shall be identified by a form number which is unique to that form. This number should be printed in the lower lefthand corner of the first page, and no other number should appear in close proximity to the form number. If any loose leaf or alternate pages are submitted in accordance with Insurance Article, §12-203(e), Annotated Code of Maryland, each page shall also be identified by a unique form number.</text> </paragraph> <paragraph num="E."> <text>Each form shall be printed in a size and style of type which is easily legible.</text> </paragraph> <paragraph num="F."> <text>If any portion of a form is in a language other than English, an English translation shall appear in the same form.</text> </paragraph> <paragraph num="G."> <text>Name of Carrier.</text> <paragraph num="(1)"> <text>Each complete form, except riders or endorsements, shall bear on the face the corporate name and either:</text> <paragraph num="(a)"> <text>The address (city and state) of the carrier; or</text> </paragraph> <paragraph num="(b)"> <text>The address of the carrier's office that will administer the form.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The name of the carrier shall appear with more prominence on a form than the name of:</text> <paragraph num="(a)"> <text>An affiliate;</text> </paragraph> <paragraph num="(b)"> <text>A producer;</text> </paragraph> <paragraph num="(c)"> <text>An underwriter;</text> </paragraph> <paragraph num="(d)"> <text>A holding company; or</text> </paragraph> <paragraph num="(e)"> <text>A third party administrator.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Modifications or Revisions.</text> <paragraph num="(1)"> <text>A carrier may modify or revise a form only through:</text> <paragraph num="(a)"> <text>Some form of press plate, such as imprinting, multigraph, mimeograph, multilith, electronic printer, or rubber stamp; or</text> </paragraph> <paragraph num="(b)"> <text>A computer generated revision.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A carrier may not modify or revise a form through handwritten or typed interlineations or deletions.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Submission of Forms.</text> <paragraph num="(1)"> <text>Except as provided in §I(2) of this regulation, a carrier shall submit forms for approval with the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>A third party may submit a form for approval on behalf of a carrier, if the third party includes a written authorization from the carrier to make the form filing.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Submission Details. If the submission is new, the carrier shall point out the unique features of the form.</text> </paragraph> <paragraph num="K."> <text>Representative Specimen Data.</text> <paragraph num="(1)"> <text>Except for applications filed for approval, a carrier shall complete each form filed for approval with representative specimen data.</text> </paragraph> <paragraph num="(2)"> <text>A carrier shall use the following specimen data for life insurance policies:</text> <paragraph num="(a)"> <text>35 years old for a policy issued at that age; and</text> </paragraph> <paragraph num="(b)"> <text>The lowest age of issue for juvenile policy forms.</text> </paragraph> </paragraph> </paragraph> <paragraph num="L."> <text>Mortality Table or Interest Rate Changes in Life Insurance or Annuity Contracts. If no other change in the contract is being filed at the same time, a carrier may file a change in the nonforfeiture basis for a previously approved contract by filing:</text> <paragraph num="(1)"> <text>Revised pages for any pages in the contract that are affected; and</text> </paragraph> <paragraph num="(2)"> <text>A revised actuarial memorandum demonstrating compliance with minimum nonforfeiture and reserve requirements.</text> </paragraph> </paragraph> <paragraph num="M."> <text>Any individual or group policy, group certificate, policy amendment, rider, or endorsement form shall have affixed the signature of a responsible officer of the carrier as part of the form.</text> </paragraph> <paragraph num="N."> <text>In the case of a life insurance policy or certificate, the carrier shall furnish a mathematical outline showing, for the specimen age and a specimen duration, computation of the:</text> <paragraph num="(1)"> <text>Net premium;</text> </paragraph> <paragraph num="(2)"> <text>Adjusted premium;</text> </paragraph> <paragraph num="(3)"> <text>Nonforfeiture factor, if different from the adjusted premium for the specimen age used; and</text> </paragraph> <paragraph num="(4)"> <text>Nonforfeiture values.</text> </paragraph> </paragraph> <paragraph num="O."> <text>Except for an annuity contract that is listed as exempt under Insurance Article, §16-501, Annotated Code of Maryland, in the case of an annuity contract, the carrier shall furnish:</text> <paragraph num="(1)"> <text>A mathematical outline showing computation of the minimum nonforfeiture amounts; and</text> </paragraph> <paragraph num="(2)"> <text>A numerical demonstration that the minimum paid-up annuity, cash surrender, or death benefits available under the contract are not less than the minimum benefits required under Insurance Article, Title 16, Subtitle 5, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Variable Materials, Insert Pages, and Contracts Comprised of Sections."> <paragraph num="A."> <text>Variable Information.</text> <paragraph num="(1)"> <text>Individual Contracts.</text> <paragraph num="(a)"> <text>Except as specified in §A(1)(b) of this regulation, a carrier may not include variable material in an individual contract, or in a form to be used with an individual contract.</text> </paragraph> <paragraph num="(b)"> <text>A carrier may include variable material in an individual contract or in a form to be used with an individual contract in the following portions of the form:</text> <paragraph num="(i)"> <text>The specifications, data, or schedule page;</text> </paragraph> <paragraph num="(ii)"> <text>The product marketing name;</text> </paragraph> <paragraph num="(iii)"> <text>The address of the carrier;</text> </paragraph> <paragraph num="(iv)"> <text>Signatures of officers of the carrier;</text> </paragraph> <paragraph num="(v)"> <text>Descriptions of copayment amounts, deductibles, coinsurance amounts, out-of-pocket limits, annual maximums, or lifetime maximums;</text> </paragraph> <paragraph num="(vi)"> <text>Specific dates, such as effective dates and termination dates; and</text> </paragraph> <paragraph num="(vii)"> <text>Descriptions of benefit amounts, benefit limits, waiting periods or elimination periods.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>If an individual contract or a form to be used with an individual contract contains variable material as permitted under §A(1)(b) of this regulation, the carrier shall:</text> <paragraph num="(i)"> <text>Bracket the variable material or otherwise mark the variable material to denote variability; and</text> </paragraph> <paragraph num="(ii)"> <text>Include a statement of variability, in duplicate, that discusses how each variable item may change.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>After an individual contract or a form to be used with an individual contract is approved with variable material, a carrier may not submit a new statement of variability to be used with the previously approved individual contract or form, except for the following:</text> <paragraph num="(i)"> <text>Copayment amounts;</text> </paragraph> <paragraph num="(ii)"> <text>Coinsurance amounts;</text> </paragraph> <paragraph num="(iii)"> <text>Deductible amounts;</text> </paragraph> <paragraph num="(iv)"> <text>Out-of-pocket limits;</text> </paragraph> <paragraph num="(v)"> <text>Annual maximums;</text> </paragraph> <paragraph num="(vi)"> <text>Lifetime maximums;</text> </paragraph> <paragraph num="(vii)"> <text>Benefit amounts;</text> </paragraph> <paragraph num="(viii)"> <text>Benefit limits;</text> </paragraph> <paragraph num="(ix)"> <text>Waiting periods; or</text> </paragraph> <paragraph num="(x)"> <text>Elimination periods.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>A carrier shall include the following with a new statement of variability filing for a previously approved individual contract or form:</text> <paragraph num="(i)"> <text>A cover letter identifying the carrier and the carrier's National Association of Insurance Commissioners company code number; and</text> </paragraph> <paragraph num="(ii)"> <text>The form number and date of approval of the form for which new variable material is being submitted.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Group Contracts.</text> <paragraph num="(a)"> <text>A carrier may include variable material in a group contract or in a form to be used with a group contract, if the carrier:</text> <paragraph num="(i)"> <text>Brackets the variable material or otherwise marks the variable material to denote variability; and</text> </paragraph> <paragraph num="(ii)"> <text>Includes a statement of variability, in duplicate, that discusses how each variable item may change, including all textual variations that are intended.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>After a group contract or a form to be used with a group contract is approved with variable material, a carrier may not submit a new statement of variability to be used with the previously approved group contract or form, except for the following:</text> <paragraph num="(i)"> <text>Copayment amounts;</text> </paragraph> <paragraph num="(ii)"> <text>Coinsurance amounts;</text> </paragraph> <paragraph num="(iii)"> <text>Deductible amounts;</text> </paragraph> <paragraph num="(iv)"> <text>Out-of-pocket limits;</text> </paragraph> <paragraph num="(v)"> <text>Annual maximums;</text> </paragraph> <paragraph num="(vi)"> <text>Lifetime maximums;</text> </paragraph> <paragraph num="(vii)"> <text>Benefit amounts;</text> </paragraph> <paragraph num="(viii)"> <text>Benefit limits;</text> </paragraph> <paragraph num="(ix)"> <text>Waiting periods; or</text> </paragraph> <paragraph num="(x)"> <text>Elimination periods.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A carrier shall include the following with a new statement of variability filing for a previously approved group contract or form:</text> <paragraph num="(i)"> <text>A cover letter identifying the carrier and the carrier's National Association of Insurance Commissioners company code number; and</text> </paragraph> <paragraph num="(ii)"> <text>The form number and date of approval of the form for which new variable material is being submitted.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Contracts with Insert Pages.</text> <paragraph num="(1)"> <text>A carrier may file for approval of a contract on an insert page basis, only if:</text> <paragraph num="(a)"> <text>Each insert page is identified by a unique form number appearing in the lower left corner of the insert page; and</text> </paragraph> <paragraph num="(b)"> <text>The carrier includes the following in the filing submission:</text> <paragraph num="(i)"> <text>A description of how the various insert pages will be combined;</text> </paragraph> <paragraph num="(ii)"> <text>A listing of the insert pages that can be substituted for other specific insert pages; and</text> </paragraph> <paragraph num="(iii)"> <text>The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each insert page with a unique form number.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A carrier may not file for approval of insert pages for use with a previously approved contract, if the previously approved contract was not approved on an insert page basis.</text> </paragraph> <paragraph num="(3)"> <text>If a carrier files for approval of insert pages for a previously approved contract, the submission shall:</text> <paragraph num="(a)"> <text>Identify by form number and date of approval any insert pages that the new insert pages will replace; and</text> </paragraph> <paragraph num="(b)"> <text>Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Contracts Comprised of Sections.</text> <paragraph num="(1)"> <text>A carrier may file for approval of a contract on a sectional basis, only if:</text> <paragraph num="(a)"> <text>Each section is identified by a unique form number appearing in the lower left corner of the first page of the section; and</text> </paragraph> <paragraph num="(b)"> <text>The carrier includes the following in the filing submission:</text> <paragraph num="(i)"> <text>A description of how the various sections will be combined;</text> </paragraph> <paragraph num="(ii)"> <text>A listing of the sections that can be substituted for other specific sections; and</text> </paragraph> <paragraph num="(iii)"> <text>The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each section with a unique form number.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A carrier may not file for approval of sections for use with a previously approved contract, if the previously approved contract was not approved on a sectional basis.</text> </paragraph> <paragraph num="(3)"> <text>If a carrier files for approval of sections for a previously approved contract, the submission shall:</text> <paragraph num="(a)"> <text>Identify by form number and date of approval any sections that the new sections will replace; and</text> </paragraph> <paragraph num="(b)"> <text>Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Failure to Respond to the Commissioner's Correspondence."> <paragraph num="A."> <text>The Commissioner shall deem a filing withdrawn by the carrier if the carrier fails to respond to correspondence from the Commissioner regarding the filing within 90 days of the date of the correspondence from the Commissioner.</text> </paragraph> <paragraph num="B."> <text>If a carrier resubmits a form for approval after 90 days of the date of the Commissioner's correspondence regarding the filing in which the form was included, the carrier shall:</text> <paragraph num="(1)"> <text>Include a new filing fee for the form and associated premium rates included in the filing; and</text> </paragraph> <paragraph num="(2)"> <text>Include in the filing all the information required in Regulation .03 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Contents of Application Forms."> <paragraph num="A."> <text>An application form shall stipulate the plan and amount of insurance and any added optional benefits being applied for.</text> </paragraph> <paragraph num="B."> <text>If the carrier uses an application form which contains language substantially as follows, “Except that no change in amount, classification, plan of insurance or benefits shall be effective unless agreed to in writing by the applicant”, with an additional statement that this exception is effective only in certain states, the form shall specifically name Maryland as one of the states in which the exception is effective.</text> </paragraph> <paragraph num="C."> <text>If an application inquires about the applicant's participation in “hazardous activities”, the application shall list the activities that are considered to be “hazardous”.</text> </paragraph> <paragraph num="D."> <text>If an application inquires about the applicant's use of “other habit-forming drugs”, the application shall list the specific drugs that are considered “habit-forming”.</text> </paragraph> <paragraph num="E."> <text>If an application contains questions regarding past or present health conditions:</text> <paragraph num="(1)"> <text>The questions shall be asked to the best of the applicant's knowledge and belief; or</text> </paragraph> <paragraph num="(2)"> <text>The application shall include a statement that all of the answers provided are representations and are not warranties.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If an application inquires about a symptom of an applicant, the question shall be asked about a “known symptom” of a physical condition or mental condition.</text> </paragraph> <paragraph num="G."> <text>If an application inquires if an applicant has had any indication of a physical condition or mental condition, the question shall be asked about a “known indication” of a physical condition or mental condition.</text> </paragraph> <paragraph num="H."> <text>Applications for Individual Insurance.</text> <paragraph num="(1)"> <text>If an application is to be used by more than one carrier, the application shall include check-off boxes to indicate the carrier to which application is being made.</text> </paragraph> <paragraph num="(2)"> <text>Each carrier using the application shall:</text> <paragraph num="(a)"> <text>File the application with the Commissioner for approval; and</text> </paragraph> <paragraph num="(b)"> <text>Receive approval of use of the application from the Commissioner before using it in Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Applications for Group Insurance.</text> <paragraph num="(1)"> <text>A group application may be used by more than one carrier if each carrier using the application shall:</text> <paragraph num="(a)"> <text>File the application with the Commissioner; and</text> </paragraph> <paragraph num="(b)"> <text>Receive approval of the application from the Commissioner before using it in Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If more than one carrier requests approval to use the same application with different group applicants, the application shall include check-off boxes to indicate the carrier to which application is being made.</text> </paragraph> <paragraph num="(3)"> <text>Group Applications for Multiple Carriers.</text> <paragraph num="(a)"> <text>A group application may be designed to be used by:</text> <paragraph num="(i)"> <text>More than one carrier;</text> </paragraph> <paragraph num="(ii)"> <text>A carrier and a health maintenance organization; or</text> </paragraph> <paragraph num="(iii)"> <text>Multiple carriers and a health maintenance organization.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A group application described in §I(3)(a) of this regulation shall clearly identify the coverage underwritten by each carrier or health maintenance organization.</text> </paragraph> </paragraph> </paragraph> <paragraph num="J."> <text>If an application is to be completed by more than one individual, the signature box in the application shall clearly indicate that the signature applies only to the portion of the application completed by that individual.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Advertising Material Within a Form."> <paragraph num="A."> <text>A form may not contain any advertising material.</text> </paragraph> <paragraph num="B."> <text>A carrier may use a marketing name, registered trademark, or logo in a form, if the logo, registered trademark, or marketing name does not mislead as to the identity of the carrier.</text> </paragraph> <paragraph num="C."> <text>A carrier may include text such as “50th Anniversary Year”, “Established over 100 Years”, or “Incorporated 1860” in a form.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Proxy."> <text>A statement may not appear in the application with respect to a proxy through which one or more members of the board of directors is authorized to vote in the election of directors.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Life Insurance Policies."> <paragraph num="A."> <text>In the case of term policies, the insurer shall indicate in clear, unambiguous language, whether or not coverage is granted if loss occurs on the term expiry date. Some examples of acceptable language are:</text> <paragraph num="(1)"> <text>If death occurs on or before the 5th anniversary of the policy, etc.;</text> </paragraph> <paragraph num="(2)"> <text>If death occurs before but not including, the 5th anniversary of the policy, etc.;</text> </paragraph> <paragraph num="(3)"> <text>This policy shall terminate on the 5th anniversary of the date of issue at 12:00 o'clock noon Standard Time at the place where the insured then resides.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In the case of a renewable term life insurance policy (that is, a term policy containing an option on the part of the policyholder to renew for one or more further periods of term insurance), the actual premiums to be charged at each renewal date shall be shown in the policy. In a policy of wholesale or group term life insurance, however, the insurer may reserve the right to change the table of renewal premiums on any policy anniversary on 30 days' notice.</text> </paragraph> <paragraph num="C."> <text>If the brief description of a policy indicates that the policy is renewable or convertible, or both, the brief description shall further indicate the term during which the policyholder may exercise the option to renew or convert, or both, unless this option may be exercised during the entire term of the policy or renewal of the policy.</text> </paragraph> <paragraph num="D."> <text>In the case of a convertible term life insurance policy issued on a participating basis, if there is a provision for the computation of the cost of change on the basis of difference in premiums (or premiums plus interest), the cost of change also shall provide for adjustment in dividends.</text> </paragraph> <paragraph num="E."> <text>If a life insurance policy contains a war or aviation exclusion, or both, a printed or stamped statement shall appear as part of the brief description on the first page of the policy reading “War Restrictions Included”, “Aviation Exclusions Included”, “War and Aviation Restrictions Included”, or any similar language approved by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="General Requirements for Forms."> <paragraph num="A."> <text>If a carrier embodies a brief description on the filing back of a form, the brief description shall be identical in language with that embodied on the first page of the form.</text> </paragraph> <paragraph num="B."> <text>An application, policy, or contract may not require a warranty of the state of health of the insured or that the good health of the insured be a condition precedent to the policy or contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Self-Destruction or Self-Inflicted Injury."> <paragraph num="A."> <text>In any group life insurance policy, or in any provisions in either a life insurance policy or a certificate relating to additional disability benefits or to additional benefits in the event of death by accident or accidental means:</text> <paragraph num="(1)"> <text>If the insurer desires to exclude self-destruction or self-inflicted injury, or both, regardless whether intentional or unintentional, language such as “self-destruction and/or self-inflicted injury, intentional or unintentional” or “self-destruction and/or self-inflicted injury, voluntary or involuntary”, should be used.</text> </paragraph> <paragraph num="(2)"> <text>If the insurer desires to exclude only suicide or intentional self-inflicted injury, or both, language such as “suicide”, “intentional self-destruction”, “voluntary self-destruction”, “intentional self-inflicted injury”, and/or “voluntary self-inflicted injury” should be used. The insurer, at its option, may also add the language “while sane or insane”.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In nonprofit health service plan forms and health insurance forms, including certificates of health insurance issued by fraternal benefit societies, the carrier may not exclude unintentional self-destruction or unintentional self-inflicted injury, but may exclude self-destruction or self-inflicted injury by an insane person.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Military Service Exclusion."> <paragraph num="A."> <text>Except as provided in §B of this regulation, a contract shall provide for a refund of premium upon request of the policyholder of pro rata unearned premium for any period during which the insured is not covered if:</text> <paragraph num="(1)"> <text>Coverage terminates for an individual when the individual enters military service; or</text> </paragraph> <paragraph num="(2)"> <text>The contract excludes any coverage while the individual is in military service.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The refund of premium requirement described in §A of this regulation does not apply to:</text> <paragraph num="(1)"> <text>A group contract;</text> </paragraph> <paragraph num="(2)"> <text>An individual contract that contains a military exclusion that applies only to loss resulting from military service while in the military service;</text> </paragraph> <paragraph num="(3)"> <text>An individual life insurance contract that provides for automatic reinstatement:</text> <paragraph num="(a)"> <text>Upon discharge from military service; or</text> </paragraph> <paragraph num="(b)"> <text>Within a stated period not exceeding 6 months after discharge; or</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>An individual health insurance or nonprofit health service plan contract, if:</text> <paragraph num="(a)"> <text>The contract is a noncancellable contract or a guaranteed renewable contract; and</text> </paragraph> <paragraph num="(b)"> <text>The contract provides for automatic reinstatement:</text> <paragraph num="(i)"> <text>Upon discharge from military service; or</text> </paragraph> <paragraph num="(ii)"> <text>Within a stated period not exceeding 6 months after discharge.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Prohibited Coverage."> <paragraph num="A."> <text>Health Insurance Coverage Prohibited in Individual Life Insurance Policies. An ordinary or industrial life insurance policy may not include a health insurance benefit, except for the following types of benefits:</text> <paragraph num="(1)"> <text>Long-term care coverage;</text> </paragraph> <paragraph num="(2)"> <text>Accidental death and dismemberment coverage;</text> </paragraph> <paragraph num="(3)"> <text>Waiver of premium for permanent disability coverage;</text> </paragraph> <paragraph num="(4)"> <text>Acceleration of death benefit for terminal illness or chronic condition;</text> </paragraph> <paragraph num="(5)"> <text>Benefits for a second opinion for health conditions specified in the policy; or</text> </paragraph> <paragraph num="(6)"> <text>Benefits that:</text> <paragraph num="(a)"> <text>Provide a lump-sum benefit for a disease specified in the policy; and</text> </paragraph> <paragraph num="(b)"> <text>Meet the requirements established by the Commissioner under Insurance Article, §15-109, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Natural Death Benefit Prohibited in Individual Health Insurance Policies.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, a health insurance policy subject to Insurance Article, Title 15, Subtitle 2, Annotated Code of Maryland, or any supplementary benefit under such a policy, may not provide a natural death benefit.</text> </paragraph> <paragraph num="(2)"> <text>A disability income policy may provide a survivor benefit, provided the survivor benefit does not exceed 3 times the last full monthly disability income benefit.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Standard Nonforfeiture Value Method."> <text>The expression “standard nonforfeiture value method” is acceptable for the description of the method of determining a cash value by deducting from the present value of future benefits, the present value of future nonforfeiture factors or adjusted premiums. When using this expression, it is necessary to state the amount of the nonforfeiture factor for the particular policy. If the nonforfeiture factor is identical with the statutory adjusted premium, the following language is acceptable if applicable: “The cash value under this policy as of any policy anniversary is the amount computed in accordance with the standard nonforfeiture value method using the adjusted premium as defined in the laws of the State in which this policy is delivered”.</text> </regulation> <regulation prefix="Regulation" num=".15" heading="Recommendations of National Association of Insurance Commissioners."> <text>The Commissioner shall be guided by recommendations made by a subcommittee of the National Association of Insurance Commissioners in those instances where:</text> <paragraph num="A."> <text>The question of the computation of minimum cash values for a particular type of policy or type of insurance coverage has been made the subject of a study by the subcommittee of the National Association of Insurance Commissioners; and</text> </paragraph> <paragraph num="B."> <text>Maryland does not have a specific regulation covering the question described in §A of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Use of Dividends."> <text>In a participating life insurance policy or certificate, if dividends may be used to purchase additional term or paid-up insurance, the policy shall specify the basis of the maximum charge for the purchase of this insurance.</text> </regulation> <regulation prefix="Regulation" num=".17" heading="Riots and Altercations."> <paragraph num="A."> <text>Life Insurance. If a life insurance form excludes liability for injury or accidental death arising out of:</text> <paragraph num="(1)"> <text>A riot, the exclusion shall be confined to cases in which the insured is participating in the riot; and</text> </paragraph> <paragraph num="(2)"> <text>An altercation, the exclusion shall be confined to cases in which the insured provoked the altercation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Health Insurance. Exclusions or limitations for riots or altercations in health insurance and nonprofit health service plan contracts shall comply with the applicable provisions found in COMAR 31.10.25.05A, COMAR 31.10.28.03A, and COMAR 31.11.10.06A.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Health Insurance—Pre-Existing Condition Exclusions."> <text>For health insurance contracts or contracts issued by a nonprofit health service plan, a carrier may not impose a pre-existing condition exclusion that exceeds 1 year if the application does not include medical questions or health history questions.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 8-433(a), 12-203(a)(1)(i) and (2) and (b), 13-110(a), 14-109(3)(iv), 14-110(a)(2)(iii)1, 14-126, 14-405(b)(8) and (9), 14-410(c), 15-904, and 16-504(e), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 1, 1967</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulations .01 and .02I amended effective September 23, 1985 (12:19 Md. R. 1848)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective July 19, 1993 (20:14 Md. R. 1169)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A-1 adopted effective July 19, 1993 (20:14 Md. R. 1169)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.45 to COMAR 31.04.17 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 25, 2005 (32:8 Md. R. 743)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03M amended effective October 1, 2019 (46:17 Md. R. 727)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03O adopted effective June 20, 2016 (43:12 Md. R. 668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13A amended effective October 3, 2011 (38:20 Md. R. 1205)</annotation> </annotations> </chapter> <chapter num="18" heading="Form Filings Under the Maryland Insurance Acquisitions Disclosure and Control Act"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>These regulations are applicable to a person subject to the notification or registration requirements of the Maryland Insurance Acquisition and Disclosure Act under Insurance Article, Title 7, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affiliate” means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person.</text> </paragraph> <paragraph num="(2)"> <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 unless the power is the result of an official position with or corporate office held by the person.</text> </paragraph> <paragraph num="(3)"> <text>Enterprise Risk.</text> <paragraph num="(a)"> <text>“Enterprise risk” means any activity, circumstance, event, or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect on the financial condition or liquidity of the insurer or its insurance holding company system as a whole.</text> </paragraph> <paragraph num="(b)"> <text>“Enterprise risk” includes anything that would:</text> <paragraph num="(i)"> <text>Cause the insurer’s risk-based capital to fall to or below a company action level under Insurance Article, Title 4, Subtitle 3, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(ii)"> <text>Cause the insurer to be in a hazardous financial condition under Insurance Article, §9-102, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Executive officer” means the chief executive officer, president, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under any other title.</text> </paragraph> <paragraph num="(5)"> <text>“Extraordinary dividend” or “extraordinary distribution” has the meaning stated in the Insurance Article, §7-706(b), Annotated Code Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Form A” means the “Statement Regarding the Acquisition of Control of or Merger with a Domestic Insurer” form filed pursuant to Insurance Article, §7-304, Annotated Code of Maryland, and Regulation .08 of this chapter.</text> </paragraph> <paragraph num="(7)"> <text>“Form B” means the “Insurance Holding Company System Annual Registration Statement” form filed pursuant to Insurance Article, §7-601, Annotated Code of Maryland, and Regulation .09 of this chapter.</text> </paragraph> <paragraph num="(8)"> <text>“Form C” means the “Summary of Changes to Registration Statement” form filed pursuant to Insurance Article, §7-601, Annotated Code of Maryland, and Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(9)"> <text>“Form D” means the “Prior Notice of a Transaction” form filed pursuant to Insurance Article, §7-703, Annotated Code of Maryland, and Regulation .12 of this chapter.</text> </paragraph> <paragraph num="(10)"> <text>“Form E” means the “Pre-Acquisition Notification Form Regarding the Potential Competitive Impact of a Proposed Merger or Acquisition by a Non-Domiciliary Insurer Doing Business in this State or by a Domestic Insurer” form filed pursuant to Insurance Article, §7-303(a) or 7-403(a), Annotated Code of Maryland, and Regulation .07 of this chapter.</text> </paragraph> <paragraph num="(11)"> <text>“Form F” means the “Enterprise Risk Report” form filed pursuant to Insurance Article, §7-603(h)(1), Annotated Code of Maryland, and Regulation .13 of this chapter.</text> </paragraph> <paragraph num="(12)"> <text>“Insurance holding company” means a person that directly or indirectly controls an insurer or controls a person that controls an insurer.</text> </paragraph> <paragraph num="(13)"> <text>“Insurance holding company system” means two or more affiliates, at least one of which is an insurer.</text> </paragraph> <paragraph num="(14)"> <text>“Lead state commissioner” means the lead state insurance commissioner of the insurance holding company system as determined by the procedures in the NAIC Financial Analysis Handbook.</text> </paragraph> <paragraph num="(15)"> <text>“NAIC” means the National Association of Insurance Commissioners.</text> </paragraph> <paragraph num="(16)"> <text>“Ordinary dividend” means any dividend or distribution of cash or other property with a fair market value that when combined with the fair market value of any other dividends or distributions made in the preceding 12 months is not an extraordinary dividend as defined in Insurance Article, §7-706(b), Annotated Code Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Subsidiary” means an affiliate of a person that, directly or indirectly, through one or more intermediaries, is controlled by that person.</text> </paragraph> <paragraph num="(18)"> <text>“Troubled insurer” means an insurer that is in or moving towards a financial position that subjects its policyholders, claimants and other creditors to greater-than-normal financial risk, including the possibility that the company may not maintain compliance with statutory capital and/or surplus requirements.</text> </paragraph> <paragraph num="(19)"> <text>“Ultimate controlling person” means the person within an insurance holding company system that is not controlled by any other person.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Adequacy of Surplus."> <text>The factors set forth in Insurance Article, §7–105(a), Annotated Code of Maryland, are not intended to be an exhaustive list for use in determining whether an insurer’s assets and surplus are reasonable in relation to the insurer’s outstanding liabilities and adequate to meet its financial needs. In applying the factors set forth in Insurance Article, §7–105(a), Annotated Code of Maryland, the Commissioner shall adhere to the following principles:</text> <paragraph num="A."> <text>The Commissioner may not deem any single factor as necessarily controlling;</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall consider the net effect of the factors, plus other factors deemed by the Commissioner to impact the financial condition of the insurer;</text> </paragraph> <paragraph num="C."> <text>In comparing the surplus maintained by other insurers, the Commissioner shall consider the extent to which each of the factors varies from company to company; and</text> </paragraph> <paragraph num="D."> <text>In determining the quality and liquidity of investments in subsidiaries, the Commissioner shall consider the individual subsidiary and may discount or disallow its valuation to the extent the individual investments so warrant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Forms — General Requirements."> <paragraph num="A."> <text>A person required to file a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, shall file the statement, form, or notification as specified in the instructions provided in this chapter, and in accordance with the format, guidelines, and instructions approved by the Commissioner. The forms are not intended to be blank forms which are to be filled in; rather, the forms are intended to be guides in the preparation of the statements. A filed statement shall contain the number and captions of all items outlined in the form, with text addressing each applicable item or a response in the negative where not applicable.</text> </paragraph> <paragraph num="B."> <text>A person filing a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter shall provide the filing, including exhibits, documents, information, and all other papers filed as part of the submission:</text> <paragraph num="(1)"> <text>Electronically to the Commissioner; or</text> </paragraph> <paragraph num="(2)"> <text>Via personal delivery or mail addressed to The Insurance Commissioner, Maryland Insurance Administration, Attention: Chief Financial Analyst, Examination & Auditing Unit, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The statement, form, or notification pursuant to §A of this regulation shall:</text> <paragraph num="(1)"> <text>Be prepared in the English language; and</text> </paragraph> <paragraph num="(2)"> <text>State monetary values in U.S. currency.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Exhibits, documents, information, and all other papers filed as part of the submission pursuant to §A of this regulation shall:</text> <paragraph num="(1)"> <text>Be easily readable;</text> </paragraph> <paragraph num="(2)"> <text>Be suitable for review and reproduction;</text> </paragraph> <paragraph num="(3)"> <text>Designate debits in credit categories and credits in debit categories so as to be clearly distinguishable on reproductions;</text> </paragraph> <paragraph num="(4)"> <text>Provide a translation into the English language if the exhibit, document, or information is in a foreign language; and</text> </paragraph> <paragraph num="(5)"> <text>Provide conversion into U.S. currency if the monetary values are in a foreign denomination.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The person submitting a filing under §B(2) of this regulation:</text> <paragraph num="(1)"> <text>Shall prepare the statements on 8-1/2 x 11 inch paper;</text> </paragraph> <paragraph num="(2)"> <text>May bind at the top or the top left-hand corner of the paper; and</text> </paragraph> <paragraph num="(3)"> <text>May provide the exhibits, documents, information, and all other papers filed as part of the submission, unless specifically prepared for the filing, in their original size paper.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A statement, form, or notification filed pursuant to Insurance Article, Title 7, Annotated Code of Maryland, shall be:</text> <paragraph num="(1)"> <text>Signed in the manner prescribed on the form; and</text> </paragraph> <paragraph num="(2)"> <text>Accompanied by a copy of the power of attorney or other authority if the signature of any person is affixed pursuant to a power of attorney or other similar authority.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Forms — Incorporation by Reference, Summaries, and Omissions."> <paragraph num="A."> <text>A person filing a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter may:</text> <paragraph num="(1)"> <text>Incorporate by reference in an answer or partial answer to:</text> <paragraph num="(a)"> <text>Information required in previously submitted or current submissions of other filings of statements, forms, or notifications pursuant to Insurance Article, Title 7, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document provided in previously submitted or current submissions of other filings of statements, forms, or notifications pursuant to Insurance Article, Title 7, Annotated Code of Maryland, provided the document is filed as an exhibit to the submission; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Provide excerpts of documents to be filed as exhibits if the documents are extensive.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Exhibits, documents, information, and all other papers filed as part of the submission of a statement, form, or notification filed within 3 years of the current filing pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter may be omitted as exhibits for the current filing.</text> </paragraph> <paragraph num="C."> <text>References to exhibits, documents, information, and all other papers filed as part of the submission of prior filings shall:</text> <paragraph num="(1)"> <text>Clearly and concisely identify the material; and</text> </paragraph> <paragraph num="(2)"> <text>Specifically indicate that such material is to be incorporated by reference for the current filing.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Incorporation by reference pursuant to §§A and C of this regulation may not be used if the incorporation would render the submission of a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, and this chapter incomplete, vague, or confusing.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Extension of Time to Provide Notification."> <paragraph num="A."> <text>If it is impractical for a person filing a statement, form, or notification pursuant to Insurance Article, Title 7, Annotated Code of Maryland, to furnish any required information, document, or report at the time it is required to be filed, the person shall file with the Commissioner a separate document:</text> <paragraph num="(1)"> <text>Identifying the information, document, or report in question;</text> </paragraph> <paragraph num="(2)"> <text>Stating why the filing thereof at the time required is impractical; and</text> </paragraph> <paragraph num="(3)"> <text>Requesting an extension of time for filing the information, document, or report to a specified date.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The request for extension shall be deemed granted unless the Commissioner denies the request in writing and within 30 business days of the receipt of the request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Pre-Acquisition Notification."> <paragraph num="A."> <text>If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to Insurance Article, §7–303(a), Annotated Code of Maryland, that person shall file with the Commissioner, at least 30 days before a transaction is proposed to become effective, a Form E, in accordance with the format, guidelines, and instructions approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The acquiring person in an acquisition subject to Insurance Article, §7-403, Annotated Code of Maryland, shall file with the Commissioner, at least 30 days before the acquisition is proposed to become effective, a Form E, in accordance with the format, guidelines, and instructions approved by the Commissioner.</text> </paragraph> <paragraph num="C."> <text>Upon request and in addition to the information provided in §A or B of this regulation, the Commissioner may require the opinion of an economist about the competitive impact of the acquisition or merger in the State, together with a summary of the education and experience of the economist indicating the economist’s ability to make an informed opinion pursuant to Insurance Article, §7–403(c)(2)(ii), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Statement of Filing for Acquisition of Control of a Domestic Insurer."> <paragraph num="A."> <text>A person seeking to acquire control of a domestic insurer pursuant to Insurance Article, §7–304, Annotated Code of Maryland, shall file with the Commissioner and provide a copy to the domestic insurer a Form A at least 60 days before a transaction is proposed to become effective, in accordance with the format, guidelines, and instructions approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>If any material change occurs in the facts set forth in the statement filed with the Commissioner and provided to the insurer in the Form A, an amendment, together with copies of any documents or other materials necessary to describe the amendment, shall be filed with the Commissioner prior to the Commissioner’s disposition on the application, and provided to the insurer within the earlier of 2 business days after:</text> <paragraph num="(1)"> <text>The change occurs; or</text> </paragraph> <paragraph num="(2)"> <text>The person that filed the statement learns of the change.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Annual Registration Statement."> <paragraph num="A."> <text>A person required to file an annual registration statement pursuant to Insurance Article, §7–601, Annotated Code of Maryland, shall file with the Commissioner a Form B, in accordance with the format, guidelines, and instructions approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Unless extended by the Commissioner for good cause, the Form B shall be filed within 15 days after the insurer becomes subject to registration and, for each subsequent year, annually on or before May 1.</text> </paragraph> <paragraph num="C."> <text>No information need be disclosed pursuant to §A of this regulation if the information is not material. Sales, purchases, exchanges, loans, or extensions of credit, investments, or guarantees involving 1/2 of 1 percent (.5 percent) or less of an insurer’s admitted assets as of the 31st day of the December next preceding may not be deemed material for the purposes of this section.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Summary of Changes to Registration Statement and Pre-Divestiture Notification."> <text>A person required to file an annual registration statement pursuant to Insurance Article, §7–601, Annotated Code of Maryland, and Regulation .09 of this chapter shall file with the Commissioner a Form C, in accordance with the format, guidelines, and instructions approved by the Commissioner, annually on or before May 1.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Disclaimers and Termination of Registration."> <paragraph num="A."> <text>A disclaimer of affiliation or a request for termination of registration claiming that a person does not, or will not upon the taking of some proposed action, control another person (hereinafter referred to as the “subject”) shall contain the following information:</text> <paragraph num="(1)"> <text>The number of authorized, issued, and outstanding voting securities of the subject;</text> </paragraph> <paragraph num="(2)"> <text>With respect to the person whose control is denied and all affiliates of such person, the number and percentage of shares of the subject’s voting securities which are held of record or known to be beneficially owned, and the number of shares concerning which there is a right to acquire, directly or indirectly;</text> </paragraph> <paragraph num="(3)"> <text>All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of such person; and</text> </paragraph> <paragraph num="(4)"> <text>A statement explaining why the person should not be considered to control the subject.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A request for termination of registration shall be deemed to have been granted unless the Commissioner, within 30 days after receipt of the request, notifies the registrant otherwise.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Transactions Subject to Prior Notice — Notice Filing and Standards."> <paragraph num="A."> <text>A person filing notice with the Commissioner of a proposed transaction pursuant to Insurance Article, Title 7, Subtitle 7, Annotated Code of Maryland, shall file a Form D, in accordance with the format, guidelines, and instructions approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Pursuant to Insurance Article, §7-702(6), Annotated Code of Maryland, agreements, including but not limited to management agreements, service contracts, tax allocation agreements, or cost-sharing agreements shall include as applicable, the following provisions:</text> <paragraph num="(1)"> <text>Identification of the person providing services and the nature of such services, managerial responsibilities, or services to be performed;</text> </paragraph> <paragraph num="(2)"> <text>The methods to allocate costs;</text> </paragraph> <paragraph num="(3)"> <text>Timely settlement, not less frequently than on a quarterly basis and compliance with the requirements in the NAIC Accounting Practices and Procedure Manual regarding expense allocation;</text> </paragraph> <paragraph num="(4)"> <text>The prohibition of the advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;</text> </paragraph> <paragraph num="(5)"> <text>The statement that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;</text> </paragraph> <paragraph num="(6)"> <text>The definition of books and records of the insurer to include all books and records developed or maintained under or related to the agreement;</text> </paragraph> <paragraph num="(7)"> <text>The statement that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;</text> </paragraph> <paragraph num="(8)"> <text>The statement that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer, and are subject to the control of the insurer;</text> </paragraph> <paragraph num="(9)"> <text>The standards for termination of the agreement with and without cause;</text> </paragraph> <paragraph num="(10)"> <text>The indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services;</text> </paragraph> <paragraph num="(11)"> <text>The statement that, if the insurer is placed in receivership or seized by the Commissioner pursuant to Insurance Article, §9-212, Annotated Code of Maryland:</text> <paragraph num="(a)"> <text>All of the rights of the insurer under the agreement extend to the receiver or the Commissioner; and</text> </paragraph> <paragraph num="(b)"> <text>All books and records will immediately be made available to the receiver or the Commissioner, and shall be turned over to the receiver or the Commissioner immediately upon the receiver’s or the Commissioner’s request;</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>The statement that if the insurer is placed in receivership pursuant to Insurance Article, §9-212, Annotated Code of Maryland the affiliate has no automatic right to terminate the agreement; and</text> </paragraph> <paragraph num="(13)"> <text>The statement that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the Commissioner pursuant to Insurance Article, §9-212, Annotated Code of Maryland, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In determining whether a transaction is fair and reasonable pursuant to Insurance Article, §7-702, Annotated Code of Maryland, the Commissioner may consider:</text> <paragraph num="(1)"> <text>Services received or provided;</text> </paragraph> <paragraph num="(2)"> <text>Whether the services provided by the affiliated entity are:</text> <paragraph num="(a)"> <text>Only being provided to other affiliated entities; or</text> </paragraph> <paragraph num="(b)"> <text>Being provided to both affiliated and nonaffiliated entities;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The cost of services received or provided, including:</text> <paragraph num="(a)"> <text>Actual cost;</text> </paragraph> <paragraph num="(b)"> <text>Market cost;</text> </paragraph> <paragraph num="(c)"> <text>Overhead charges;</text> </paragraph> <paragraph num="(d)"> <text>Profit margin; and</text> </paragraph> <paragraph num="(e)"> <text>The allocation method used to share:</text> <paragraph num="(i)"> <text>Costs of services received or provided; and</text> </paragraph> <paragraph num="(ii)"> <text>Federal income tax expenses and credits among parties to consolidated federal income tax filing agreements; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Other factors deemed necessary by the Commissioner to determine if the terms of the transaction are fair and reasonable.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Enterprise Risk Report."> <text>The ultimate controlling person of an insurer required to file an enterprise risk report under Insurance Article, §7–603(h)(1), Annotated Code of Maryland, shall:</text> <paragraph num="A."> <text>Unless extended by the Commissioner for good cause, by July 1 of each year, file with the Commissioner a properly executed Form F in accordance with the format, guidelines, and instructions approved by the Commissioner; and</text> </paragraph> <paragraph num="B."> <text>File any other document or information that the Commissioner considers necessary to identify the significant risks within the insurance holding company system that could pose enterprise risk to the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Extraordinary Dividends and Other Distributions."> <paragraph num="A."> <text>Pursuant to Insurance Article, §7-706, Annotated Code of Maryland, a domestic insurer may not pay an extraordinary dividend or make any other extraordinary distribution to its shareholders unless:</text> <paragraph num="(1)"> <text>The insurer provides notice of the declaration to the Commissioner at least 30 days before the declaration is made; and</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner has approved or not disapproved the declaration within 30 days following the notice.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The insurer shall file a written request for approval of extraordinary dividends or any other extraordinary distribution to shareholders and shall include the following in the request:</text> <paragraph num="(1)"> <text>The amount of the proposed dividend or distribution;</text> </paragraph> <paragraph num="(2)"> <text>The date proposed for the payment of the dividend or the distribution;</text> </paragraph> <paragraph num="(3)"> <text>A statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value together with an explanation of the basis for valuation;</text> </paragraph> <paragraph num="(4)"> <text>The copy of the calculations determining that the proposed dividend is extraordinary pursuant to the definition in Insurance Article, §7-706(b), Annotated Code of Maryland, which shall include the following information:</text> <paragraph num="(a)"> <text>The amounts, dates, and form of payment of all dividends or distributions of cash or other property stated at fair market value paid within the preceding 12 consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought;</text> </paragraph> <paragraph num="(b)"> <text>Surplus as regards policyholders (total capital and surplus) as of the 31st day of December of the preceding year;</text> </paragraph> <paragraph num="(c)"> <text>One of the following:</text> <paragraph num="(i)"> <text>If the insurer is a life insurer, the net gain from operations of the insurer not including realized capital gains for the 12-month-period ending December 31 of the preceding year or pro rata distributions of any class of the insurer’s own securities; or</text> </paragraph> <paragraph num="(ii)"> <text>If the insurer is not a life insurer, the net investment income not including realized capital gains for the 12-month period ending December 31 of the preceding year or pro rata distributions of any class of the insurer’s own securities; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>If the insurer is not a life insurer, the net investment income from the 3 calendar years prior to the preceding calendar year, not including realized capital gains, minus dividends paid to stockholders in the preceding 3 calendar years;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A balance sheet and statement of income for the period intervening from the last annual statement filed with the Commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and</text> </paragraph> <paragraph num="(6)"> <text>A brief statement as to the effect of the proposed dividend upon the insurer’s surplus and the reasonableness of surplus in relation to the insurer’s outstanding liabilities and the adequacy of surplus relative to the insurer’s financial needs.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Group Capital Calculation."> <paragraph num="A."> <text>Where an insurance holding company system has previously filed the annual group capital calculation required under Insurance Article, §7–603(i), Annotated Code of Maryland, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation if the lead state commissioner makes a determination based upon that filing that the insurance holding company system:</text> <paragraph num="(1)"> <text>Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than $1,000,000,000;</text> </paragraph> <paragraph num="(2)"> <text>Does not include an insurer that is domiciled outside of the United States or one of its territories;</text> </paragraph> <paragraph num="(3)"> <text>Does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework;</text> </paragraph> <paragraph num="(4)"> <text>Attests that no material changes in the transactions between insurers and non-insurers in the group have occurred since the last filing of the annual group capital; and</text> </paragraph> <paragraph num="(5)"> <text>Does not include a non-insurer that poses a material financial risk to the insurer’s ability to honor policyholder obligations.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Where an insurance holding company system has previously filed the annual group capital calculation required under Insurance Article, §7–603(i), Annotated Code of Maryland, the lead state commissioner may accept a limited group capital filing in lieu of the group capital calculation if the insurance holding company system:</text> <paragraph num="(1)"> <text>Has annual direct written and unaffiliated assumed premium (including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program) of less than $1,000,000,000;</text> </paragraph> <paragraph num="(2)"> <text>Does not include an insurer that is domiciled outside of the United States or one of its territories;</text> </paragraph> <paragraph num="(3)"> <text>Does not include a banking, depository or other financial entity that is subject to an identified regulatory capital framework;</text> </paragraph> <paragraph num="(4)"> <text>Attests that no material changes in the transactions between insurers and non-insurers in the group have occurred since the last filing of the annual group capital; and</text> </paragraph> <paragraph num="(5)"> <text>Does not include a non-insurer that poses a material financial risk to the insurer’s ability to honor policyholder obligations.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For an insurance holding company that has previously met an exemption with respect to the group capital calculation pursuant to §A or B of this regulation, the lead state commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the group capital calculation instructions adopted by the NAIC, if:</text> <paragraph num="(1)"> <text>Any insurer within the insurance holding company system is in a risk-based capital action or control level event as set forth in Insurance Article, §§4-305 through 4-308, Annotated Code of Maryland, or a similar standard for a non-U.S. insurer;</text> </paragraph> <paragraph num="(2)"> <text>Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Insurance Article, §9-102, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(3)"> <text>Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer, as determined by the lead state commissioner based on unique circumstances including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A non-U.S. jurisdiction is considered to “recognize and accept” the group capital calculation, as described in Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland, if:</text> <paragraph num="(1)"> <text>It satisfies either of the following criteria:</text> <paragraph num="(a)"> <text>The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital, by providing confirmation by a competent regulatory authority, in such jurisdiction, that insurers and insurance groups whose lead state is accredited by the NAIC under the NAIC Accreditation Program shall be subject only to worldwide prudential insurance group supervision including worldwide group governance, solvency and capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency and capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or</text> </paragraph> <paragraph num="(b)"> <text>Where no U.S. insurance groups operate in the non-U.S. jurisdiction, that non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in such jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the lead state commissioner in accordance with a memorandum of understanding or similar document between the commissioner and such jurisdiction, including but not limited to the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the NAIC, provided that the Commissioner shall determine in consultation with the NAIC committee process that the requirements of such memorandum are in force.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A list will be published through the NAIC committee process that:</text> <paragraph num="(1)"> <text>Identifies non-U.S. jurisdictions that are considered to “recognize and accept” the group capital calculation, as described in Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland to assist the lead state commissioner in determining which insurers shall file an annual group capital calculation;</text> </paragraph> <paragraph num="(2)"> <text>Clarifies those situations in which a jurisdiction is exempted from filing under Insurance Article, §7–603(i)(2)(iv)-(v), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>To assist with a determination under Insurance Article, §7–603(i)(3), Annotated Code of Maryland, identify whether a jurisdiction that is exempted under Insurance Article, §7–603(i)(2)(iii)-(v) , Annotated Code of Maryland requires a group capital filing for any U.S. based insurance group’s operations in that non-U.S. jurisdiction.</text> </paragraph> </paragraph> <paragraph num="F."> <text>For a non-U.S. jurisdiction where no U.S. insurance groups operate, the confirmation provided to meet the requirement of §D(1)(b) of this regulation will serve as support for recommendation to be published as a jurisdiction that “recognizes and accepts” the group capital calculation through the NAIC committee process.</text> </paragraph> <paragraph num="G."> <text>If the lead state commissioner makes a determination pursuant to Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland that differs from the NAIC List, the lead state commissioner shall provide thoroughly documented justification to the NAIC and other states.</text> </paragraph> <paragraph num="H."> <text>Upon determination by the lead state commissioner that a non-U.S. jurisdiction no longer meets one or more of the requirements to “recognize and accept” the group capital calculation, as described in Insurance Article, §7–603(i)(2)(v), Annotated Code of Maryland, the lead state commissioner may provide a recommendation to the NAIC that the non-U.S. jurisdiction be removed from the list of jurisdictions that “recognize and accepts” the group capital calculation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-101(jj), 2-109, 2-205, 2-209, and 5-901—5-917 and Title 7, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01 and .02 adopted as an emergency provision effective December 8, 1993 (20:26 Md. R. 2024)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01 and .02 adopted effective March 28, 1994 (21:6 Md. R. 467)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from 09.31.01 to COMAR 31.04.18 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed and new Regulation .02 adopted effective November 7, 2016 (43:16 Md. R. 901)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 6, 2025 (51:26 Md. R. 1187)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03—.14 adopted effective November 7, 2016 (43:16 Md. R. 901)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 adopted effective January 6, 2025 (51:26 Md. R. 1187)</annotation> </annotations> </chapter> <chapter num="19" heading="Filing of Forms Under File and Use Method"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <text>This chapter applies to the submission of any form required to be filed under Insurance Article, §12-203(b), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accidental death policy” means a health insurance policy that limits benefits under it to benefits that are payable upon the accidental death of an insured.</text> </paragraph> <paragraph num="(2)"> <text>“Accidental death and dismemberment policy” means a health insurance policy that limits benefits under it to benefits that are payable upon the accidental death or dismemberment of an insured.</text> </paragraph> <paragraph num="(3)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(4)"> <text>“Annuity” has the meaning defined in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>Application.</text> <paragraph num="(a)"> <text>“Application” means the form used to apply for insurance.</text> </paragraph> <paragraph num="(b)"> <text>“Application” includes:</text> <paragraph num="(i)"> <text>Group applications and enrollment forms; and</text> </paragraph> <paragraph num="(ii)"> <text>Individual applications.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>Blanket Health Insurance.</text> <paragraph num="(a)"> <text>“Blanket health insurance” has the meaning stated in Insurance Article, §15-305, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Blanket health insurance” does not include a contract or policy for which a covered individual is required to complete an application.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(8)"> <text>“Credit life insurance” has the meaning stated in Insurance Article, §13-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>Employer Retrospective Premium Arrangement.</text> <paragraph num="(a)"> <text>“Employer retrospective premium arrangement” means a rider to an employer group health insurance contract that provides that the employer may pay a negotiated reduced premium during the plan year, in accordance with a methodology approved by the Administration, with an adjustment at the end of the plan year based on the actual experience of the employer's group.</text> </paragraph> <paragraph num="(b)"> <text>“Employer retrospective premium arrangement” does not include any rider used with a small employer health benefit plan.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Expense Incurred.</text> <paragraph num="(a)"> <text>“Expense incurred” means the benefits payable under the health insurance contract are based on the medical expenses the insured incurs.</text> </paragraph> <paragraph num="(b)"> <text>For the purposes of this chapter, a health insurance contract that includes both expense incurred benefits and indemnity benefits shall be considered to be written on an expense incurred basis.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“File and use method” means the method prescribed by the Commissioner which permits an insurer to file forms prescribed in Regulation .05 of this chapter and begin using the form at the earlier of:</text> <paragraph num="(a)"> <text>30 days after the date the forms are received by the Commissioner, provided the forms are not disapproved by the Commissioner within this 30 day period; or</text> </paragraph> <paragraph num="(b)"> <text>The date the insurer receives notice from the Commissioner that the filing has been accepted.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Final disposition” means approval, disapproval or withdrawal of a form submitted for approval.</text> </paragraph> <paragraph num="(13)"> <text>Form.</text> <paragraph num="(a)"> <text>“Form” means:</text> <paragraph num="(i)"> <text>A policy;</text> </paragraph> <paragraph num="(ii)"> <text>A certificate;</text> </paragraph> <paragraph num="(iii)"> <text>A contract;</text> </paragraph> <paragraph num="(iv)"> <text>A rider;</text> </paragraph> <paragraph num="(v)"> <text>An endorsement;</text> </paragraph> <paragraph num="(vi)"> <text>An amendment; or</text> </paragraph> <paragraph num="(vii)"> <text>An application.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Form” includes:</text> <paragraph num="(i)"> <text>An insert page to a contract, if the insurer complies with the insert page filing requirements for contractsS on an insert page basis found in COMAR 31.04.17.04B; and</text> </paragraph> <paragraph num="(ii)"> <text>A section of a contract, if the insurer complies with the section filing requirements for contracts on a sectional basis found in COMAR 31.04.17.04C.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Health insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Indemnity” means the benefits payable under the health insurance contract are flat amounts that are not related to the expenses the insured incurs, such as a hospital indemnity contract that pays a flat fee for each day the insured is confined in a hospital regardless of the actual expenses the insured incurs during the hospital confinement.</text> </paragraph> <paragraph num="(17)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(18)"> <text>“Life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(19)"> <text>“Long term care insurance” has the meaning stated in Insurance Article, §18-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“Medical stop-loss insurance” has the meaning stated in Insurance Article, §15-129(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(21)"> <text>“Medicare supplement policy” has the meaning stated in Insurance Article, §15-901, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(22)"> <text>“Noncompliant” means a form is not in compliance with Maryland statutes and regulations.</text> </paragraph> <paragraph num="(23)"> <text>“Prior approval method” means the method that insurers use to file forms with the Commissioner in which the forms may not be used in Maryland by the insurer until the forms are approved by the Commissioner.</text> </paragraph> <paragraph num="(24)"> <text>“Small employer” has the meaning stated in Insurance Article, §31-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(25)"> <text>“Wholesale life insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing of Forms for Approval."> <text>Except as otherwise provided in this chapter, the filing of forms shall be in compliance with the requirements under:</text> <paragraph num="A."> <text>COMAR 31.04.17 for life and health insurance filings; and</text> </paragraph> <paragraph num="B."> <text>COMAR 31.10.01 for health insurance filings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Submission Requirements for File and Use Method."> <paragraph num="A."> <text>An insurer may request that a form filing be accepted under a file and use method.</text> </paragraph> <paragraph num="B."> <text>The cover letter included with forms filed under the file and use method shall include the following:</text> <paragraph num="(1)"> <text>A reference line that indicates that the forms are being filed under the file and use method;</text> </paragraph> <paragraph num="(2)"> <text>A list of the forms included in the submission; and</text> </paragraph> <paragraph num="(3)"> <text>For each form listed in the cover letter required under §B(2) of this regulation, a cite to the authority to file the form under Regulation .05 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The use of the file and use method shall be limited in accordance with the types of forms specified in Regulation .05 of this chapter.</text> </paragraph> <paragraph num="D."> <text>An insurer may not combine in the same submission:</text> <paragraph num="(1)"> <text>Forms filed under the file and use method; and</text> </paragraph> <paragraph num="(2)"> <text>Forms filed under the prior approval method.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A request under a file and use method shall include a signed certification from a responsible officer that, to the best of the officer's knowledge and belief, the forms comply with applicable statutes and regulations.</text> </paragraph> <paragraph num="F."> <text>A filing made under a file and use method shall be subject to the same filing fee requirements applicable to filings made under a prior approval method.</text> </paragraph> <paragraph num="G."> <text>An insurer may issue a form for delivery in Maryland that was filed under the file and use method at the earlier of the following dates:</text> <paragraph num="(1)"> <text>30 days after the date the form has been received by the Commissioner, provided the Commissioner has not previously disapproved the filing; or</text> </paragraph> <paragraph num="(2)"> <text>The date the insurer receives written notice from the Commissioner that the filing has been accepted under the file and use method.</text> </paragraph> </paragraph> <paragraph num="H."> <text>An insurer may not use the file and use method before the insurer has had a certificate of authority to write the same type of coverage in Maryland for at least 12 months.</text> </paragraph> <paragraph num="I."> <text>An insurer may not use the file and use method to file a form in Maryland if:</text> <paragraph num="(1)"> <text>The form has previously been disapproved by the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>The form has been previously filed for approval with the Commissioner under the prior approval method and is still pending final disposition with the Commissioner; or</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner has decided that the form has been previously withdrawn by the insurer in accordance with COMAR 31.04.17.05.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Types of Forms Used on a File and Use Method."> <paragraph num="A."> <text>The forms listed in §B of this regulation are the only forms that may be used on a file and use basis.</text> </paragraph> <paragraph num="B."> <text>The following life insurance, health insurance, and annuity forms may be filed under the file and use method:</text> <paragraph num="(1)"> <text>Group life insurance policies and certificates, except for group credit life insurance policies and certificates;</text> </paragraph> <paragraph num="(2)"> <text>Endorsements, amendments, and riders to be used with group life insurance policies and certificates, except for endorsements, amendments, and riders to be used with group credit life insurance policies and certificates;</text> </paragraph> <paragraph num="(3)"> <text>Wholesale life insurance policies;</text> </paragraph> <paragraph num="(4)"> <text>Endorsements, amendments, and riders to be used with wholesale life insurance policies;</text> </paragraph> <paragraph num="(5)"> <text>Accidental death benefit riders to be used with individual life insurance policies;</text> </paragraph> <paragraph num="(6)"> <text>Waiver of premium riders to be used with individual life insurance policies;</text> </paragraph> <paragraph num="(7)"> <text>Accidental death and dismemberment riders to be used with individual life insurance policies;</text> </paragraph> <paragraph num="(8)"> <text>Riders to be used with individual life insurance policies that provide coverage to the spouse or dependent children of the insured;</text> </paragraph> <paragraph num="(9)"> <text>Guaranteed insurability option riders to be used with individual life insurance policies;</text> </paragraph> <paragraph num="(10)"> <text>Group annuity contracts and certificates, including variable and nonvariable group annuity contracts and certificates;</text> </paragraph> <paragraph num="(11)"> <text>Endorsements, amendments, and riders to be used with group annuity contracts and certificates;</text> </paragraph> <paragraph num="(12)"> <text>Individual retirement account (IRA) endorsements to be used with individual fixed annuity contracts or with individual variable annuity contracts;</text> </paragraph> <paragraph num="(13)"> <text>Tax sheltered annuity (TSA) endorsements to be used with:</text> <paragraph num="(a)"> <text>Individual fixed annuity contracts; or</text> </paragraph> <paragraph num="(b)"> <text>Individual variable annuity contracts;</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>Medical stop-loss insurance;</text> </paragraph> <paragraph num="(15)"> <text>Group accidental death policies and certificates;</text> </paragraph> <paragraph num="(16)"> <text>Group accidental death and dismemberment policies and certificates;</text> </paragraph> <paragraph num="(17)"> <text>Group travel health insurance policies and certificates, except for the following:</text> <paragraph num="(a)"> <text>Any form that includes lost baggage benefits;</text> </paragraph> <paragraph num="(b)"> <text>Any form that includes a trip cancellation benefit that is payable for a reason other than the illness or death of:</text> <paragraph num="(i)"> <text>The insured;</text> </paragraph> <paragraph num="(ii)"> <text>A member of the insured's family; or</text> </paragraph> <paragraph num="(iii)"> <text>One or more of the insured's travel companions; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Any form that contains any other property or casualty type benefit not included in §B(17)(a) and (b) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>Group health insurance policies and certificates that:</text> <paragraph num="(a)"> <text>Limit coverage to losses due to accident; and</text> </paragraph> <paragraph num="(b)"> <text>Do not pay benefits on an expense-incurred basis;</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>Employer retrospective premium arrangements;</text> </paragraph> <paragraph num="(20)"> <text>Blanket health insurance policies that limit benefits to accidental death benefits;</text> </paragraph> <paragraph num="(21)"> <text>Blanket health insurance policies that limit benefits to accidental death and dismemberment benefits;</text> </paragraph> <paragraph num="(22)"> <text>Blanket health insurance policies that limit benefits to travel benefits;</text> </paragraph> <paragraph num="(23)"> <text>Blanket health insurance policies that:</text> <paragraph num="(a)"> <text>Limit coverage to losses due to accident; and</text> </paragraph> <paragraph num="(b)"> <text>Do not pay benefits on an expense-incurred basis; and</text> </paragraph> </paragraph> <paragraph num="(24)"> <text>Applications, except applications for:</text> <paragraph num="(a)"> <text>Medicare supplement policies;</text> </paragraph> <paragraph num="(b)"> <text>Long-term care insurance;</text> </paragraph> <paragraph num="(c)"> <text>Individual health benefit plans; and</text> </paragraph> <paragraph num="(d)"> <text>Small employer health benefit plans.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Use of Noncompliant Forms."> <paragraph num="A."> <text>If an insurer uses a form which becomes effective under a file and use method and the form is found by the Commissioner to be noncompliant, the Commissioner may:</text> <paragraph num="(1)"> <text>Disapprove the form by:</text> <paragraph num="(a)"> <text>Giving notice of the disapproval;</text> </paragraph> <paragraph num="(b)"> <text>Showing cause for the disapproval; and</text> </paragraph> <paragraph num="(c)"> <text>Stating the effective date of the disapproval in the notice; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Impose a penalty as provided under Insurance Article, §4-113, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner may remove file and use authority from an insurer upon a finding that the insurer has made inappropriate or noncompliant filings under this method with such frequency as to constitute a business practice.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 12-203(d)(2), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 17, 2006 (33:14 Md. R. 1165)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective June 20, 2016 (43:12 Md. R. 668)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective June 20, 2016 (43:12 Md. R. 668)</annotation> </annotations> </chapter> <chapter num="20" heading="Market Conduct Actions"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <paragraph num="A."> <text>This chapter establishes the process and procedures for market conduct actions.</text> </paragraph> <paragraph num="B."> <text>This chapter does not apply to the examination or investigation of:</text> <paragraph num="(1)"> <text>A person's financial condition as described in Insurance Article, Titles 5, 6, 7, and 9, Annotated Code of Maryland, as well as COMAR 31.04, 31.05, and 31.06; or</text> </paragraph> <paragraph num="(2)"> <text>An insurance producer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>Nothing in this chapter limits the Commissioner's authority to conduct an analysis, investigation, or examination, or to issue orders pursuant to law. All applicable provisions, including the confidentiality provisions, of Insurance Article, Annotated Code of Maryland, apply to market conduct actions.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Analysis” has the meaning stated in Insurance Article, §2-205(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Business practices” means the operations, policies, procedures and other activities or administrative methods used by a person to conduct business.</text> </paragraph> <paragraph num="(3)"> <text>“Commissioner” means the Insurance Commissioner of Maryland or the Insurance Commissioner's designee.</text> </paragraph> <paragraph num="(4)"> <text>“Complaint” means a written or documented oral communication expressing dissatisfaction with a person.</text> </paragraph> <paragraph num="(5)"> <text>“Market conduct action” means any of the full range of activities that the Commissioner may initiate to assess the business practices of a person or persons, or the insurance market, including a market conduct analysis, market conduct investigation, or market conduct examination.</text> </paragraph> <paragraph num="(6)"> <text>“Market conduct analysis” means an evaluation conducted whenever the Commissioner considers it advisable to identify or investigate the business practices of one or more persons, or the insurance market, from filed schedules, surveys, required reports, or other sources of information.</text> </paragraph> <paragraph num="(7)"> <text>“Market conduct examination” means an inspection of the accounts, records, documents, or transactions of a person to develop a detailed understanding of the person's business practices to evaluate compliance with State law.</text> </paragraph> <paragraph num="(8)"> <text>“Market conduct investigation” means a process used by the Commissioner to determine if a person has violated State law in that person's business practices.</text> </paragraph> <paragraph num="(9)"> <text>“Person” means an insurer or other entity subject to regulation by the Commissioner and authorized to conduct business in this State.</text> </paragraph> <paragraph num="(10)"> <text>“Proposed market conduct examination report” means the completed market conduct examination report that is required under Regulation .07 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Market Conduct Action."> <paragraph num="A."> <text>Whenever the Commissioner has the authority to conduct an analysis, examination, or investigation of a person's business practices, the Commissioner may conduct a market conduct action.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may conduct a market conduct action:</text> <paragraph num="(1)"> <text>Based on a complaint;</text> </paragraph> <paragraph num="(2)"> <text>As authorized by law;</text> </paragraph> <paragraph num="(3)"> <text>Whenever the Commissioner considers it is advisable; or</text> </paragraph> <paragraph num="(4)"> <text>With other states.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the Commissioner determines information is needed from a person to conduct a market conduct action, in accordance with Regulation .05 of this chapter:</text> <paragraph num="(1)"> <text>The Commissioner shall request the information; and</text> </paragraph> <paragraph num="(2)"> <text>The person shall provide the information.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Commissioner may participate in a market conduct action with one or more other states to determine if a Maryland law has been violated by the person subject to the market conduct action.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Information."> <paragraph num="A."> <text>The Commissioner may request accounts, records, documents, files, or other information needed to complete a market conduct action.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may include a reference to the applicable law pertaining to the request.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may request information through:</text> <paragraph num="(1)"> <text>A survey;</text> </paragraph> <paragraph num="(2)"> <text>An interrogatory;</text> </paragraph> <paragraph num="(3)"> <text>An interview; or</text> </paragraph> <paragraph num="(4)"> <text>Any other procedure identified by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Whenever a person receives a request from the Commissioner for information, the person shall provide the requested information:</text> <paragraph num="(1)"> <text>Within the time specified by the Commissioner, unless an extension has been granted by the Commissioner in accordance with §§G and H of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>In the manner specified by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>When the person submits the information to the Commissioner, the person shall provide written certification, signed by an individual with authority to bind the person providing the response, that the:</text> <paragraph num="(1)"> <text>Information is, to the best of that individual's knowledge, information, and belief, a full, complete, and truthful response to the Commissioner's request; and</text> </paragraph> <paragraph num="(2)"> <text>Individual making the certification has undertaken an adequate inquiry to make the required certification.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If the person fails to provide the certification required under §E of this regulation, the absence of this certification:</text> <paragraph num="(1)"> <text>Does not relieve the person responding to a request of the Commissioner of the duty to provide a full, complete, and truthful response to the Commissioner's request; and</text> </paragraph> <paragraph num="(2)"> <text>Shall constitute an explicit representation by the person that the response is full, complete, and truthful.</text> </paragraph> </paragraph> <paragraph num="G."> <text>A person may submit a written request, stating the reason for the request, to the Commissioner to extend the time for the submission of information:</text> <paragraph num="(1)"> <text>For a market conduct analysis or market conduct investigation, after receipt of the request specified in §D of this regulation; or</text> </paragraph> <paragraph num="(2)"> <text>For a market conduct examination, after receipt of the notice specified in Regulation .06G of this chapter.</text> </paragraph> </paragraph> <paragraph num="H."> <text>If the Commissioner receives the request pursuant to §G of this regulation, the Commissioner shall:</text> <paragraph num="(1)"> <text>Grant an extension; or</text> </paragraph> <paragraph num="(2)"> <text>Notify the person that the request to extend the time is denied.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Market Conduct Examination."> <paragraph num="A."> <text>The Commissioner shall conduct a market conduct examination in accordance with this regulation.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall notify the person subject to the market conduct examination, in writing, that a market conduct examination has commenced.</text> </paragraph> <paragraph num="C."> <text>The Commissioner's notification that a market conduct examination has commenced shall:</text> <paragraph num="(1)"> <text>Specify the lines of insurance, scope, intent, and period covered by the market conduct examination;</text> </paragraph> <paragraph num="(2)"> <text>Provide the name and contact information of the Commissioner; and</text> </paragraph> <paragraph num="(3)"> <text>Provide any other information the Commissioner considers relevant.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The person notified under §B of this regulation shall give written notice to the Commissioner of the individual who:</text> <paragraph num="(1)"> <text>Has the authority and responsibility to respond to the Commissioner's request for accounts, records, documents, files, or other information needed in order to complete the market conduct examination; and</text> </paragraph> <paragraph num="(2)"> <text>Will coordinate on behalf of the person the market conduct examination with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Following the notice provided under §§B and C of this regulation, the Commissioner shall conduct a conference with the person in a manner determined by the Commissioner to review:</text> <paragraph num="(1)"> <text>The information the person must provide for the market conduct examination;</text> </paragraph> <paragraph num="(2)"> <text>The administrative aspects of the market conduct examination, including but not limited to, market conduct examination expenses to be paid by the person examined; and</text> </paragraph> <paragraph num="(3)"> <text>Any other information the Commissioner considers relevant.</text> </paragraph> </paragraph> <paragraph num="F."> <text>After the completion of the conference required in §E of this regulation, the Commissioner:</text> <paragraph num="(1)"> <text>May provide a written summary of the conference to the person; and</text> </paragraph> <paragraph num="(2)"> <text>Shall provide written notification of the information the person must provide for the market conduct examination in accordance with Regulation .05 of this chapter.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The Commissioner shall notify the person subject to a market conduct examination of the date after which the Commissioner may not accept additional information unless an extension has been granted by the Commissioner in accordance with Regulation .05G and H of this chapter.</text> </paragraph> <paragraph num="H."> <text>The Commissioner shall conduct an exit conference with the person subject to the market conduct examination in a manner determined by the Commissioner</text> </paragraph> <paragraph num="I."> <text>At the discretion of the Commissioner, a report certified by the insurance supervisory official of another state may be accepted in lieu of conducting a market conduct examination.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Market Conduct Examination Report."> <paragraph num="A."> <text>Whenever a market conduct examination is conducted pursuant to Regulation .06 of this chapter, the Commissioner shall:</text> <paragraph num="(1)"> <text>Provide the person with a copy of the draft proposed market conduct examination report;</text> </paragraph> <paragraph num="(2)"> <text>Allow the person to submit written comments on the draft proposed market conduct examination report within 30 days after the receipt of the draft proposed market conduct examination report, or the period specified by the Commissioner, whichever is longer;</text> </paragraph> <paragraph num="(3)"> <text>Consider the written comments submitted by the person in finalizing the draft proposed market conduct examination report; and</text> </paragraph> <paragraph num="(4)"> <text>Include the written comments submitted by the person to the draft proposed market conduct examination report as an attachment to the proposed market conduct examination report.</text> </paragraph> </paragraph> <paragraph num="B."> <text>After receipt of the draft proposed market conduct examination report, a person may submit a written request, stating the reason for the request, to the Commissioner to extend the time for the submission of written comments.</text> </paragraph> <paragraph num="C."> <text>If the Commissioner receives a request pursuant to §B of this regulation, the Commissioner shall:</text> <paragraph num="(1)"> <text>Grant an extension; or</text> </paragraph> <paragraph num="(2)"> <text>Notify the person that the request to extend the time is denied.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Commissioner shall provide the person with a copy of the proposed market conduct examination report.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Commissioner's Actions."> <paragraph num="A."> <text>Based on the information reviewed during a market conduct analysis the Commissioner may, in the Commissioner's sole discretion:</text> <paragraph num="(1)"> <text>Broaden the scope and period of the market conduct analysis;</text> </paragraph> <paragraph num="(2)"> <text>Conduct a market conduct investigation or market conduct examination;</text> </paragraph> <paragraph num="(3)"> <text>Issue an order; or</text> </paragraph> <paragraph num="(4)"> <text>Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the Commissioner conducts a market conduct investigation, the Commissioner may, in the Commissioner's sole discretion, based on the information reviewed during the market conduct investigation:</text> <paragraph num="(1)"> <text>Broaden the scope and period of the market conduct investigation;</text> </paragraph> <paragraph num="(2)"> <text>Conduct a market conduct examination;</text> </paragraph> <paragraph num="(3)"> <text>Issue an order; or</text> </paragraph> <paragraph num="(4)"> <text>Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the Commissioner conducts a market conduct examination, the Commissioner may, in the Commissioner's sole discretion, based on the information reviewed during the market conduct examination:</text> <paragraph num="(1)"> <text>Conduct a market conduct investigation of a particular matter;</text> </paragraph> <paragraph num="(2)"> <text>Broaden the scope and period of the market conduct examination;</text> </paragraph> <paragraph num="(3)"> <text>Issue an order; or</text> </paragraph> <paragraph num="(4)"> <text>Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Sanctions."> <text>If a person subject to this chapter fails to provide the information requested by the Commissioner in accordance with this chapter, the person may be subject to an administrative fine not exceeding $500 per day, in addition to any other penalty available to the Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Hearings."> <paragraph num="A."> <text>A person aggrieved by an order or proposed market conduct examination report may request a hearing in accordance with the provisions of COMAR 31.02.01.</text> </paragraph> <paragraph num="B."> <text>Except as otherwise provided by law, a person may not rely on any information not timely provided in accordance with Regulation .06G of this chapter in any hearing held on an order or proposed market conduct examination report.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 12-203(d)(2), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 5, 2010 (37:7 Md. R. 576)</annotation> </annotations> </chapter> <chapter num="21" heading="Payment of Actuarial Review of Rate Filings"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to the examination of rate filings made pursuant to:</text> <paragraph num="(1)"> <text>Health-General Article, §19-713, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Insurance Article, Title 11, Subtitles 2 and 3, and §§12-205 and 14-126(a)(2), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>COMAR 31.10.01.02A.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter does not apply to the Maryland Automobile Insurance Fund.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Actuarial consultant” means a consultant retained by the Commissioner subject to applicable procurement requirements to examine a rate filing.</text> </paragraph> <paragraph num="(2)"> <text>“Advisory organization” has the meaning stated in Insurance Article, §11-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means an authorized insurer, nonprofit health service plan, or health maintenance organization.</text> </paragraph> <paragraph num="(4)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>“Rating organization” has the meaning stated in Insurance Article, §11-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Examination of Rate Filings by an Actuarial Consultant."> <paragraph num="A."> <text>Whenever the Commissioner considers it advisable, the Commissioner may retain an actuarial consultant to examine a rate filing submitted by an advisory organization, carrier, or rating organization.</text> </paragraph> <paragraph num="B."> <text>If the Commissioner retains an actuarial consultant to examine a rate filing submitted by an advisory organization, carrier, or rating organization the Commissioner shall notify the advisory organization, carrier, or rating organization that the Commissioner has retained an actuarial consultant to examine the rate filing.</text> </paragraph> <paragraph num="C."> <text>The Commissioner or the actuarial consultant shall make a complete report of the examination in accordance with the provisions of Insurance Article, §2-209, Annotated Code of Maryland.</text> </paragraph> <paragraph num="D."> <text>The advisory organization, carrier, or rating organization shall pay the expenses for the actuarial consultant’s examination of a rate filing in accordance with the provisions of Insurance Article, §2-208, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108, 2-205, 2-208, 11-207(a)(2), 12-205, 14-126(a)(2), and 15-605(c); Health-General Article, §19-713; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 16, 2011 (38:10 Md. R. 618)</annotation> </annotations> </chapter> <chapter num="22" heading="Title Insurers"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter applies to a title insurer, title insurance producer, and title agency.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter:</text> <paragraph num="A."> <text>Establishes the minimum standards and procedures for conducting a review; and</text> </paragraph> <paragraph num="B."> <text>Provides for the filing of a review report with the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accounts” means all accounts associated with the principal agent’s title insurance business.</text> </paragraph> <paragraph num="(2)"> <text>“Appointment” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Certification” means a written statement signed by the principal agent that the information provided to the title insurer during the annual review is, to the best of the principal agent’s knowledge, information, and belief, full, complete, and truthful and that the principal agent has undertaken an adequate inquiry to make the required certification</text> </paragraph> <paragraph num="(4)"> <text>“Claim” has the meaning set forth in COMAR 31.15.07.02B(2).</text> </paragraph> <paragraph num="(5)"> <text>“Commissioner” means the Maryland Insurance Commissioner or the Commissioner’s designee.</text> </paragraph> <paragraph num="(6)"> <text>“Designated responsible licensed producer” means a licensed insurance producer who is:</text> <paragraph num="(a)"> <text>Responsible for the principal agent’s compliance with insurance laws, rules, and regulations; and</text> </paragraph> <paragraph num="(b)"> <text>Listed as a designated or responsible licensed producer on:</text> <paragraph num="(i)"> <text>The principal agent’s uniform business entity application; or</text> </paragraph> <paragraph num="(ii)"> <text>The Association/Responsible Individual Designation form filed with the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Escrow” means the act or process of providing closing services or services under an escrow agreement by a title insurer or a principal agent.</text> </paragraph> <paragraph num="(8)"> <text>“Escrow account” means an account that contains or has contained trust money deposits or other money that a person entrusts to a title insurer or a principal agent to hold for the benefit of a buyer or borrower in a real estate transaction or for a beneficial owner, in connection with an escrow, settlement, closing, or title indemnification.</text> </paragraph> <paragraph num="(9)"> <text>“Insurance” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Insurance business” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Insurer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Licensed insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Licensee” means a title insurer, title insurance producer, or title insurance agency.</text> </paragraph> <paragraph num="(15)"> <text>“MAHT” means the Maryland Affordable Housing Trust established under the Housing and Community Development Article, §10-102, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Principal agent” means a title insurance producer appointed by the title insurer to act on behalf of the title insurer as described in Insurance Article, §10-121(k)(1)(i), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Report” means the written report required under Insurance Article, §10-121(k), Annotated Code of Maryland, and containing the elements specified by the Commissioner.</text> </paragraph> <paragraph num="(18)"> <text>“Review” means a review of the underwriting, claims, and escrow practices of each principal agent conducted by a title insurer or its designee.</text> </paragraph> <paragraph num="(19)"> <text>“Title agency” has the meaning set forth in Insurance Article, §10-125, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“Title insurance” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(21)"> <text>“Title insurance producer” has the meaning set forth in Insurance Article, §10-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(22)"> <text>“Title insurer” means an insurer authorized by the Commissioner to conduct title insurance business in the State.</text> </paragraph> <paragraph num="(23)"> <text>“Trust money” has the meaning set forth in Insurance Article, §10-121, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(24)"> <text>“Underwriting standards” has the meaning set forth in COMAR 31.04.16.02.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Conducting a Review."> <paragraph num="A."> <text>A title insurer:</text> <paragraph num="(1)"> <text>Shall, except as provided in §A(4) of this regulation, conduct a review during each calendar year of the underwriting, claims, and escrow practices of each principal agent;</text> </paragraph> <paragraph num="(2)"> <text>Shall conduct a review during normal business hours;</text> </paragraph> <paragraph num="(3)"> <text>May not be required to provide advance notice to the principal agent of the beginning of a review; and</text> </paragraph> <paragraph num="(4)"> <text>May not be required to conduct a review of a principal agent for the calendar year during which the principal agent is initially appointed, if the appointment is made on or after June 30 of that calendar year.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The review required under §A of this regulation shall, at a minimum, include:</text> <paragraph num="(1)"> <text>A determination of whether:</text> <paragraph num="(a)"> <text>The principal agent is in compliance with the title insurer’s underwriting standards in the State; and</text> </paragraph> <paragraph num="(b)"> <text>The principal agent’s escrow accounts have been properly reconciled as of the date of the completed review and contain sufficient funds to disburse the trust money from all settlement files necessary to establish the lien, title or interests insured in accordance with title insurance policies issued by the title insurer conducting the review;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A review of the principal agent’s operations to evaluate compliance with the notice requirements under Insurance Article, §22-103, Annotated Code of Maryland, including whether the principal agent:</text> <paragraph num="(a)"> <text>Inserted the name of each proposed insured as required under Insurance Article, §22-103(a)(1), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Delivered to the buyer or agent or attorney of the buyer immediately upon receipt of the premium, written notice of the name of each insured under the title insurance policy, the face amount of the title insurance policy, the buyer’s right and opportunity to obtain simultaneous title insurance in the buyer’s favor, written notice of the additional premium that will be required for the purchase of simultaneous title insurance in the buyer’s favor; and</text> </paragraph> <paragraph num="(c)"> <text>Obtained from the buyer a written statement that he or she received the notice referenced in §B(2)(b) of this regulation and a statement that the buyer wants or does not want owner’s title insurance;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A review of the title insurance producer’s or agency’s policy issuing and processing operations;</text> </paragraph> <paragraph num="(4)"> <text>To the extent that a title insurer delegates the responsibility to the principal agent to handle any aspect of a claim, a review of whether the principal agent is in compliance with the title insurer’s policies and procedures for handling a claim;</text> </paragraph> <paragraph num="(5)"> <text>Verification that:</text> <paragraph num="(a)"> <text>The principal agent has filed the annual report required under COMAR 31.16.03.06;</text> </paragraph> <paragraph num="(b)"> <text>Only a licensed title insurance producer exercises control over trust money;</text> </paragraph> <paragraph num="(c)"> <text>Premium monies are held separate from other funds or confirmation that the principal agent has received express written consent from the title insurer in the form required by COMAR 31.03.03 to comingle premium monies with the principal agent’s personal fund; and</text> </paragraph> <paragraph num="(d)"> <text>Funds received by the principal agent are accurately accounted for in the books and records of the principal agent;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A review of the escrow practices of the principal agent; and</text> </paragraph> <paragraph num="(7)"> <text>Receipt of the written certification of the principal agent which shall contain:</text> <paragraph num="(a)"> <text>The printed name and signature of a designated responsible licensed producer or an attorney of the law firm who is a licensed title insurance producer, if the principal agent is a law firm as defined by Insurance Article, §10-125(a)(3), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>The date the certification was signed; and</text> </paragraph> <paragraph num="(c)"> <text>The following statement in at least 12-point font: I hereby certify that the information provided to the title insurer or its designee during the review is, to the best of my knowledge, information, and belief, full, complete, and truthful and that I have undertaken an adequate inquiry to make this certification.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>If the principal agent does not maintain separate bank or trust accounts for each title insurer it represents, the title insurer shall verify that the trust deposits held on its behalf are reasonably ascertainable from the books of account and records of the principal agent.</text> </paragraph> <paragraph num="D."> <text>A title insurer may enter into a written contract with a third party to perform a review.</text> </paragraph> <paragraph num="E."> <text>A title insurer that enters into a written contract with a third party to perform a review is:</text> <paragraph num="(1)"> <text>Bound by the findings of the third party; and</text> </paragraph> <paragraph num="(2)"> <text>Responsible for any violation of §A, B or C of this regulation, regardless of any delegation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Failure to Cooperate."> <text>A principal agent’s failure to cooperate with a title insurer at the beginning of or during a review shall constitute a reason to believe that the principal agent has engaged in a prohibited activity under Insurance Article, §10-126, Annotated Code of Maryland, and shall be reported to the Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Report."> <paragraph num="A."> <text>A title insurer shall prepare a written report setting forth the results of its annual review, which shall be made available to the Commissioner upon request.</text> </paragraph> <paragraph num="B."> <text>A title insurer shall file a report with the Commissioner within 45 calendar days after the completion of the review if the title insurer has reasonable cause to believe that the title insurance producer or agency at any time engaged in any of the prohibited activities set forth in Insurance Article, §10-126, Annotated Code of Maryland. The report shall be submitted regardless of whether the prohibited activities ceased or were remedied prior to, during the course of, or as a result of the review. The report shall be in writing on a form specified by the Commissioner and submitted by electronic means directed by the Commissioner..</text> </paragraph> <paragraph num="C."> <text>The report shall address the following areas:</text> <paragraph num="(1)"> <text>If applicable, a detailed description of the basis for the reasonable cause to believe that the title insurance producer or agency engaged in any of the prohibited activities set forth in Insurance Article, §10-126, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The name, Maryland producer license number, and contact information of the principal agent or any insurance producer designated under Insurance Article, §10-106, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>The name and Maryland producer license number of any insurance producer associated with the principal agent, including the name and license number or numbers of any TIPICs utilized by the agency and confirmation that they are appointed with the insurer;</text> </paragraph> <paragraph num="(4)"> <text>The file number and property address for each file that was reviewed;</text> </paragraph> <paragraph num="(5)"> <text>The principal agent’s escrow accounts and related practices, including a review to ensure that:</text> <paragraph num="(a)"> <text>Only licensed insurance producers exercise control over trust money;</text> </paragraph> <paragraph num="(b)"> <text>Premium monies are held in compliance with COMAR 31.03.03;</text> </paragraph> <paragraph num="(c)"> <text>Funds received by the principal agent are accurately accounted for in the books and records of the principal agent; and</text> </paragraph> <paragraph num="(d)"> <text>The principal agent’s escrow accounts have been properly reconciled as of the date of the completed review and the trust deposits held on its behalf are reasonably ascertainable from the books of account and records of the principal agent;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The report shall indicate if there are or have been any escrow or account shortages at any time during the review period;</text> </paragraph> <paragraph num="(7)"> <text>Except for transfers of money between the principal agent’s escrow or trust account and the principal agent’s operating account for the fees due the principal agent, transfers of money between principal agent’s accounts that contain or have contained trust money deposits;</text> </paragraph> <paragraph num="(8)"> <text>Discrepancies between receipts and disbursements, and, if discrepancies are found, a description of the discrepancies in detail and whether the title producer or lender prepared the closing disclosure or HUD-1;</text> </paragraph> <paragraph num="(9)"> <text>Compliance by the principal agent with the annual MAHT report requirement under COMAR 31.16.03.06;</text> </paragraph> <paragraph num="(10)"> <text>Information relating to escrow accounts or settlement, closing, or title indemnification conducted by a principal agent, or title insurance producer acting on behalf of the title insurer;</text> </paragraph> <paragraph num="(11)"> <text>The principal agent’s policy blank inventory;</text> </paragraph> <paragraph num="(12)"> <text>The principal agent’s failure to comply with the title insurer’s financial accounting requirements; and</text> </paragraph> <paragraph num="(13)"> <text>Any additional information requested by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A title insurer is not precluded from providing a more comprehensive description of the review.</text> </paragraph> <paragraph num="E."> <text>The report shall contain:</text> <paragraph num="(1)"> <text>The certification from the principal agent required under Regulation .04B(7) of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>A copy of the express written consent required under Regulation .04B(5)(c) of this chapter, if premium monies are comingled with the principal agent’s personal funds.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Required Notifications."> <paragraph num="A."> <text>Except as provided in §B of this regulation, if a title insurer has reason to believe that the principal agent has engaged in, or is engaging in, conduct that is prohibited by Insurance Article, §10-126, Annotated Code of Maryland, the title insurer shall notify the Commissioner in writing, which may be through email, facsimile, or other electronic transmission, within 10 calendar days after obtaining such knowledge or belief, in addition to filing any required a report.</text> </paragraph> <paragraph num="B."> <text>A title insurer shall notify the Commissioner in writing, which may be through email, facsimile, or other electronic transmission, within 2 calendar days if a title insurer has reason to believe that a principal agent has converted or misappropriated money received or held in trust in addition to filing any required report.</text> </paragraph> <paragraph num="C."> <text>A title insurer’s written notification to the Commissioner under §§A and B of this regulation shall include the following information:</text> <paragraph num="(1)"> <text>The name, physical address, telephone number, and email address of the principal agent or its designated insurance producer who satisfies the qualifications set forth in §10-121(c);</text> </paragraph> <paragraph num="(2)"> <text>The principal agent’s producer license number;</text> </paragraph> <paragraph num="(3)"> <text>The date or dates on which the principal agent failed to cooperate, if applicable;</text> </paragraph> <paragraph num="(4)"> <text>A description of the facts and circumstances of the principal agent’s conduct prohibited by Insurance Article, §10-126, Annotated Code of Maryland, if applicable; and</text> </paragraph> <paragraph num="(5)"> <text>A description of the facts and circumstances giving rise to the title insurer’s reason to believe that a principal agent has converted or misappropriated money received or held in trust.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Maintenance of Records."> <paragraph num="A."> <text>A licensee shall maintain for a period of 5 years after the conclusion of an annual review, and make available to the Commissioner upon request, all documentation collected, prepared, and produced by the licensee during an annual review including, but not limited to, work papers, summaries, daily log notes, and the report.</text> </paragraph> <paragraph num="B."> <text>Records required by this regulation may be maintained in paper, photographic, magnetic, mechanical, or electronic media or by any process that accurately reproduces the actual document, if the copy of the record is maintained in a manner that:</text> <paragraph num="(1)"> <text>Is clear and legible;</text> </paragraph> <paragraph num="(2)"> <text>Accurately reproduces the original document in its entirety, including any attachments to the document;</text> </paragraph> <paragraph num="(3)"> <text>Is capable of producing a clear and legible hard copy of the original document; and</text> </paragraph> <paragraph num="(4)"> <text>Preserves evidence of any signature contained on the document.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108, 2-109, 10-121, and 10-128.1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 1, 2014 (41:20 Md. R. 1114)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective August 21, 2023 (50:15 Md. R. 729)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective April 20, 2020 (47:2 Md. R. 62); August 21, 2023 (50:15 Md. R. 729); June 9, 2025 (52:11 Md. R. 534)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective August 21, 2023 (50:15 Md. R. 729)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective June 20, 2016 (43:12 Md. R. 668); April 20, 2020 (47:2 Md. R. 62)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective August 21, 2023 (50:15 Md. R. 729)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective August 21, 2023 (50:15 Md. R. 729)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective August 21, 2023 (50:15 Md. R. 729)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective June 9, 2025 (52:11 Md. R. 534)</annotation> </annotations> </chapter> <chapter num="23" heading="Corporate Governance Annual Disclosure"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter is applicable to a person subject to the filing requirements of the Maryland Insurance Corporate Governance Annual Disclosure Act under Insurance Article, Title 4, Subtitle 5, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Board” means the insurer’s or insurance group’s Board of Directors.</text> </paragraph> <paragraph num="(2)"> <text>“Commissioner” has the meaning stated in Insurance Article, §1-101(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Corporate Governance Annual Disclosure” or “CGAD” has the meaning stated in Insurance Article, §4-501(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Insurance group” means those insurers and affiliates included within an insurance holding company system as defined in Insurance Article, §4-501(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Insurer” has the meaning stated in Insurance Article, §4-501(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Own Risk and Solvency Assessment” or “ORSA” has the meaning stated in Insurance Article, §32-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>Senior Management.</text> <paragraph num="(a)"> <text>“Senior Management” means any corporate officer responsible for reporting information to the Board at regular intervals or providing this information to shareholders and regulators.</text> </paragraph> <paragraph num="(b)"> <text>“Senior Management” includes, for example and without limitation:</text> <paragraph num="(i)"> <text>The Chief Executive Officer;</text> </paragraph> <paragraph num="(ii)"> <text>The Chief Financial Officer;</text> </paragraph> <paragraph num="(iii)"> <text>The Chief Operations Officer;</text> </paragraph> <paragraph num="(iv)"> <text>The Chief Procurement Officer;</text> </paragraph> <paragraph num="(v)"> <text>The Chief Legal Officer;</text> </paragraph> <paragraph num="(vi)"> <text>The Chief Information Officer;</text> </paragraph> <paragraph num="(vii)"> <text>The Chief Technology Officer;</text> </paragraph> <paragraph num="(viii)"> <text>The Chief Revenue Officer;</text> </paragraph> <paragraph num="(ix)"> <text>The Chief Visionary Officer; and</text> </paragraph> <paragraph num="(x)"> <text>Any other “C” level executive.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing Procedures."> <paragraph num="A."> <text>An insurer, or the insurance group of which the insurer is a member, required to file a CGAD under Insurance Article, Title 4, Subtitle 5, Annotated Code of Maryland, shall, no later than June 1 of each calendar year, submit to the Commissioner a CGAD that contains the information described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="B."> <text>The CGAD shall include a signature of the insurer’s or insurance group’s Chief Executive Officer or Corporate Secretary attesting to the best of that individual’s belief and knowledge that the insurer or insurance group has implemented the corporate governance practices and that a copy of the CGAD has been provided to the insurer’s Board or its appropriate committee.</text> </paragraph> <paragraph num="C."> <text>The insurer or insurance group shall have discretion regarding the appropriate format for providing the information required by these regulations and is permitted to customize the CGAD to provide the most relevant information utilized by the insurer or insurance group necessary to permit the Commissioner to gain an understanding of:</text> <paragraph num="(1)"> <text>The corporate governance structure;</text> </paragraph> <paragraph num="(2)"> <text>Corporate governance policies; and</text> </paragraph> <paragraph num="(3)"> <text>Corporate governance practices.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Completing the CGAD.</text> <paragraph num="(1)"> <text>Depending on how an insurer or the insurance group of which the insurer is a member has structured its corporate governance system, the insurer or insurance group submitting a CGAD to the Commissioner may choose to provide information regarding its corporate governance structure at:</text> <paragraph num="(a)"> <text>The ultimate controlling parent level;</text> </paragraph> <paragraph num="(b)"> <text>An intermediate holding company level; or</text> </paragraph> <paragraph num="(c)"> <text>The individual legal entity level.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The insurer or insurance group is encouraged to consider the following criteria in determining the level for which information will be provided under §D(1) of this regulation:</text> <paragraph num="(a)"> <text>The level at which the insurer’s or insurance group’s risk appetite is determined;</text> </paragraph> <paragraph num="(b)"> <text>The level at which factors, such as earnings, capital, liquidity, operations, and reputation of the insurer, are overseen collectively, and at which level the supervision of those factors is coordinated and exercised; or</text> </paragraph> <paragraph num="(c)"> <text>The level at which legal liability for failure of general corporate governance duties would be placed.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the insurer or insurance group determines the level of reporting based on the criteria in §D(2) of this regulation, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in the level of reporting.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Notwithstanding §A of this regulation, and as outlined in Insurance Article, §4-503, Annotated Code of Maryland, if the CGAD is completed at the insurance group level:</text> <paragraph num="(1)"> <text>It shall be filed with the lead state of the group as determined by the procedures outlined in the most recent financial analysis handbook adopted by the National Association of Insurance Commissioners; and</text> </paragraph> <paragraph num="(2)"> <text>Upon request to the lead state of the group, the chief regulatory official of any state in which the insurance group has a domestic insurer may request a copy of the CGAD and the CGAD shall be provided to that state.</text> </paragraph> </paragraph> <paragraph num="F."> <text>An insurer or insurance group may comply with this regulation by referencing other existing documents if the documents provide information that is comparable to the information described in Regulation .04 of this chapter, if the insurer or insurance group:</text> <paragraph num="(1)"> <text>Clearly references the location of the relevant information within the CGAD; and</text> </paragraph> <paragraph num="(2)"> <text>Attaches the referenced document if it is not already filed or available to the regulator.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Examples of other existing documents that may be referenced in the CGAD may include, without limitation:</text> <paragraph num="(1)"> <text>An ORSA summary report;</text> </paragraph> <paragraph num="(2)"> <text>Holding Company Form B or F Filings;</text> </paragraph> <paragraph num="(3)"> <text>Securities and Exchange Commission Proxy Statements;</text> </paragraph> <paragraph num="(4)"> <text>Foreign regulatory reporting requirements; or</text> </paragraph> <paragraph num="(5)"> <text>Other similar documents.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Each year following the initial filing of the CGAD, the insurer or insurance group shall file an amended version of the previously filed CGAD indicating:</text> <paragraph num="(1)"> <text>Where changes have been made in the information or activities reported by the insurer or insurance group; or</text> </paragraph> <paragraph num="(2)"> <text>If no changes have been made in the information or activities previously reported, that no changes have been made.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Contents of Corporate Governance Annual Disclosure."> <paragraph num="A."> <text>The insurer or insurance group shall be as descriptive as possible in completing the CGAD. This means that attachments or example documents may be included if they are used in the governance process since these may provide a means to demonstrate the strengths of the insurer’s or insurance group’s governance framework and practices.</text> </paragraph> <paragraph num="B."> <text>The CGAD shall describe the insurer’s or insurance group’s corporate governance framework and structure, including the following:</text> <paragraph num="(1)"> <text>The Board and its various committees ultimately responsible for overseeing the insurer or insurance group and the level or levels at which that oversight occurs;</text> </paragraph> <paragraph num="(2)"> <text>The rationale for the current Board size and structure;</text> </paragraph> <paragraph num="(3)"> <text>The duties of the Board and each of its significant committees;</text> </paragraph> <paragraph num="(4)"> <text>How the Board and its significant committees are governed, which may include documents such as bylaws, charters, and informal mandates; and</text> </paragraph> <paragraph num="(5)"> <text>How the Board’s leadership is structured, including a discussion of the roles of Chief Executive Officer and Chairman of the Board within the organization.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The insurer or insurance group shall describe the policies and practices of the most senior governing entity and significant committees thereof, including a discussion of the following factors:</text> <paragraph num="(1)"> <text>How the qualifications, expertise, and experience of each Board member meet the needs of the insurer or insurance group;</text> </paragraph> <paragraph num="(2)"> <text>How an appropriate amount of independence is maintained by the Board and its significant committees;</text> </paragraph> <paragraph num="(3)"> <text>The number of meetings held by the Board and its significant committees over the past year as well as information on director attendance;</text> </paragraph> <paragraph num="(4)"> <text>How the insurer or insurance group identifies, nominates, and elects members to the Board and its committees, including, for example:</text> <paragraph num="(a)"> <text>Whether a nomination committee is in place to identify and select individuals for consideration;</text> </paragraph> <paragraph num="(b)"> <text>Whether term limits are placed on directors;</text> </paragraph> <paragraph num="(c)"> <text>How the election and re-election processes function; and</text> </paragraph> <paragraph num="(d)"> <text>Whether a Board diversity policy is in place and, if so, how it functions; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The processes in place for the Board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance, including any Board or committee training programs that have been put in place.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The insurer or insurance group shall describe the policies and practices for directing Senior Management, including a description of the following:</text> <paragraph num="(1)"> <text>Any processes or practices, such as suitability standards, used to determine whether officers and key persons in control functions have the appropriate background, experience, and integrity to fulfill their prospective roles, including:</text> <paragraph num="(a)"> <text>Identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and</text> </paragraph> <paragraph num="(b)"> <text>Any changes in an officer’s or key person’s suitability as outlined by the insurer’s or insurance group’s standards and procedures to monitor and evaluate such changes;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The insurer’s or insurance group’s code of business conduct and ethics, the discussion of which considers, for example:</text> <paragraph num="(a)"> <text>Compliance with laws, rules, and regulations; and</text> </paragraph> <paragraph num="(b)"> <text>Proactive reporting of any illegal or unethical behavior;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The insurer’s or insurance group’s processes for performance evaluation, compensation and corrective action to ensure effective senior management throughout the organization, including a description of the general objective of significant compensation programs and what the programs are designed to reward. The description shall include:</text> <paragraph num="(a)"> <text>Sufficient detail to allow the Commissioner to understand how the organization ensures</text> </paragraph> <paragraph num="(b)"> <text>A discussion of the elements used in determining the organization’s compensation programs, which may include, for example:</text> <paragraph num="(i)"> <text>The Board’s role in overseeing management compensation programs and practices;</text> </paragraph> <paragraph num="(ii)"> <text>The various elements of compensation awarded in the insurer’s or insurance group’s compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;</text> </paragraph> <paragraph num="(iii)"> <text>How compensation programs are related to both company and individual performance over time;</text> </paragraph> <paragraph num="(iv)"> <text>Whether the compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;</text> </paragraph> <paragraph num="(v)"> <text>Any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and</text> </paragraph> <paragraph num="(vi)"> <text>Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>The insurer’s or insurance group’s plans for Chief Executive Officer and Senior Management succession.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The insurer or insurance group shall describe the process by which the Board, its committees, and Senior Management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer’s business activities, including a discussion of:</text> <paragraph num="(1)"> <text>How oversight and management responsibilities are delegated between the Board, its committees, and Senior Management;</text> </paragraph> <paragraph num="(2)"> <text>How the Board is kept informed of the insurer’s strategic plans, the associated risks, and steps that Senior Management is taking to monitor and manage those risk; and</text> </paragraph> <paragraph num="(3)"> <text>A description of how reporting responsibilities are organized to allow the Commissioner to understand the frequency at which information is reported to and reviewed by Senior Management and the Board in the following critical risk areas of the insurer:</text> <paragraph num="(a)"> <text>Risk management processes, which may include reference to an insurer’s ORSA Summary Report pursuant to Insurance Article, §32-105, Annotated Code of Maryland, if applicable;</text> </paragraph> <paragraph num="(b)"> <text>Actuarial function;</text> </paragraph> <paragraph num="(c)"> <text>Investment decision-making processes;</text> </paragraph> <paragraph num="(d)"> <text>Reinsurance decision-making processes;</text> </paragraph> <paragraph num="(e)"> <text>Business strategy or finance decision-making processes;</text> </paragraph> <paragraph num="(f)"> <text>Compliance function;</text> </paragraph> <paragraph num="(g)"> <text>Financial reporting or internal auditing; and</text> </paragraph> <paragraph num="(h)"> <text>Market conduct decision-making processes.</text> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§4-503 and 4-508, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 6, 2020 (47:7 Md. R. 384)</annotation> </annotations> </chapter> </subtitle> <subtitle num="05" heading="Assets, Liabilities, Reserves, and Investments of Insurers"> <chapter num="01" heading="Annual Actuarial Opinion and Memorandum"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to all life insurance companies and fraternal benefit societies that are authorized to:</text> <paragraph num="(1)"> <text>Do business in this State; or</text> </paragraph> <paragraph num="(2)"> <text>Reinsure life insurance, annuities, or accident and health business in this State.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and in developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the Commissioner has the authority to specify specific methods of actuarial analysis and actuarial assumptions when, in the Commissioner's judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items.</text> </paragraph> <paragraph num="C."> <text>This chapter is applicable to all annual statements filed with the Insurance Commissioner after the effective date of this chapter in accordance with Insurance Article, §§4-116 and 8-444, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Actuarial opinion” means the opinion of an appointed actuary regarding the adequacy of reserves and related actuarial items based on an asset adequacy analysis in accordance with:</text> <paragraph num="(a)"> <text>Regulation .05 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Applicable actuarial standards of practice.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.</text> </paragraph> <paragraph num="(3)"> <text>“Annual statement” means the statement required in accordance with the provisions of Insurance Article, §§4-116 and 8-444, Annotated Code of Maryland, to be filed by the company with the Commissioner annually.</text> </paragraph> <paragraph num="(4)"> <text>“Appointed actuary” means an individual who is appointed or retained in accordance with the requirements set forth in Regulation .03B of this chapter to provide the actuarial opinion and supporting memorandum required by Insurance Article, §5-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Asset adequacy analysis” means an analysis:</text> <paragraph num="(a)"> <text>That meets the standards and other requirements referred to in Regulation .03C of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Which may take many forms, including, but not limited to, cash flow testing, sensitivity testing, or applications of risk theory.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Company” means a life insurance company or a fraternal benefit society:</text> <paragraph num="(a)"> <text>Authorized to do business in this State; or</text> </paragraph> <paragraph num="(b)"> <text>Authorized to reinsure life insurance, annuities, or accident and health business in this State.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Qualified actuary” means an individual who:</text> <paragraph num="(a)"> <text>Is a member in good standing of the American Academy of Actuaries;</text> </paragraph> <paragraph num="(b)"> <text>Is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing these statements;</text> </paragraph> <paragraph num="(c)"> <text>Is familiar with the valuation requirements applicable to life and health insurance companies;</text> </paragraph> <paragraph num="(d)"> <text>Has not failed to notify the Commissioner of any adverse action taken by the insurance regulatory authority of any state similar to that in §B(7)(e)(i)-(v) of this regulation; and</text> </paragraph> <paragraph num="(e)"> <text>Has not been found by the Commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing, to have:</text> <paragraph num="(i)"> <text>Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of the actuary's dealings as a qualified actuary;</text> </paragraph> <paragraph num="(ii)"> <text>Been found guilty of fraudulent or dishonest practices;</text> </paragraph> <paragraph num="(iii)"> <text>Demonstrated incompetency, lack of cooperation, or untrustworthiness to act as a qualified actuary;</text> </paragraph> <paragraph num="(iv)"> <text>Submitted to the Commissioner during the past 5 years an actuarial opinion or memorandum pursuant to Regulations .05 and .06 of this chapter that the Commissioner rejected because it did not meet the provisions of these regulations, including standards set by the Actuarial Standards Board; or</text> </paragraph> <paragraph num="(v)"> <text>Resigned or been removed as an actuary within the past 5 years as a result of acts or omissions indicated in any adverse report on examination or as a result of failure to adhere to generally acceptable actuarial standards.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="General Requirements."> <paragraph num="A."> <text>Submission of Statement of Actuarial Opinion.</text> <paragraph num="(1)"> <text>There shall be included on or attached to page 1 of the annual statement for each year, beginning with the year in which this chapter becomes effective, the statement of an appointed actuary, entitled “Statement of Actuarial Opinion”, setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>In the case of a statement of actuarial opinion required to be submitted by a foreign or alien company, the Commissioner may accept the statement of actuarial opinion filed by the company with the insurance regulator of another state if the Commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.</text> </paragraph> <paragraph num="(3)"> <text>Upon written request by the company and upon good cause shown, the Commissioner may grant an extension of the date for submission of the statement of actuarial opinion.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Appointed Actuary.</text> <paragraph num="(1)"> <text>An appointed actuary is a qualified actuary who is appointed or retained to prepare the statement of actuarial opinion required by this chapter, either directly by, or by the authority of, the board of directors through an executive officer of the company other than the qualified actuary.</text> </paragraph> <paragraph num="(2)"> <text>The company shall:</text> <paragraph num="(a)"> <text>Give the Commissioner timely written notice of the name, title, and, in the case of a consulting actuary, the name of the firm, and manner of appointment or retention of each individual appointed or retained by the company as an appointed actuary; and</text> </paragraph> <paragraph num="(b)"> <text>State in the notice that the individual meets the requirements of a qualified actuary and is not disqualified under Regulation .02B(7) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Once notice is furnished, further notice is not required with respect to this individual if the company gives the Commissioner timely written notice if the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set forth in this chapter.</text> </paragraph> <paragraph num="(4)"> <text>If an individual appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Standards for Asset Adequacy Analysis. The asset adequacy analysis required by this chapter shall:</text> <paragraph num="(1)"> <text>Conform to the standards of practice:</text> <paragraph num="(a)"> <text>As promulgated from time to time by the Actuarial Standards Board and any additional standards under this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Which are to form the basis of the statement of actuarial opinion in accordance with Regulation .05 of this chapter; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Be based on methods of analysis considered appropriate for these purposes by the Actuarial Standards Board.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Liabilities To Be Covered."> <paragraph num="A."> <text>The statement of actuarial opinion shall apply to all the business the company has in force on the statement date, whether directly issued or assumed, regardless of when or where issued, for example, reserves of Exhibits 5, 6, and 7 of the Annual Statement, and claim liabilities in Exhibit 8, Part 1 of the Annual Statement, and equivalent items in the separate account statement or statements of a life insurance company, and corresponding items in the annual statements of other companies.</text> </paragraph> <paragraph num="B."> <text>If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in accordance with the requirements of the Insurance Article, Title 5, Subtitle 3 (The Standard Valuation Law), Annotated Code of Maryland, and regulations adopted under it, the company shall establish the additional reserve.</text> </paragraph> <paragraph num="C."> <text>Additional reserves established under §B of this regulation and considered not necessary in subsequent years may be released. Any amounts released shall be disclosed in the actuarial opinion for the applicable year. The release of these reserves is not considered an adoption of a lower standard of valuation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Statement of Actuarial Opinion Based on an Asset Adequacy Analysis."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>The statement of actuarial opinion submitted in accordance with this regulation shall consist of:</text> <paragraph num="(a)"> <text>A paragraph identifying the appointed actuary and the actuary's qualifications as required by §B(5) of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>A scope paragraph identifying:</text> <paragraph num="(i)"> <text>The subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items which have been analyzed for asset adequacy and the method of analysis as required by §B(6) of this regulation; and</text> </paragraph> <paragraph num="(ii)"> <text>The reserves and related actuarial items covered by the opinion which have not been so analyzed;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures, or assumptions, for example, anticipated cash flows from currently owned assets (including variation in cash flows according to economic scenarios in §B(7) of this regulation) supported by a statement of each expert in the form prescribed by §E of this regulation; and</text> </paragraph> <paragraph num="(d)"> <text>An opinion paragraph expressing the appointed actuary's opinion with respect to the adequacy of the supporting assets to mature the liabilities as required by §B(10) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>One or more additional paragraphs are required in individual company cases if the appointed actuary:</text> <paragraph num="(a)"> <text>Considers it necessary to state a qualification of the actuary's opinion;</text> </paragraph> <paragraph num="(b)"> <text>Must disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior opinion date with that used for this opinion;</text> </paragraph> <paragraph num="(c)"> <text>Must disclose whether additional reserves as of the prior opinion date are released as of this opinion date, and the extent of the release; or</text> </paragraph> <paragraph num="(d)"> <text>Chooses to add a paragraph briefly describing the assumptions which form the basis for the actuarial opinion.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Required Language.</text> <paragraph num="(1)"> <text>The language in §B(5)—(13) of this regulation, or language substantially similar, shall be used in the statement of actuarial opinion in accordance with this section.</text> </paragraph> <paragraph num="(2)"> <text>The required language is that which in typical circumstances should be included in a statement of actuarial opinion.</text> </paragraph> <paragraph num="(3)"> <text>The required language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language which clearly expresses the actuary's professional judgment and which indicates why the required language was not used.</text> </paragraph> <paragraph num="(4)"> <text>The opinion shall retain all pertinent aspects of the language provided in this regulation.</text> </paragraph> <paragraph num="(5)"> <text>The opening paragraph shall generally indicate the appointed actuary's relationship to the company and the actuary's qualifications to sign the opinion in the following manner:</text> <paragraph num="(a)"> <text>For a company actuary, the opening paragraph of the actuarial opinion should read as follows: “I, {name}, am {title} of {insurance company name} and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of said insurer to render this opinion as stated in the letter to the Commissioner dated {insert date}. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies.”; and</text> </paragraph> <paragraph num="(b)"> <text>For a consulting actuary, the opening paragraph shall contain a statement identical or similar to: “I, {name}, a member of the American Academy of Actuaries, am associated with the firm of {name of consulting firm}. I have been appointed by, or by the authority of, the Board of Directors of {name of company} to render this opinion as stated in the letter to the Commissioner dated {insert date}. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies.”</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The scope paragraph shall include a statement identical or similar to the following:</text> <paragraph num="(a)"> <text>The additional actuarial reserves are the reserves established under Regulation .04B of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>The appointed actuary should indicate the method of analysis, determined in accordance with the standards for asset adequacy analysis referred to in Regulation .03C of this chapter, by means of symbols that should be defined in footnotes to the table.</text> </paragraph> <paragraph num="(c)"> <text>Allocated Amount of Asset Valuation Reserve (AVR).</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Reliance Paragraph—Other Experts.</text> <paragraph num="(a)"> <text>If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph shall include a statement such as the following:</text> </paragraph> <paragraph num="(b)"> <text>A statement of reliance on other experts should be accompanied by a statement by each of these experts in the form prescribed by §E of this regulation.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph shall also include the following:</text> </paragraph> <paragraph num="(9)"> <text>Underlying Records Not Examined.</text> <paragraph num="(a)"> <text>If the appointed actuary has not examined the underlying records, but has relied upon listings and summaries of policies in force, or asset records prepared by the company or a third party, or both, the reliance paragraph shall include a statement identical or similar to: “In forming my opinion on {specify types of reserves}, I have relied upon listings and summaries {of policies and contracts, of asset records} prepared by {name and title of company officer certifying in-force records} as certified in the attached statement. I evaluated that data for reasonableness and consistency. I also reconciled that data to {exhibits and schedules to be listed as applicable} of the company's current annual statement. In other respects my examination included review of the actuarial assumptions and actuarial methods and tests of the actuarial calculations as I considered necessary.”</text> </paragraph> <paragraph num="(b)"> <text>The reliance paragraph in §B(9)(a) of this regulation shall be accompanied by a statement by each person relied upon in the form prescribed by §E of this regulation.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>The opinion paragraph shall include the following:</text> <paragraph num="(a)"> <text>"In my opinion the reserves and related actuarial values concerning the statement items identified above:</text> <paragraph num="(i)"> <text>Are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles;</text> </paragraph> <paragraph num="(ii)"> <text>Are based on actuarial assumptions which produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions;</text> </paragraph> <paragraph num="(iii)"> <text>Meet the requirements of the insurance law and regulations of the state of {state of domicile} and are at least as great as the minimum aggregate amounts required by the state in which that statement is filed;</text> </paragraph> <paragraph num="(iv)"> <text>Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end (with any exceptions noted below); and</text> </paragraph> <paragraph num="(v)"> <text>Include provision for all actuarial reserves and related statement items which ought to be established.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts, make adequate provision, according to presently accepted actuarial standards of practice for the anticipated cash flows required by the contractual obligations and related expenses of the company. (At the discretion of the Commissioner, this language may be omitted for an opinion filed on behalf of a company doing business only in this State and in no other state.)</text> </paragraph> <paragraph num="(c)"> <text>The actuarial methods, considerations, and analysis used in forming my opinion conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis of this statement of opinion."</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>The opinion paragraph shall include either of the following, whichever is applicable:</text> <paragraph num="(a)"> <text>“This opinion is updated annually as required by statute. To the best of my knowledge, there have been no material changes from the applicable date of the annual statement to the date of the rendering of this opinion which should be considered in reviewing this opinion.”; or</text> </paragraph> <paragraph num="(b)"> <text>“The following material change(s) which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion.”</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>The opinion paragraph shall include the following: “The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of the asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis.”</text> </paragraph> <paragraph num="(13)"> <text>The opinion paragraph shall include the signature of the appointed actuary, the address of the appointed actuary, the telephone number of the appointed actuary, and the date.</text> </paragraph> <aftertext>“My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary. I also reconciled the underlying basic asset and liability records to {exhibits and schedules listed as applicable} of the company's current annual statement.”</aftertext> </paragraph> <paragraph num="C."> <text>Assumptions for New Issues. The adoption for new issues or new claims or other new liabilities of an actuarial assumption which differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of this regulation.</text> </paragraph> <paragraph num="D."> <text>Adverse Opinions.</text> <paragraph num="(1)"> <text>If the appointed actuary is unable to form an opinion, then the actuary shall refuse to issue a statement of actuarial opinion.</text> </paragraph> <paragraph num="(2)"> <text>If the appointed actuary's opinion is adverse or qualified, then the actuary shall issue an adverse or qualified actuarial opinion explicitly stating the reason or reasons for the opinion. This statement should follow the scope paragraph and precede the opinion paragraph.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Reliance on Data Furnished by Other Persons.</text> <paragraph num="(1)"> <text>If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion should so indicate the persons the actuary is relying upon and a precise identification of the items subject to reliance.</text> </paragraph> <paragraph num="(2)"> <text>In addition, the persons on whom the appointed actuary relies shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness, or reasonableness, as applicable, of the items.</text> </paragraph> <paragraph num="(3)"> <text>The certification statement shall be identical or similar to one of the following:</text> <paragraph num="(a)"> <text>“I {name of officer}, {title}, of {name of company or accounting firm}, hereby affirm that the listings and summaries of policies and contracts in force as of December 31, 20{ }, and other liabilities prepared for and submitted to {name of appointed actuary} were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete. Signature of the Officer of the Company or Accounting Firm, Address of the Officer of the Company or Accounting Firm, Telephone Number of the Officer of the Company or Accounting Firm, Date”; or</text> </paragraph> <paragraph num="(b)"> <text>“I, {name of officer}, {title}, of {name of company, accounting firm, or security analyst}, hereby affirm that the listings, summaries, and analysis relating to data prepared for and submitted to {name of appointed actuary} in support of the asset-oriented aspects of the opinion were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete. Signature of the Officer of the Company, Accounting Firm or the Security Analyst; Address of the Officer of the Company, Accounting Firm or the Security Analyst; Telephone Number of the Officer of the Company, Accounting Firm or the Security Analyst, Date”</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Alternate Option.</text> <paragraph num="(1)"> <text>Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland (The Standard Valuation Law), gives the Commissioner broad authority to accept the valuation of a foreign insurer when that valuation meets the requirements applicable to a company domiciled in this State in the aggregate. As an alternative to the requirements in §B(10)(a)(iii) of this regulation, the Commissioner may make one or more of the additional approaches listed in §F(2)—(4) of this regulation available to the opinion actuary.</text> </paragraph> <paragraph num="(2)"> <text>Option 1.</text> <paragraph num="(a)"> <text>A statement that the reserves “meet the requirements of the insurance laws and regulations of the state of {state of domicile} and the formal written standards and conditions of this State for filing an opinion based on the law of the state of domicile” may be used.</text> </paragraph> <paragraph num="(b)"> <text>If the Commissioner chooses to allow this alternative, a formal written list of standards and conditions shall be made available.</text> </paragraph> <paragraph num="(c)"> <text>If a company chooses to use this alternative, the standards and conditions in effect on July 1 of a calendar year shall apply to statements for that calendar year, and they shall remain in effect until they are revised or revoked.</text> </paragraph> <paragraph num="(d)"> <text>If no list is available, this alternative is not available.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Option 2.</text> <paragraph num="(a)"> <text>A statement that the reserves “meet the requirements of the insurance laws and regulations of the State of {state of domicile}, and I have verified that the company's request to file an opinion based on the law of the state of domicile has been approved and that any conditions required by the Commissioner for approval of that request have been met” may be used.</text> </paragraph> <paragraph num="(b)"> <text>If the Commissioner chooses to allow this alternative, a formal written statement for the allowance shall be issued not later than March 31 of the year it is first effective. It shall remain valid until rescinded or modified by the Commissioner.</text> </paragraph> <paragraph num="(c)"> <text>The rescission or modifications shall be issued not later than March 31 of the year they are first effective.</text> </paragraph> <paragraph num="(d)"> <text>Subsequent to the statement in §F(3)(a) of this regulation being issued, if a company chooses to use this alternative, the company shall file a request to do so, along with justification for its use, not later than April 30 of the year of the opinion to be filed. The request shall be deemed approved on October 1 of that year if the Commissioner has not denied the request by that date.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Option 3.</text> <paragraph num="(a)"> <text>A statement that the reserves “meet the requirements of the insurance laws and regulations of the State of {state of domicile}, and I have submitted the required comparison as specified by this state” may be used.</text> </paragraph> <paragraph num="(b)"> <text>If the Commissioner chooses to allow this alternative, a formal written list of products for which the required comparison shall be provided will be published.</text> </paragraph> <paragraph num="(c)"> <text>If a company chooses to use this alternative, the list in effect on July 1 of a calendar year shall apply to statements for that calendar year, and it shall remain in effect until it is revised or revoked.</text> </paragraph> <paragraph num="(d)"> <text>If no list is available, this alternative is not available.</text> </paragraph> <paragraph num="(e)"> <text>If a company desires to use this alternative, the appointed actuary shall provide a comparison of the gross nationwide reserves held to the gross nationwide reserves that would be held under NAIC codification standards.</text> </paragraph> <paragraph num="(f)"> <text>Gross nationwide reserves are the total reserves calculated for the total company in-force business directly sold and assumed, indifferent to the state in which the risk resides, without reduction for reinsurance ceded.</text> </paragraph> <paragraph num="(g)"> <text>The information provided shall be at least product type, death benefit or account value, reserves held, codification reserves, and codification standard.</text> </paragraph> <paragraph num="(h)"> <text>The information listed shall include all products identified by either the state of filing or any other states subscribing to this alternative.</text> </paragraph> <paragraph num="(i)"> <text>If there is no codification standard for the type of product or risk in force or if the codification standard does not directly address the type of product or risk in force, the appointed actuary shall provide detailed disclosure of the specific method and assumptions used in determining the reserves held.</text> </paragraph> <paragraph num="(j)"> <text>The comparison provided by the company is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Notwithstanding other provisions of this regulation, the Commissioner may reject an opinion based on the laws and regulations of the state of domicile and require an opinion based on the laws of Maryland. If a company is unable to provide the opinion within 60 days of the request or other period of time determined by the Commissioner after consultation with the company, the Commissioner may contract an independent actuary at the company's expense to prepare and file the opinion.</text> </paragraph> </paragraph> <paragraph num="G."> <text>National Association of Insurance Commissioner's 2005 Annual Statement Blank.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Description of Actuarial Memorandum Including an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>In accordance with Insurance Article, §5-201, Annotated Code of Maryland, the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of the actuary's opinion regarding the reserves. The memorandum shall be made available for examination by the Commissioner upon the Commissioner's request.</text> </paragraph> <paragraph num="(2)"> <text>In preparing the memorandum, the appointed actuary may rely on, and include as a part of the actuary's own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of Regulation .02B(7) of this chapter, with respect to the areas covered in those memoranda, and so state in their memoranda.</text> </paragraph> <paragraph num="(3)"> <text>Memoranda.</text> <paragraph num="(a)"> <text>If the Commissioner requests a memorandum, the Commissioner may designate a qualified actuary to review the opinion and prepare a supporting memorandum, if:</text> <paragraph num="(i)"> <text>No memorandum exists; or</text> </paragraph> <paragraph num="(ii)"> <text>The Commissioner finds that the analysis described in the memorandum fails to meet the standards of the Actuarial Standards Board or the standards and requirements of this chapter.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The reasonable and necessary expense of the independent review shall be paid by the company, but the review shall be directed and controlled by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Company Data.</text> <paragraph num="(a)"> <text>The reviewing actuary has the same status as an examiner for purposes of obtaining data from the company. The work papers and documentation of the reviewing actuary shall be retained by the Commissioner.</text> </paragraph> <paragraph num="(b)"> <text>Information provided by the company to the reviewing actuary and included in the work papers:</text> <paragraph num="(i)"> <text>Is considered as material provided by the company to the Commissioner; and</text> </paragraph> <paragraph num="(ii)"> <text>Shall be kept confidential to the same extent as is prescribed by law with respect to other material provided by the company to the Commissioner pursuant to Insurance Article, §2-209, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The reviewing actuary may not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the company pursuant to this regulation for the current year or any one of the preceding 3 years.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Asset Adequacy Issues Summary.</text> <paragraph num="(a)"> <text>In accordance with Insurance Article, §5-201, Annotated Code of Maryland, the appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in §D of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The regulatory asset adequacy issues summary shall be submitted not later than March 15 of the year following the year for which a statement of actuarial opinion based on asset adequacy is required.</text> </paragraph> <paragraph num="(c)"> <text>The regulatory asset adequacy issues summary shall be kept confidential to the same extent and under the same conditions as the actuarial memorandum.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Details of Memorandum Section Documenting Asset Adequacy Analysis. When an actuarial opinion under Regulation .05 of this chapter is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy analysis referred to in Regulation .03C of this chapter and any additional standards under this chapter. It shall specify:</text> <paragraph num="(1)"> <text>For reserves:</text> <paragraph num="(a)"> <text>Product descriptions including market description, underwriting, and other aspects of a risk profile, and the specific risks the appointed actuary considers significant;</text> </paragraph> <paragraph num="(b)"> <text>Source of liability in force;</text> </paragraph> <paragraph num="(c)"> <text>Reserve method and basis;</text> </paragraph> <paragraph num="(d)"> <text>Investment reserves;</text> </paragraph> <paragraph num="(e)"> <text>Reinsurance arrangements;</text> </paragraph> <paragraph num="(f)"> <text>Identification of any explicit or implied guarantees made by the general account in support of benefits provided through a separate account or under a separate account policy or contract, and the methods used by the appointed actuary to provide for the guarantees in the asset adequacy analysis; and</text> </paragraph> <paragraph num="(g)"> <text>Documentation of assumptions to test reserves for the following:</text> <paragraph num="(i)"> <text>Lapse rates (both base and excess);</text> </paragraph> <paragraph num="(ii)"> <text>Interest crediting rate strategy;</text> </paragraph> <paragraph num="(iii)"> <text>Mortality;</text> </paragraph> <paragraph num="(iv)"> <text>Policyholder dividend strategy;</text> </paragraph> <paragraph num="(v)"> <text>Competitor or market interest rate;</text> </paragraph> <paragraph num="(vi)"> <text>Annuitization rates;</text> </paragraph> <paragraph num="(vii)"> <text>Commissions and expenses; and</text> </paragraph> <paragraph num="(viii)"> <text>Morbidity;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For assets:</text> <paragraph num="(a)"> <text>Portfolio descriptions, including a risk profile disclosing the quality, distribution, and types of assets;</text> </paragraph> <paragraph num="(b)"> <text>Investment and disinvestment assumptions;</text> </paragraph> <paragraph num="(c)"> <text>Source of asset data;</text> </paragraph> <paragraph num="(d)"> <text>Asset valuation bases; and</text> </paragraph> <paragraph num="(e)"> <text>Documentation of assumptions made for:</text> <paragraph num="(i)"> <text>Default costs;</text> </paragraph> <paragraph num="(ii)"> <text>Bond call function;</text> </paragraph> <paragraph num="(iii)"> <text>Mortgage prepayment function;</text> </paragraph> <paragraph num="(iv)"> <text>Determining market value for assets sold due to disinvestment strategy; and</text> </paragraph> <paragraph num="(v)"> <text>Determining yield on assets acquired through the investment strategy;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>For the analysis basis:</text> <paragraph num="(a)"> <text>Methodology;</text> </paragraph> <paragraph num="(b)"> <text>Rationale for inclusion/exclusion of different blocks of business and how pertinent risks were analyzed;</text> </paragraph> <paragraph num="(c)"> <text>Rationale for degree of rigor in analyzing different blocks of business, including the level of materiality that was used in determining how rigorously to analyze different blocks of business;</text> </paragraph> <paragraph num="(d)"> <text>Criteria for determining asset adequacy, including the precise basis for determining if assets are adequate to cover reserves under moderately adverse conditions or other conditions as specified in relevant actuarial standards of practice; and</text> </paragraph> <paragraph num="(e)"> <text>Whether the impact of federal income taxes was considered and the treatment of reinsurance in the asset adequacy analysis;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Summary of material changes in methods, procedures, or assumptions from the prior year's asset adequacy analysis;</text> </paragraph> <paragraph num="(5)"> <text>Summary of results; and</text> </paragraph> <paragraph num="(6)"> <text>Conclusion or conclusions.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In §B(1) and (2) of this regulation, the documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions.</text> </paragraph> <paragraph num="D."> <text>Details of the Regulatory Asset Adequacy Issues Summary.</text> <paragraph num="(1)"> <text>The regulatory asset adequacy issues summary shall include:</text> <paragraph num="(a)"> <text>Descriptions of the scenarios tested, including whether those scenarios are stochastic or deterministic, and the sensitivity testing done relative to those scenarios as follows:</text> <paragraph num="(i)"> <text>If negative ending surplus results under certain tests in the aggregate, the actuary should describe those tests and the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values; and</text> </paragraph> <paragraph num="(ii)"> <text>Ending surplus values shall be determined by either extending the projection period until the in-force and associated assets and liabilities at the end of the projection period are immaterial or by adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities remaining in force;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The extent to which the appointed actuary uses assumptions in the asset adequacy analysis that are materially different than the assumptions used in the previous asset adequacy analysis;</text> </paragraph> <paragraph num="(c)"> <text>The amount of reserves and the identity of the product lines that had been subjected to asset adequacy analysis in the prior opinion but were not subject to analysis for the current opinion;</text> </paragraph> <paragraph num="(d)"> <text>Comments on any interim results that may be of significant concern to the appointed actuary, for example, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods;</text> </paragraph> <paragraph num="(e)"> <text>The methods used by the actuary to recognize the impact of reinsurance on the company's cash flows, including both assets and liabilities, under each of the scenarios tested; and</text> </paragraph> <paragraph num="(f)"> <text>Whether the actuary has been satisfied that all options whether explicit or embedded, in any asset or liability, including but not limited to those affecting cash flows embedded in fixed income securities, and equity-like features in any investments, have been appropriately considered in the asset adequacy analysis.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The regulatory asset adequacy issues summary shall contain the name of the company for which the regulatory asset adequacy issues summary is being supplied and shall be signed and dated by the appointed actuary rendering the actuarial opinion.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Conformity to Standards of Practice. The memorandum shall include a statement:</text> </paragraph> <paragraph num="F."> <text>Use of Assets Supporting the Interest Maintenance Reserve and the Asset Valuation Reserve.</text> <paragraph num="(1)"> <text>An appropriate allocation of assets in the amount of the interest maintenance reserve (IMR), whether positive or negative, shall be used in any asset adequacy analysis.</text> </paragraph> <paragraph num="(2)"> <text>Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the asset valuation reserve (AVR), and these AVR assets may not be applied for any other risks with respect to reserve adequacy.</text> </paragraph> <paragraph num="(3)"> <text>Analysis of these AVR assets and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support.</text> </paragraph> <paragraph num="(4)"> <text>The amount of the assets used for the AVR shall be disclosed in the Table of Reserves and Liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets shall be disclosed in the memorandum.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Documentation. The appointed actuary shall retain on file, for at least 7 years, sufficient documentation so that it will be possible to determine:</text> <paragraph num="(1)"> <text>The procedures followed;</text> </paragraph> <paragraph num="(2)"> <text>The analyses performed;</text> </paragraph> <paragraph num="(3)"> <text>The basis for assumptions; and</text> </paragraph> <paragraph num="(4)"> <text>The results obtained.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Annual Filing Requirement."> <text>A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with Regulation .05 of this chapter, and a memorandum in support of the analysis in accordance with Regulation .06 of this chapter, is required each year.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 4-116, 5-103, 5-201, 8-444, and 14-121, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.10 adopted as an emergency provision effective October 26, 1993 (20:23 Md. R. 1799); adopted permanently effective January 31, 1994 (21:2 Md. R. 98)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.99 to COMAR 31.05.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.10 repealed and new Regulations .01—.07 adopted as an emergency provision effective March 13, 2009 (36:8 Md. R. 592); adopted permanently effective June 1, 2009 (36:11 Md. R. 787)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective April 2, 2012 (39:6 Md. R. 412)</annotation> </annotations> </chapter> <chapter num="02" heading="Certificate of Valuation—Life Insurers"> <regulation prefix="Regulation" num=".01" heading="Certificate of Valuation."> <paragraph num="A."> <text>Each life insurance company licensed in Maryland shall annually furnish the Commissioner within 30 days of its issuance by the state of domicile a certificate of valuation covering the previous calendar year attested by the insurance supervisory official of the company's state of domicile. The submission of the certificate of valuation shall be in addition to the submission of the annual or interim statement by the insurer as may be required by statute.</text> </paragraph> <paragraph num="B."> <text>Each life insurance company incorporated under the laws of Maryland shall furnish the Commissioner on or before February 15th of each year with properly attested true and correct lists and valuations of its business in force, which, after appropriate investigation, will be used in connection with the annual valuation of policies. Failure to furnish the required lists and valuations will preclude the issuance by the Commissioner of a certificate of valuation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 4-116, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 31, 1953</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective February 20, 1989 (16:3 Md. R. 342</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.10 to COMAR 31.05.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="03" heading="Valuation of Life Insurance Policies"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>The purpose of this chapter is to provide:</text> <paragraph num="(1)"> <text>Tables of select mortality factors and rules for their use;</text> </paragraph> <paragraph num="(2)"> <text>Rules concerning a minimum standard for the valuation of plans with nonlevel premiums or benefits;</text> </paragraph> <paragraph num="(3)"> <text>Rules concerning a minimum standard for the valuation of plans with secondary guarantees;</text> </paragraph> <paragraph num="(4)"> <text>Mortality tables to determine minimum valuation standards and minimum nonforfeiture standards for life insurance policies; and</text> </paragraph> <paragraph num="(5)"> <text>A requirement that all life insurers perform an asset adequacy analysis except in certain cases.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The method for calculating basic reserves defined in this chapter constitutes the Commissioner's Reserve Valuation Method for policies to which this chapter is applicable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <paragraph num="A."> <text>In General. Except as provided in §B of this regulation, this chapter applies to all life insurance policies, with or without nonforfeiture values, issued on or after the effective date of this chapter, subject to the conditions of §C of this regulation.</text> </paragraph> <paragraph num="B."> <text>Exceptions. Regulations .07—.13 of this chapter do not apply to:</text> <paragraph num="(1)"> <text>An individual life insurance policy:</text> <paragraph num="(a)"> <text>Issued on or after the effective date of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Issued in accordance with and as a result of a reentry provision contained in the original life insurance policy of the same or greater face amount which:</text> <paragraph num="(i)"> <text>Was issued before the effective date of this chapter, and</text> </paragraph> <paragraph num="(ii)"> <text>Guarantees the premium rates of the new policy;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Subsequent policies issued as a result of the exercise of the provision described in §B(1)(b) of this regulation, or a derivation of the provision in the new policy;</text> </paragraph> <paragraph num="(3)"> <text>A variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts;</text> </paragraph> <paragraph num="(4)"> <text>A variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts;</text> </paragraph> <paragraph num="(5)"> <text>Group life insurance certificates unless the certificates provide for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of 1 year; or</text> </paragraph> <paragraph num="(6)"> <text>A universal life insurance policy if the:</text> <paragraph num="(a)"> <text>Secondary guarantee period, if any, is 5 years or less;</text> </paragraph> <paragraph num="(b)"> <text>Specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on:</text> <paragraph num="(i)"> <text>For policies issued before January 1, 2009, the 1980 CSO valuation table or the ultimate mortality rates in the 2001 CSO Mortality Table, and the applicable valuation interest rate; and</text> </paragraph> <paragraph num="(ii)"> <text>For policies issued on or after January 1, 2009, the ultimate mortality rates in the 2001 CSO Mortality Table and the applicable valuation interest rate; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Initial surrender charge is not less than 100 percent of the first year annualized specified premium for the second guarantee period.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Conditions.</text> <paragraph num="(1)"> <text>Calculation of the minimum valuation standard for policies, other than universal life policies, with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, or both, shall be in accordance with the provisions of Regulation .11 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period, shall be in accordance with the provisions of Regulation .12 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Basic reserves” means reserves calculated in accordance with the principles of Insurance Article, §5-307, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>“Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.</text> </paragraph> <paragraph num="(4)"> <text>“Contract segmentation method” means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined under Regulation .07 of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Deficiency reserves” means the excess, if greater than zero, of:</text> <paragraph num="(a)"> <text>Minimum reserves calculated in accordance with the principles of Insurance Article, §5-311, Annotated Code of Maryland; over</text> </paragraph> <paragraph num="(b)"> <text>Basic reserves.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Guaranteed gross premiums” means the premiums under a policy of life insurance that are guaranteed and determined at issue.</text> </paragraph> <paragraph num="(7)"> <text>“Maximum valuation interest rates” means the interest rates defined in Insurance Article, §5-306(d)(2), Annotated Code of Maryland, that are to be used in determining the minimum standard for the valuation of life insurance policies.</text> </paragraph> <paragraph num="(8)"> <text>“NAIC” means the National Association of Insurance Commissioners.</text> </paragraph> <paragraph num="(9)"> <text>"1980 CSO valuation tables" means the Commissioner's 1980 Standard Ordinary Mortality Table (1980 CSO Table) without 10-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law, and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983.</text> </paragraph> <paragraph num="(10)"> <text>“Preneed insurance contract” means any life insurance policy or certificate, annuity contract, or other insurance contract which, by assignment or otherwise, has for a purpose the funding of an agreement relating to the purchase or provision of specific funeral or cemetery merchandise or services to be provided at the time of the individual's death.</text> </paragraph> <paragraph num="(11)"> <text>“Scheduled gross premium” means:</text> <paragraph num="(a)"> <text>The smallest illustrated gross premium at issue for other than universal life insurance policies; or</text> </paragraph> <paragraph num="(b)"> <text>The smallest specified premium described in Regulation .12A(3) of this chapter, if any, for universal life insurance policies, or else the minimum premium described in Regulation .12A(4) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Segmented reserves” means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy as described in Regulation .08 of this chapter.</text> </paragraph> <paragraph num="(13)"> <text>“Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.</text> </paragraph> <paragraph num="(14)"> <text>“Statistical agent” means an entity with:</text> <paragraph num="(a)"> <text>Proven systems for protecting the confidentiality of individual insurance and insurer information;</text> </paragraph> <paragraph num="(b)"> <text>Demonstrated resources for, and history of, ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and</text> </paragraph> <paragraph num="(c)"> <text>A history of, and means for, aggregation of data and accurate promulgation of the experience modifications in a timely manner.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Tabular cost of insurance” means the net single premium at the beginning of a policy year for 1-year term insurance in the amount of the guaranteed death benefit in that policy year.</text> </paragraph> <paragraph num="(16)"> <text>"10-year select factors" means the select factors adopted with the 1980 amendments to the NAIC Standard Valuation Law.</text> </paragraph> <paragraph num="(17)"> <text>2001 CSO Mortality Table.</text> <paragraph num="(a)"> <text>"2001 CSO Mortality Table" means that mortality table:</text> <paragraph num="(i)"> <text>Consisting of separate rates of mortality for male and female lives;</text> </paragraph> <paragraph num="(ii)"> <text>Developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force;</text> </paragraph> <paragraph num="(iii)"> <text>Adopted by the NAIC in December 2002 and included in the Proceedings of the NAIC (2nd Quarter 2002); and</text> </paragraph> <paragraph num="(iv)"> <text>Supplemented by the 2001 CSO Preferred Class Structure Mortality Table.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Unless the context indicates otherwise, "2001 CSO Mortality Table" includes:</text> <paragraph num="(i)"> <text>The ultimate form of that table;</text> </paragraph> <paragraph num="(ii)"> <text>The select and ultimate form of that table;</text> </paragraph> <paragraph num="(iii)"> <text>Both the smoker and nonsmoker mortality tables;</text> </paragraph> <paragraph num="(iv)"> <text>The composite mortality tables; and</text> </paragraph> <paragraph num="(v)"> <text>Both the age-nearest-birthday and age-last-birthday bases of the mortality tables.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(18)"> <text>"2001 CSO Mortality Table (F)" means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.</text> </paragraph> <paragraph num="(19)"> <text>"2001 CSO Mortality Table (M)" means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.</text> </paragraph> <paragraph num="(20)"> <text>2001 CSO Preferred Class Structure Mortality Table.</text> <paragraph num="(a)"> <text>"2001 CSO Preferred Class Structure Mortality Table" means those mortality tables adopted by the NAIC in September 2006, and included in the Proceedings of the NAIC (3rd Quarter 2006) which have separate rates of mortality for:</text> <paragraph num="(i)"> <text>Super preferred nonsmokers;</text> </paragraph> <paragraph num="(ii)"> <text>Preferred nonsmokers;</text> </paragraph> <paragraph num="(iii)"> <text>Residual standard nonsmokers:</text> </paragraph> <paragraph num="(iv)"> <text>Preferred smokers; and</text> </paragraph> <paragraph num="(v)"> <text>Residual standard smokers.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Unless the context indicates otherwise, "2001 CSO Preferred Class Structure Mortality Table" includes:</text> <paragraph num="(i)"> <text>The ultimate form of that table;</text> </paragraph> <paragraph num="(ii)"> <text>The select and ultimate form of that table;</text> </paragraph> <paragraph num="(iii)"> <text>Both the smoker and nonsmoker mortality tables;</text> </paragraph> <paragraph num="(iv)"> <text>Both the male and female mortality tables;</text> </paragraph> <paragraph num="(v)"> <text>The gender composite mortality tables; and</text> </paragraph> <paragraph num="(vi)"> <text>Both the age-nearest-birthday and age-last-birthday bases of the mortality table.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Unitary reserves” means the present value of all future guaranteed benefits less the present value of all future modified net premiums as described in Regulation .09 of this chapter.</text> </paragraph> <paragraph num="(22)"> <text>“Universal life insurance policy” means an individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Incorporation by Reference."> <paragraph num="A."> <text>The Select Mortality Factors Tables from pages 830-17—830-36 of the NAIC Valuation of Life Insurance Policies Model Regulation, as adopted in March 1999, are incorporated by reference.</text> </paragraph> <paragraph num="B."> <text>The 2001 CSO Mortality Table, as adopted by the NAIC in December 2002 and included in the Proceedings of the NAIC (2nd Quarter 2002), is incorporated by reference.</text> </paragraph> <paragraph num="C."> <text>The 2001 CSO Preferred Class Structure Mortality Table, as adopted by the NAIC in September 2006 and included in the Proceedings of the NAIC (3rd Quarter 2006), is incorporated by reference.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Application of Mortality Tables."> <paragraph num="A."> <text>Policies Issued Before January 1, 2009.</text> <paragraph num="(1)"> <text>At the election of an insurer for any one or more specified plans of insurance, an insurer may use the 1980 CSO valuation table or the 2001 CSO Mortality Table as the minimum standard for a policy issued before January 1, 2009.</text> </paragraph> <paragraph num="(2)"> <text>If an insurer elects to use the 2001 CSO Mortality Table as the minimum standard, the insurer shall do so for both valuation and nonforfeiture purposes.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Policies Issued on or After January 1, 2009. Except as set forth in §C of this regulation, for a policy issued on or after January 1, 2009, an insurer shall use the 2001 CSO Mortality Table as the minimum standard.</text> </paragraph> <paragraph num="C."> <text>Preneed Insurance Contracts.</text> <paragraph num="(1)"> <text>For a preneed insurance contract issued on or after January 1, 2009, and before January 1, 2012, an insurer may elect to use either the ultimate form of the 1980 CSO valuation tables or the 2001 CSO Mortality Table as the minimum standard for valuation and nonforfeiture purposes.</text> </paragraph> <paragraph num="(2)"> <text>If an insurer elects to use the 2001 CSO Mortality Table as the minimum standard for a preneed insurance contract issued on or after January 1, 2009, the insurer shall provide, as a part of the actuarial opinion memorandum submitted in support of the company's asset adequacy testing, an annual written notification to the domiciliary commissioner.</text> </paragraph> <paragraph num="(3)"> <text>The notification required by §C(2) of this regulation shall include:</text> <paragraph num="(a)"> <text>A complete list of all preneed insurance contract forms that use the 2001 CSO Mortality Table as the minimum standard;</text> </paragraph> <paragraph num="(b)"> <text>A certification signed by the appointed actuary stating that the reserve methodology employed by the company in determining reserves for the preneed insurance contracts issued after January 1, 2009, and using the 2001 CSO Mortality Table as the minimum standard develops adequate reserves; and</text> </paragraph> <paragraph num="(c)"> <text>Supporting information regarding the adequacy of reserves for preneed insurance contracts issued after January 1, 2009, and using the 2001 CSO Mortality Table as the minimum standard.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>For the purposes of the certification required in §C(3)(b) of this regulation, the preneed insurance contracts using the 2001 CSO Mortality Table as the minimum standard may not be aggregated with any other policies.</text> </paragraph> <paragraph num="(5)"> <text>For a preneed insurance contract issued on or after January 1, 2012, an insurer shall use the ultimate form of the 1980 CSO valuation tables as the minimum standard for valuation and nonforfeiture purposes.</text> </paragraph> <paragraph num="(6)"> <text>The status of a policy or contract as a preneed insurance contract is determined at the time of issue in accordance with the policy form filing.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Conditions for Use of Mortality Tables."> <paragraph num="A."> <text>Plans of Insurance With Separate Rates for Smokers and Nonsmokers. For each plan of insurance with separate rates for smokers and nonsmokers, an insurer may use:</text> <paragraph num="(1)"> <text>Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;</text> </paragraph> <paragraph num="(2)"> <text>Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by Insurance Article, §5-311, Annotated Code of Maryland, and composite mortality tables to determine the basic minimum reserves, minimum cash surrender values, and amounts of paid-up nonforfeiture benefits; or</text> </paragraph> <paragraph num="(3)"> <text>Smoker and nonsmoker mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Plans of Insurance Without Separate Rates for Smokers and Nonsmokers. For each plan of insurance without separate rates for smokers and nonsmokers, an insurer shall use the composite mortality tables.</text> </paragraph> <paragraph num="C."> <text>Plans of Insurance With Separate Rates for Preferred and Standard Nonsmokers.</text> <paragraph num="(1)"> <text>For each plan of insurance with separate rates for preferred and standard nonsmokers, an insurer may use super preferred nonsmoker, preferred nonsmoker, and residual standard nonsmoker tables to substitute for the nonsmoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves.</text> </paragraph> <paragraph num="(2)"> <text>At the time of election and annually thereafter, except for business valued under the residual standard nonsmoker table, the appointed actuary shall certify that:</text> <paragraph num="(a)"> <text>The present value of death benefits over the next 10 years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class; and</text> </paragraph> <paragraph num="(b)"> <text>The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Plans of Insurance With Separate Rates for Preferred and Standard Smokers.</text> <paragraph num="(1)"> <text>For each plan of insurance with separate rates for preferred and standard smoker lives, an insurer may use the preferred smoker and residual standard smoker tables to substitute for the smoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves.</text> </paragraph> <paragraph num="(2)"> <text>At the time of election and annually thereafter, for business valued under the preferred smoker table, the appointed actuary shall certify that:</text> <paragraph num="(a)"> <text>The present value of death benefits over the next 10 years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class; and</text> </paragraph> <paragraph num="(b)"> <text>The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basic table corresponding to the valuation table being used for that class.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Unless exempted by the Commissioner, every authorized insurer using the 2001 CSO Preferred Class Structure Mortality Table shall annually file with the Commissioner, with the NAIC, or with a statistical agent designated by the NAIC and acceptable to the Commissioner, statistical reports showing mortality and such other information as the Commissioner may consider necessary or expedient for the administration of the provisions of this regulation.</text> </paragraph> <paragraph num="F."> <text>The form of the reports required pursuant to §E of this regulation, shall be established by the Commissioner, or the Commissioner may require the use of a form established by the NAIC or by a statistical agent designated by the NAIC, and acceptable to the Commissioner.</text> </paragraph> <paragraph num="G."> <text>The use of the 2001 CSO Preferred Class Structure Mortality Table for the valuation of policies issued prior to January 1, 2007 may not be permitted in any statutory financial statement in which a company reports, with respect to any policy or portion of a policy coinsured, for either of the following:</text> <paragraph num="(1)"> <text>In cases where the mode of payment of the reinsurance premium is less frequent than the mode of payment of the policy premium, a reserve credit that exceeds, by more than the amount specified in this subsection as Y, the gross reserve calculated before reinsurance. Y is the amount of the gross reinsurance premium that:</text> <paragraph num="(a)"> <text>Provides coverage for the period from the next policy premium due date to the earlier of the end of the policy year and the next reinsurance premium due date; and</text> </paragraph> <paragraph num="(b)"> <text>Would be refunded to the ceding entity upon the termination of the policy.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In cases where the mode of payment of the reinsurance premium is more frequent than the mode of payment of the policy premium, a reserve credit that is less than the gross reserve, calculated before reinsurance, by an amount that is less than the amount specified in this subsection as Z. Z is the amount of the gross reinsurance premium that the ceding entity would need to pay the assuming company to provide reinsurance coverage from the period of the next reinsurance premium due date to the next policy premium due date minus any liability established for the proportionate amount not remitted to the reinsurer.</text> </paragraph> </paragraph> <paragraph num="H."> <text>For purposes of §G of this regulation, both the reserve credit and the gross reserve before reinsurance(i) for the mean reserve method shall be defined as the mean reserve minus the deferred premium asset, and (ii) for the mid-terminal reserve method shall include the unearned premium reserve. A company may estimate and adjust its accounting on an aggregate basis in order to meet the conditions to use the 2001 CSO Preferred Class Mortality Structure Table.</text> </paragraph> <paragraph num="I."> <text>Reserve Liabilities, Cash Surrender Values, and Paid-Up Nonforfeiture Benefits. Subject to the restrictions of Regulations .02 and .10—.12 of this chapter and Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland, relative to use of the select and ultimate form of the 2001 CSO Mortality Table, an insurer may use the ultimate form or the ultimate and select form of the 2001 CSO Mortality Table to determine:</text> <paragraph num="(1)"> <text>Minimum reserve liabilities;</text> </paragraph> <paragraph num="(2)"> <text>Minimum cash surrender values; and</text> </paragraph> <paragraph num="(3)"> <text>Amounts of paid-up nonforfeiture benefits.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Asset Adequacy Analysis.</text> <paragraph num="(1)"> <text>When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for a company, the actuarial opinion in the annual statement filed with the Commissioner shall be based on an asset adequacy analysis as specified in COMAR 31.05.01.08.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may waive the requirement of §D(1) of this regulation for an insurer doing business in this State and in no other state.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="General Calculation Requirements for Contract Segmentation Method."> <paragraph num="A."> <text>All calculations are made using:</text> <paragraph num="(1)"> <text>For policies issued before January 1, 2009, the 1980 CSO valuation table or the 2001 CSO Mortality Table;</text> </paragraph> <paragraph num="(2)"> <text>For policies issued on or after January 1, 2009, the 2001 CSO Mortality Table; and</text> </paragraph> <paragraph num="(3)"> <text>If elected, the optional minimum mortality standard for deficiency reserves stipulated in Regulation .10B—D of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The length of a particular contract segment shall be set equal to the minimum of the value t, for which Gt is greater than Rt (if Gt never exceeds Rt the segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiration date of the policy), where Gt and Rt are defined as follows:</text> <paragraph num="(1)"> <text>Gt = (GPx+k+t/GPx+k+t-l)</text> </paragraph> <paragraph num="(2)"> <text>When the 2001 CSO Mortality Table is elected or required to be used, the value of “qx+k+1” is the valuation mortality rate for deficiency reserves in policy year k+t, but using the unmodified select mortality rates if modified select mortality rates are used in the computation of deficiency reserves.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="General Calculation Requirements for Segmented Reserves."> <paragraph num="A."> <text>The net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:</text> <paragraph num="(1)"> <text>The present value of the death benefits within the segment; plus</text> </paragraph> <paragraph num="(2)"> <text>The present value of any unusual guaranteed cash value, as specified in Regulation .11D of this chapter, occurring at the end of the segment; less</text> </paragraph> <paragraph num="(3)"> <text>Any unusual guaranteed cash value occurring at the start of the segment; plus</text> </paragraph> <paragraph num="(4)"> <text>For the first segment only, the excess of §A(4)(a) over §A(4)(b) of this regulation as follows:</text> <paragraph num="(a)"> <text>A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. The net level annual premium may not exceed the net level annual premium on the 19-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age 1 year higher than the age at issue of the policy.</text> </paragraph> <paragraph num="(b)"> <text>A net 1-year premium for the benefits provided for in the first year policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The length of each segment is determined by the contract segmentation method, as defined in Regulation.07B of this chapter.</text> </paragraph> <paragraph num="C."> <text>The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy.</text> </paragraph> <paragraph num="D."> <text>For both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="General Calculation Requirements for Unitary Reserves."> <paragraph num="A."> <text>Guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy.</text> </paragraph> <paragraph num="B."> <text>Modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of §B(1) over §B(2) of this regulation as follows:</text> <paragraph num="(1)"> <text>A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. The net level annual premium may not exceed the net level annual premium on the 19-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age 1 year higher than the age at issue of the policy;</text> </paragraph> <paragraph num="(2)"> <text>A net 1-year term premium for the benefits provided for in the first policy year.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves."> <paragraph num="A."> <text>Basic Reserves.</text> <paragraph num="(1)"> <text>At the election of the company for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using:</text> <paragraph num="(a)"> <text>For policies issued before January 1, 2009, the 1980 CSO valuation table with select mortality factors or the 2001 CSO Mortality Table; and</text> </paragraph> <paragraph num="(b)"> <text>For policies issued on or after January 1, 2009, the 2001 CSO Mortality Table.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If select mortality factors are elected, they may be:</text> <paragraph num="(a)"> <text>The 10-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;</text> </paragraph> <paragraph num="(b)"> <text>The select mortality factors incorporated by reference under Regulation .04 of this chapter; or</text> </paragraph> <paragraph num="(c)"> <text>Any other table of select mortality factors adopted by the NAIC after the effective date of this chapter and promulgated by regulation by the Commissioner for the purpose of calculating basic reserves.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Deficiency Reserves.</text> <paragraph num="(1)"> <text>Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve.</text> </paragraph> <paragraph num="(2)"> <text>The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums.</text> </paragraph> <paragraph num="(3)"> <text>At the election of the company for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon:</text> <paragraph num="(a)"> <text>For policies issued before January 1, 2009, the 1980 CSO valuation table with select mortality factors or the 2001 CSO Mortality Table; and</text> </paragraph> <paragraph num="(b)"> <text>For policies issued on or after January 1, 2009, the 2001 CSO Mortality Table.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Deficiency Reserves — Select Mortality Factors. If select mortality factors are elected, they may be:</text> <paragraph num="(1)"> <text>The 10-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;</text> </paragraph> <paragraph num="(2)"> <text>The select mortality factors incorporated by reference under Regulation .04 of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>For durations in the first segment, X percent of the select mortality factors incorporated by reference under Regulation .04 of this chapter, subject to the following:</text> <paragraph num="(a)"> <text>X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience;</text> </paragraph> <paragraph num="(b)"> <text>X is such that, when using the valuation interest rate used for basic reserves, subparagraph(i) is greater than or equal to subparagraph (ii) as follows:</text> <paragraph num="(i)"> <text>The actuarial present value of future death benefits, calculated using the mortality rates resulting from the application of X;</text> </paragraph> <paragraph num="(ii)"> <text>The actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first 5 years after the valuation date;</text> </paragraph> <paragraph num="(d)"> <text>The appointed actuary shall increase X at any valuation date where it is necessary to continue to meet all the requirements of this subsection;</text> </paragraph> <paragraph num="(e)"> <text>The appointed actuary may decrease X at any valuation date as long as X continues to meet all the requirements of this subsection;</text> </paragraph> <paragraph num="(f)"> <text>The appointed actuary shall specifically take into account the adverse effect on expected mortality and lapsation of any anticipated or actual increase in gross premiums; and</text> </paragraph> <paragraph num="(g)"> <text>If X is less than 100 percent at any duration for any policy, the following requirements shall be met:</text> <paragraph num="(i)"> <text>Each year, the appointed actuary shall prepare an actuarial opinion and memorandum for the company in conformance with the requirements of COMAR 31.05.01;</text> </paragraph> <paragraph num="(ii)"> <text>The appointed actuary shall disclose, in the Regulatory Asset Adequacy Issues Summary, the impact of the insufficiency of assets to support the payment of benefits and expenses and the establishment of statutory reserves during one or more interim periods; and</text> </paragraph> <paragraph num="(iii)"> <text>Each year, the appointed actuary shall issue an opinion for all policies subject to this chapter stating whether the mortality rates resulting from the application of X meet the requirements of this subsection, with the opinion supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries, and using X factors that reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience; or</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>Any other table of select mortality factors adopted by the NAIC after the effective date of this chapter and promulgated by regulation by the Commissioner for the purpose of calculating deficiency reserves.</text> </paragraph> </paragraph> <paragraph num="D."> <text>In demonstrating compliance with the conditions of §C(3) of this regulation, the demonstrations may not combine the results of tests that utilize the 1980 CSO Mortality Table with those tests that utilize the 2001 CSO Mortality Table, unless the combination is:</text> <paragraph num="(1)"> <text>Explicitly required by regulation; or</text> </paragraph> <paragraph num="(2)"> <text>Necessary to be in compliance with relevant Actuarial Standards of Practice.</text> </paragraph> </paragraph> <paragraph num="E."> <text>This section applies to both basic reserves and deficiency reserves that are determined by using the 1980 CSO valuation tables. Any set of select mortality factors may be used only for the first segment. If the first segment is less than 10 years, the appropriate 10-year select mortality factors incorporated into the 1980 amendments to NAIC Standard Valuation Law may be used thereafter through the tenth policy year from the date of issue.</text> </paragraph> <paragraph num="F."> <text>In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used when the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums even if not included in the actual calculation of basic reserves.</text> </paragraph> <paragraph num="G."> <text>Reserves for Policies With Certain Changes Made After Issue. Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than 1 year after the date of the change shall be the greatest of the following:</text> <paragraph num="(1)"> <text>Reserves calculated ignoring the guarantee;</text> </paragraph> <paragraph num="(2)"> <text>Reserves assuming the guarantee was made at issue; and</text> </paragraph> <paragraph num="(3)"> <text>Reserves assuming that the policy was issued on the date of the guarantee.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Documentation of Adequacy of Reserves.</text> <paragraph num="(1)"> <text>The Commissioner may require that the company document the extent of the adequacy of reserves for specified blocks, including policies issued before the effective date of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>The documentation may include a demonstration of the extent to which aggregation with other nonspecified blocks of business is relied on in the formation of the appointed actuary opinion pursuant to and consistent with the requirements of COMAR 31.05.01.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies)."> <paragraph num="A."> <text>Basic Reserves. Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and selection factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the following adjustments may be made:</text> <paragraph num="(1)"> <text>Treat the unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment, and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment; or</text> </paragraph> <paragraph num="(2)"> <text>Treat the guaranteed cash surrender value, if greater than zero, applicable at the end of each segment as a pure endowment, and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Deficiency Reserves.</text> <paragraph num="(1)"> <text>The deficiency reserve at any duration shall be calculated:</text> <paragraph num="(a)"> <text>On a unitary basis if the corresponding basic reserve determined by §A of this regulation is unitary;</text> </paragraph> <paragraph num="(b)"> <text>On a segmented basis if the corresponding basic reserve determined by §A of this regulation is segmented; or</text> </paragraph> <paragraph num="(c)"> <text>On the segmented basis if the corresponding basic reserve determined by §A of this regulation is equal to both the segmented reserve and the unitary reserve.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>This section applies to a policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality as specified in Regulation .10B—D of this chapter, and rate of interest.</text> </paragraph> <paragraph num="(3)"> <text>Deficiency reserves, if any, shall be calculated for each policy as the excess if greater than zero, for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in Regulation.10B—D of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Minimum Value.</text> <paragraph num="(1)"> <text>Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used.</text> </paragraph> <paragraph num="(2)"> <text>Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid-terminal reserves are used.</text> </paragraph> <paragraph num="(3)"> <text>Subject to §C(4) of this regulation, the valuation mortality table used in determining the tabular cost of insurance shall be:</text> <paragraph num="(a)"> <text>For policies issued before January 1, 2009, the 1980 CSO valuation table or the 2001 CSO Mortality Table; and</text> </paragraph> <paragraph num="(b)"> <text>For policies issued on or after January 1, 2009, the 2001 CSO Mortality Table.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves.</text> </paragraph> <paragraph num="(5)"> <text>If select mortality factors are used, they shall be the 10-year select factors incorporated into the 1980 amendments of the NAIC Standard Valuation Law.</text> </paragraph> <paragraph num="(6)"> <text>Total reserves, including basic reserves, deficiency reserves, and any reserves held for supplemental benefits that would expire upon contract termination may not be less than the amount that the policyowner would receive, including the cash surrender value of the supplemental benefits, if any, referred to above, exclusive of any deduction for policy loans, upon termination of the policy.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Unusual Pattern of Guaranteed Cash Surrender Values.</text> <paragraph num="(1)"> <text>For a policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held before the first unusual guaranteed cash surrender value may not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.</text> </paragraph> <paragraph num="(2)"> <text>The reserves actually held subsequent to any unusual guaranteed cash surrender value may not be less than the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where:</text> <paragraph num="(a)"> <text>n is the number of years from the date of the last unusual guaranteed cash surrender value before the valuation date to the earlier of:</text> <paragraph num="(i)"> <text>The date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date, or</text> </paragraph> <paragraph num="(ii)"> <text>The mandatory expiration date of the policy;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The net premium for a given year during the n year period is equal to the product of the net to gross ratio and the respective gross premium; and</text> </paragraph> <paragraph num="(c)"> <text>The net to gross ratio is equal to §D(2)(c)(i) divided by §D(2)(c)(ii) of this regulation as follows:</text> <paragraph num="(i)"> <text>The present value, at the beginning of the n year period, of death benefits payable during the n year period plus the present value, at the beginning of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n year period,</text> </paragraph> <paragraph num="(ii)"> <text>The present value, at the beginning of the n year period, of the scheduled gross premiums payable during the n year period.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>For purposes of this section, a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year's guaranteed cash surrender value by more than the sum of:</text> <paragraph num="(a)"> <text>110 percent of the scheduled gross premium for that year;</text> </paragraph> <paragraph num="(b)"> <text>110 percent of one year's accrued interest on the sum of the prior year's guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and</text> </paragraph> <paragraph num="(c)"> <text>5 percent of the first policy year surrender charge, if any.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Optional Exemption for Yearly Renewable Term Reinsurance. At the option of the company, the following approach for reserves on YRT reinsurance may be used:</text> <paragraph num="(1)"> <text>Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year;</text> </paragraph> <paragraph num="(2)"> <text>Basic reserves may not be less than the tabular cost of insurance for the appropriate period, as defined in §C of this regulation;</text> </paragraph> <paragraph num="(3)"> <text>Deficiency reserves:</text> <paragraph num="(a)"> <text>For each policy year, the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium is calculated,</text> </paragraph> <paragraph num="(b)"> <text>May not be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with §E(3)(a) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>For purposes of this section, the calculations use the maximum valuation interest rate and:</text> <paragraph num="(a)"> <text>For policies issued before January 1, 2009, the 1980 CSO mortality tables with or without 10-year select mortality factors or the ultimate mortality rates in the 2001 CSO Mortality Table; and</text> </paragraph> <paragraph num="(b)"> <text>For policies issued on or after January 1, 2009, the ultimate mortality rates in the 2001 CSO Mortality Table;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A reinsurance agreement shall be considered YRT reinsurance for purposes of this section if only the mortality risk is reinsured;</text> </paragraph> <paragraph num="(6)"> <text>If the assuming company chooses this optional exemption, the ceding company's reinsurance reserve credit is limited to the amount of reserve held by the assuming company for the affected policies.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Optional Exemption for Attained-Age-Based Yearly Renewable Term Life Insurance Policies. At the option of the company, the following approach for reserves for attained-age-based YRT life insurance policies may be used:</text> <paragraph num="(1)"> <text>Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year;</text> </paragraph> <paragraph num="(2)"> <text>Basic reserves may not be less than the tabular cost of insurance for the appropriate period, as defined in §C of this regulation;</text> </paragraph> <paragraph num="(3)"> <text>Deficiency reserves:</text> <paragraph num="(a)"> <text>For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium,</text> </paragraph> <paragraph num="(b)"> <text>May not be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with §F(3)(a) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>For purposes of this section, the calculations use the maximum valuation interest rate and:</text> <paragraph num="(a)"> <text>For policies issued before January 1, 2009, the 1980 CSO valuation tables with or without 10-year select mortality factors or the ultimate mortality rates in the 2001 CSO Mortality Table; and</text> </paragraph> <paragraph num="(b)"> <text>For policies issued on or after January 1, 2009, the ultimate mortality rates in the 2001 CSO Mortality Table;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A policy shall be considered an attained-age-based YRT life insurance policy for purposes of this section if the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are:</text> <paragraph num="(a)"> <text>Based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued, and</text> </paragraph> <paragraph num="(b)"> <text>The same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance, and attained age;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>For policies that become attained-age-based YRT policies after an initial period of coverage, the approach of this section may be used after the initial period if:</text> <paragraph num="(a)"> <text>The initial period is constant for all insureds of the same sex, risk class, and plan of insurance or the initial period runs to a common attained age for all insureds of the same sex, risk class, and plan of insurance, and</text> </paragraph> <paragraph num="(b)"> <text>After the initial period of coverage, the policy meets the conditions of §F(6) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>If this election is made, this approach shall be applied in determining reserves for all attained-age-based YRT life insurance policies issued on or after the effective date of this chapter.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Exemption from Unitary Reserves for Certain n Year Renewable Term Life Insurance Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:</text> <paragraph num="(1)"> <text>The policy consists of a series of n year periods, including the first period and all renewal periods, where n is the same for each period except that for the first renewal period, n may be shortened or extended to reach the expiration age, if this final renewal period is less than 10 years and less than twice the size of the earlier n year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;</text> </paragraph> <paragraph num="(2)"> <text>The guaranteed gross premiums in all n year periods are not less than the corresponding net premiums based upon:</text> <paragraph num="(a)"> <text>For policies issued before January 1, 2009, the 1980 CSO Tables with or without the 10-year select mortality factors or the ultimate mortality rates in the 2001 CSO Mortality Tables; and</text> </paragraph> <paragraph num="(b)"> <text>For policies issued on or after January 1, 2009, the ultimate mortality rates in the 2001 CSO Mortality Tables; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>There are no cash surrender values in any policy year.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Exemption from Unitary Reserves for Certain Juvenile Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:</text> <paragraph num="(1)"> <text>The insured is 24 years old or younger;</text> </paragraph> <paragraph num="(2)"> <text>Until the insured reaches the end of the juvenile period, which shall occur at or before age 25, the gross premiums and death benefits are level, and there are no cash surrender values; and</text> </paragraph> <paragraph num="(3)"> <text>After the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies that Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force over a Secondary Guarantee Period."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>Policies with a secondary guarantee include a policy:</text> <paragraph num="(a)"> <text>With a guarantee that the policy remains in force at the original schedule of benefits, subject only to the payment of specified premiums;</text> </paragraph> <paragraph num="(b)"> <text>In which the minimum premium at any duration is less than the corresponding 1-year valuation premium, calculated using the maximum valuation interest rate and:</text> <paragraph num="(i)"> <text>For policies issued before January 1, 2009, the 1980 CSO valuation tables with or without 10-year select mortality factors or the ultimate mortality rates in the 2001 CSO Mortality Table; and</text> </paragraph> <paragraph num="(ii)"> <text>For policies issued on or after January 1, 2009, the ultimate mortality rates in the 2001 CSO Mortality Table; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>With any combination of §A(1)(a) and (b) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in §§B and C of this regulation shall be recalculated from issue to reflect the changes.</text> </paragraph> <paragraph num="(3)"> <text>Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.</text> </paragraph> <paragraph num="(4)"> <text>For purposes of this regulation, the minimum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors, including mortality charges, loads, and expense charges, and the interest crediting rate, which are all guaranteed at issue.</text> </paragraph> <paragraph num="(5)"> <text>The 1-year valuation premium means the net 1-year premium based upon the original schedule of benefits for a given policy year. The 1-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in Regulation .10C(2), (3), and (4) of this chapter may not be used to calculate the 1-year valuation premiums.</text> </paragraph> <paragraph num="(6)"> <text>The 1-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Basic Reserves for the Secondary Guarantees. Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments are determined according to the contract segmentation method as defined in Regulation .07B of this chapter.</text> </paragraph> <paragraph num="C."> <text>Deficiency Reserves for the Secondary Guarantees. Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in Regulation .11B of this chapter with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.</text> </paragraph> <paragraph num="D."> <text>Minimum Reserves. The minimum reserves during the secondary guarantee period are the greater of:</text> <paragraph num="(1)"> <text>The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or</text> </paragraph> <paragraph num="(2)"> <text>The minimum reserves required by other rules or regulations governing universal life plans.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Select Mortality Factors."> <paragraph num="A."> <text>The tables of the Select Mortality Factors, which are incorporated by reference under Regulation .04 of this chapter, are the bases to which the respective percentage of Regulation .10C(2) and (3) of this chapter are applied.</text> </paragraph> <paragraph num="B."> <text>The six tables of base select mortality factors, which are incorporated by reference, include:</text> <paragraph num="(1)"> <text>Male aggregate;</text> </paragraph> <paragraph num="(2)"> <text>Male nonsmoker;</text> </paragraph> <paragraph num="(3)"> <text>Male smoker;</text> </paragraph> <paragraph num="(4)"> <text>Female aggregate;</text> </paragraph> <paragraph num="(5)"> <text>Female nonsmoker; and</text> </paragraph> <paragraph num="(6)"> <text>Female smoker.</text> </paragraph> </paragraph> <paragraph num="C."> <text>These tables apply to both age last birthday and age nearest birthday mortality tables. For sex-blended mortality tables, select mortality factors are computed in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated base select mortality factors are 80 percent of the appropriate male table, plus 20 percent of the appropriate female table.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Gender-Blended Tables."> <text>An insurer that issues an ordinary life insurance policy for delivery in this State on or after January 1, 2004, that utilizes the same premium rates charged for male and female lives may:</text> <paragraph num="A."> <text>Substitute a mortality table that is a blend of the 2001 CSO Mortality Table (F) and the 2001 CSO Mortality Table (M) instead of the 2001 CSO Mortality Table for use in determining:</text> <paragraph num="(1)"> <text>Minimum cash surrender values; and</text> </paragraph> <paragraph num="(2)"> <text>Amounts of paid-up nonforfeiture benefits;</text> </paragraph> </paragraph> <paragraph num="B."> <text>Choose from among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the NAIC in December 2002; and</text> </paragraph> <paragraph num="C."> <text>Issue the same kind of life insurance policy on both a sex-distinct and a sex-neutral basis.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="2001 CSO Preferred Class Structure Mortality Tables."> <paragraph num="A."> <text>This regulation applies to policies issued on or after January 1, 2004.</text> </paragraph> <paragraph num="B."> <text>Election of Minimum Valuation Standard.</text> <paragraph num="(1)"> <text>At the election of the insurer for any one or more specified plans of insurance and subject to satisfying the conditions stated in this chapter, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO smoker or nonsmoker Mortality Table as the minimum valuation standard for policies issued on or after January 1, 2007.</text> </paragraph> <paragraph num="(2)"> <text>For policies issued on or after January 1, 2004, and prior to January 1 2007, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO smoker or nonsmoker Mortality Table with the consent of the Commissioner and subject to the conditions in Regulation .06C—H of this chapter. In determining such consent, the Commissioner may rely on the consent of the Commissioner of the company's state of domicile.</text> </paragraph> <paragraph num="(3)"> <text>The election shall be made for each calendar year of issue.</text> </paragraph> <paragraph num="(4)"> <text>No election in §B(1) and (2) of this regulation shall be made until the insurer demonstrates that at least 20 percent of the business to be valued on the basis of the 2001 CSO Preferred Class Structure Mortality Table is in one or more of the preferred classes.</text> </paragraph> <paragraph num="(5)"> <text>A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of this chapter, is treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the requirements of the NAIC model regulation “Recognition of the 2001 CSO Mortality Table For Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation,” referenced in §C of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>National Association of Insurance Commissioners', “Recognition of the 2001 CSO Mortality Table For Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation”.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109, Title 5, Subtitle 3, and §16-309, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 5, 1997 (24:9 Md. R. 656)</annotation> <annotation type="History" subtype="Administrative History">Annotation: Implementation of this chapter is described in Regulation .02D. Notice that this chapter is being implemented will be published in the Maryland Register.</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.16 to COMAR 31.05.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective January 1, 2000 (27:3 Md. R. 326); revised permanently effective May 15, 2000 (27:8 Md. R. 860)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 2004 (30:24 Md. R. 1746)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 26, 2007 (34:6 Md. R. 630); December 15, 2008 (35:25 Md. R. 2151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C adopted effective March 26, 2007 (34:6 Md. R. 630)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective December 15, 2008 (35:25 Md. R. 2151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C adopted effective December 15, 2008 (35:25 Md. R. 2151)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective December 28, 2009 (36:26 Md. R. 1999)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective March 26, 2007 (34:6 Md. R. 630)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision effective January 25, 2010 (37:4 Md. R. 336); amended permanently effective May 3, 2010 (37:9 Md. R. 674)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10C, H amended as an emergency provision effective January 25, 2010 (37:4 Md. R. 336); amended permanently effective May 3, 2010 (37:9 Md. R. 674)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 adopted effective March 26, 2007 (34:6 Md. R. 630)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended as an emergency provision effective January 25, 2010 (37:4 Md. R. 336); amended permanently effective May 3, 2010 (37:9 Md. R. 674)</annotation> </annotations> </chapter> <chapter num="04" heading="Valuation Standards for Individual Annuity and Pure Endowment Contracts"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to approve the use of the following mortality tables adopted by the National Association of Insurance Commissioners after 1980 as a basis for determining the minimum standards of valuation for individual annuity and pure endowment contracts:</text> <paragraph num="A."> <text>The 1983 Table “a”;</text> </paragraph> <paragraph num="B."> <text>The Annuity 2000 Mortality Table; and</text> </paragraph> <paragraph num="C."> <text>The 2012 Individual Annuity Reserving Table.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Annuity 2000 Mortality Table” means the mortality table:</text> <paragraph num="(a)"> <text>Developed by the Society of Actuaries Committee on Life Insurance Research; and</text> </paragraph> <paragraph num="(b)"> <text>Set out in Regulation .04 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Generational mortality table” means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a period table and a projection scale containing rates of mortality improvement.</text> </paragraph> <paragraph num="(3)"> <text>“Period table” means a table of mortality rates applicable to a given calendar year.</text> </paragraph> <paragraph num="(4)"> <text>“Projection Scale G2” means a table:</text> <paragraph num="(a)"> <text>Containing annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012;</text> </paragraph> <paragraph num="(b)"> <text>Developed by the Society of Actuaries Committee on Life Insurance Research; and</text> </paragraph> <paragraph num="(c)"> <text>Set out in Regulation .07 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>"1983 Table “a” means the mortality table:</text> <paragraph num="(a)"> <text>Developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation;</text> </paragraph> <paragraph num="(b)"> <text>Adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners; and</text> </paragraph> <paragraph num="(c)"> <text>Set out in Regulation .03 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“2012 Individual Annuity Mortality Period Life Table” or “2012 IAM Period Table” means the period table containing loaded mortality rates for calendar year 2012. This table:</text> <paragraph num="(a)"> <text>Contains rates, qx2012, developed by the Society of Actuaries Committee on Life Insurance Research; and</text> </paragraph> <paragraph num="(b)"> <text>Is set out in Regulation .06 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“2012 Individual Annuity Reserving Table” or “2012 IAR Table” means the generational mortality table:</text> <paragraph num="(a)"> <text>Developed by the Society of Actuaries Committee on Life Insurance Research; and</text> </paragraph> <paragraph num="(b)"> <text>Containing rates, qx2012+n, that are derived from a combination of the 2012 IAM Period Table and Projection Scale G2 using the methodology set out in Regulation .08 of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Table “a”."> <text>The 1983 Table “a”, as shown below, is the mortality table designated by that name and adopted in June, 1982, by the National Association of Insurance Commissioners.</text> <text>1983 TABLE “a”—1,000qx Age Males Females 5 0.377 0.194 6 0.350 0.160 7 0.333 0.134 8 0.352 0.134 9 0.368 0.136 10 0.382 0.141 11 0.394 0.147 12 0.405 0.155 13 0.415 0.165 14 0.425 0.175 15 0.435 0.183 16 0.446 0.201 17 0.458 0.214 18 0.472 0.229 19 0.488 0.244 20 0.505 0.260 21 0.525 0.276 22 0.546 0.293 23 0.570 0.311 24 0.596 0.330 25 0.622 0.349 26 0.650 0.368 27 0.677 0.387 28 0.704 0.405 29 0.731 0.423 30 0.759 0.441 31 0.786 0.460 32 0.814 0.479 33 0.843 0.499 34 0.876 0.521 35 0.917 0.545 36 0.968 0.574 37 1.032 0.607 38 1.114 0.646 39 1.216 0.691 40 1.341 0.742 41 1.492 0.801 42 1.673 0.867 43 1.886 0.942 44 2.129 1.026 45 2.399 1.122 46 2.693 1.231 47 3.009 1.356 48 3.343 1.499 49 3.694 1.657 50 4.057 1.830 51 4.431 2.016 52 4.812 2.215 53 5.198 2.426 54 5.591 2.650 55 5.994 2.891 56 6.409 3.151 57 6.839 3.432 58 7.290 3.739 59 7.782 4.081 60 8.338 4.467 61 8.983 4.908 62 9.740 5.413 63 10.630 5.990 64 11.664 6.633 65 12.851 7.336 66 14.199 8.090 67 15.717 8.888 68 17.414 9.731 68 19.296 10.653 70 21.371 11.697 71 23.647 12.905 72 26.131 14.319 73 28.835 15.980 74 31.794 17.909 75 35.046 20.127 76 38.631 22.654 77 42.587 25.509 78 46.951 28.717 79 51.755 32.328 80 57.026 36.395 81 62.791 40.975 82 69.081 46.121 83 75.908 51.889 84 83.230 58.336 85 90.987 65.518 86 99.122 73.493 87 107.577 82.318 88 116.316 92.017 89 125.394 102.491 90 134.887 113.605 91 144.873 125.227 92 155.429 137.222 93 166.629 149.462 94 178.537 161.834 95 191.214 174.228 96 204.721 186.535 97 219.120 198.646 98 234.735 211.102 99 251.889 224.445 100 270.906 239.215 101 292.111 255.953 102 315.826 275.201 103 342.377 297.500 104 372.086 323.390 105 405.278 353.414 106 442.277 388.111 107 483.406 428.023 108 528.989 473.692 109 579.351 525.658 110 634.814 584.462 111 695.704 650.646 112 762.343 724.750 113 835.056 807.316 114 914.167 898.885 115 1000.000 1000.000</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Annuity 2000 Mortality Table."> <text>1000q Age Nearest Birthday (x) Male Female* 5 0.291 0.171 6 0.270 0.141 7 0.257 0.118 8 0.294 0.118 9 0.325 0.121 10 0.350 0.126 11 0.371 0.133 12 0.388 0.142 13 0.402 0.152 14 0.414 0.164 15 0.425 0.177 16 0.437 0.190 17 0.449 0.204 18 0.463 0.219 19 0.480 0.234 20 0.499 0.250 21 0.519 0.265 22 0.542 0.281 23 0.566 0.298 24 0.592 0.314 25 0.616 0.331 26 0.639 0.347 27 0.659 0.362 28 0.675 0.376 29 0.687 0.389 30 0.694 0.402 31 0.699 0.414 32 0.700 0.425 33 0.701 0.436 34 0.702 0.449 35 0.704 0.463 36 0.719 0.481 37 0.749 0.504 38 0.796 0.532 39 0.864 0.567 40 0.953 0.609 41 1.065 0.658 42 1.201 0.715 43 1.362 0.781 44 1.547 0.855 45 1.752 0.939 46 1.974 1.035 47 2.211 1.141 48 2.460 1.261 49 2.721 1.393 50 2.994 1.538 51 3.279 1.695 52 3.576 1.864 53 3.884 2.047 54 4.203 2.244 55 4.534 2.457 56 4.876 2.689 57 5.228 2.942 58 5.593 3.218 59 5.988 3.523 60 6.428 3.863 61 6.933 4.242 62 7.520 4.668 63 8.207 5.144 64 9.008 5.671 65 9.940 6.250 66 11.016 6.878 67 12.251 7.555 68 13.657 8.287 69 15.233 9.102 70 16.979 10.034 71 18.891 11.117 72 20.967 12.386 73 23.209 13.871 74 25.644 15.592 75 28.304 17.564 76 31.220 19.805 77 34.425 22.328 78 37.948 25.158 79 41.812 28.341 80 46.037 31.933 81 50.643 35.985 82 55.651 40.552 83 61.080 45.690 84 66.948 51.456 85 73.275 57.913 86 80.076 65.119 87 87.370 73.136 88 95.169 81.991 89 103.455 91.577 90 112.208 101.758 91 121.402 112.395 92 131.017 123.349 93 141.030 134.486 94 151.422 145.689 95 162.179 156.846 96 173.279 167.841 97 184.706 178.563 98 196.946 189.604 99 210.484 201.557 100 225.806 215.013 101 243.398 230.565 102 263.745 248.805 103 287.334 270.326 104 314.649 295.719 105 346.177 325.576 106 382.403 360.491 107 423.813 401.054 108 470.893 447.860 109 524.128 501.498 110 584.004 562.563 111 651.007 631.645 112 725.622 709.338 113 808.336 796.233 114 899.633 892.923 115 1000.000 1000.000</text> <text>*Based on 50% of Female Improvement Scale G.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Valuation Standards."> <paragraph num="A."> <text>In valuing the reserve liabilities under individual annuity and pure endowment contracts in accordance with the provisions of Insurance Article, §5-305(c) and (d), Annotated Code of Maryland, insurers may use either the 1971 Individual Annuity Mortality Table or the 1983 Table “a” for contracts issued on or after July 1, 1980, and before January 1, 1987.</text> </paragraph> <paragraph num="B."> <text>Except as provided in §§C, D, and E of this regulation, the 1983 Table “a”, as shown in Regulation .03 of this chapter, is to be used by insurers in valuing reserve liabilities under individual annuity and pure endowment contracts in accordance with the provisions of Insurance Article, §5-305(c) and (d), Annotated Code of Maryland, for contracts issued on and after January 1, 1987.</text> </paragraph> <paragraph num="C."> <text>Except as provided in §§D and E of this regulation, either the 1983 Table “a” or the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 2004.</text> </paragraph> <paragraph num="D."> <text>Except as provided in §§E and F of this regulation, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 2005 and before January 1, 2015.</text> </paragraph> <paragraph num="E."> <text>Except as provided in §F of this regulation, the 2012 IAR Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015.</text> </paragraph> <paragraph num="F."> <text>The 1983 Table “a” without projection shall be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after July 1, 2005, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:</text> <paragraph num="(1)"> <text>Settlements of various forms of claims pertaining to court settlements or out-of-court settlements from tort actions;</text> </paragraph> <paragraph num="(2)"> <text>Settlements involving similar actions such as Workers' Compensation claims; or</text> </paragraph> <paragraph num="(3)"> <text>Settlements of long-term disability claims if a temporary or life annuity has been used instead of continuing disability payments.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="2012 IAM Period Table."> <text>The 2012 Individual Annuity Mortality Period Life Table, as shown below, is the mortality table designated by that name and developed by the Society of Actuaries Committee on Life Insurance Research.</text> <text>1000 qx2012 Age Nearest Birthday Male Female 0 1.605 1.621 1 0.401 0.405 2 0.275 0.259 3 0.229 0.179 4 0.174 0.137 5 0.168 0.125 6 0.165 0.117 7 0.159 0.110 8 0.143 0.095 9 0.129 0.088 10 0.113 0.085 11 0.111 0.086 12 0.132 0.094 13 0.169 0.108 14 0.213 0.131 15 0.254 0.156 16 0.293 0.179 17 0.328 0.198 18 0.359 0.211 19 0.387 0.221 20 0.414 0.228 21 0.443 0.234 22 0.473 0.240 23 0.513 0.245 24 0.554 0.247 25 0.602 0.250 26 0.655 0.256 27 0.688 0.261 28 0.710 0.270 29 0.727 0.281 30 0.741 0.300 31 0.751 0.321 32 0.754 0.338 33 0.756 0.351 34 0.756 0.365 35 0.756 0.381 36 0.756 0.402 37 0.756 0.429 38 0.756 0.463 39 0.800 0.504 40 0.859 0.552 41 0.926 0.600 42 0.999 0.650 43 1.069 0.697 44 1.142 0.740 45 1.219 0.780 46 1.318 0.825 47 1.454 0.885 48 1.627 0.964 49 1.829 1.051 50 2.057 1.161 51 2.302 1.308 52 2.545 1.460 53 2.779 1.613 54 3.011 1.774 55 3.254 1.950 56 3.529 2.154 57 3.845 2.399 58 4.213 2.700 59 4.631 3.054 60 5.096 3.460 61 5.614 3.916 62 6.169 4.409 63 6.759 4.933 64 7.398 5.507 65 8.106 6.146 66 8.548 6.551 67 9.076 7.039 68 9.708 7.628 69 10.463 8.311 70 11.357 9.074 71 12.418 9.910 72 13.675 10.827 73 15.150 11.839 74 16.860 12.974 75 18.815 14.282 76 21.031 15.799 77 23.540 17.550 78 26.375 19.582 79 29.572 21.970 80 33.234 24.821 81 37.533 28.351 82 42.261 32.509 83 47.441 37.329 84 53.233 42.830 85 59.855 48.997 86 67.514 55.774 87 76.340 63.140 88 86.388 71.066 89 97.634 79.502 90 109.993 88.377 91 123.119 97.491 92 137.168 107.269 93 152.171 118.201 94 168.194 130.969 95 185.260 146.449 96 197.322 163.908 97 214.751 179.695 98 232.507 196.151 99 250.397 213.150 100 268.607 230.722 101 290.016 251.505 102 311.849 273.007 103 333.962 295.086 104 356.207 317.591 105 380.000 340.362 106 400.000 362.371 107 400.000 384.113 108 400.000 400.000 109 400.000 400.000 110 400.000 400.000 111 400.000 400.000 112 400.000 400.000 113 400.000 400.000 114 400.000 400.000 115 400.000 400.000 116 400.000 400.000 117 400.000 400.000 118 400.000 400.000 119 400.000 400.000 120 1000.000 1000.000</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Projection Scale G2."> <text>Projection Scale G2, as shown below, is a table containing annual rates, G2x , of mortality improvement by age for projecting future mortality rates beyond calendar year 2012 and was developed by the Society of Actuaries Committee on Life Insurance Research.</text> <text>G2x Age Nearest Birthday Male Female 0 0.010 0.010 1 0.010 0.010 2 0.010 0.010 3 0.010 0.010 4 0.010 0.010 5 0.010 0.010 6 0.010 0.010 7 0.010 0.010 8 0.010 0.010 9 0.010 0.010 10 0.010 0.010 11 0.010 0.010 12 0.010 0.010 13 0.010 0.010 14 0.010 0.010 15 0.010 0.010 16 0.010 0.010 17 0.010 0.010 18 0.010 0.010 19 0.010 0.010 20 0.010 0.010 21 0.010 0.010 22 0.010 0.010 23 0.010 0.010 24 0.010 0.010 25 0.010 0.010 26 0.010 0.010 27 0.010 0.010 28 0.010 0.010 29 0.010 0.010 30 0.010 0.010 31 0.010 0.010 32 0.010 0.010 33 0.010 0.010 34 0.010 0.010 35 0.010 0.010 36 0.010 0.010 37 0.010 0.010 38 0.010 0.010 39 0.010 0.010 40 0.010 0.010 41 0.010 0.010 42 0.010 0.010 43 0.010 0.010 44 0.010 0.010 45 0.010 0.010 46 0.010 0.010 47 0.010 0.010 48 0.010 0.010 49 0.010 0.010 50 0.010 0.010 51 0.011 0.010 52 0.011 0.011 53 0.012 0.011 54 0.012 0.011 55 0.013 0.012 56 0.013 0.012 57 0.014 0.012 58 0.014 0.012 59 0.015 0.013 60 0.015 0.013 61 0.015 0.013 62 0.015 0.013 63 0.015 0.013 64 0.015 0.013 65 0.015 0.013 66 0.015 0.013 67 0.015 0.013 68 0.015 0.013 69 0.015 0.013 70 0.015 0.013 71 0.015 0.013 72 0.015 0.013 73 0.015 0.013 74 0.015 0.013 75 0.015 0.013 76 0.015 0.013 77 0.015 0.013 78 0.015 0.013 79 0.015 0.013 80 0.015 0.013 81 0.014 0.012 82 0.013 0.012 83 0.013 0.011 84 0.012 0.010 85 0.011 0.010 86 0.010 0.009 87 0.009 0.008 88 0.009 0.007 89 0.008 0.007 90 0.007 0.006 91 0.007 0.006 92 0.006 0.005 93 0.005 0.005 94 0.005 0.004 95 0.004 0.004 96 0.004 0.004 97 0.003 0.003 98 0.003 0.003 99 0.002 0.002 100 0.002 0.002 101 0.002 0.002 102 0.001 0.001 103 0.001 0.001 104 0.000 0.000 105 0.000 0.000 106 0.000 0.000 107 0.000 0.000 108 0.000 0.000 109 0.000 0.000 110 0.000 0.000 111 0.000 0.000 112 0.000 0.000 113 0.000 0.000 114 0.000 0.000 115 0.000 0.000 116 0.000 0.000 117 0.000 0.000 118 0.000 0.000 119 0.000 0.000 120 0.000 0.000</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Application of the 2012 IAR Table."> <paragraph num="A."> <text>In using the 2012 IAR Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:</text> </paragraph> <paragraph num="B."> <text>The resulting qx2012+n, as calculated in §A of this regulation, shall be rounded to three decimal places per 1,000.</text> </paragraph> <paragraph num="C."> <text>The rounding described in §B of this regulation shall occur according to the formula in §A of this regulation, starting at the 2012 period table rate.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 5, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 31, 1985 (12:26 Md. R. 2545)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.68 to COMAR 31.05.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective May 24, 2004 (31:10 Md. R. 796)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 10, 2014 (41:22 Md. R. 1320)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 1, 2015 (41:22 Md. R. 1320)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 1, 2015 (41:22 Md. R. 1320)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 adopted effective January 1, 2015 (41:22 Md. R. 1320)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 adopted effective January 1, 2015 (41:22 Md. R. 1320)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 adopted effective January 1, 2015 (41:22 Md. R. 1320)</annotation> </annotations> </chapter> <chapter num="05" heading="Valuation Standards for Group Annuity and Pure Endowment Contracts"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to approve the use of new mortality tables adopted by the National Association of Insurance Commissioners after 1980 as a basis for determining the minimum standards of valuation of annuities and pure endowments purchased under group annuity and pure endowment contracts.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>"1983 GAM Tables" means the mortality tables:</text> <paragraph num="(a)"> <text>Developed by the Society of Actuaries Committee on Annuities;</text> </paragraph> <paragraph num="(b)"> <text>Adopted as a recognized mortality table for annuities in December 1983 by the National Association of Insurance Commissioners; and</text> </paragraph> <paragraph num="(c)"> <text>Set out in Regulation .03 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>"1983 Table “a” means the mortality table:</text> <paragraph num="(a)"> <text>Developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation;</text> </paragraph> <paragraph num="(b)"> <text>Adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners; and</text> </paragraph> <paragraph num="(c)"> <text>Set out in COMAR 31.05.04.03.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>"1994 GAR Table" means the mortality table:</text> <paragraph num="(a)"> <text>Developed by the Society of Actuaries Group Annuity Valuation Table Task Force; and</text> </paragraph> <paragraph num="(b)"> <text>Set out in Regulation .04 of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="1983 GAM Tables."> <paragraph num="A."> <text>1983 GAM TABLE—MALES.</text> </paragraph> <paragraph num="B."> <text>1983 GAM TABLE—FEMALES.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="1994 GAR Table."> <text>Male Female Age (x) qx1994 AAx qx1994 AAx 1 0.000592 0.020 0.000531 0.020 2 0.000400 0.020 0.000346 0.020 3 0.000332 0.020 0.000258 0.020 4 0.000259 0.020 0.000194 0.020 5 0.000237 0.020 0.000175 0.020 6 0.000227 0.020 0.000163 0.020 7 0.000217 0.020 0.000153 0.020 8 0.000201 0.020 0.000137 0.020 9 0.000194 0.020 0.000130 0.020 10 0.000197 0.020 0.000131 0.020 11 0.000208 0.020 0.000138 0.020 12 0.000226 0.020 0.000148 0.020 13 0.000255 0.020 0.000164 0.020 14 0.000297 0.019 0.000189 0.018 15 0.000345 0.019 0.000216 0.016 16 0.000391 0.019 0.000242 0.015 17 0.000430 0.019 0.000262 0.014 18 0.000460 0.019 0.000273 0.014 19 0.000484 0.019 0.000280 0.015 20 0.000507 0.019 0.000284 0.016 21 0.000530 0.018 0.000286 0.017 22 0.000556 0.017 0.000289 0.017 23 0.000589 0.015 0.000292 0.016 24 0.000624 0.013 0.000291 0.015 25 0.000661 0.010 0.000291 0.014 26 0.000696 0.006 0.000294 0.012 27 0.000727 0.005 0.000302 0.012 28 0.000754 0.005 0.000314 0.012 29 0.000779 0.005 0.000331 0.012 30 0.000801 0.005 0.000351 0.010 31 0.000821 0.005 0.000373 0.008 32 0.000839 0.005 0.000397 0.008 33 0.000848 0.005 0.000422 0.009 34 0.000849 0.005 0.000449 0.010 35 0.000851 0.005 0.000478 0.011 36 0.000862 0.005 0.000512 0.012 37 0.000891 0.005 0.000551 0.013 38 0.000939 0.006 0.000598 0.014 39 0.000999 0.007 0.000652 0.015 40 0.001072 0.008 0.000709 0.015 41 0.001156 0.009 0.000768 0.015 42 0.001252 0.010 0.000825 0.015 43 0.001352 0.011 0.000877 0.015 44 0.001458 0.012 0.000923 0.015 45 0.001578 0.013 0.000973 0.016 46 0.001722 0.014 0.001033 0.017 47 0.001899 0.015 0.001112 0.018 48 0.002102 0.016 0.001206 0.018 49 0.002326 0.017 0.001310 0.018 50 0.002579 0.018 0.001428 0.017 51 0.002872 0.019 0.001568 0.016 52 0.003213 0.020 0.001734 0.014 53 0.003584 0.020 0.001907 0.012 54 0.003979 0.020 0.002084 0.010 55 0.004425 0.019 0.002294 0.008 56 0.004949 0.018 0.002563 0.006 57 0.005581 0.017 0.002919 0.005 58 0.006300 0.016 0.003359 0.005 59 0.007090 0.016 0.003863 0.005 60 0.007976 0.016 0.004439 0.005 61 0.008986 0.015 0.005093 0.005 62 0.010147 0.015 0.005832 0.005 63 0.011471 0.014 0.006677 0.005 64 0.012940 0.014 0.007621 0.005 65 0.014535 0.014 0.008636 0.005 66 0.016239 0.013 0.009694 0.005 67 0.018034 0.013 0.010764 0.005 68 0.019859 0.014 0.011763 0.005 69 0.021729 0.014 0.012709 0.005 70 0.023730 0.015 0.013730 0.005 71 0.025951 0.015 0.014953 0.006 72 0.028481 0.015 0.016506 0.006 73 0.031201 0.015 0.018344 0.007 74 0.034051 0.015 0.020381 0.007 75 0.037211 0.014 0.022686 0.008 76 0.040858 0.014 0.025325 0.008 77 0.045171 0.013 0.028366 0.007 78 0.050211 0.012 0.031727 0.007 79 0.055861 0.011 0.035362 0.007 80 0.062027 0.010 0.039396 0.007 81 0.068615 0.009 0.043952 0.007 82 0.075532 0.008 0.049153 0.007 83 0.082510 0.008 0.054857 0.007 84 0.089613 0.007 0.060979 0.007 85 0.097240 0.007 0.067738 0.006 86 0.105792 0.007 0.075347 0.005 87 0.115671 0.006 0.084023 0.004 88 0.126980 0.005 0.093820 0.004 89 0.139452 0.005 0.104594 0.003 90 0.152931 0.004 0.116265 0.003 91 0.167260 0.004 0.128751 0.003 92 0.182281 0.003 0.141973 0.003 93 0.198392 0.003 0.155931 0.002 94 0.215700 0.003 0.170677 0.002 95 0.233606 0.002 0.186213 0.002 96 0.251510 0.002 0.202538 0.002 97 0.268815 0.002 0.219655 0.001 98 0.285277 0.001 0.237713 0.001 99 0.301298 0.001 0.256712 0.001 100 0.317238 0.001 0.276427 0.001 101 0.333461 0.000 0.296629 0.000 102 0.350330 0.000 0.317093 0.000 103 0.368542 0.000 0.338505 0.000 104 0.387855 0.000 0.361016 0.000 105 0.407224 0.000 0.383597 0.000 106 0.425599 0.000 0.405217 0.000 107 0.441935 0.000 0.424846 0.000 108 0.457553 0.000 0.444358 0.000 109 0.473150 0.000 0.464469 0.000 110 0.486745 0.000 0.482325 0.000 111 0.496356 0.000 0.495110 0.000 112 0.500000 0.000 0.500000 0.000 113 0.500000 0.000 0.500000 0.000 114 0.500000 0.000 0.500000 0.000 115 0.500000 0.000 0.500000 0.000 116 0.500000 0.000 0.500000 0.000 117 0.500000 0.000 0.500000 0.000 118 0.500000 0.000 0.500000 0.000 119 0.500000 0.000 0.500000 0.000 120 1.000000 0.000 1.000000 0.000</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Valuation Standards."> <paragraph num="A."> <text>In valuing the reserve liabilities for annuities and pure endowments purchased under group annuity and pure endowment contracts in accordance with the provisions of Insurance Article, §5-305(f), Annotated Code of Maryland, insurers may use either the 1971 Group Annuity Mortality Table, the 1983 GAM Tables shown in Regulation .03 of this chapter, or the 1983 Table “a” shown in COMAR 31.05.04.03 for annuities and pure endowments purchased on or after July 1, 1980, and before January 1, 1987.</text> </paragraph> <paragraph num="B."> <text>Except as provided in §§C and D of this regulation, the 1983 GAM Tables are to be used by insurers in valuing reserve liabilities in accordance with the provisions of Insurance Article, §5-305(f), Annotated Code of Maryland, for annuities and pure endowments purchased on and after January 1, 1987, under group annuity and pure endowment contracts.</text> </paragraph> <paragraph num="C."> <text>Except as provided in §D of this regulation, either the 1983 GAM Table or the 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after July 1, 2004 under a group annuity or pure endowment contract.</text> </paragraph> <paragraph num="D."> <text>The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after July 1, 2005 under a group annuity or pure endowment contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Application of the 1994 GAR Table."> <text>In using the 1994 GAR Table, the mortality rate for a person age X in year (1994 + n) is calculated as follows:</text> <text>qx1994+n = qx1994 (1-AAx) n</text> <text>where the qx1994 and AAxs are as specified in the 1994 GAR Table.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 5, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 31, 1985 (12:26 Md. R. 2545)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.69 to COMAR 31.05.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective May 24, 2004 (31:10 Md. R. 796)</annotation> </annotations> </chapter> <chapter num="06" heading="Investments of Life Insurers and Property and Casualty Insurers in High Yield/High Risk Obligations"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to protect the interests of policyholders of life insurers and property and casualty insurers admitted to do business in Maryland by limiting the amount of high yield/high risk obligations in which an insurer may invest, so that the assets of the insurer will be reasonable in relation to the insurer's liabilities and adequate to its financial needs, permitting policyholders to rely with confidence on the insurer's ability to fulfill its contractual obligations.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Admitted assets” means those assets of the insurer which comply with the definition of the term contained in Insurance Article, §5-101, Annotated Code of Maryland, and which are listed on the last annual statement of the insurer filed with the Commissioner and valued in accordance with the then current instructions, rules, and regulations of the National Association of Insurance Commissioners and of the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>“High yield/high risk obligation” means an interest-bearing obligation which is not an investment grade obligation.</text> </paragraph> <paragraph num="(3)"> <text>“Interest-bearing obligation” means:</text> <paragraph num="(a)"> <text>An obligation of the type specified in Insurance Article, §§5-511(d)(ii), (iii), (iv) and 5-608(d) and (e), Annotated Code of Maryland, for a reserve investment; or</text> </paragraph> <paragraph num="(b)"> <text>A collateral loan which meets the requirements of Insurance Article, §5-511(i), Annotated Code of Maryland, and is secured by an obligation described in §B(3)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Investment grade obligation” means an interest-bearing obligation which qualifies under any of the following:</text> <paragraph num="(a)"> <text>The obligation is currently rated by Moody's Investors Service or by Standard and Poor's Corporation in one of the top four generic lettered rating classifications of either of those organizations;</text> </paragraph> <paragraph num="(b)"> <text>The obligation has been designated as “Yes X” or “Yes” or classified in designation(1) or (2) by the Securities Valuation Office of the National Association of Insurance Commissioners, or is determined by that office to qualify for a designation of “Yes X”, “Yes”,(1), or (2); or</text> </paragraph> <paragraph num="(c)"> <text>The obligation is currently given a corresponding rating by another rating agency approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Person” means a person as defined in Insurance Article, §1-101(dd), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Rating agency” means the Securities Valuation Office of the National Association of Insurance Commissioners, Moody's Investors Service, Standard and Poor's Corporation, or any similar organization approved by the Commissioner at the request of an insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <text>This chapter is applicable to the acquisition of any high yield/high risk obligation by any life insurer or property and casualty insurer admitted to do business in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Acquisition of Certain Obligations."> <paragraph num="A."> <text>A life insurer or property and casualty insurer admitted to do business in Maryland may not acquire directly or indirectly, except with the prior approval of the Commissioner, or except under a plan of replacement approved by the Commissioner in accordance with §C of this regulation, any high yield/high risk obligation of any person if, after giving effect to the acquisition, the aggregate cost of the acquisition plus the admitted value of all other high yield/high risk obligations then held by the insurer would exceed 20 percent of the insurer's admitted assets.</text> </paragraph> <paragraph num="B."> <text>In considering approval of an acquisition in excess of the limit stated in §A of this regulation, the Commissioner shall consider the following factors:</text> <paragraph num="(1)"> <text>Requirements of law relating to the acquisition;</text> </paragraph> <paragraph num="(2)"> <text>The amount of capital and surplus of the life insurer or property and casualty insurer relative to its size and the activities in which it is currently engaged;</text> </paragraph> <paragraph num="(3)"> <text>The size of the life insurer or property and casualty insurer as measured by its assets, reserves, premium writings, and insurance in force;</text> </paragraph> <paragraph num="(4)"> <text>The quality, diversification, and liquidity of the life insurer's or property and casualty insurer's investment portfolio;</text> </paragraph> <paragraph num="(5)"> <text>The past and projected future trends in the amount of the life insurer's or property and casualty insurer's surplus as regards policyholders;</text> </paragraph> <paragraph num="(6)"> <text>The financial position of the life insurer or property and casualty insurer when investments in, and other transactions with, affiliated persons are excluded from assets.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Plan of Replacement.</text> <paragraph num="(1)"> <text>A life insurer or property and casualty insurer which, on the effective date of this regulation, holds high yield/high risk obligations in excess of 20 percent of its admitted assets may request approval from the Commissioner for a 12-month plan of replacement, and may request renewal of approval of the plan from year to year after that for the purpose of replacing high yield/high risk obligations owned by the insurer with other high yield/high risk obligations.</text> </paragraph> <paragraph num="(2)"> <text>In reviewing requests for approval, the Commissioner shall consider the factors enumerated in §B of this regulation and any other factors reasonably related to the plan of replacement and to the financial condition of the life insurer or property and casualty insurer.</text> </paragraph> <paragraph num="(3)"> <text>A plan of replacement is subject to the following conditions and any other conditions which the Commissioner determines to be necessary:</text> <paragraph num="(a)"> <text>High yield/high risk obligations that are acquired are to be limited to those issued by:</text> <paragraph num="(i)"> <text>Governmental units that are current in all their obligations, and</text> </paragraph> <paragraph num="(ii)"> <text>Corporations with not less than $100 million in assets which are current in all their obligations;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A replacement or exchange of a high yield/high risk obligation is not to increase the:</text> <paragraph num="(i)"> <text>Amount invested by the life insurer or property and casualty insurer in high yield/high risk obligations, nor the weighted average maturity date of those obligations, or</text> </paragraph> <paragraph num="(ii)"> <text>Percentage of admitted assets of the life insurer or property and casualty insurer invested in high yield/high risk obligations;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The plan is to provide that at the end of each 12-month period the high yield/high risk obligations held by the life insurer or property and casualty insurer when measured as a percentage of its admitted assets will be at least 5 percent less or, if required by the Commissioner, as much as 10 percent less than the percentage of its high yield/high risk obligations at the beginning of the 12-month period until the 20 percent limitation established by §A of this regulation is reached;</text> </paragraph> <paragraph num="(d)"> <text>The life insurer or property and casualty insurer is to maintain a separate file of all transactions involving high risk/high yield obligations with such information as the Commissioner may require.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Collateral Loans."> <text>If a collateral loan is secured by one or more high yield/high risk obligations as well as by other types of collateral, the amount of the collateral loan to be considered for purposes of Regulation .04A of this chapter shall be that fraction of the loan which the value of the high yield/high risk obligations bears to the total value of the collateral.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Private Placements."> <paragraph num="A."> <text>This regulation applies to private placements which have not been rated by rating agencies.</text> </paragraph> <paragraph num="B."> <text>If a private placement does not qualify as an investment grade obligation in accordance with Regulation .02B(4) of this chapter it shall be considered a high yield/high risk obligation unless:</text> <paragraph num="(1)"> <text>In the case of an interest-bearing obligation which does not involve an equity feature, the interest rate charged is comparable to rates generally prevailing at the time of the loan for securities of comparable terms and duration which are classified in an investment grade classification (for example, BBB or Baa or higher) by at least one of the accepted rating agencies;</text> </paragraph> <paragraph num="(2)"> <text>In the case of an interest-bearing obligation which also provides minor equity benefits to the lender, the interest rate charged is comparable to interest rates generally prevailing at the time of the loan for securities of comparable terms and duration which are classified in the third grade (for example, A) by at least one of the accepted rating agencies; or</text> </paragraph> <paragraph num="(3)"> <text>In the case of an interest-bearing obligation which also provides substantial equity benefits to the lender, the interest rate charged is comparable to interest rates generally prevailing at the time of the loan for securities of comparable terms and duration which are classified in the second grade (for example, AA) by at least one of the accepted rating agencies.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Separate Accounts."> <paragraph num="A."> <text>This regulation is applicable only to life insurers, and not to property and casualty insurers.</text> </paragraph> <paragraph num="B."> <text>In this regulation, the term “separate account” means a segregated asset account which is used to determine the basis of values of variable life insurance policies and variable annuity contracts and which complies with the requirements of Insurance Article, Title 16, Subtitle 6, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>A life insurer, at its option, may regard the entire assets of a fund in a separate account as being investment grade assets if not more than 20 percent of the assets of the fund are invested in high yield/high risk obligations.</text> </paragraph> <paragraph num="D."> <text>If more than 20 percent of the assets of a fund in account are invested in high yield/high risk obligations, the life insurer, at its option, may either:</text> <paragraph num="(1)"> <text>Allocate the assets of the fund between investment grade obligations and high yield/high risk obligations as the case may be; or</text> </paragraph> <paragraph num="(2)"> <text>Omit the total value of the fund from the calculation to be made under Regulation .04A of this chapter of both the life insurer's aggregate amount of high yield/high risk obligations and of its total admitted assets, if policyholders and contract holders selecting the funds have been furnished with a prospectus which indicates that the fund may invest in speculative or in high yield/high risk obligations.</text> </paragraph> </paragraph> <paragraph num="E."> <text>For purposes of this regulation, if a fund has several series, the term “fund” as used in this regulation is applicable to each series separately.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-103(c), 5-502, 5-506, 5-507, 5-511, 5-605, 5-606, and 5-608, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 10, 1990 (17:24 Md. R. 2837)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective September 26, 1994 (21:19 Md. R. 1634)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective September 26, 1994 (21:19 Md. R. 1634)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective September 26, 1994 (21:19 Md. R. 1634)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective September 26, 1994 (21:19 Md. R. 1634)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective September 26, 1994 (21:19 Md. R. 1634)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.85 to COMAR 31.05.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective June 20, 2016 (43:12 Md. R. 668)</annotation> </annotations> </chapter> <chapter num="07" heading="Life and Health Reinsurance Agreements"> <regulation prefix="Regulation" num=".01" heading="Regulatory Considerations."> <paragraph num="A."> <text>The Insurance Commissioner recognizes that licensed insurers routinely enter into reinsurance agreements that yield legitimate relief to the ceding insurer from strain to the ceding insurer's surplus.</text> </paragraph> <paragraph num="B."> <text>It is improper, however, for a licensed insurer, in the capacity of ceding insurer, to enter into a reinsurance agreement for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business being reinsured.</text> </paragraph> <paragraph num="C."> <text>Under this type of agreement, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged by the reinsurance transaction, notwithstanding certain risk elements in the reinsurance agreement, such as catastrophic mortality or extraordinary survival.</text> </paragraph> <paragraph num="D."> <text>The terms of an agreement described in §§B and C of this regulation and Regulation .05 of this chapter violate:</text> <paragraph num="(1)"> <text>Insurance Article, §4-116, Annotated Code of Maryland, relating to financial statements, resulting in statements that do not properly reflect the financial condition of the ceding insurer;</text> </paragraph> <paragraph num="(2)"> <text>Insurance Article, §5-904(a), Annotated Code of Maryland, relating to reinsurance reserve credits, resulting in a ceding insurer improperly reducing liabilities or establishing assets for reinsurance ceded; and</text> </paragraph> <paragraph num="(3)"> <text>Insurance Article, §4-113(b)(3), Annotated Code of Maryland, relating to creating a situation that would be contrary to the interests of the policyholders or stockholders of the ceding insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>This chapter applies to:</text> <paragraph num="(1)"> <text>Each domestic life and accident and health insurer, including nonprofit health service plans;</text> </paragraph> <paragraph num="(2)"> <text>Any other licensed life and accident and health insurer, including a nonprofit health services plan, that is not subject to a substantially similar regulation in its domiciliary state; and</text> </paragraph> <paragraph num="(3)"> <text>Each licensed property and casualty insurer with respect to its accident and health business.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter does not apply to:</text> <paragraph num="(1)"> <text>Assumption reinsurance;</text> </paragraph> <paragraph num="(2)"> <text>Yearly renewable term reinsurance; or</text> </paragraph> <paragraph num="(3)"> <text>Certain nonproportional reinsurance, such as stop loss or catastrophe reinsurance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Credit Quality Risk.</text> <paragraph num="(a)"> <text>“Credit quality risk” means the risk that invested assets supporting the reinsured business will decrease in value creating the hazard that assets will default or that there will be a decrease in earning power.</text> </paragraph> <paragraph num="(b)"> <text>“Credit quality risk” does not include market value declines due to changes in interest rates.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Disintermediation risk” means the risk that interest rates will rise and policy loans and surrenders will increase or maturing contracts will not renew at anticipated rates of renewal, with the mismatch increasing if asset durations are greater than liability durations, resulting in the hazards that:</text> <paragraph num="(a)"> <text>Policyholders will move their funds into new products offering higher rates; and</text> </paragraph> <paragraph num="(b)"> <text>The company may have to sell assets at a loss to provide for these withdrawals.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Expenses” includes:</text> <paragraph num="(a)"> <text>Commissions;</text> </paragraph> <paragraph num="(b)"> <text>Premium taxes; and</text> </paragraph> <paragraph num="(c)"> <text>Direct expenses, including billing, valuation, claims, and maintenance expected by the company at the time the business is reinsured.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Lapse risk” means the risk that a policy will voluntarily terminate before the recoupment of a statutory surplus strain experienced at issue of the policy.</text> </paragraph> <paragraph num="(5)"> <text>“Negative experience” means that the evolving claims under an initial insurance policy or contract or a reinsurance contract exceed those anticipated at the time of entering into the policy or contract.</text> </paragraph> <paragraph num="(6)"> <text>“Reinsurer” means an insurer that, in consideration of the payment by a ceding insurer of a risk charge, enters into a reinsurance contract with the ceding insurer, under which the reinsurer bears all or a portion of the risk of the ceding insurer.</text> </paragraph> <paragraph num="(7)"> <text>“Reinvestment risk” means the risk that interest rates will fall and funds reinvested, such as coupon payments or money received on asset maturity or call, will earn less than expected, with the mismatch increasing if asset durations are less than liability durations.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Taking Reserve Credit or Establishing Assets for Reinsurance Ceded."> <paragraph num="A."> <text>Allowed. Notwithstanding the prohibitions contained in Regulation .05 of this chapter, an insurer may, with the prior approval of the Commissioner, take the reserve credit and establish the assets for reinsurance ceded as the Commissioner considers consistent with the Insurance Article of the Annotated Code of Maryland, the Code of Maryland Regulations, and any actuarial interpretations or standards adopted by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Limitation on Amount of Credit or Assets. An insurer may not take reserve credit or establish assets for reinsurance ceded in an amount that is greater than the underlying reserve of the ceding insurer supporting the policy obligations transferred under the reinsurance agreement.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Circumstances Under Which Reduction of Liability and Establishment of Asset Prohibited."> <paragraph num="A."> <text>In general. An insurer may not, for reinsurance ceded, reduce any liability or establish any asset in any financial statement filed with the Commissioner if, by the terms of the reinsurance agreement, in substance or effect:</text> <paragraph num="(1)"> <text>Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall using assumptions equal to the applicable statutory reserve basis on the business reinsured;</text> </paragraph> <paragraph num="(2)"> <text>The ceding insurer can be deprived of surplus or assets:</text> <paragraph num="(a)"> <text>At the reinsurer's option, or</text> </paragraph> <paragraph num="(b)"> <text>Automatically on the occurrence of some event, such as the insolvency of the ceding insurer;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The ceding insurer is required to reimburse the reinsurer for negative experience;</text> </paragraph> <paragraph num="(4)"> <text>The ceding insurer is required, at specific points in time scheduled in the agreement, to terminate or automatically recapture all or part of the reinsurance ceded;</text> </paragraph> <paragraph num="(5)"> <text>The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts other than from income realized from the reinsured policies, such as reinsurance premiums or other fees or charges to a reinsurer that are greater than the direct premiums collected by the ceding company;</text> </paragraph> <paragraph num="(6)"> <text>All of the significant risk inherent in the business being reinsured is not transferred;</text> </paragraph> <paragraph num="(7)"> <text>The credit quality risk, reinvestment risk, or disintermediation risk is significant for the business reinsured and except as provided in Regulation .06B of this chapter, the ceding company does not:</text> <paragraph num="(a)"> <text>Transfer the underlying assets to the reinsurer, or</text> </paragraph> <paragraph num="(b)"> <text>Legally segregate the underlying assets in a trust or escrow account or otherwise establish a mechanism satisfactory to the Commissioner that legally segregates, by contract, the underlying assets;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within 90 days after the settlement date;</text> </paragraph> <paragraph num="(9)"> <text>The ceding insurer is required to make representations or warranties:</text> <paragraph num="(a)"> <text>Not reasonably related to the business being reinsured, or</text> </paragraph> <paragraph num="(b)"> <text>About future performance of the business being reinsured; or</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Acts Not Prohibited.</text> <paragraph num="(1)"> <text>Section A(2) of this regulation does not prohibit a reinsurer from terminating the reinsurance agreement for nonpayment of:</text> <paragraph num="(a)"> <text>Reinsurance premiums; or</text> </paragraph> <paragraph num="(b)"> <text>Other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Section A(3) of this regulation does not prohibit:</text> <paragraph num="(a)"> <text>Offsetting experience refunds against current and prior years' losses under the agreement; or</text> </paragraph> <paragraph num="(b)"> <text>Payment by the ceding insurer of an amount equal to the current and prior years' losses under the agreement on voluntary termination of in force reinsurance by the ceding insurer.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Voluntary termination under §B(2)(b) of this regulation does not include termination because of unreasonable provisions that allow the reinsurer to reduce its risk under the agreement, such as a provision that gives the reinsurer the right to increase reinsurance premiums or risk and expense charges to excessive levels forcing the ceding company to prematurely terminate the reinsurance agreement.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Determining Whether Significant Risk Exists."> <paragraph num="A."> <text>Risk Table.</text> <paragraph num="(1)"> <text>The table contained in this section identifies for a representative sampling of products or types of business the risks that are considered to be significant.</text> </paragraph> <paragraph num="(2)"> <text>For products that are not included in the table, the risks determined to be significant shall be consistent with the table.</text> </paragraph> <paragraph num="(3)"> <text>Table.</text> </paragraph> <aftertext>KEY: + = Significant 0 = Insignificant</aftertext> </paragraph> <paragraph num="B."> <text>Classes of Business for Which Separation of Assets Not Required. Notwithstanding Regulation .05A(7) of this chapter, a ceding insurer may hold assets supporting reserves without segregating the assets for the following classes of business:</text> <paragraph num="(1)"> <text>Health insurance—long-term care or long-term disability;</text> </paragraph> <paragraph num="(2)"> <text>Traditional non-par permanent;</text> </paragraph> <paragraph num="(3)"> <text>Traditional par permanent;</text> </paragraph> <paragraph num="(4)"> <text>Adjustable premium permanent;</text> </paragraph> <paragraph num="(5)"> <text>Indeterminate premium permanent;</text> </paragraph> <paragraph num="(6)"> <text>Universal life fixed premium with no dump-in premiums allowed; and</text> </paragraph> <paragraph num="(7)"> <text>Any other class of business that does not have a significant credit quality risk, reinvestment risk, or disintermediation risk.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Formula for Determining Reserve Interest Rate Adjustment.</text> <paragraph num="(1)"> <text>The associated formula for determining the reserve interest rate adjustment shall be a formula that:</text> <paragraph num="(a)"> <text>Reflects the ceding insurer's investment earnings; and</text> </paragraph> <paragraph num="(b)"> <text>Incorporates all realized and unrealized gains and losses reflected in the statutory statement.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The following is an acceptable formula:</text> </paragraph> <paragraph num="(3)"> <text>In the formula under §C(2) of this regulation:</text> <paragraph num="(a)"> <text>I is the net investment income;</text> </paragraph> <paragraph num="(b)"> <text>CG is capital gains less capital losses;</text> </paragraph> <paragraph num="(c)"> <text>X is the current year cash and investment assets plus investment income due and accrued less borrowed money; and</text> </paragraph> <paragraph num="(d)"> <text>Y is the same as X, but for the prior year.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Filing Agreements with Commissioner."> <paragraph num="A."> <text>Filing Required. A ceding insurer shall file with the Commissioner:</text> <paragraph num="(1)"> <text>Each agreement entered into after the effective date of this chapter that involves the reinsurance of business issued before the effective date of the agreement; and</text> </paragraph> <paragraph num="(2)"> <text>Any amendment to an agreement required to be filed under §A(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Time for Filing. A ceding insurer shall file an agreement or amendment within 30 days after the execution of the agreement or amendment.</text> </paragraph> <paragraph num="C."> <text>Contents of Filing. Each filing shall include data detailing the financial impact of the transaction.</text> </paragraph> <paragraph num="D."> <text>Duties of Actuary.</text> <paragraph num="(1)"> <text>The ceding insurer's actuary, who signs the financial statement actuarial opinion with respect to valuation of reserves, shall consider this chapter and any applicable actuarial standards of practice when determining the proper credit in financial statements filed with the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>The actuary shall maintain adequate documentation and be prepared, on request, to:</text> <paragraph num="(a)"> <text>Describe the actuarial work performed for inclusion in the financial statements; and</text> </paragraph> <paragraph num="(b)"> <text>Demonstrate that the work conforms to this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Increase in Surplus Net of Federal Income Tax.</text> <paragraph num="(1)"> <text>If there is an increase in surplus net of federal income tax resulting from arrangements described in this regulation, the surplus increase shall be:</text> <paragraph num="(a)"> <text>Identified separately on the insurer's statutory financial statement as a surplus item on the “aggregate write-ins for gains and losses in surplus” line in the capital and surplus account in the annual statement; and</text> </paragraph> <paragraph num="(b)"> <text>Recognized as income by being reflected on a net of tax basis in the “reinsurance ceded” line of the annual statement as earnings emerge from the business reinsured.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The following is an example of how an increase in surplus should be identified on the insurer's statutory financial statement:</text> <paragraph num="(a)"> <text>On the last day of calendar year N, company XYZ pays a $20 million initial commission and expense allowance to company ABC for reinsuring an existing block of business;</text> </paragraph> <paragraph num="(b)"> <text>Assuming a 34 percent tax rate, the net increase in surplus at inception is $13.2 million ($20 million - $6.8 million) which is reported on the “aggregate write-ins for gains and losses in surplus” line in the capital and surplus account;</text> </paragraph> <paragraph num="(c)"> <text>$6.8 million (34 percent of $20 million) is reported as income on the “commissions and expense allowances or reinsurance ceded” line of the summary of operations;</text> </paragraph> <paragraph num="(d)"> <text>At the end of N+1 the business has earned $4 million;</text> </paragraph> <paragraph num="(e)"> <text>Company ABC has paid $0.5 million in profit and risk charges in arrears for the year and has received a $1 million experience refund;</text> </paragraph> <paragraph num="(f)"> <text>Company ABC's annual statement would report $1.65 million (66 percent of ($4 million - $1 million - $0.5 million) up to a maximum of $13.2 million) on the “commissions and expense allowance on reinsurance ceded” line of the summary of operations, and -$1.65 million on the “aggregate write-ins for gains and losses in surplus” line of the capital and surplus account; and</text> </paragraph> <paragraph num="(g)"> <text>The experience refund would be reported separately as a miscellaneous income item in the summary of operations.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Requirements of Written Agreements."> <paragraph num="A."> <text>Execution by Both Parties. An insurer may not use a reinsurance agreement or an amendment to a reinsurance agreement to reduce any liability or to establish any asset in a financial statement filed with the Commissioner, unless the agreement, amendment, or a binding letter of intent has been duly executed by both parties not later than the “as of date” of the financial statement.</text> </paragraph> <paragraph num="B."> <text>Letter of Intent—Time of Execution. In the case of a letter of intent, a reinsurance agreement or an amendment to a reinsurance agreement shall be executed within a reasonable period of time, not exceeding 90 days from the execution date of the letter of intent, in order for credit to be granted for the reinsurance ceded.</text> </paragraph> <paragraph num="C."> <text>Contents of Reinsurance Agreement. A reinsurance agreement shall provide that:</text> <paragraph num="(1)"> <text>The agreement constitutes the entire agreement between the parties with respect to the business being reinsured under the agreement;</text> </paragraph> <paragraph num="(2)"> <text>There are no understandings between the parties other than as expressed in the agreement; and</text> </paragraph> <paragraph num="(3)"> <text>Any change to the agreement is void unless made by amendment to the agreement and signed by both parties.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Existing Agreements."> <paragraph num="A."> <text>Subject to §B of this regulation, an insurer shall reduce to zero by December 31, 1998, any reserve credits or assets established with respect to reinsurance agreements entered into before the effective date of this chapter that, under this chapter, would not be entitled to recognition of the reserve credits or assets.</text> </paragraph> <paragraph num="B."> <text>An insurer is entitled to the grace period for a reinsurance agreement under §A of this regulation only if the reinsurance agreement was in compliance with the law and regulations in existence immediately preceding the effective date of this chapter.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-101(jj), 2-109, 3-124, 3-125, 4-113, 4-114, 4-116, 5-103, 5-201(b)(2), 5-203, 5-901, 5-903—5-905, 14-102, 14-108—14-111, 14-124(b), and 14-126, and Title 5, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 2, 1993 (19:26 Md. R. 2287)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 repealed and new Regulations .01—.09 adopted as an emergency provision effective December 19, 1997 (25:2 Md. R. 73); adopted permanently effective May 4, 1998 (25:9 Md. R. 678)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.91 to COMAR 31.05.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01D amended effective December 17, 2007 (34:25 Md. R. 2216)</annotation> </annotations> </chapter> <chapter num="08" heading="Credit for Reinsurance"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter is applicable to any domestic authorized insurer who obtains reinsurance for itself from another insurer for all or part of its insurance risk.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accredited reinsurer” means an unauthorized insurer who is accepted by the Commissioner to act as a reinsurer in the State under Insurance Article, §5-906, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Actuarial method”, as used in Regulation .29 of this chapter, means the methodology used to determine the required level of primary security as described in Regulation .29C of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>“Beneficiary” means:</text> <paragraph num="(a)"> <text>The entity for whose sole benefit the trust has been established; or</text> </paragraph> <paragraph num="(b)"> <text>Any successor of the beneficiary by operation of law or, if a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary is the court appointed domiciliary receiver, including conservator, rehabilitator, or liquidator.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Covered policies”, subject to the exemptions in Regulation .29B of this chapter, means those policies, other than grandfathered policies, of the following policy types:</text> <paragraph num="(a)"> <text>Life insurance policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, except for flexible premium universal life insurance policies; or</text> </paragraph> <paragraph num="(b)"> <text>Flexible premium universal life insurance policies with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Grandfathered policies” means policies of the types described in §B(4) of this regulation that were:</text> <paragraph num="(a)"> <text>Issued prior to January 1, 2015; and</text> </paragraph> <paragraph num="(b)"> <text>Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in Regulation .29B of this chapter had that section been in effect.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Grantor.</text> <paragraph num="(a)"> <text>“Grantor” means the entity that has established a trust for the sole benefit of the beneficiary.</text> </paragraph> <paragraph num="(b)"> <text>When established in conjunction with a reinsurance contract, the grantor is the unauthorized unaccredited assuming insurer.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Liabilities”, as used in Regulations .08—.11 of this chapter, means the assuming insurer's gross liabilities attributable to reinsurance ceded by U.S. domiciled insurers that are not otherwise secured by acceptable means, and shall include:</text> <paragraph num="(a)"> <text>For business ceded by domestic insurers authorized to write accident and health, and property and casualty insurance:</text> <paragraph num="(i)"> <text>Losses and loss adjustment expenses paid by the ceding insurer, recoverable from the assuming insurer;</text> </paragraph> <paragraph num="(ii)"> <text>Reserves for losses reported and outstanding;</text> </paragraph> <paragraph num="(iii)"> <text>Reserves for losses incurred but not reported;</text> </paragraph> <paragraph num="(iv)"> <text>Reserves for loss adjustment expenses; and</text> </paragraph> <paragraph num="(v)"> <text>Unearned premiums; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For business ceded by domestic insurers authorized to write life, health, and annuity insurance:</text> <paragraph num="(i)"> <text>Aggregate reserves for life policies and contracts net of policy loans and net due and deferred premiums;</text> </paragraph> <paragraph num="(ii)"> <text>Aggregate reserves for accident and health policies;</text> </paragraph> <paragraph num="(iii)"> <text>Deposit funds and other liabilities without life or disability contingencies; and</text> </paragraph> <paragraph num="(iv)"> <text>Liabilities for policy and contract claims.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Mortgage-related security”, as used in Regulation .10 of this chapter, means an obligation that is rated AA or higher (or the equivalent) by a nationally recognized statistical rating organization approved by the Securities Valuation Office and that either:</text> <paragraph num="(a)"> <text>Represents ownership of one or more promissory notes or certificates of interest or participation in the notes (including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of the notes, certificates, or participation of amounts payable under, the notes, certificates or participation), that:</text> <paragraph num="(i)"> <text>Are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home as defined in 42 U.S.C. §5402(6), whether the manufactured home is considered real or personal property under the laws of the state in which it is located; and</text> </paragraph> <paragraph num="(ii)"> <text>Were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution that is supervised and examined by a federal or state housing authority, or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. §§1709 and 1715-b, or, where the notes involve a lien on the manufactured home, by an institution or by a financial institution approved for insurance by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. §1703; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Is secured by one or more promissory notes or certificates of deposit or participations in the notes (with or without recourse to the insurer of the notes) and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, or notes meeting the requirements of §B(5)(a)(i) and (ii) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“NAIC” means National Association of Insurance Commissioners.</text> </paragraph> <paragraph num="(10)"> <text>“Non-covered policies”, as used in Regulation .29 of this chapter, means any policy that does not meet the definition of covered policies, including grandfathered policies.</text> </paragraph> <paragraph num="(11)"> <text>“Obligations”, as used in Regulation .17 of this chapter, means:</text> <paragraph num="(a)"> <text>Reinsured losses and loss adjustment expenses paid by the ceding insurer, but not recovered from the assuming insurer;</text> </paragraph> <paragraph num="(b)"> <text>Reserves for reinsured losses reported and outstanding;</text> </paragraph> <paragraph num="(c)"> <text>Reserves for reinsured losses incurred but not reported; and</text> </paragraph> <paragraph num="(d)"> <text>Reserves for allocated reinsured loss expenses and unearned premiums.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Other security”, as used in Regulation .29 of this chapter, means any security acceptable to the Commissioner other than security meeting the definition of primary security.</text> </paragraph> <paragraph num="(13)"> <text>“Primary security”, as used in Regulation .29 of this chapter, means the following forms of security:</text> <paragraph num="(a)"> <text>Cash;</text> </paragraph> <paragraph num="(b)"> <text>Securities listed by the Securities Valuation Office meeting the requirements of Insurance Article, §5-914(c)(2), Annotated Code of Maryland, but excluding any synthetic letter of credit, contingent note, credit-linked note, or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and</text> </paragraph> <paragraph num="(c)"> <text>For security held in connection with funds-withheld and modified coinsurance reinsurance treaties:</text> <paragraph num="(i)"> <text>Commercial loans in good standing of CM3 quality and higher;</text> </paragraph> <paragraph num="(ii)"> <text>Policy loans; and</text> </paragraph> <paragraph num="(iii)"> <text>Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Promissory note”, as used in Regulation .10 of this chapter, when used in connection with a manufactured home, also includes a loan, advance, or credit sale as evidenced by a retail installment sales contract or other instrument.</text> </paragraph> <paragraph num="(15)"> <text>“Qualified jurisdiction” has the meaning set forth in Insurance Article, §5-901(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Qualified U.S. financial institution” means:</text> <paragraph num="(a)"> <text>For purposes of those provisions of Regulation .14 of this chapter specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that:</text> <paragraph num="(i)"> <text>Is organized, or in the case of a U.S. branch or agency office of a foreign banking organization, licensed, under the laws of the United States or any state and has been granted authority to operate with fiduciary powers; and</text> </paragraph> <paragraph num="(ii)"> <text>Is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For purposes of those provisions of Regulation .14 of this chapter specifying those institutions that are eligible to issue letters of credit, an institution that:</text> <paragraph num="(i)"> <text>Is organized or, in the case of a U.S. office of a foreign banking organization, licensed, under the laws of the United States or any state;</text> </paragraph> <paragraph num="(ii)"> <text>Is regulated, supervised, and examined by U.S. federal or state authorities having regulatory authority over banks and trust companies; and</text> </paragraph> <paragraph num="(iii)"> <text>Has been determined by either the Commissioner or the Securities Valuation Office of the NAIC to meet the standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Reinsurance intermediary” has the meaning set forth in Insurance Article, §8-501(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(18)"> <text>“Required level of primary security”, as used in Regulation .29 of this chapter, means the dollar amount determined by applying the actuarial method to the risks ceded with respect to covered policies, but not more than the total reserve ceded.</text> </paragraph> <paragraph num="(19)"> <text>“Securities Valuation Office” refers to the Securities Valuation Office of the NAIC.</text> </paragraph> <paragraph num="(20)"> <text>“Valuation manual”, as used in Regulation .29 of this chapter, means the valuation manual adopted by the NAIC as described in Insurance Article, §5-313(b), Annotated Code of Maryland, with all amendments adopted by the NAIC that are effective for the financial statement date on which credit for reinsurance is claimed.</text> </paragraph> <paragraph num="(21)"> <text>“VM-20” means “Requirements for Principle-Based Reserves for Life Products,” including all relevant definitions from the Valuation Manual.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Credit for Reinsurance."> <text>The Commissioner shall allow a domestic authorized insurer credit as an asset or deduction from liability for reinsurance that the insurer obtains, if the reinsurance is obtained:</text> <paragraph num="A."> <text>From an insurer that was authorized in this State as of any date on which the statutory financial statement credit for reinsurance is claimed;</text> </paragraph> <paragraph num="B."> <text>From an accredited reinsurer pursuant to Regulations .04—.07 of this chapter;</text> </paragraph> <paragraph num="C."> <text>From a reinsurer maintaining trust funds for multiple cedents pursuant to Regulation .08—.11 of this chapter;</text> </paragraph> <paragraph num="D."> <text>When required by law pursuant to Regulation .12 of this chapter;</text> </paragraph> <paragraph num="E."> <text>From an unauthorized reinsurer pursuant to Regulations .14—.23 of this chapter; or</text> </paragraph> <paragraph num="F."> <text>From a certified reinsurer pursuant to Regulations .24, .25, and .27 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Approval Required for Accreditation of Reinsurer."> <text>An unauthorized insurer may not act as an accredited reinsurer in the State, unless the Commissioner accepts the insurer as a reinsurer under Insurance Article, §5-906, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Requirements for Accredited Reinsurer."> <paragraph num="A."> <text>The Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is accredited as a reinsurer in this State as of the date on which statutory financial statement credit for reinsurance is claimed.</text> </paragraph> <paragraph num="B."> <text>For initial eligibility as an accredited reinsurer, an applicant shall file with the Commissioner:</text> <paragraph num="(1)"> <text>An appointment of the Commissioner as its attorney to receive legal process issued against the applicant in the State on a form approved by the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>A properly executed NAIC Form AR-1 Certificate of Assuming Insurer as evidence that the applicant agrees to submit to the jurisdiction of the State and to the Commissioner's authority to examine its books and records;</text> </paragraph> <paragraph num="(3)"> <text>If reinsuring a life insurer, a certificate of valuation issued by the insurance regulatory agency of the applicant's state of domicile if a foreign insurer, or state of entry if an alien insurer;</text> </paragraph> <paragraph num="(4)"> <text>An annual statement fee pursuant to Insurance Article, §2-112(a)(8), Annotated Code of Maryland, and an annual fraud prevention fee pursuant to Insurance Article, §6-203(a), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(5)"> <text>A Maryland Insurance Administration Reinsurance Application; and</text> </paragraph> <paragraph num="(6)"> <text>Upon request of the Commissioner:</text> <paragraph num="(a)"> <text>A certified copy of its annual statement for the preceding calendar year;</text> </paragraph> <paragraph num="(b)"> <text>Evidence that the insurer is licensed to transact insurance or reinsurance in at least one state or, in the case of a U.S. branch of an alien insurer, is entered through and licensed to transact insurance or reinsurance in at least one state;</text> </paragraph> <paragraph num="(c)"> <text>An audited financial report for the preceding calendar year prepared by an independent certified public accountant;</text> </paragraph> <paragraph num="(d)"> <text>A certificate of deposit issued by the official custodian of deposits of the applicant's state of domicile if a foreign insurer, or state of entry if an alien insurer;</text> </paragraph> <paragraph num="(e)"> <text>A copy of the report of the last examination made of the applicant by the insurance regulatory agency of the applicant's state of domicile if a foreign insurer, or state of entry if an alien insurer; and</text> </paragraph> <paragraph num="(f)"> <text>Any other document or information that the Commissioner considers necessary to determine eligibility to act as an accredited reinsurer.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>For continued eligibility as an accredited reinsurer, an applicant shall, by May 30 of each year, file with the Commissioner:</text> <paragraph num="(1)"> <text>A properly executed NAIC Form AR-1 Certificate of Assuming Insurer as evidence that the applicant agrees to submit to the jurisdiction of the State and to the Commissioner's authority to examine its books and records;</text> </paragraph> <paragraph num="(2)"> <text>If reinsuring a life insurer, a certificate of valuation issued by the insurance regulatory agency of the applicant's state of domicile if a foreign insurer, or state of entry if an alien insurer;</text> </paragraph> <paragraph num="(3)"> <text>An annual statement fee pursuant to Insurance Article, §2-112(a)(8), Annotated Code of Maryland, and an annual fraud prevention fee pursuant to Insurance Article, §6-203(a), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(4)"> <text>A Maryland Insurance Administration Reinsurance Application; and</text> </paragraph> <paragraph num="(5)"> <text>Upon request of the Commissioner:</text> <paragraph num="(a)"> <text>A certified copy of its annual statement for the preceding calendar year;</text> </paragraph> <paragraph num="(b)"> <text>Evidence that the insurer is licensed to transact insurance or reinsurance in at least one state or, in the case of a U.S. branch of an alien insurer, is entered through and licensed to transact insurance or reinsurance in at least one state;</text> </paragraph> <paragraph num="(c)"> <text>An audited financial report for the preceding calendar year prepared by an independent certified public accountant;</text> </paragraph> <paragraph num="(d)"> <text>A certificate of deposit issued by the official custodian of deposits of the applicant's state of domicile if a foreign insurer, or state of entry if an alien insurer;</text> </paragraph> <paragraph num="(e)"> <text>A copy of the report of the last examination made of the applicant by the insurance regulatory agency of the applicant's state of domicile if a foreign insurer, or state of entry if an alien insurer; and</text> </paragraph> <paragraph num="(f)"> <text>Any other document or information that the Commissioner considers necessary to determine continued eligibility to act as an accredited reinsurer.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Surplus. An accredited reinsurer shall maintain a surplus as regards policyholders in an amount not less than $20,000,000.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Examination of Accredited Reinsurer."> <text>Whenever the Commissioner considers it advisable, the Commissioner shall examine the affairs, transactions, accounts, records, and assets of each accredited reinsurer.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Suspension or Revocation of Accreditation."> <text>Contracts not qualifying for credit after suspension or revocation beyond secured obligations:</text> <paragraph num="A."> <text>While a reinsurer’s accreditation or certification is suspended, a reinsurance contract issued or renewed after the effective date of the suspension does not qualify for credit except to the extent the reinsurer’s obligations under the contract are secured in accordance with Insurance Article, §5-914, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>If a reinsurer’s accreditation or certification is revoked, credit for reinsurance may not be granted after the effective date of the revocation except to the extent that the reinsurer’s obligations under the contract are secured in accordance with Insurance Article, §5-911 or 5-914, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Credit for Reinsurance — Reinsurers Maintaining Trust Funds for Multiple Cedents — General Requirements."> <paragraph num="A."> <text>The Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer which, as of any date on which statutory financial statement credit for reinsurance is claimed, and thereafter for so long as credit for reinsurance is claimed, maintains a trust fund in an amount prescribed below in a qualified U.S. financial institution, for the payment of the valid claims of its U.S. domiciled ceding insurers, their assigns, and successors in interest.</text> </paragraph> <paragraph num="B."> <text>The assuming insurer shall report annually to the Commissioner substantially the same information as that required to be reported on the National Association of Insurance Commissioners (NAIC) annual statement form by authorized insurers, to enable the Commissioner to determine the sufficiency of the trust fund.</text> </paragraph> <paragraph num="C."> <text>Categories of Assuming Insurer.</text> <paragraph num="(1)"> <text>The requirements of this section apply to the categories of assuming insurer described in this section.</text> </paragraph> <paragraph num="(2)"> <text>The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by U.S. domiciled insurers, and in addition, the assuming insurer shall maintain a trusteed surplus in excess of the assuming insurer's obligations of not less than $20,000,000 except as provided in §C(3) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least 3 full years, the insurance regulatory agency with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of U.S. ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer’s liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than 30 percent of the assuming insurer’s liabilities attributable to reinsurance ceded by U.S. ceding insurers covered by the trust.</text> </paragraph> <paragraph num="(4)"> <text>Trust Funds for Groups — General Requirements.</text> <paragraph num="(a)"> <text>The trust fund for a group including incorporated and individual unincorporated underwriters shall consist of:</text> <paragraph num="(i)"> <text>For reinsurance ceded under reinsurance contracts with an inception, amendment, or renewal date on or after January 1, 1993, funds in trust in an amount not less than the respective underwriters’ several liabilities attributable to business ceded by U.S. domiciled ceding insurers to any underwriter of the group;</text> </paragraph> <paragraph num="(ii)"> <text>For reinsurance ceded under reinsurance contracts with an inception date on or before December 31, 1992, and not amended or renewed after that date, notwithstanding the other provisions of this regulation, funds in trust in an amount not less than the respective underwriters’ several insurance and reinsurance liabilities attributable to business written in the United States; and</text> </paragraph> <paragraph num="(iii)"> <text>In addition to these trusts, a trusteed surplus of which $100,000,000 shall be held jointly for the benefit of the U.S. domiciled ceding insurers of any member of the group for all the years of account.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The incorporated members of the group may not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of regulation and solvency control by the group's domiciliary regulator as are the unincorporated members. The group shall, within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, provide to the Commissioner:</text> <paragraph num="(i)"> <text>An annual certification by the group's domiciliary regulator of the solvency of each underwriter member of the group; or</text> </paragraph> <paragraph num="(ii)"> <text>If a certification is unavailable, a financial statement, audited by independent public accountants, of each underwriter member of the group.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Credit for Reinsurance — Reinsurers Maintaining Trust Funds for Multiple Cedents — Trusts."> <paragraph num="A."> <text>Credit for reinsurance may not be granted unless the form of the trust and any amendments to the trust have been approved by either the insurance regulatory agency of the state where the trust is domiciled or the insurance regulatory agency of another state who, pursuant to the terms of the trust instrument, has accepted responsibility for regulatory oversight of the trust. The form of the trust and any trust amendments also shall be filed with the insurance regulatory agency of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that:</text> <paragraph num="(1)"> <text>Contested claims shall be valid and enforceable out of funds in trust to the extent remaining unsatisfied 30 days after entry of the final order of any court of competent jurisdiction in the United States;</text> </paragraph> <paragraph num="(2)"> <text>Legal title to the assets of the trust shall be vested in the trustee for the benefit of the grantor's U.S. ceding insurers, their assigns, and successors in interest;</text> </paragraph> <paragraph num="(3)"> <text>The trust shall be subject to examination as determined by the Commissioner;</text> </paragraph> <paragraph num="(4)"> <text>The trust shall remain in effect for as long as the assuming insurer, or any member or former member of a group of insurers, shall have outstanding obligations under reinsurance contracts subject to the trust; and</text> </paragraph> <paragraph num="(5)"> <text>No later than February 28 of each year, the trustee of the trust shall report to the Commissioner in writing setting forth the balance in the trust and listing the trust's investments at the preceding year-end, and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the following December 31.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Inadequate Trust Funds.</text> <paragraph num="(1)"> <text>Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by Regulation .08C of this chapter or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the insurance regulatory agency with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the insurance regulatory agency with regulatory oversight over the trust or other designated receiver all of the assets of the trust fund.</text> </paragraph> <paragraph num="(2)"> <text>The assets shall be distributed by and claims shall be filed with and valued by the insurance regulatory agency with regulatory oversight over the trust in accordance with the laws of the state in which the trust is domiciled applicable to the liquidation of domestic insurance companies.</text> </paragraph> <paragraph num="(3)"> <text>If the insurance regulatory agency with regulatory oversight over the trust determines that the assets of the trust fund or any part of the assets are not necessary to satisfy the claims of the U.S. beneficiaries of the trust, the insurance regulatory agency with regulatory oversight over the trust shall return the assets, or any part of the assets, to the trustee for distribution in accordance with the trust agreement.</text> </paragraph> <paragraph num="(4)"> <text>The grantor shall waive any right otherwise available to it under U.S. law that is inconsistent with this provision.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Credit for Reinsurance — Reinsurers Maintaining Trust Funds for Multiple Cedents — Assets Deposited in the Trust."> <paragraph num="A."> <text>Assets deposited in the trust shall be valued according to their current fair market value and shall consist only of cash in U.S. dollars, certificates of deposit issued by a qualified U.S. financial institution, clean, irrevocable, unconditional and “evergreen” letters of credit issued or confirmed by a qualified U.S. financial institution, and investments of the type specified in this regulation, but investments in or issued by an entity controlling, controlled by, or under common control with either the grantor or beneficiary of the trust may not exceed 5 percent of total investments.</text> </paragraph> <paragraph num="B."> <text>No more than 20 percent of the total of the investments in the trust may be foreign investments authorized under §D(1)(d), D(3), E(2), or F of this regulation, and no more than 10 percent of the total of the investments in the trust may be securities denominated in foreign currencies.</text> </paragraph> <paragraph num="C."> <text>For purposes of applying §B of this regulation, a depository receipt denominated in U.S. dollars and representing rights conferred by a foreign security shall be classified as a foreign investment denominated in a foreign currency.</text> </paragraph> <paragraph num="D."> <text>The assets of a trust established to satisfy the requirements of Regulations .08—.11 of this chapter shall be invested only as follows:</text> <paragraph num="(1)"> <text>Government obligations that are not in default as to principal or interest, that are valid and legally authorized and that are issued, assumed, or guaranteed by:</text> <paragraph num="(a)"> <text>The United States or by any agency or instrumentality of the United States;</text> </paragraph> <paragraph num="(b)"> <text>A state of the United States;</text> </paragraph> <paragraph num="(c)"> <text>A territory, possession, or other governmental unit of the United States;</text> </paragraph> <paragraph num="(d)"> <text>An agency or instrumentality of a governmental unit referred to in §D(1)(b) and (c) of this regulation if the obligations shall be by law (statutory or otherwise) payable, as to both principal and interest, from taxes levied, or by law required to be levied, or from adequate special revenues pledged or otherwise appropriated, or by law required to be provided for making these payments, but may not be obligations eligible for investment under this section if payable solely out of special assessments on properties benefited by local improvements; or</text> </paragraph> <paragraph num="(e)"> <text>The government of any other country that is a member of the Organization for Economic Cooperation and Development and whose government obligations are rated A or higher, or the equivalent, by a nationally recognized statistical rating organization approved by the Securities Valuation Office;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Obligations that are issued in the United States, or that are dollar denominated and issued in a non-U.S. market, by a solvent U.S. institution (other than an insurance company), or that are assumed or guaranteed by a solvent U.S. institution (other than an insurance company) and that are not in default as to principal or interest if the obligations:</text> <paragraph num="(a)"> <text>Are rated A or higher (or the equivalent) by a nationally recognized statistical rating organization approved by the Securities Valuation Office, or, if not so rated, are similar in structure and other material respects to other obligations of the same institution that are so rated;</text> </paragraph> <paragraph num="(b)"> <text>Are insured by at least one authorized insurer (other than the investing insurer or a parent, subsidiary, or affiliate of the investing insurer) licensed to insure obligations in this State and, after considering the insurance, are rated AAA (or the equivalent) by a nationally recognized statistical rating organization approved by the Securities Valuation Office; or</text> </paragraph> <paragraph num="(c)"> <text>Have been designated as Class One or Class Two by the Securities Valuation Office;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Obligations issued, assumed, or guaranteed by a solvent non-U.S. institution chartered in a country that is a member of the Organization for Economic Cooperation and Development, or obligations of U.S. corporations issued in a non-U.S. currency, provided that in either case the obligations are rated A or higher, or the equivalent, by a nationally recognized statistical rating organization approved by the Securities Valuation Office;</text> </paragraph> <paragraph num="(4)"> <text>An investment made pursuant to the provisions of §D(1), (2), or (3) of this regulation shall be subject to the following additional limitations:</text> <paragraph num="(a)"> <text>An investment in or loan upon the obligations of an institution other than an institution that issues mortgage-related securities may not exceed 5 percent of the assets of the trust;</text> </paragraph> <paragraph num="(b)"> <text>An investment in any one mortgage-related security may not exceed 5 percent of the assets of the trust;</text> </paragraph> <paragraph num="(c)"> <text>The aggregate total investment in mortgage-related securities may not exceed 25 percent of the assets of the trust; and</text> </paragraph> <paragraph num="(d)"> <text>Preferred or guaranteed shares issued or guaranteed by a solvent U.S. institution are permissible investments if all of the institution's obligations are eligible as investments under §D(2)(a) and (c) of this regulation, but may not exceed 2 percent of the assets of the trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Equity Interests.</text> <paragraph num="(1)"> <text>Investments in common shares or partnership interests of a solvent U.S. institution are permissible if:</text> <paragraph num="(a)"> <text>Its obligations and preferred shares, if any, are eligible as investments under §D of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>The equity interests of the institution (except an insurance company) are registered on a national securities exchange as provided in the Securities Exchange Act of 1934, 15 U.S.C. §78a to 78kk or otherwise registered pursuant to that Act, and if otherwise registered, price quotations for them are furnished through a nationwide automated quotations system approved by the Financial Industry Regulatory Authority or successor organization; and</text> </paragraph> <paragraph num="(c)"> <text>The amount invested in equity interests under this subsection does not exceed 1 percent of the assets of the trust even though the equity interests are not so registered and are not issued by an insurance company.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Investments in common shares of a solvent institution organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development are permissible if:</text> <paragraph num="(a)"> <text>All its obligations are rated A or higher, or the equivalent, by a nationally recognized statistical rating organization approved by the Securities Valuation Office; and</text> </paragraph> <paragraph num="(b)"> <text>The equity interests of the institution are registered on a securities exchange regulated by the government of a country that is a member of the Organization for Economic Cooperation and Development.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An investment in or loan upon any one institution's outstanding equity interests may not exceed 1 percent of the assets of the trust. The cost of an investment in equity interests made pursuant to this section, when added to the aggregate cost of other investments in equity interests then held pursuant to this section, may not exceed 10 percent of the assets in the trust.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Obligations issued, assumed, or guaranteed by a multinational development bank are permissible investments, provided the obligations are rated A or higher, or the equivalent, by a nationally recognized statistical rating organization approved by the Securities Valuation Office.</text> </paragraph> <paragraph num="G."> <text>Investment Companies.</text> <paragraph num="(1)"> <text>Securities of an investment company registered pursuant to the Investment Company Act of 1940, 15 U.S.C. §80a, are permissible investments if the investment company:</text> <paragraph num="(a)"> <text>Invests at least 90 percent of its assets in the types of securities that qualify as an investment under §D(1), (2), or (3) of this regulation or invests in securities that are determined by the Commissioner to be substantively similar to the types of securities set forth in §D(1), (2), or (3) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>Invests at least 90 percent of its assets in the types of equity interests that qualify as an investment under §E(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Investments made by a trust in investment companies under this section may not exceed the following limitations:</text> <paragraph num="(a)"> <text>An investment in an investment company qualifying under §G(1)(a) of this regulation may not exceed 10 percent of the assets in the trust, and the aggregate amount of investment in qualifying investment companies may not exceed 25 percent of the assets in the trust; and</text> </paragraph> <paragraph num="(b)"> <text>Investments in an investment company qualifying under §G(1)(b) of this regulation may not exceed 5 percent of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall be included when calculating the permissible aggregate value of equity interests pursuant to §E(1) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Letters of Credit.</text> <paragraph num="(1)"> <text>In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or some other binding agreement, duly approved by the Commissioner, to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.</text> </paragraph> <paragraph num="(2)"> <text>The trust agreement shall provide that the trustee shall be liable for its negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where the draw would be required shall be considered to be negligence, willful misconduct, or both.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Credit for Reinsurance—Reinsurers Maintaining Trust Funds for Multiple Cedents—Additional Security."> <text>A specific security provided to a ceding insurer by an assuming insurer pursuant to Regulation .14 of this chapter shall be applied, until exhausted, to the payment of liabilities of the assuming insurer to the ceding insurer holding the specific security prior to, and as a condition precedent for, presentation of a claim by the ceding insurer for payment by a trustee of a trust established by the assuming insurer pursuant to Regulations .08—.10 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Credit for Reinsurance Required by Law."> <paragraph num="A."> <text>In this regulation, “jurisdiction” means a state, district, or territory of the United States and any lawful national government.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of Regulations .03—.05, .08—.11, .14, and .24—.27 of this chapter, but only as to the insurance of risks located in jurisdictions where the reinsurance is required by the applicable law or regulation of that jurisdiction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Credit Allowed a Foreign Ceding Insurer — Repealed." /> <regulation prefix="Regulation" num=".14" heading="Reduction from Liability for Reinsurance"> <paragraph num="A."> <text>Notwithstanding Regulations .03—.13 of this chapter and subject to the requirements of this regulation, the Commissioner shall allow a ceding insurer a reduction from liability for reinsurance obtained from an assuming insurer for the payment of the obligations under a reinsurance contract.</text> </paragraph> <paragraph num="B."> <text>Requirements.</text> <paragraph num="(1)"> <text>The Commissioner shall allow a ceding insurer a reduction from liability for the reinsurance ceded in an amount equal to the funds held by it or on its behalf, including funds held in trust, as security for the payment of the obligations under a reinsurance contract.</text> </paragraph> <paragraph num="(2)"> <text>The reduction from liability that is allowed a ceding insurer may not exceed the liabilities carried by the ceding insurer for the business reinsured.</text> </paragraph> <paragraph num="(3)"> <text>Any funds held by the ceding insurer, or on its behalf, as security for the payment of its obligations under a reinsurance contract shall be held for the exclusive benefit of the ceding insurer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Forms of Security Under Reinsurance Contract.</text> <paragraph num="(1)"> <text>The Commissioner shall accept the following as security under a reinsurance contract:</text> <paragraph num="(a)"> <text>Cash;</text> </paragraph> <paragraph num="(b)"> <text>A letter of credit issued or confirmed by a qualified U.S. financial institution;</text> </paragraph> <paragraph num="(c)"> <text>Any security that qualifies as an admitted asset and is listed by the Securities Valuation Office, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office; or</text> </paragraph> <paragraph num="(d)"> <text>Any other form of security acceptable to the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The security shall be held in:</text> <paragraph num="(a)"> <text>The United States and subject to withdrawal solely by and under the exclusive control of the ceding insurer; or</text> </paragraph> <paragraph num="(b)"> <text>A qualified U.S. financial institution, if the security is held in trust.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Standards of Acceptability for Letters of Credit.</text> <paragraph num="(1)"> <text>For acceptance as security under a reinsurance contract, a letter of credit shall:</text> <paragraph num="(a)"> <text>Be clean, irrevocable, and unconditional;</text> </paragraph> <paragraph num="(b)"> <text>Be issued or confirmed by a qualified U.S. financial institution authorized to issue letters of credit, pursuant to Regulation .02B(9)(b) of this chapter, and effective on or before December 31 of the year for which the annual statement filing is made;</text> </paragraph> <paragraph num="(c)"> <text>Be in the possession of or in trust for the ceding insurer on or before the date for filing its annual statement;</text> </paragraph> <paragraph num="(d)"> <text>Be issued for a term of at least 1 year, with an issue date and expiration date; and</text> </paragraph> <paragraph num="(e)"> <text>Contain an “evergreen clause” that:</text> <paragraph num="(i)"> <text>Prevents the expiration of the letter of credit without due notice from the issuer; and</text> </paragraph> <paragraph num="(ii)"> <text>Provides for the letter of credit to renew automatically unless the issuer notifies the Commissioner and beneficiary no less than 30 days prior to the expiration date or nonrenewal.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>On the date of issuance or confirmation of the letter of credit, the issuer of the letter of credit shall meet the applicable standards of acceptability for a letter of credit.</text> </paragraph> <paragraph num="(3)"> <text>Notwithstanding the failure of a previously accepted issuer of a letter of credit to continue to meet applicable standards of acceptability for a letter of credit, the letter of credit shall continue to be accepted until:</text> <paragraph num="(a)"> <text>15 days from the date that its issuer fails to meet the standards of acceptability; or</text> </paragraph> <paragraph num="(b)"> <text>The date of its scheduled expiration, if earlier.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A letter of credit shall provide that to obtain funds, the beneficiary need:</text> <paragraph num="(a)"> <text>Only draw a sight draft under the letter of credit and present it; and</text> </paragraph> <paragraph num="(b)"> <text>Not present any other document.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A letter of credit shall provide that it is not subject to any condition outside of the letter of credit.</text> </paragraph> <paragraph num="(6)"> <text>A letter of credit may not contain references to any other agreements, documents, or entities.</text> </paragraph> <paragraph num="(7)"> <text>The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section shall be clearly marked to indicate that the information is for internal identification purposes only.</text> </paragraph> <paragraph num="(8)"> <text>The letter of credit shall contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent upon reimbursement with respect thereto.</text> </paragraph> <paragraph num="(9)"> <text>The letter of credit shall state whether it is subject to and governed by the laws of this State or the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce Publication 600 (UCP 600), International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication, and all drafts drawn thereunder shall be presentable at an office in the U. S. of a qualified U. S. financial institution.</text> </paragraph> <paragraph num="(10)"> <text>If the letter of credit is made subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce Publication 600 (UCP 600), International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication, then the letter of credit shall specifically address and provide for an extension of time to draw against the letter of credit in the event that one or more of the occurrences specified in Article 17 of Publication 500, or any other successor publication, occur.</text> </paragraph> <paragraph num="(11)"> <text>If the letter of credit is issued by a financial institution authorized to issue letters of credit, other than a qualified U. S. financial institution as described in Regulation .02B(9)(b) of this chapter, then the following additional requirements shall be met:</text> <paragraph num="(a)"> <text>The issuing financial institution shall formally designate the confirming qualified U.S. financial institution as its agent for the receipt and payment of the drafts; and</text> </paragraph> <paragraph num="(b)"> <text>The “evergreen clause” shall provide for 30 days notice, to the Commissioner and beneficiary, prior to the expiry date for nonrenewal.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Standards of Acceptability for Letters of Credit—Reinsurance Contract Provisions.</text> <paragraph num="(1)"> <text>The reinsurance contract in conjunction with which the letter of credit is obtained may contain provisions that:</text> <paragraph num="(a)"> <text>Require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover;</text> </paragraph> <paragraph num="(b)"> <text>Stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer pursuant to the provisions of the reinsurance contract may be drawn upon at any time, notwithstanding any other provisions in the contract and shall be utilized by the ceding insurer or its successors in interest only for one or more of the following reasons:</text> <paragraph num="(i)"> <text>To pay or reimburse the ceding insurer for the assuming insurer's share under the specific reinsurance contract of premiums returned, but not yet recovered from the assuming insurers, to the owners of policies reinsured under the reinsurance contract on account of cancellations of the policies;</text> </paragraph> <paragraph num="(ii)"> <text>To pay or reimburse the ceding insurer for the assuming insurer's share, under the specific reinsurance contract of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurers, under the terms and provisions of the policies reinsured under the reinsurance contract;</text> </paragraph> <paragraph num="(iii)"> <text>To pay or reimburse the ceding insurer for any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; and</text> </paragraph> <paragraph num="(iv)"> <text>When the letter of credit will expire without renewal or be reduced or replaced by a letter of credit for a reduced amount and when the assuming insurer's entire obligations under the specific reinsurance remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of the liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer and exceed the amount of any reduced or replacement letter of credit, and deposit those amounts in a separate account in the name of the ceding insurer in a qualified U.S. financial institution apart from its general assets, in trust for such uses and purposes specified in §E(1)(b)(i) of this regulation as may remain after withdrawal and for any period after the termination date.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>All of the provisions of §E of this regulation shall be applied without diminution because of insolvency on the part of the ceding insurer or assuming insurer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>This section does not preclude the ceding insurer and assuming insurer from providing for:</text> <paragraph num="(a)"> <text>An interest payment, at a rate not in excess of the prime rate of interest, on the amounts held pursuant to §E(1)(b) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>The return of any amounts drawn down on the letters of credit in excess of the actual amounts required for the above or any amounts that are subsequently determined not to be due.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Required Standards for Trust Agreements Under Regulation .14."> <paragraph num="A."> <text>In General. A trust agreement established to meet the requirements of Regulation .14 of this chapter shall comply with this regulation.</text> </paragraph> <paragraph num="B."> <text>Parties to Trust Agreement.</text> <paragraph num="(1)"> <text>A trust agreement shall be entered into between a beneficiary, a grantor, and a trustee, which shall be a qualified U.S. financial institution.</text> </paragraph> <paragraph num="(2)"> <text>A trust agreement shall be established for the sole benefit of the beneficiary.</text> </paragraph> <paragraph num="(3)"> <text>The failure of a trust agreement to identify the beneficiary does not affect any actions or rights that the Commissioner may take or possess under the laws of this State.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Trust Account.</text> <paragraph num="(1)"> <text>A trust agreement shall create a trust account into which assets shall be deposited.</text> </paragraph> <paragraph num="(2)"> <text>The assets in the trust account shall be held by the trustee at the trustee's office in the United States.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Withdrawal of Assets. A trust agreement shall provide that the beneficiary:</text> <paragraph num="(1)"> <text>May withdraw assets from the trust account at any time, without notice to the grantor, if the beneficiary provides written notice to the trustee; and</text> </paragraph> <paragraph num="(2)"> <text>Is not required to present any other statement or document to withdraw assets, but may be required to acknowledge receipt of withdrawn assets.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Governing Law; Trust Agreement Not Subject to Other Conditions.</text> <paragraph num="(1)"> <text>A trust agreement shall:</text> <paragraph num="(a)"> <text>Be subject to and governed by the laws of the state in which the trust is domiciled; and</text> </paragraph> <paragraph num="(b)"> <text>Provide that it is not subject to any conditions outside of the trust agreement.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Except as provided in Regulation .17 of this chapter, a trust agreement may not contain references to any other agreement or document.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Duties of Trustee.</text> <paragraph num="(1)"> <text>A trust agreement shall require the trustee to:</text> <paragraph num="(a)"> <text>Receive assets and hold the assets in a safe place;</text> </paragraph> <paragraph num="(b)"> <text>Determine that the assets are in a form that the beneficiary, or the trustee on direction of the beneficiary, may negotiate whenever necessary, without consent or signature from the grantor or any other person or entity;</text> </paragraph> <paragraph num="(c)"> <text>Provide to the grantor and the beneficiary a statement of all assets in the trust account on its inception and at least as often as the end of each calendar quarter;</text> </paragraph> <paragraph num="(d)"> <text>Notify the grantor and the beneficiary, within 10 days, of any deposits to or withdrawals from the trust account;</text> </paragraph> <paragraph num="(e)"> <text>On written demand of the beneficiary, immediately take the steps necessary to transfer absolutely all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and</text> </paragraph> <paragraph num="(f)"> <text>Allow no substitutions or withdrawals of assets from the trust account, except on:</text> <paragraph num="(i)"> <text>Written instructions from the beneficiary; or</text> </paragraph> <paragraph num="(ii)"> <text>Call or maturity of any trust asset if the trustee provides written notice to the beneficiary and pays the proceeds from the asset into the trust account.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A trust agreement shall prohibit invasion of the trust corpus to pay compensation to, or reimburse the expenses of, the trustee.</text> </paragraph> <paragraph num="(3)"> <text>In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the trust agreement or some other binding agreement, duly approved by the Commissioner, to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.</text> </paragraph> <paragraph num="(4)"> <text>The trust agreement shall provide that the trustee shall be liable for its negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where the draw would be required shall be considered to be negligence, willful misconduct, or both.</text> </paragraph> </paragraph> <paragraph num="G."> <text>When Grantor Is Declared Insolvent or Placed into Receivership, Rehabilitation, or Liquidation.</text> <paragraph num="(1)"> <text>Notwithstanding any other provision in a trust agreement, if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the insurance regulatory agency with regulatory oversight of the trust or court of competent jurisdiction directing the trustee to transfer to the insurance regulatory agency with regulatory oversight or other designated receiver all of the assets of the trust fund.</text> </paragraph> <paragraph num="(2)"> <text>The assets shall be applied in accordance with the priority statutes and laws of the state in which the trust is domiciled applicable to the assets of insurance companies in liquidation.</text> </paragraph> <paragraph num="(3)"> <text>If the insurance regulatory agency with regulatory oversight determines that the assets of the trust fund or any part of the assets are not necessary to satisfy claims of the U.S. beneficiaries of the trust, the assets or any part of the assets shall be returned to the trustee for distribution in accordance with the trust agreement.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Termination of Trust Account. A trust agreement shall provide that at least 30 days, but not more than 45 days, before termination of the trust account, the trustee shall deliver to the beneficiary and the Commissioner written notice of termination.</text> </paragraph> <paragraph num="I."> <text>Valuation and Form of Assets.</text> <paragraph num="(1)"> <text>Either the reinsurance contract or the trust agreement shall stipulate that assets deposited in the trust account shall:</text> <paragraph num="(a)"> <text>Be valued according to their current fair market value; and</text> </paragraph> <paragraph num="(b)"> <text>Consist only of:</text> <paragraph num="(i)"> <text>Cash in U.S. dollars;</text> </paragraph> <paragraph num="(ii)"> <text>Certificates of deposit issued by a U.S. bank and payable in U.S. dollars;</text> </paragraph> <paragraph num="(iii)"> <text>Investments permitted by the Insurance Article, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(iv)"> <text>Any combination of §I(1)(b)(i)—(iii) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Investments in or issued by an entity controlling, controlled by, or under common control with the grantor or the beneficiary of the trust may not exceed 5 percent of total investments.</text> </paragraph> <paragraph num="(3)"> <text>A trust agreement may specify the types of investments to be deposited in the trust account.</text> </paragraph> <paragraph num="(4)"> <text>If a trust agreement is entered into in conjunction with a reinsurance contract covering life, annuities, or accident and health, then the reinsurance contract shall contain the provisions required by this section.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Permitted Conditions for Trust Agreements."> <paragraph num="A."> <text>In General. A trust agreement established to meet the requirements of Regulation .14 of this chapter may include the provisions allowed under this regulation.</text> </paragraph> <paragraph num="B."> <text>Resignation and Removal of Trustee.</text> <paragraph num="(1)"> <text>Subject to §B(2) of this regulation, a trust agreement may provide that the:</text> <paragraph num="(a)"> <text>Trustee may resign by delivering to the beneficiary and grantor written notice of resignation, effective not less than 90 days after receipt by the beneficiary and grantor; and</text> </paragraph> <paragraph num="(b)"> <text>Grantor may remove the trustee by delivering to the trustee and beneficiary written notice of removal, effective not less than 90 days after receipt by the trustee and beneficiary.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A resignation or removal under this section may not become effective until:</text> <paragraph num="(a)"> <text>A successor trustee has been appointed and approved by the beneficiary and the grantor; and</text> </paragraph> <paragraph num="(b)"> <text>All assets in the trust have been transferred to the new trustee.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Shares of Stock—Voting Rights and Dividends.</text> <paragraph num="(1)"> <text>A trust agreement may give the grantor the full and unqualified right to:</text> <paragraph num="(a)"> <text>Vote any shares of stock in the trust account; and</text> </paragraph> <paragraph num="(b)"> <text>Receive from time to time payments of any dividends or interest on any shares of stock or obligations included in the trust account.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Any interest or dividends shall be:</text> <paragraph num="(a)"> <text>Forwarded promptly on receipt to the grantor; or</text> </paragraph> <paragraph num="(b)"> <text>Deposited in a separate account established in the grantor's name.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Investment and Substitution.</text> <paragraph num="(1)"> <text>Subject to §D(2) of this regulation, a trust agreement may authorize the trustee to invest, and accept substitutions of, any funds in the account.</text> </paragraph> <paragraph num="(2)"> <text>The trustee may not make an investment or substitution without prior approval of the beneficiary unless the trust agreement:</text> <paragraph num="(a)"> <text>Specifies categories of investments acceptable to the beneficiary; and</text> </paragraph> <paragraph num="(b)"> <text>Authorizes the trustee to invest funds and to accept substitutions that the trustee determines are at least equal in current fair market value to the assets withdrawn, and that are consistent with the restrictions in Regulation .15 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Transfer of Assets.</text> <paragraph num="(1)"> <text>A trust agreement may provide that the beneficiary may at any time designate a party to which all or part of the trust assets shall be transferred.</text> </paragraph> <paragraph num="(2)"> <text>Transfer may be conditioned on the trustee receiving other specified assets before or simultaneously with the transfer.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Delivery of Assets to Grantor on Termination of Account. A trust agreement may provide that, on termination of the trust account, all assets not previously withdrawn by the beneficiary shall, with written approval of the beneficiary, be delivered to the grantor.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Trust Agreement Established in Conjunction with Reinsurance Contracts Covering Risks Other than Life, Annuities, and Accident and Health."> <paragraph num="A."> <text>Use of Amounts Drawn on Trust Account. Notwithstanding any provision of Regulation .15 of this chapter, when a trust agreement is established to meet the requirements of Regulation .14 of this chapter in conjunction with a reinsurance contract covering risks other than life, annuities, or accident and health, where it is customary practice to provide a trust agreement for a specific purpose, the trust agreement may allow the ceding insurer to use amounts drawn on the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the purposes listed in this regulation.</text> </paragraph> <paragraph num="B."> <text>To Pay or Reimburse Ceding Insurer. A trust agreement may allow the ceding insurer to use amounts drawn on the trust account to pay or reimburse the ceding insurer for:</text> <paragraph num="(1)"> <text>The assuming insurer's share under the specific reinsurance contract regarding any losses and loss adjustment expenses paid by the ceding insurer but not recovered from the assuming insurer; and</text> </paragraph> <paragraph num="(2)"> <text>Unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Payment to Assuming Insurer. A trust agreement may allow the ceding insurer to use amounts drawn on the trust account to make payment to the assuming insurer of any amounts held in the trust account that exceed 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance contract.</text> </paragraph> <paragraph num="D."> <text>On Termination of Trust Account.</text> <paragraph num="(1)"> <text>A trust agreement may allow the ceding insurer to withdraw amounts equal to the assuming insurer's entire obligations under the reinsurance contract and deposit those amounts in a separate account in accordance with §D(2) of this regulation in trust for the uses specified in §§B and C of this regulation if the:</text> <paragraph num="(a)"> <text>Ceding insurer has received notification of termination of the trust account; and</text> </paragraph> <paragraph num="(b)"> <text>Assuming insurer's entire obligations under the reinsurance contract remain unliquidated and undischarged 10 days before the termination date.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Amounts withdrawn from the trust account and deposited under §D(1) of this regulation shall be deposited:</text> <paragraph num="(a)"> <text>In a separate account, in the name of the ceding insurer, in a qualified U.S. financial institution, apart from the general assets of the ceding insurer; and</text> </paragraph> <paragraph num="(b)"> <text>In trust for the uses specified in §§B and C of this regulation as may remain executory after the withdrawal and for any period after the termination date.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Trust Agreement Established in Conjunction with Reinsurance Contracts Covering Life, Annuities, or Accident and Health Risks."> <paragraph num="A."> <text>Use of Amounts Drawn on Trust Account. Notwithstanding any provision of Regulation .15 of this chapter, when a trust agreement is established to meet the requirements of Regulation .14 of this chapter in conjunction with a reinsurance contract covering life, annuities, or accident and health risks, where it is customary to provide a trust agreement for a specific purpose, the trust agreement may allow the ceding insurer to use amounts drawn on the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the purposes listed in this regulation.</text> </paragraph> <paragraph num="B."> <text>To Pay or Reimburse Ceding Insurer. A trust agreement may allow the ceding insurer to use amounts drawn on the trust account to pay or reimburse the ceding insurer for the assuming insurer's share under the:</text> <paragraph num="(1)"> <text>Reinsurance contract of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the insurance contract on account of cancellations of the policies; and</text> </paragraph> <paragraph num="(2)"> <text>Specific reinsurance contract of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance contract.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Payment to Assuming Insurer. A trust agreement may allow the ceding insurer to use amounts drawn on the trust account to pay to the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.</text> </paragraph> <paragraph num="D."> <text>On Termination of Trust Account.</text> <paragraph num="(1)"> <text>A trust agreement may allow the ceding insurer to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer, and deposit those amounts in a separate account in accordance with §D(2) of this regulation in trust for the uses and purposes specified in §§B and C of this regulation if the:</text> <paragraph num="(a)"> <text>Ceding insurer has received notification of termination of the trust account; and</text> </paragraph> <paragraph num="(b)"> <text>Assuming insurer's entire obligations under the specific reinsurance contract remain unliquidated and undischarged 10 days before the termination date.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Amounts withdrawn from the trust account and deposited under §D(1) of this regulation shall be deposited:</text> <paragraph num="(a)"> <text>In a separate account, in the name of the ceding insurer, in a qualified U.S. financial institution, apart from the general assets of the ceding insurer; and</text> </paragraph> <paragraph num="(b)"> <text>In trust for the uses specified in §§A and B of this regulation as may remain executory after the withdrawal and for any period after the termination date.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Permitted Conditions Applicable to Reinsurance Contracts."> <paragraph num="A."> <text>Trust Agreement. A reinsurance contract may:</text> <paragraph num="(1)"> <text>Require the assuming insurer to enter into a trust agreement;</text> </paragraph> <paragraph num="(2)"> <text>Establish a trust account for the benefit of the ceding insurer; and</text> </paragraph> <paragraph num="(3)"> <text>Specify what the agreement is to cover.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Execution of Assignments or Endorsements. To allow the ceding insurer, or the trustee on the direction of the ceding insurer, to negotiate assets whenever necessary without consent or signature from the assuming insurer or any other entity, a reinsurance agreement may require the assuming insurer, before depositing assets with the trustee, to:</text> <paragraph num="(1)"> <text>Execute assignments or endorsements in blank; or</text> </paragraph> <paragraph num="(2)"> <text>Transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Settlements of Account in Cash or Equivalent. A reinsurance contract may require that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent.</text> </paragraph> <paragraph num="D."> <text>Withdrawal of Assets. A reinsurance contract may stipulate that the assuming insurer and the ceding insurer agree that the assets in the trust account, established under the provisions of the reinsurance contract, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the reinsurance contract, and may be used by the ceding insurer or its successors in interest by operation of law, including any liquidator, rehabilitator, receiver, or conservator of the company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, for the following purposes:</text> <paragraph num="(1)"> <text>To pay or reimburse the ceding insurer for:</text> <paragraph num="(a)"> <text>The assuming insurer's share under the specific reinsurance contract of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance contract because of cancellations of the policies;</text> </paragraph> <paragraph num="(b)"> <text>The assuming insurer's share of surrenders and benefits or losses paid by the ceding insurer under the provisions of the policies reinsured under the reinsurance contract; or</text> </paragraph> <paragraph num="(c)"> <text>Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>To make payment to the assuming insurer of amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Transfer of Assets to Assuming Insurer. A reinsurance contract may allow the assuming insurer to seek approval from the ceding insurer, which may not be unreasonably or arbitrarily withheld, to withdraw from the trust account all or any part of the trust assets and transfer those assets to the assuming insurer, if:</text> <paragraph num="(1)"> <text>At the time of withdrawal, the assuming insurer replaces the withdrawn assets with other qualified assets that have a current fair market value equal to the market value of the withdrawn assets to maintain at all times the deposit in the required amount; or</text> </paragraph> <paragraph num="(2)"> <text>After withdrawal and transfer, the current fair market value of the trust account is not less than 102 percent of the required amount.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Return of Amount Withdrawn; Interest. A reinsurance contract may provide for:</text> <paragraph num="(1)"> <text>The return of any amount withdrawn in excess of the actual amounts required for §D of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Interest payments at a rate not in excess of the prime rate of interest on such amounts held pursuant to §D of this regulation.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Arbitration Panel or Court-Award of Expenses. A reinsurance contract may allow the award by an arbitration panel or court of competent jurisdiction of:</text> <paragraph num="(1)"> <text>Interest at a rate different from that provided in §F of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>Court or arbitration costs;</text> </paragraph> <paragraph num="(3)"> <text>Attorney's fees; and</text> </paragraph> <paragraph num="(4)"> <text>Any other reasonable expenses.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Financial Reporting."> <paragraph num="A."> <text>Reduction of Liability. A ceding insurer may use a trust agreement to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with the Commissioner in compliance with this chapter when the trust agreement is established on or before the date of filing of the financial statement of the ceding insurer.</text> </paragraph> <paragraph num="B."> <text>Amount of Reduction. A reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but the reduction may not exceed the specific obligations under the reinsurance contract that the trust account was established to secure.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Existing Agreements — Repealed." /> <regulation prefix="Regulation" num=".22" heading="Other Security."> <text>A ceding insurer may take credit for unencumbered funds that are:</text> <paragraph num="A."> <text>Withheld by the ceding insurer in the United States;</text> </paragraph> <paragraph num="B."> <text>Subject to withdrawal solely by the ceding insurer; and</text> </paragraph> <paragraph num="C."> <text>Under the exclusive control of the ceding insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Reinsurance Contract."> <text>Credit for reinsurance may not be allowed by the Commissioner as an admitted asset or deduction from liability to any ceding insurer for a reinsurance contract entered into with a reinsurer under this chapter after the adoption of this regulation unless the reinsurance contract includes:</text> <paragraph num="A."> <text>An insolvency clause, in accordance with Insurance Article, §5-905(a), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="B."> <text>A provision under which the reinsurer, if an unauthorized reinsurer, has:</text> <paragraph num="(1)"> <text>Submitted to the jurisdiction of an alternative dispute resolution panel or court of competent jurisdiction within the United States;</text> </paragraph> <paragraph num="(2)"> <text>Agreed to comply with all requirements necessary to give the court or panel jurisdiction;</text> </paragraph> <paragraph num="(3)"> <text>Designated an agent to receive service of process; and</text> </paragraph> <paragraph num="(4)"> <text>Agreed to abide by the final decision of the court or panel.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Includes a proper reinsurance intermediary clause, if applicable, which stipulates that the credit risk for the intermediary is carried by the assuming insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Credit for Reinsurance — Certified Reinsurers."> <paragraph num="A."> <text>The Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that has been certified as a reinsurer in this State at all times for which statutory financial statement credit for reinsurance is claimed under this regulation.</text> </paragraph> <paragraph num="B."> <text>The credit allowed shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the Commissioner.</text> </paragraph> <paragraph num="C."> <text>The security shall be in a form consistent with Insurance Article, §§5-911 and 5-914, Annotated Code of Maryland, and this chapter.</text> </paragraph> <paragraph num="D."> <text>The amount of security required in order for full credit to be allowed shall correspond with the following requirements:</text> <paragraph num="(1)"> <text>Certification Ratings.</text> </paragraph> <paragraph num="(2)"> <text>Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions.</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner shall require the certified reinsurer to post 100 percent security, for the benefit of the ceding insurer or its estate, upon the entry of an order of rehabilitation, liquidation, or conservation against the ceding insurer.</text> </paragraph> <paragraph num="(4)"> <text>Catastrophic Occurrence.</text> <paragraph num="(a)"> <text>A certified reinsurer may defer posting security for catastrophe recoverables for a period of up to 1 year from the date of the first instance of a liability reserve entry by the ceding company as a result of a catastrophic occurrence that is likely to result in significant insured losses as recognized by the Commissioner.</text> </paragraph> <paragraph num="(b)"> <text>The deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner as determined by the Commissioner.</text> </paragraph> <paragraph num="(c)"> <text>Reinsurance recoverables for only the following lines of business as reported on the NAIC annual financial statement related specifically to the catastrophic occurrence will be included in the deferral:</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Credit for reinsurance under this regulation shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Any reinsurance contract entered into prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this regulation with respect to losses incurred and reserves reported on or after the effective date of the amendment or new contract.</text> </paragraph> <paragraph num="(6)"> <text>Nothing in this section shall prohibit the parties to a reinsurance contract from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this section.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Certification Procedure.</text> <paragraph num="(1)"> <text>The Commissioner shall post notice on the Administration’s website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The Commissioner may not take final action on the application until at least 30 days after posting the notice required by this subsection.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner shall issue written notice to an assuming insurer that has been approved as a certified reinsurer. Including in such notice shall be the certification rating assigned to the certified reinsurer in accordance with §G(2) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner shall publish a list of all certified reinsurers and their ratings.</text> </paragraph> <paragraph num="(4)"> <text>The Commissioner shall comply with all reporting and notification requirements that may be established by the NAIC with respect to certified reinsurers and qualified jurisdictions.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Certification Eligibility Requirements. In order to be eligible for certification, the assuming insurer shall meet the following requirements:</text> <paragraph num="(1)"> <text>The assuming insurer shall be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the Commissioner pursuant to Regulation .26 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>The assuming insurer shall maintain capital and surplus, or its equivalent, of no less than $250,000,000, calculated in accordance with §G(2)(h) of this regulation. This requirement may also be satisfied by a group including incorporated and individual unincorporated underwriters having minimum capital and surplus equivalents (net of liabilities) of at least $250,000,000 and a central fund containing a balance of at least $250,000,000.</text> </paragraph> <paragraph num="(3)"> <text>The assuming insurer shall have financial strength ratings from two or more rating agencies deemed acceptable by the Commissioner. These ratings shall be based on interactive communication between the rating agency and the assuming insurer and may not be based solely on publicly available information. These financial strength ratings shall be one factor used by the Commissioner in determining the rating that is assigned to the assuming insurer. Failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies shall result in the loss of eligibility for certification. Acceptable rating agencies include the following:</text> <paragraph num="(a)"> <text>Standard & Poor’s;</text> </paragraph> <paragraph num="(b)"> <text>Moody’s Investors Service;</text> </paragraph> <paragraph num="(c)"> <text>Fitch Ratings;</text> </paragraph> <paragraph num="(d)"> <text>A.M. Best Company; or</text> </paragraph> <paragraph num="(e)"> <text>A nationally recognized statistical rating organization deemed acceptable by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Any other requirements imposed by the Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>If an applicant for certification has been certified as a reinsurer by the insurance regulatory agency of a state accredited by the NAIC, the Commissioner has the discretion to defer to that insurance regulatory agency to designate the assuming insurer as a certified reinsurer in this State.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Certification Rating.</text> <paragraph num="(1)"> <text>The Commissioner shall rate each certified reinsurer on a legal entity basis and with due consideration being given to a group rating where appropriate, except that a group including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating.</text> </paragraph> <paragraph num="(2)"> <text>Factors that may be considered as part of the certification rating process include, but are not limited to:</text> <paragraph num="(a)"> <text>The certified reinsurer’s financial strength rating from an acceptable rating agency pursuant to §F(3) of this regulation, as follows:</text> <paragraph num="(i)"> <text>A certified reinsurer may not be eligible for a certification rating higher than the rating corresponding with the financial strength ratings set forth in §G(2)(a)(iii) of this regulation.</text> </paragraph> <paragraph num="(ii)"> <text>The Commissioner shall use the lowest financial strength rating received from an acceptable rating agency in establishing the maximum certification rating of a certified reinsurer.</text> </paragraph> <paragraph num="(iii)"> <text>Financial Strength Rating Chart.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations;</text> </paragraph> <paragraph num="(c)"> <text>For certified reinsurers domiciled in the U.S., a review of the most recent applicable NAIC Annual Statement Blank, either Schedule F (for property/casualty reinsurers) or Schedule S (for life and health reinsurers);</text> </paragraph> <paragraph num="(d)"> <text>For certified reinsurers not domiciled in the U.S., a review annually of the Maryland Insurance Administration Reinsurance Application and NAIC Form CR-F Assumed Reinsurance (for Property/Casualty Reinsurers) or NAIC Form CR-S Reinsurance Assumed (for Life and Health Reinsurers);</text> </paragraph> <paragraph num="(e)"> <text>The history of the certified reinsurer for prompt payment of claims under reinsurance contracts, based on an analysis of ceding insurers’ Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;</text> </paragraph> <paragraph num="(f)"> <text>Regulatory actions against the certified reinsurer;</text> </paragraph> <paragraph num="(g)"> <text>The report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in §G(2)(h) of this regulation;</text> </paragraph> <paragraph num="(h)"> <text>For certified reinsurers not domiciled in the U.S., audited financial statements, regulatory filings and actuarial opinions (as filed with the non-U.S. jurisdiction supervisor, with a translation into English). Upon the initial application for certification, the Commissioner shall consider audited financial statements for the last 2 years filed with its non-U.S. jurisdiction supervisor;</text> </paragraph> <paragraph num="(i)"> <text>The liquidation priority of obligations to a ceding insurer in the certified reinsurer’s domiciliary jurisdiction in the context of an insolvency proceeding;</text> </paragraph> <paragraph num="(j)"> <text>A certified reinsurer’s participation in any solvent scheme of arrangement, or similar procedure, which involves U.S. ceding insurers. The Commissioner shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and</text> </paragraph> <paragraph num="(k)"> <text>Any other information deemed relevant by the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Certification Rating and Security Adjustment. Based on the analysis conducted under §G(2) of this regulation of a certified reinsurer’s history of prompt payment of claims, the Commissioner may adjust the security the certified reinsurer is required to post to protect its liabilities to U.S. ceding insurers provided that the Commissioner shall, at a minimum, increase the security the certified reinsurer is required to post by one certification rating level pursuant to §G(2)(a)(iii) of this regulation if the Commissioner finds that:</text> <paragraph num="(1)"> <text>More than 15 percent of the certified reinsurer’s ceding insurers have overdue reinsurance recoverables on paid losses of 90 calendar days or more which are not in dispute and which exceed $100,000 for each cedent; or</text> </paragraph> <paragraph num="(2)"> <text>The aggregate amount of reinsurance recoverables on paid losses which are not in dispute that are overdue by 90 calendar days or more exceeds $50,000,000.</text> </paragraph> </paragraph> <paragraph num="I."> <text>The Commissioner may not certify any assuming insurer that is domiciled in a jurisdiction that the Commissioner has determined does not adequately and promptly enforce final U.S. judgments or arbitration awards.</text> </paragraph> <paragraph num="J."> <text>For initial eligibility as a certified reinsurer, an applicant shall agree to meet applicable information filing requirements as determined by the Commissioner. All information submitted by applicants, which is not otherwise public information subject to disclosure, shall be exempt from disclosure under General Provisions Article, Title 4, Annotated Code of Maryland, and shall be withheld from public disclosure. The applicant shall file with the Commissioner:</text> <paragraph num="(1)"> <text>A properly executed NAIC Form CR-F Assumed Reinsurance (for Property/Casualty Reinsurers) or NAIC Form CR-S Reinsurance Assumed (for Life and Health Reinsurers);</text> </paragraph> <paragraph num="(2)"> <text>A Maryland Insurance Administration Reinsurance Application;</text> </paragraph> <paragraph num="(3)"> <text>An updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from U.S. domestic ceding insurers;</text> </paragraph> <paragraph num="(4)"> <text>The report of the independent auditor on the financial statements of the insurance enterprise and the audited financial statements, regulatory filings and actuarial opinions (as filed with the non-U.S. jurisdiction supervisor, with a translation into English). Upon the initial application for certification, the Commissioner may consider audited financial statements for the last 2 years filed with its non-U.S. jurisdiction supervisor;</text> </paragraph> <paragraph num="(5)"> <text>A certification from the certified reinsurer’s domestic regulator that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction’s highest regulatory action level;</text> </paragraph> <paragraph num="(6)"> <text>Any other document or information that the Commissioner considers necessary to determine eligibility to act as a certified reinsurer; and</text> </paragraph> <paragraph num="(7)"> <text>A properly executed NAIC Form CR-1 Certificate of Certified Reinsurer as evidence that the applicant agrees to:</text> <paragraph num="(a)"> <text>Submit to the jurisdiction of the State;</text> </paragraph> <paragraph num="(b)"> <text>The Appointment of the Commissioner as an agent for service of process in this State; and</text> </paragraph> <paragraph num="(c)"> <text>Provide security for 100 percent of the assuming insurer’s liabilities attributable to reinsurance ceded by U.S. ceding insurers if it resists enforcement of a final U.S. judgment.</text> </paragraph> </paragraph> </paragraph> <paragraph num="K."> <text>If an applicant for certification has been certified as a reinsurer in a NAIC accredited jurisdiction, the Commissioner shall have the discretion to defer to that jurisdiction’s certification, and to defer to the rating assigned by that jurisdiction, if the assuming insurer submits a properly executed NAIC Form CR-1 and any additional information the Commissioner requires. The assuming insurer shall be considered to be a certified reinsurer in this State based on the following limitations:</text> <paragraph num="(1)"> <text>Any change in the certified reinsurer’s status or rating in the other jurisdiction shall apply automatically in this State as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the Commissioner of any change in its status or rating within 10 days after receiving notice of the change.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may withdraw recognition of the other jurisdiction’s rating at any time and assign a new rating in accordance with Regulation .25 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner may withdraw recognition of the other jurisdiction’s certification at any time, with written notice to the certified reinsurer. Unless the Commissioner suspends or revokes the certified reinsurer’s certification in accordance with Regulation .25 of this chapter, the certified reinsurer’s certification shall remain in good standing in this State for a period of 3 months, which shall be extended if additional time is necessary to consider the assuming insurer’s application for certification in this State.</text> </paragraph> </paragraph> <paragraph num="L."> <text>For continued eligibility as a certified reinsurer, a certified reinsurer shall agree to meet applicable information filing requirements as determined by the Commissioner. All information submitted by certified reinsurers which is not otherwise public information subject to disclosure shall be exempted from disclosure under General Provisions Article, Title 4, Annotated Code of Maryland, and shall be withheld from public disclosure. The certified reinsurer shall by May 30 of each year, file with the Commissioner:</text> <paragraph num="(1)"> <text>A properly executed NAIC Form CR-F Assumed Reinsurance (for Property/Casualty Reinsurers) or NAIC Form CR-S Reinsurance Assumed (for Life and Health Reinsurers);</text> </paragraph> <paragraph num="(2)"> <text>A Maryland Insurance Administration Reinsurance Application;</text> </paragraph> <paragraph num="(3)"> <text>An updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from U.S. domestic ceding insurers;</text> </paragraph> <paragraph num="(4)"> <text>The report of the independent auditor on the financial statements of the insurance enterprise and the audited financial statements, regulatory filings and actuarial opinions (as filed with the non-U.S. jurisdiction supervisor, with a translation into English). Upon the initial application for certification, the Commissioner may consider audited financial statements for the last 2 years filed with its non-U.S. jurisdiction supervisor;</text> </paragraph> <paragraph num="(5)"> <text>A certification from the certified reinsurer’s domestic regulator that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction’s highest regulatory action level;</text> </paragraph> <paragraph num="(6)"> <text>Any other document or information that the Commissioner considers necessary to determine continued eligibility to act as a certified reinsurer; and</text> </paragraph> <paragraph num="(7)"> <text>A properly executed NAIC Form CR-1 Certificate of Certified Reinsurer as evidence that the applicant agrees to:</text> <paragraph num="(a)"> <text>Submit to the jurisdiction of the State;</text> </paragraph> <paragraph num="(b)"> <text>The Appointment of the Commissioner as an agent for service of process in this State; and</text> </paragraph> <paragraph num="(c)"> <text>Provide security for 100 percent of the assuming insurer’s liabilities attributable to reinsurance ceded by U.S. ceding insurers if it resists enforcement of a final U.S. judgment.</text> </paragraph> </paragraph> </paragraph> <paragraph num="M."> <text>Notification of the Commissioner by the Certified Reinsurer. In order to obtain or maintain a certification, a certified reinsurer shall agree to notify and provide a written statement describing the changes and the reasons therefore in writing to the Commissioner within 10 business days of:</text> <paragraph num="(1)"> <text>Any regulatory actions taken against the certified reinsurer;</text> </paragraph> <paragraph num="(2)"> <text>Any change in the provisions of its domiciliary license; or</text> </paragraph> <paragraph num="(3)"> <text>Any change in rating by an acceptable rating agency pursuant to §F(3) of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Change in Certification Rating or Suspension or Revocation of Certification."> <paragraph num="A."> <text>Change in Certification Rating.</text> <paragraph num="(1)"> <text>In the case of a downgrade of a financial strength rating by a rating agency, or other change in circumstance, the Commissioner shall upon written notice to the certified reinsurer assign a new certification rating to the certified reinsurer in accordance with the requirements of Regulation .24 of this chapter. If the Commissioner downgrades the certified reinsurer’s certification rating, the certified reinsurer shall meet the security requirements applicable to its new certification rating for all business it has assumed as a certified reinsurer.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner upgrades a certified reinsurer’s certification rating, the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the Commissioner shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Authority to Suspend or Revoke. The Commissioner may upon written notice and opportunity for a hearing pursuant to Insurance Article, §2-210, Annotated Code of Maryland, suspend or revoke a certified reinsurer’s certification at any time if:</text> <paragraph num="(1)"> <text>The certified reinsurer fails to meet its obligations or security requirements under this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the Commissioner to reconsider the certified reinsurer’s ability or willingness to meet its contractual obligations; or</text> </paragraph> <paragraph num="(3)"> <text>The certified reinsurer ceases to meet other requirements for certification.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Suspension or Revocation of the Certification of a Certified Reinsurer.</text> <paragraph num="(1)"> <text>While a reinsurer’s certification is suspended, a reinsurance contract issued or renewed after the effective date of the suspension does not qualify for credit except to the extent the reinsurer’s obligations under the contract are secured in accordance with Insurance Article, §5-914, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>If a reinsurer’s certification is revoked, credit for reinsurance may not be granted after the effective date of the revocation except to the extent that the reinsurer’s obligations under the contract are secured in accordance with Insurance Article, §5-911, Annotated Code of Maryland, or Insurance Article, §5-914, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Notwithstanding the change of a certified reinsurer’s certification rating or suspension or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of 3 months for all reinsurance ceded to that certified reinsurer, unless the Commissioner finds that the reinsurance is found to be at high risk of uncollectibility.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Qualified Jurisdictions."> <paragraph num="A."> <text>Eligibility.</text> <paragraph num="(1)"> <text>The Commissioner shall maintain and publish a list of qualified jurisdictions under which an assuming insurer, licensed and domiciled in that jurisdiction, is eligible to be considered for certification by the Commissioner as a certified reinsurer.</text> </paragraph> <paragraph num="(2)"> <text>In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the Commissioner shall:</text> <paragraph num="(a)"> <text>Evaluate the reinsurance supervisory system of the non-U.S. jurisdiction, both initially and on an ongoing basis;</text> </paragraph> <paragraph num="(b)"> <text>Consider the rights, benefits and extent of reciprocal recognition afforded by a non-U.S. jurisdiction to reinsurers licensed and domiciled in the U.S.; and</text> </paragraph> <paragraph num="(c)"> <text>Consider any additional factors that the Commissioner deems appropriate, which may include:</text> <paragraph num="(i)"> <text>The framework under which the assuming insurer is regulated;</text> </paragraph> <paragraph num="(ii)"> <text>The structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;</text> </paragraph> <paragraph num="(iii)"> <text>The substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;</text> </paragraph> <paragraph num="(iv)"> <text>The form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used for purposes of those reports;</text> </paragraph> <paragraph num="(v)"> <text>The domiciliary regulator’s cooperation with U.S. regulators, including the Commissioner;</text> </paragraph> <paragraph num="(vi)"> <text>The history of performance by assuming insurers in the domiciliary jurisdiction;</text> </paragraph> <paragraph num="(vii)"> <text>Any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or successor organization; and</text> </paragraph> <paragraph num="(viii)"> <text>Any other matters deemed relevant by the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Commissioner may not recognize a jurisdiction as a qualified jurisdiction unless the Commissioner has determined that the jurisdiction adequately and promptly enforces final U.S. judgments or arbitration awards.</text> </paragraph> <paragraph num="(4)"> <text>A qualified jurisdiction shall agree in writing to share information and cooperate with the Commissioner with respect to all certified reinsurers domiciled within that jurisdiction.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Additional Considerations.</text> <paragraph num="(1)"> <text>The Commissioner shall consider the list of qualified jurisdictions published through the NAIC Committee Process in determining qualified jurisdictions in this State.</text> </paragraph> <paragraph num="(2)"> <text>In determining whether a jurisdiction is a qualified jurisdiction, the Commissioner shall consider the NAIC’s list:</text> <paragraph num="(a)"> <text>when the jurisdiction has been evaluated for inclusion on the list; and</text> </paragraph> <paragraph num="(b)"> <text>whenever the list is amended.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the Commissioner approves a jurisdiction as qualified that does not appear on the NAIC’s list of qualified jurisdictions, the Commissioner shall provide to the NAIC, upon written request, information relating to such determination pursuant to the requirements in Section A of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The Commissioner shall recognize as a qualified jurisdiction in this State any state that meets the requirements for accreditation under the NAIC’s financial standards and accreditation program.</text> </paragraph> <paragraph num="(5)"> <text>The Commissioner shall withdraw recognition of those jurisdictions that are no longer qualified.</text> </paragraph> <paragraph num="(6)"> <text>The Commissioner shall publish notice of jurisdictions that have qualified or are no longer qualified to be recognized as a qualified jurisdiction.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Mandatory Funding Clause."> <text>In addition to the requirements of Regulations .14—.18 of this chapter, reinsurance contracts entered into or renewed under Regulations .24—.26 of this chapter shall include a funding clause, which requires the certified reinsurer to provide and maintain security in an amount sufficient to avoid the imposition of any unfavorable financial statement accounting treatment on the ceding insurer under this chapter for reinsurance ceded to the certified reinsurer.</text> </regulation> <regulation prefix="Regulation" num=".28" heading="Credit for Reinsurance — Reciprocal Jurisdictions"> <paragraph num="A."> <text>Pursuant to Insurance Article, §5-917, Annotated Code of Maryland, the Commissioner shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is licensed to write reinsurance by, and has its head office or is domiciled in, a reciprocal jurisdiction, and which meets the other requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>A “reciprocal jurisdiction” means a jurisdiction, as designated by the Commissioner pursuant to §D of this regulation that is:</text> <paragraph num="(1)"> <text>A non-U.S. jurisdiction that is subject to an in-force covered agreement with the U.S., each within its legal authority, or, in the case of a covered agreement between the U.S. and the European Union, is a member state of the European Union. For purposes of this section, a “covered agreement” is an agreement:</text> <paragraph num="(a)"> <text>Entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§313 and 314; and</text> </paragraph> <paragraph num="(b)"> <text>Currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this State or for allowing the ceding insurer to recognize credit for reinsurance;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A U.S. jurisdiction that meets the requirements for accreditation under the NAIC financial standard and accreditation program; or</text> </paragraph> <paragraph num="(3)"> <text>A qualified jurisdiction as determined by the Commissioner pursuant to Insurance Article, §5-909, Annotated Code of Maryland, and Regulation .26 of this chapter which is not otherwise described in §B(1) or (2) of this regulation and the Commissioner:</text> <paragraph num="(a)"> <text>Provides that an insurer which has its head office or is domiciled in such qualified jurisdiction shall receive credit for reinsurance ceded to a U.S.-domiciled assuming insurer in the same manner as credit for reinsurance is received for reinsurance assumed by insurers domiciled in such qualified jurisdictions;</text> </paragraph> <paragraph num="(b)"> <text>Does not require a U.S.-domiciled assuming insurer to establish or maintain a local presence as a condition for entering into a reinsurance agreement with any ceding insurer subject to regulation by the non-U.S. jurisdiction or as a condition to allow the ceding insurer to recognize credit for such reinsurance;</text> </paragraph> <paragraph num="(c)"> <text>Recognizes the U.S.’s state regulatory approach to group supervision and group capital, by providing written confirmation by a competent regulatory authority, in such qualified jurisdiction, that insurers and insurance groups that are domiciled or maintain their headquarters in this State or another jurisdiction accredited by the NAIC shall be subject to:</text> <paragraph num="(i)"> <text>Worldwide prudential insurance group supervision including worldwide group governance, solvency, and capital; and</text> </paragraph> <paragraph num="(ii)"> <text>Reporting, as applicable, by the Commissioner or the commissioner of the domiciliary state. Insurers and insurance groups will not be subject to group supervision at the level of the worldwide parent undertaking of the insurance or reinsurance group by the qualified jurisdiction; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Provides written confirmation by a competent regulatory authority in such qualified jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, shall be provided to the Commissioner in accordance with a memorandum of understanding or similar document between the Commissioner and such qualified jurisdiction, including, but not limited to:</text> <paragraph num="(i)"> <text>The International Association of Insurance Supervisors Multilateral Memorandum of Understanding; or</text> </paragraph> <paragraph num="(ii)"> <text>Other multilateral memoranda of understanding coordinated by the NAIC.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Credit shall be allowed when the reinsurance is ceded from an insurer domiciled in this State to an assuming insurer meeting each of the conditions set forth below:</text> <paragraph num="(1)"> <text>The assuming insurer shall be licensed to transact reinsurance by, and have its head office or be domiciled in, a reciprocal jurisdiction;</text> </paragraph> <paragraph num="(2)"> <text>The assuming insurer shall have and maintain on an ongoing basis minimum capital and surplus, or its equivalent, calculated on at least an annual basis as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, and confirmed as set forth in §C(7) of this regulation according to the methodology of its domiciliary jurisdiction, in the following amounts:</text> <paragraph num="(a)"> <text>No less than $250,000,000; or</text> </paragraph> <paragraph num="(b)"> <text>If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, then the association shall have:</text> <paragraph num="(i)"> <text>Minimum capital and surplus equivalents (net of liabilities) or own funds of the equivalent of at least $250,000,000; and</text> </paragraph> <paragraph num="(ii)"> <text>A central fund containing a balance of the equivalent of at least $250,000,000;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The assuming insurer shall have and maintain on an ongoing basis a minimum solvency or capital ratio, as applicable, as follows:</text> <paragraph num="(a)"> <text>If the assuming insurer has its head office or is domiciled in a reciprocal jurisdiction as defined in §B of this regulation, the ratio specified in the applicable covered agreement;</text> </paragraph> <paragraph num="(b)"> <text>If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in §B of this regulation, a risk-based capital ratio of 300 percent of the authorized control level, calculated in accordance with the formula developed by the NAIC; or</text> </paragraph> <paragraph num="(c)"> <text>If the assuming insurer is domiciled in a reciprocal jurisdiction as defined in §B of this regulation, after consultation with the reciprocal jurisdiction and considering any recommendations published through the NAIC Committee Process, such as solvency or capital ratio as the Commissioner determines to be an effective measure of solvency;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The assuming insurer shall agree to and provide adequate assurance, in the form of a properly executed Form RJ-1 Certificate of Reinsurer Domiciled in Reciprocal Jurisdiction, of its agreement to:</text> <paragraph num="(a)"> <text>Provide prompt written notice and explanation to the Commissioner if it falls below the minimum requirements set forth in §C(2) or (3) of this regulation, or if any regulatory action is taken against it for serious noncompliance with applicable law;</text> </paragraph> <paragraph num="(b)"> <text>Consent in writing to the jurisdiction of the courts of this State and to the appointment of the Commissioner as agent for service of process. In addition:</text> <paragraph num="(i)"> <text>The Commissioner may require that such consent be provided and included in each reinsurance agreement under the Commissioner’s jurisdiction; and</text> </paragraph> <paragraph num="(ii)"> <text>Nothing in this provision shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency of delinquency laws;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Consent in writing to pay all final judgements, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgement was obtained;</text> </paragraph> <paragraph num="(d)"> <text>Include a provision in each reinsurance agreement requiring the assuming insurer to provide security in an amount equal to 100 percent of the assuming insurer’s liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgement that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its estate, if applicable;</text> </paragraph> <paragraph num="(e)"> <text>Confirm that it is not presently participating in any solvent scheme of arrangement, which involves this State’s ceding insurers, and agrees to notify the ceding insurer and the Commissioner of such solvent scheme arrangement; and to provide 100 percent security to the ceding insurer consistent with the terms of the scheme should the assuming insurer enter into such a solvent scheme of arrangement. Such security shall be in a form consistent with the provision of Insurance Article, §§5-908 and 5-914, Annotated Code of Maryland, and Regulations .14—.18 and .22 of this chapter. For purposes of this regulation, the term “solvent scheme of arrangement” means a foreign or alien statutory or regulatory compromise procedure subject to requisite majority creditor approval and judicial sanction in the assuming insurer’s home jurisdiction either to:</text> <paragraph num="(i)"> <text>Finally commute liabilities of duly noticed class members or creditors of a solvent debtor; or</text> </paragraph> <paragraph num="(ii)"> <text>To reorganize or restructure the debts and obligations of a solvent debtor on a final basis and which may be subject to judicial recognition and enforcement of the arrangement by a governing authority outside the ceding insurer’s home jurisdiction; and</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Meet the applicable information filing requirements as set forth in §C(5) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The assuming insurer or its legal successor shall provide, if requested by the Commissioner, on behalf of itself and any legal predecessors, the following documentation:</text> <paragraph num="(a)"> <text>For the 2 years preceding entry into the reinsurance agreement and on an annual basis thereafter, the assuming insurer’s annual audited financial statements, in accordance with the applicable law of the jurisdiction of its head office or domiciliary jurisdiction, as applicable, including the external audit report;</text> </paragraph> <paragraph num="(b)"> <text>For the 2 years preceding entry into the reinsurance agreement, the solvency and financial condition report or actuarial opinion, if filed with the assuming insurer’s supervisor;</text> </paragraph> <paragraph num="(c)"> <text>An updated list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance assumed from ceding insurers domiciled in the U.S. shall be submitted prior to entry into the reinsurance agreement and on a semi-annual basis thereafter; and</text> </paragraph> <paragraph num="(d)"> <text>Information regarding the assuming insurer’s assumed reinsurance by ceding insurer, ceded reinsurance by the assuming insurer, and reinsurance recoverable on paid and unpaid losses by the assuming insurer to allow for the evaluation of the criteria set forth in §C(6) of the regulation, shall be provided prior to entry into the reinsurance agreement and on a semi-annual basis thereafter;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The assuming insurer shall maintain a practice of prompt payment of claims under reinsurance agreements. The lack of prompt payment will be evidenced if any of the following criteria is met:</text> <paragraph num="(a)"> <text>More than 15 percent of the reinsurance recoverable from the assuming insurer are overdue and in dispute as reported to the Commissioner;</text> </paragraph> <paragraph num="(b)"> <text>More than 15 percent of the assuming insurer’s ceding insurers or reinsurers have overdue reinsurance recoverable on paid losses of 90 days or more which are not in dispute and which exceed for each ceding insurer $100,000, or as otherwise specified in a covered agreement; or</text> </paragraph> <paragraph num="(c)"> <text>The aggregate amount of reinsurance recoverable on paid losses which are not in dispute, but are overdue by 90 days or more, exceeds $50,000,000, or as otherwise specified in a covered agreement;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>The assuming insurer’s supervisory authority shall confirm to the Commissioner on an annual basis that the assuming insurer complies with the requirements set forth in §C(2) and (3) of this regulation; and</text> </paragraph> <paragraph num="(8)"> <text>The assuming insurer may provide the Commissioner with information on a voluntary basis.</text> </paragraph> </paragraph> <paragraph num="D."> <text>List of Reciprocal Jurisdictions.</text> <paragraph num="(1)"> <text>The Commissioner shall create and publish a list of reciprocal jurisdictions.</text> </paragraph> <paragraph num="(2)"> <text>A list of reciprocal jurisdictions is published through the NAIC Committee Process. The Commissioner’s list shall include any reciprocal jurisdiction as defined under §B of this regulation and shall consider any other reciprocal jurisdiction included on the NAIC list. The Commissioner may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions as provided by applicable law, regulation, or in accordance with criteria published through the NAIC Committee process.</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets one or more of the requirements of a reciprocal jurisdiction, as provided by applicable law, regulation, or in accordance with a process published through the NAIC Committee process, except that the Commissioner may not remove from the list a reciprocal jurisdiction as defined under §B(1) and (2) of this regulation. Upon removal of a reciprocal jurisdiction from this list, credit for reinsurance ceded to an assuming insurer domiciled in that jurisdiction shall be allowed, if otherwise allowed pursuant to Insurance Article, Title 5, Subtitle 9, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="E."> <text>List of Assuming Insurers.</text> <paragraph num="(1)"> <text>The Commissioner shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this regulation and to which cessions shall be granted credit in accordance with this regulation.</text> </paragraph> <paragraph num="(2)"> <text>If an NAIC accredited jurisdiction has determined that the conditions set forth in §C of this regulation have been met, the Commissioner may defer to that jurisdiction’s determination, and add such assuming insurer to the list of assuming insurers to which cessions shall be granted credit in accordance with this section.</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner may accept financial documentation filed with another NAIC accredited jurisdiction or with the NAIC in satisfaction of the requirements of §C of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>When requesting that the Commissioner defer to another NAIC accredited jurisdiction’s determination, an assuming insurer shall submit a properly executed NAIC Form RJ-1 and additional information as the Commissioner may require. A state that has received such a request shall notify other states through the NAIC Committee process and provide relevant information with respect to the determination of eligibility.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Suspension of Assuming Insurers.</text> <paragraph num="(1)"> <text>If the Commissioner determines that an assuming insurer no longer meets one or more of the requirements under this regulation, the Commissioner may revoke or suspend the eligibility of the assuming insurer for recognition under this section.</text> </paragraph> <paragraph num="(2)"> <text>While an assuming insurer’s eligibility is suspended, no reinsurance agreement issued, amended or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer’s obligations under the contract are secured in accordance with Insurance Article, §5-914, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>If an assuming insurer’s eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into prior to the date of revocation, except to the extent that the assuming insurer’s obligations under the contract are secured in a form acceptable to the Commissioner and consistent with the provisions of Insurance Article, §5-914, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Security.</text> <paragraph num="(1)"> <text>Before denying statement credit or imposing a requirement to post security with respect to §F of this regulation or adopting any similar requirement that will have substantially the same regulatory impact as security, the Commissioner shall:</text> <paragraph num="(a)"> <text>Communicate with the ceding insurer, the assuming insurer, and the assuming insurer’s supervisory authority that the assuming insurer no longer satisfies one of the conditions listed in §C of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>Provide the assuming insurer with 30 days from the initial communication to submit a plan to remedy the defect, and 90 days from the initial communication to remedy the defect, except in exceptional circumstances in which a shorter period is necessary for policyholder and other consumer protection; and</text> </paragraph> <paragraph num="(c)"> <text>Provide a written explanation to the assuming insurer of any of the requirements set out in this section.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>After the expiration of 90 days or less, as set out in §G(1)(b) of this regulation, if the Commissioner determines that no or insufficient action was taken by the assuming insurer, the Commissioner may impose any of the requirements as set out in this section.</text> </paragraph> </paragraph> <paragraph num="H."> <text>If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding liabilities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".29" heading="Term and Universal Life Insurance Reserve Financing."> <paragraph num="A."> <text>The purpose and intent of this regulation is to establish uniform, national standards governing reserve financing arrangements pertaining to life insurance policies containing guaranteed nonlevel gross premiums, guaranteed nonlevel benefits, and universal life insurance policies with secondary guarantees; and to ensure that, with respect to each such financing arrangement, funds consisting of primary security and other security, as defined in Regulation .02 of this chapter, are held by or on behalf of ceding insurers in the forms and amounts required herein.</text> </paragraph> <paragraph num="B."> <text>Applicability of this Regulation.</text> <paragraph num="(1)"> <text>This regulation shall apply to reinsurance treaties that cede liabilities pertaining to covered policies, as that term is defined in Regulation .02B(4) of this chapter, issued by a life insurance company domiciled in this State.</text> </paragraph> <paragraph num="(2)"> <text>This regulation and Regulations .03—.28 of this chapter shall both apply to such reinsurance treaties; provided that, in the event of a direct conflict between the provisions of this regulation and Regulations .03—.28 of this chapter, the provisions of this regulations shall apply, but only to the extent of the conflict.</text> </paragraph> <paragraph num="(3)"> <text>This regulation does not apply to:</text> <paragraph num="(a)"> <text>Reinsurance of:</text> <paragraph num="(i)"> <text>Policies that satisfy the criteria for exemption set forth in COMAR 31.05.03.11F or G and which are issued before the effective date of this regulation;</text> </paragraph> <paragraph num="(ii)"> <text>Portions of policies that satisfy the criteria for exemption set forth in COMAR 31.05.03.11E and which are issued before the effective date of this regulation;</text> </paragraph> <paragraph num="(iii)"> <text>Any universal life insurance policy that has a secondary guarantee period, if any, of 5 years or less, has specified premium for the secondary guarantee period that is not less than the net level reserve premium for the secondary guarantee period based on the Commissioners Standard Ordinary valuation tables and valuation interest rate applicable to the issue year of the policy, and has an initial surrender charge that is not less than 100 percent of the first year annualized specified premium for the secondary guarantee period;</text> </paragraph> <paragraph num="(iv)"> <text>Credit life insurance;</text> </paragraph> <paragraph num="(v)"> <text>Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts; or</text> </paragraph> <paragraph num="(vi)"> <text>Any group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of 1 year;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Reinsurance ceded to an assuming insurer that meets the applicable requirements of Insurance Article, §§5-904(e) and 5-907, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Reinsurance ceded to an assuming insurer that meets the applicable requirements of Insurance Article, §5-904(c) or (d) or §5-906, Annotated Code of Maryland, and that:</text> <paragraph num="(i)"> <text>Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual, without any departure from NAIC statutory accounting practices and procedures pertaining to the admissibility or valuation of assets or liabilities that increase the assuming insurer’s reported surplus and are material enough that they need to be disclosed in the financial statement of the assuming insurer pursuant to Statement of Statutory Accounting Principles No. 1; and</text> </paragraph> <paragraph num="(ii)"> <text>Is not in a company action level event, regulatory action level event, authorized control level event, or mandatory control level event as those terms are defined in Insurance Article, §§4-305—4-308, Annotated Code of Maryland, when its risk-based capital is calculated in accordance with the life risk-based capital report including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Reinsurance ceded to an assuming insurer that meets the applicable requirements of Insurance Article, §5-904(c) or (d) or §5-906, Annotated Code of Maryland, and that:</text> <paragraph num="(i)"> <text>Is not an affiliate, as that term is defined in Insurance Article, §7-101, Annotated Code Maryland, of the insurer ceding the business to the assuming insurer or any insurer that directly or indirectly ceded the business to that ceding insurer;</text> </paragraph> <paragraph num="(ii)"> <text>Prepares statutory financial statements in compliance with the NAIC Accounting Practices and Procedures Manual;</text> </paragraph> <paragraph num="(iii)"> <text>Is both licensed or accredited in at least ten states including its state of domicile and not licensed in any state as a captive, special purpose vehicle, special purpose financial captive, special purpose life reinsurance company, limited purpose subsidiary, or any other similar licensing regime; and</text> </paragraph> <paragraph num="(iv)"> <text>Is not, or would not be below 500 percent of the authorized control level RBC as that term is defined in Insurance Article, §4-301, Annotated Code of Maryland, when its risk-based capital is calculated in accordance with the life risk-based capital reporting including overview and instructions for companies, as the same may be amended by the NAIC from time to time, without deviation, and without recognition of any departures from NAIC statutory accounting practices and procedures pertaining to the admission or valuation of assets or liabilities that increase the assuming insurer’s reported surplus;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Reinsurance ceded to an assuming insurer that meets the requirements of Insurance Article, §5-916(b)(4), Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(f)"> <text>Reinsurance not otherwise exempt under §B(3)(a)—(e) of this regulation if the Commissioner, after consulting with the NAIC Financial Analysis Working Group or other group of regulators designated by the NAIC, as applicable, determines under all the facts and circumstances that all of the following apply:</text> <paragraph num="(i)"> <text>The risks are clearly outside of the intent and purpose of this regulation;</text> </paragraph> <paragraph num="(ii)"> <text>The risks are included within the scope of this regulation only as a technicality; and</text> </paragraph> <paragraph num="(iii)"> <text>The application of this regulation to those risks is not necessary to provide appropriate protection to policyholders.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Commissioner shall publicly disclose any decision made pursuant to §B(3)(f) of this regulation to exempt a reinsurance treaty from this regulation, as well as the general basis for the decision, including a summary description of the treaty.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The actuarial method to establish the required level of primary security for each reinsurance treaty subject to this regulation shall be VM-20, applied on a treaty-by-treaty basis, including all relevant definitions, from the Valuation Manual as then in effect. This method shall be applied as follows:</text> <paragraph num="(1)"> <text>For covered policies described in Regulation .02B(4)(a) of this chapter, the actuarial method is the greater of the deterministic reserve or the net premium reserve regardless of whether the criteria for exemption testing can be met;</text> </paragraph> <paragraph num="(2)"> <text>If, for covered policies described in Regulation .02B(4)(a) of this chapter, the covered policies do not meet the requirements of the stochastic reserve exclusion test in the Valuation Manual, then the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the net premium reserve;</text> </paragraph> <paragraph num="(3)"> <text>If, for covered policies described in Regulation .02B(4)(a) of this chapter, the covered policies are reinsured in a reinsurance treaty that also contains covered policies described in Regulation .02B(4)(b) of this chapter, the ceding insurer may elect to instead use §C(5) of this regulation as the actuarial method for the entire reinsurance agreement;</text> </paragraph> <paragraph num="(4)"> <text>Regardless of whether §C(1), (2), (3), or (5) of this regulation is used, the actuarial method shall comply with any requirements or restrictions that the Valuation Manual imposes when aggregating these policy types for purposes of principle-based reserve calculations;</text> </paragraph> <paragraph num="(5)"> <text>For covered policies described in Regulation .02B(4)(b) of this chapter, the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the net premium reserve regardless of whether the criteria for exemption testing can be met;</text> </paragraph> <paragraph num="(6)"> <text>Except as provided in §C(7) of this regulation, the actuarial method shall be applied on a gross basis to all risks with respect to the covered policies as originally issued or assumed by the ceding insurer;</text> </paragraph> <paragraph num="(7)"> <text>If the reinsurance treaty cedes less than 100 percent of the risk with respect to the covered policies, then the required level of primary security may be reduced as follows:</text> <paragraph num="(a)"> <text>If a reinsurance treaty cedes only a quota share of some or all of the risks pertaining to the covered policies, the required level of primary security, as well as any adjustment under §C(7)(c) of this regulation, may be reduced to a pro rata portion in accordance with the percentage of the risk ceded;</text> </paragraph> <paragraph num="(b)"> <text>If the reinsurance treaty in a non-exempt arrangement cedes only the risks pertaining to a secondary guarantee, the required level of primary security may be reduced by an amount determined by applying the actuarial method on a gross basis to all risks, other than risk relating to the secondary guarantee, pertaining to the covered policies, except that for covered policies for which the ceding insurer did not elect to apply the provisions of VM-20 to establish statutory reserves, the required level of primary security may be reduced by the statutory reserve retained by the ceding insurer on those covered policies, where the retained reserve of those covered policies shall be reflective of any reduction pursuant to the cession of mortality risk on a yearly renewable term basis in an exempt arrangement;</text> </paragraph> <paragraph num="(c)"> <text>If a portion of the covered policy risk is ceded to another reinsurer on a yearly renewable term basis in an exempt arrangement, the required level of primary security may be reduced by the amount resulting by applying the actuarial method including the reinsurance section of VM-20 to the portion of the covered policy risks ceded in the exempt arrangement, except that for covered policies issued prior to January 1, 2017, this adjustment, is not to exceed [cx/ (2 * number of reinsurance premiums per year)] where cx is calculated using the same mortality table used in calculating the net premium reserve;</text> </paragraph> <paragraph num="(d)"> <text>For any other treaty ceding a portion of risk to a different reinsurer, including, but not limited to stop loss, excess of loss and other non-proportional reinsurance treaties, there will be no reduction in the required level of primary security;</text> </paragraph> <paragraph num="(e)"> <text>It is possible for any combination of §C(7)(a)—(d) of this regulation to apply. Such adjustments to the required level of primary security will be done in the sequence that accurately reflects the portion of the risk ceded via the treaty. The ceding insurer shall document the rationale and steps taken to accomplish the adjustments to the required level of primary security due to the cession of less than 100 percent of the risk; and</text> </paragraph> <paragraph num="(f)"> <text>The adjustments for other reinsurance will be made only with respect to reinsurance treaties entered into directly by the ceding insurer. The ceding insurer shall make no adjustment as a result of a retrocession treaty entered into by the assuming insurers;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>In no event shall the required level of primary security resulting from application of the actuarial method exceed the amount of statutory reserves ceded;</text> </paragraph> <paragraph num="(9)"> <text>If the ceding insurer cedes risks with respect to covered policies, including any riders, in more than one reinsurance treaty subject to this regulation, in no event shall the aggregate required level of primary security for those reinsurance treaties be less than the required level of primary security calculated using the actuarial method as if all risks ceded in those treaties were ceded in a single treaty subject to this regulation;</text> </paragraph> <paragraph num="(10)"> <text>If a reinsurance treaty subject to this regulation ceded risk on both covered and non-covered policies, credit for the ceded reserves shall be determined as follows:</text> <paragraph num="(a)"> <text>The actuarial method shall be used to determine the required level of primary security for the covered policies, and §D of this regulation shall be used to determine the reinsurance credit for the covered policy reserves; and</text> </paragraph> <paragraph num="(b)"> <text>Credit for the non-covered policy reserves shall be granted only to the extent that security, in addition to the security held to satisfy the requirements of §C(10)(a) of this regulation, is held by or on behalf of the ceding insurer in accordance with Insurance Article, Title 5, Subtitle 9, Annotated Code of Maryland. Any primary security used to meet the requirements of this subparagraph may not be used to satisfy the required level of primary security for the covered policies; and</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>For the purposes of both calculating the required level of primary security pursuant to the actuarial method and determining the amount of primary security and other security, as applicable, held by or on behalf of the ceding insurer, the following shall apply:</text> <paragraph num="(a)"> <text>For assets, including any such assets held in trust, that would be admitted under the NAIC Accounting Practices and Procedures Manual if they were held by the ceding insurer, the valuations are to be determined according to statutory accounting procedures as if such assets were held in the ceding insurer’s general account and without taking into consideration the effect of any prescribed or permitted practices; and</text> </paragraph> <paragraph num="(b)"> <text>For all other assets:</text> <paragraph num="(i)"> <text>The valuations are to be those that were assigned to the assets for the purpose of determining the amount of reserve credit taken;</text> </paragraph> <paragraph num="(ii)"> <text>The asset spread tables and asset default cost tables required by VM-20 shall be included in the actuarial method if adopted by the NAIC’s Life Actuarial(a) Task Force no later than the December 31 on or immediately preceding the valuation date for which the required level of primary security is being calculated; and</text> </paragraph> <paragraph num="(iii)"> <text>The tables of asset spreads and asset default costs shall be incorporated into the actuarial method in the manner specified in VM-20.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Requirements Applicable to Covered Policies to Obtain Credit for Reinsurance; Opportunity for Remediation.</text> <paragraph num="(1)"> <text>Subject to the exemptions described in §B(3) of this regulation and the provisions of §D(2) of this regulation, credit for reinsurance shall be allowed with respect to ceded liabilities pertaining to covered policies pursuant to Insurance Article, §5-904, 5-914, or 5-917, Annotated Code of Maryland, if, in additional to all other requirements imposed by law or regulation, the following requirements are met on a treaty-by-treaty basis:</text> <paragraph num="(a)"> <text>The ceding insurer’s statutory policy reserves with respect to the covered policies are established in full and in accordance with the applicable requirements of Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland, and related regulations and actuarial guidelines, and credit claimed for any reinsurance treaty subject to this regulation does not exceed the proportionate share of those reserves ceded under the contract;</text> </paragraph> <paragraph num="(b)"> <text>The ceding insurer determines the required level of primary security with respect to each reinsurance treaty subject to this regulation and provides support for its calculation as determined to be acceptable to the Commissioner;</text> </paragraph> <paragraph num="(c)"> <text>Funds consisting of primary security, in an amount at least equal to the required level of primary security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty within the meaning of Insurance Article, §5-914, Annotated Code of Maryland, on a funds withheld, trust, or modified coinsurance basis;</text> </paragraph> <paragraph num="(d)"> <text>Funds consisting of other security, in an amount at least equal to any portion of the statutory reserves as to which primary security is not held pursuant to §D(1)(c) of this regulation, are held by or on behalf of the ceding insurer as security under the reinsurance treaty within the meaning of Insurance Article, §5-914, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Any trust used to satisfy the requirements of this §D of this regulation shall comply with all of the conditions and qualifications of Regulation .15 of this chapter, except that:</text> <paragraph num="(i)"> <text>Funds consisting of primary security or other security held in trust, shall for the purposes identified in §C(11) of this regulation, be valued according to the valuation rules set forth in §C(11) of this regulation, as applicable;</text> </paragraph> <paragraph num="(ii)"> <text>There are no affiliate investment limitations with respect to any security held in such trust if such security is not needed to satisfy the requirements of §D(1)(c) of this regulation;</text> </paragraph> <paragraph num="(iii)"> <text>The reinsurance treaty shall prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the primary security within the trust (when aggregated with primary security outside the trust that is held by or on behalf of the ceding insurer in the manner required by §D(1)(c) of this regulation) below 102 percent of the level required by §D(1)(c) of this regulation at the time of the withdrawal or substitution; and</text> </paragraph> <paragraph num="(iv)"> <text>The determination of reserve credit under Regulation .20 of this chapter shall be determined according to the valuation rules set forth in §C(11) of this regulation, as applicable; and</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>The reinsurance treaty has been approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Requirements at Inception Date and on an Ongoing Basis; Remediation.</text> <paragraph num="(a)"> <text>The requirements of §D(1) of this regulation, shall be satisfied as of the date that risks under covered policies are ceded, if such date is on or after the effective date of this regulation, and on an ongoing basis thereafter.</text> </paragraph> <paragraph num="(b)"> <text>Under no circumstances shall a ceding insurer take or consent to any action or series of actions that would result in a deficiency under §D(1)(c) or (d) of this regulation with respect to any reinsurance treaty under which covered policies have been ceded, and in the event that a ceding insurer becomes aware at any time that such a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as quickly as possible.</text> </paragraph> <paragraph num="(c)"> <text>Prior to the due date of each quarterly or annual statement, each life insurance company that has ceded reinsurance within the scope of §B of this regulation shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which covered policies have been ceded, whether as of the end of the immediately preceding calendar quarter (the valuation date) the requirements of §D(1)(c) and (d) of this regulation were satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of primary security actually held pursuant to §D(1)(c) of this regulation, unless either:</text> <paragraph num="(i)"> <text>The requirements of §D(1)(c) and (d) of this regulation were fully satisfied as of the valuation date as to such reinsurance treaty; or</text> </paragraph> <paragraph num="(ii)"> <text>Any deficiency has been eliminated before the due date of the quarterly or annual statement to which the valuation date relates through the addition of primary security or other security, as the case may be, in such amount and in such form as would have caused the requirements of §D(1)(c) and (d) of this regulation to be fully satisfied as of the valuation date.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Nothing in §D(2)(c) of this regulation shall be construed to allow a ceding company to maintain any deficiency under §D(1)(c) or (d) of this regulation for any period of time longer than is reasonably necessary to eliminate it.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>No insurer that has covered policies to which this regulation applies shall take any action or series of actions, or enter into any transaction or arrangement or series of transactions or arrangements if the purpose of such action, transaction, or arrangement or series thereof is to avoid the requirements of this regulation, or to circumvent its purpose and intent.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-101(jj), 2-109, 2-205, 2-209, and 5-901—5-917, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted as an emergency provision effective June 17, 1993 (20:14 Md. R. 1164); adopted permanently effective October 11, 1993 (20:20 Md. R. 1571)</annotation> <annotation type="History" subtype="Administrative History">Regulations .02B and .08F amended, and Regulations .09—.17 adopted, as an emergency provision effective December 19, 1997 (25:2 Md. R. 73); adopted permanently effective June 15, 1998 (25:12 Md. R. 947)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.97 to COMAR 31.05.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.17 repealed and new Regulations .01—.24 adopted effective June 5, 2006 (33:11 Md. R. 953)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective August 18, 2014 (41:16 Md. R. 947)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 1, 2022 (49:19 Md. R. 868)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24 amended effective July 1, 2021 (48:13 Md. R. 510)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28D amended effective December 11, 2023 (50:24 Md. R. 1043)</annotation> <annotation type="History" subtype="Administrative History">Regulation .29 adopted effective October 1, 2022 (49:19 Md. R. 868)</annotation> </annotations> </chapter> <chapter num="09" heading="Mortgage Loans"> <regulation prefix="Regulation" num=".01" heading="Information To Be Filed."> <text>All companies shall have the following information filed with each mortgage, and kept ready for convenient inspection by examiners from this Administration:</text> <paragraph num="A."> <text>The mortgage note and deed, and all assignments of them, properly recorded;</text> </paragraph> <paragraph num="B."> <text>A detailed appraisal of the property securing the mortgage, made by a disinterested, unaffiliated appraiser, with the appraiser's qualifications attached; an appraisal made by any competent licensed real estate operator with a short statement of the licensed real estate operator's experience is sufficient; and</text> </paragraph> <paragraph num="C."> <text>One of the following:</text> <paragraph num="(1)"> <text>A title insurance policy,</text> </paragraph> <paragraph num="(2)"> <text>An abstract of title to the property made by a qualified attorney and certified by him,</text> </paragraph> <paragraph num="(3)"> <text>A certificate of title from the attorney making the title examination;</text> </paragraph> </paragraph> <paragraph num="D."> <text>Fire insurance policies upon all improvements, with standard mortgagee clause attached; and</text> </paragraph> <paragraph num="E."> <text>A record of the amount at which the property is appraised for taxation at the date of the loan and the date to which all State, county, and municipal taxes on the property have been paid.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Required Procedure."> <text>An insurance company that is a party to a mortgage loan participation agreement shall have the items listed in Regulation .01A and B of this chapter in its possession. The insurer may have the lending institution certify annually that the items listed in Regulation .01C, D, and E of this chapter are in force or have been paid.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 5-511(g), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 11, 1941</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 6, 1995 (22:22 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 adopted effective June 7, 1982 (9:11 Md. R. 1126)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.15 to COMAR 31.05.09 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="10" heading="Financial Guaranty Insurance"> <regulation prefix="Regulation" num=".01" heading="Definitions"> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Asset-Backed Security.</text> <paragraph num="(a)"> <text>“Asset-backed security” has the meaning stated in Insurance Article, §5-511(a)(3), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Asset-backed security” includes a pool of credit default swaps or credit default swaps referencing a pool of obligations if:</text> <paragraph num="(i)"> <text>The swap counterparty whose obligations are insured under the credit default swap is a special purpose corporation, special purpose trust, or other special purpose legal entity;</text> </paragraph> <paragraph num="(ii)"> <text>No reference obligation in the pool, other than an obligation directly payable by, guaranteed by, or backed by the full faith and credit of the United States government or that otherwise qualifies as collateral under regulations adopted by the Commissioner under this chapter, has a notional amount exceeding 10 percent of the pool's aggregate notional amount; and</text> </paragraph> <paragraph num="(iii)"> <text>The insurer has the benefit of a deductible or other first credit protection against claims under its insurance policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Average Annual Debt Service.</text> <paragraph num="(a)"> <text>“Average annual debt service” means the amount of insured unpaid principal and interest on an obligation multiplied by the number of insured obligations, assuming that each obligation represents a $1,000 par value, divided by the amount equal to the aggregate life of all the obligations.</text> </paragraph> <paragraph num="(b)"> <text>“Average annual debt service” expressed as a formula in regard to bonds, is as follows:</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Collateral” has the meaning stated in §C of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>“Contingency reserve” means an additional liability reserve established by a financial guaranty insurer to protect policyholders against the effects of adverse economic cycles or other unforeseen circumstances.</text> </paragraph> <paragraph num="(5)"> <text>Credit Default Swap.</text> <paragraph num="(a)"> <text>“Credit default swap” means an agreement that references the credit derivative definitions published from time to time by the International Swap and Derivatives Association, Inc. or otherwise acceptable to the Commissioner under which a party agrees to compensate another party in the event of a payment default by insolvency of, or other adverse credit event with respect to, an issuer of a specified security or other obligation.</text> </paragraph> <paragraph num="(b)"> <text>A “credit default swap” is not an insurance contract and the making of a credit default swap is not doing insurance business.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Excess proceeds” means proceeds in excess of the proceeds necessary to pay an insured obligation.</text> </paragraph> <paragraph num="(7)"> <text>“Excess spread” means, with respect to any insured issue of asset-backed securities, the excess of:</text> <paragraph num="(a)"> <text>The scheduled cash flow on the underlying assets that is reasonably projected to be available, over the term of the insured securities after payment of the expenses associated with the insured issue, to make debt service payments on the insured securities; over</text> </paragraph> <paragraph num="(b)"> <text>The scheduled debt service requirements on the insured securities, if the excess is held in the same manner as collateral is required to be held under Regulation .06 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Financial guaranty insurance” has the meaning stated in §D of this regulation.</text> </paragraph> <paragraph num="(9)"> <text>“Financial guaranty insurer” means a domestic insurer that holds a certificate of authority for the purpose of transacting financial guaranty insurance in the State.</text> </paragraph> <paragraph num="(10)"> <text>“Governmental unit” means:</text> <paragraph num="(a)"> <text>The United States of America,</text> </paragraph> <paragraph num="(b)"> <text>Canada;</text> </paragraph> <paragraph num="(c)"> <text>A member country of the Organization of Economic Cooperation and Development having a sovereign rating in one of the top two generic rating classifications by a securities rating agency acceptable to the Commissioner;</text> </paragraph> <paragraph num="(d)"> <text>A state, territory, or possession of the United States of America;</text> </paragraph> <paragraph num="(e)"> <text>The District of Columbia;</text> </paragraph> <paragraph num="(f)"> <text>A province of Canada;</text> </paragraph> <paragraph num="(g)"> <text>A municipality or a political subdivision of any of the entities listed in §B(9)(a)—(f) of this regulation; or</text> </paragraph> <paragraph num="(h)"> <text>Any public agency or instrumentality of any of the entities listed in paragraphs §B(9)(a)—(g) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Guaranty of consumer debt obligation” means an insurance policy indemnifying a regulated financial institution or other purchaser or lender against loss or damage resulting from nonpayment of debts owed to the financial institution or other purchaser or lender for extensions of credit, including installment purchase agreements and leases, to individuals, provided in the normal course of the financial institution's, purchaser's, or lender's business.</text> </paragraph> <paragraph num="(12)"> <text>“Industrial development bond” means any security, or other instrument under which a payment obligation is created, issued by or on behalf of a governmental unit to finance a project serving a private industrial, commercial, or manufacturing purpose and not payable or guaranteed by a governmental unit.</text> </paragraph> <paragraph num="(13)"> <text>“Investment grade” means that either the obligation or parity obligation of the same issuer has been:</text> <paragraph num="(a)"> <text>Determined to be in one of the top four generic lettered rating classifications by a securities rating agency acceptable to the Commissioner;</text> </paragraph> <paragraph num="(b)"> <text>Identified in writing by the rating agency as an insurable risk, deemed to be of investment grade quality for purposes of insurance; or</text> </paragraph> <paragraph num="(c)"> <text>Determined to be investment grade, as indicated by a rating in category 1 or 2, by the Securities Valuation Office of the National Association of Insurance Commissioners.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>Municipal Obligation Bond.</text> <paragraph num="(a)"> <text>“Municipal obligation bond” means any security or other instrument under which a payment obligation is created or issued by or on behalf of a governmental unit to finance a project serving a substantial public purpose, and that is:</text> <paragraph num="(i)"> <text>Payable from tax revenues, but not tax allocations, within the jurisdiction of the governmental unit;</text> </paragraph> <paragraph num="(ii)"> <text>Payable or guaranteed by the United States of America or any agency, department, or instrumentality of the United States of America, or by a state housing agency;</text> </paragraph> <paragraph num="(iii)"> <text>Payable from rates or charges, excluding tolls, levied or collected in respect of a non-nuclear utility project, public transportation facility, other than an airport facility, or public higher education facility; or</text> </paragraph> <paragraph num="(iv)"> <text>With respect to lease obligations, payable from future appropriations.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Municipal obligation bond” includes a lease payable or guaranteed by a unit of the United States government or a state.</text> </paragraph> <paragraph num="(c)"> <text>“Municipal obligation bond” does not include a lease of any governmental unit other than a unit of the United States government or a state.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Special revenue bond” means any security or other instrument under which a payment obligation is created that is:</text> <paragraph num="(a)"> <text>Issued by or on behalf of a governmental unit to finance a project serving a substantial public purpose; and</text> </paragraph> <paragraph num="(b)"> <text>Not payable from the sources enumerated in §B(13) of this regulation in connection with the payment of municipal obligation bonds.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Total liability” of a financial guaranty insurer means the aggregate amount of insured unpaid principal, interest, and other monetary payments, if any, of guaranteed obligations insured or assumed, less reinsurance ceded and less collateral.</text> </paragraph> </paragraph> <paragraph num="C."> <text>“Collateral” means:</text> <paragraph num="(1)"> <text>Cash;</text> </paragraph> <paragraph num="(2)"> <text>The cash flow from obligations that are not callable and are scheduled to be received, based on expected prepayment speed, on or before the date of scheduled debt service, including scheduled redemptions or prepayments, on the insured obligation, if:</text> <paragraph num="(a)"> <text>The obligations are directly payable by, guaranteed by, or backed by the full faith and credit of the United States government; or</text> </paragraph> <paragraph num="(b)"> <text>In the case of insured obligations denominated or payable in foreign currency as permitted under Regulation .03B of this chapter, the obligations are directly payable by, guaranteed by, or backed by the full faith and credit of a foreign government or the central bank of the foreign government;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The market value of investment grade securities in an amount not to exceed the total debt service on the insured obligation, other than securities evidencing an interest in the project financed with the proceeds of the insured obligations; or</text> </paragraph> <paragraph num="(4)"> <text>The face amount of each letter of credit that:</text> <paragraph num="(a)"> <text>Is irrevocable;</text> </paragraph> <paragraph num="(b)"> <text>Provides for payment under the letter of credit in all instances in which payment under a financial guaranty insurance policy is required;</text> </paragraph> <paragraph num="(c)"> <text>Is issued, presentable, and payable either:</text> <paragraph num="(i)"> <text>At an office of the letter of credit issuer in the United States; or</text> </paragraph> <paragraph num="(ii)"> <text>At an office of the letter of credit issuer located in the jurisdiction in which the trustee or paying agent for the insured obligation is located;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Contains a statement that either:</text> <paragraph num="(i)"> <text>Identifies the insurer and any successor by operation of law, including any liquidator, rehabilitator, receiver, or conservator, as the beneficiary; or</text> </paragraph> <paragraph num="(ii)"> <text>Identifies the trustee or the paying agent for the insured obligation as the beneficiary;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Contains a statement to the effect that the obligation of the letter of credit issuer under the letter of credit is an individual obligation of the issuer and is in no way contingent on reimbursement with respect to the letter of credit;</text> </paragraph> <paragraph num="(f)"> <text>Contains an issue date and a date of expiration;</text> </paragraph> <paragraph num="(g)"> <text>Either:</text> <paragraph num="(i)"> <text>Has a term at least as long as the shorter of the term of the insured obligation or the term of the financial guaranty policy; or</text> </paragraph> <paragraph num="(ii)"> <text>Provides that the letter of credit may not expire without 30 days prior written notice to the beneficiary and allows for drawing under the letter of credit if, before expiration, the letter of credit is not renewed or extended or a substitute letter of credit or alternate collateral meeting the requirements of this §C(4)(g) of this regulation is not provided;</text> </paragraph> </paragraph> <paragraph num="(h)"> <text>States that it is governed by the laws of a state of the United States or by the 1983 or 1993 Revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce, Publication 400 or 500, or any successor Revision if approved by the Commissioner, and contains a provision for an extension of time, of not less than 30 days after resumption of business, to draw against the letter of credit if one or more of the occurrences described in Article 19 of Publication 400 or 500 occurs; and</text> </paragraph> <paragraph num="(i)"> <text>Is issued by a bank, trust company, or savings and loan association that:</text> <paragraph num="(i)"> <text>Is organized and existing under the laws of the United States or any state of the United States or, in the case of a non-domestic banking organization, has a branch or agency office licensed under the laws of the United States or any state of the United States and is domiciled in a member country of the Organization of Economic Cooperation and Development having a sovereign rating in one of the top two generic lettered rating classifications by a securities rating agency acceptable to the Commissioner;</text> </paragraph> <paragraph num="(ii)"> <text>Has a long-term debt rating of at least investment grade, or is the principal operating subsidiary of a bank holding company that has a long-term debt rating of at least investment grade; and</text> </paragraph> <paragraph num="(iii)"> <text>Is not a parent, subsidiary, or affiliate of the trustee or paying agent, if any, with respect to the insured obligation if the trustee or paying agent is the named beneficiary of the letter of credit.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Financial Guaranty Insurance.</text> <paragraph num="(1)"> <text>“Financial guaranty insurance” means a surety bond, insurance policy, or, when issued by an insurer, an indemnity contract, and any guaranty similar to a surety bond, insurance policy, or indemnity contract, under which loss is payable on proof of occurrence of financial loss to an insured claimant, obligee, or indemnity as a result of any of the following events:</text> <paragraph num="(a)"> <text>Failure of any obligor on or issuer of any debt instrument or other monetary obligation, including equity securities guaranteed under a surety bond, insurance policy, or indemnity contract, to pay when due to be paid by the obligor or scheduled at the time to be received by the holder of the instrument or obligation principal, interest, premium, dividend, or purchase price of or on, or other amounts due or payable with respect to, such instrument or obligation, when the failure is the result of a financial default or insolvency or, if the payment source is investment grade, any other failure to make payment, regardless of whether the obligation is incurred directly or as guarantor by or on behalf of another obligor that also has defaulted;</text> </paragraph> <paragraph num="(b)"> <text>Changes in the levels of interest rates, whether short or long term, or the differential in interest rates between various markets or products;</text> </paragraph> <paragraph num="(c)"> <text>Changes in the rate of exchange of currency;</text> </paragraph> <paragraph num="(d)"> <text>Inconvertibility of one currency into another for any reason, or inability to withdraw funds held in a foreign country resulting from restrictions imposed by a governmental authority;</text> </paragraph> <paragraph num="(e)"> <text>Changes in the value of specific assets or commodities, financial or commodity indices, or price levels in general; or</text> </paragraph> <paragraph num="(f)"> <text>Other events that the Commissioner determines are substantially similar to any of the events listed in §D(1)(a)—(e) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Financial guaranty insurance” does not include:</text> <paragraph num="(a)"> <text>Insurance of any loss resulting from any event described in §D(1) of this regulation, if the loss is payable only on the occurrence of any of the following, as specified in a surety bond, insurance policy, or indemnity contract:</text> <paragraph num="(i)"> <text>A fortuitous physical event;</text> </paragraph> <paragraph num="(ii)"> <text>A failure of or deficiency in the operation of equipment; or</text> </paragraph> <paragraph num="(iii)"> <text>An inability to extract or recover a natural resource;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>An individual or schedule public official bond;</text> </paragraph> <paragraph num="(c)"> <text>A contract bond, including bid, payment, or maintenance bond, or a performance bond where the bond is guaranteeing the performance of services pursuant to a contract other than a contract of indebtedness or other monetary obligation;</text> </paragraph> <paragraph num="(d)"> <text>A court bond required in connection with judicial, probate, bankruptcy, or equity proceedings, including waiver, probate, open estate, and life tenant bond;</text> </paragraph> <paragraph num="(e)"> <text>A bond running to federal, state, county, or municipal government, or other political subdivision, as a condition precedent to granting of a license to engage in a particular business or a permit to exercise a particular privilege;</text> </paragraph> <paragraph num="(f)"> <text>A loss security bond or utility payment indemnity bond, other than a bond guaranteeing a contract of indebtedness or other monetary obligation, running to a governmental unit, railroad, or charitable organization;</text> </paragraph> <paragraph num="(g)"> <text>A lease, purchase and sale, or concessionaire surety bond, other than a bond guaranteeing a contract of indebtedness or other monetary obligation;</text> </paragraph> <paragraph num="(h)"> <text>Guaranteed investment contracts issued by a life insurer that provide that the life insurer will make specified payments in exchange for specific premiums or contributions;</text> </paragraph> <paragraph num="(i)"> <text>Residual value insurance;</text> </paragraph> <paragraph num="(j)"> <text>Mortgage guaranty insurance;</text> </paragraph> <paragraph num="(k)"> <text>Indemnity contracts or similar guaranties, to the extent that they are not otherwise limited or proscribed by this chapter, in which a life insurer:</text> <paragraph num="(i)"> <text>Guarantees its obligations or indebtedness or the obligations or indebtedness of a subsidiary, as defined in Insurance Article, §7-101(f), Annotated Code of Maryland, other than a financial guaranty insurer, if, to the extent that any of the obligations or indebtedness are backed by specific assets, the assets must at all times be owned by the life insurer or the subsidiary, and, in the case of the guaranty of the obligations or indebtedness of the subsidiary that are not backed by specific assets of the life insurer, the guaranty terminates once the subsidiary ceases to be a subsidiary;</text> </paragraph> <paragraph num="(ii)"> <text>Guarantees obligations or indebtedness, including the obligation to substitute assets where appropriate, with respect to specific assets acquired by a life insurer in the course of normal investment activities and not for the purpose of resale with credit enhancement, or guarantees obligations or indebtedness acquired by its subsidiary, if the assets acquired pursuant to this item have been acquired by a special purpose entity whose sole purpose is to acquire specific assets of the life insurer or the subsidiary and issue securities or participation certificates backed by the assets, or sold to an independent third party; or</text> </paragraph> <paragraph num="(iii)"> <text>Guarantees obligations or indebtedness of an employee or agent of the life insurer; or</text> </paragraph> </paragraph> <paragraph num="(l)"> <text>Any other form of insurance covering risks that the Commissioner determines are substantially similar to any of the risks listed in §D(2)(a)—(k) of this regulation.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Contingency Reserve Requirements."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>In addition to the unearned premium reserve and the liability established for unpaid losses and loss adjustment expenses, a financial guaranty insurer shall maintain a contingency reserve.</text> </paragraph> <paragraph num="(2)"> <text>The purpose of the contingency reserve is to protect policyholders against loss during periods of extreme economic contraction.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Amount of Contingency Reserve. The contingency reserve shall be computed in accordance with COMAR 31.04.01.04.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Scope of Certificate of Authority."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>A financial guaranty insurer that holds a certificate of authority for the purpose of transacting financial guaranty insurance may write financial guaranty insurance to insure debt instruments and other monetary obligations only in the following categories:</text> <paragraph num="(a)"> <text>Municipal obligation bonds;</text> </paragraph> <paragraph num="(b)"> <text>Special revenue bonds;</text> </paragraph> <paragraph num="(c)"> <text>Industrial development bonds;</text> </paragraph> <paragraph num="(d)"> <text>Corporate obligations;</text> </paragraph> <paragraph num="(e)"> <text>Limited partnership obligations;</text> </paragraph> <paragraph num="(f)"> <text>Asset-backed securities, trust certificates, and trust obligations other than mortgage-backed securities secured by first mortgages on real property that are insurable by a mortgage guaranty insurer, unless:</text> <paragraph num="(i)"> <text>The mortgages with loan-to-value ratios in excess of 80 percent are insured by mortgage guaranty insurers; or</text> </paragraph> <paragraph num="(ii)"> <text>Additional mortgages with principal balances, other collateral with a market value, or, if the insured risk is investment grade, excess spread in an amount, in each instance at least equal to the coverage that would otherwise be provided by the mortgage guaranty insurers in accordance with this subsection, are pledged as additional security for the asset-backed securities;</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>Installment purchase agreements executed as a condition of sale;</text> </paragraph> <paragraph num="(h)"> <text>Subject to §A(2) of this regulation, consumer debt obligations;</text> </paragraph> <paragraph num="(i)"> <text>Utility first mortgage obligations; and</text> </paragraph> <paragraph num="(j)"> <text>Any other debt instrument or monetary obligation that the Commissioner determines to be substantially similar to any of the items listed in §A(1)(a)—(i) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Any guaranties of consumer debt obligations shall contain a provision that all liability terminates on the sale or transfer of the underlying consumer debt obligation to any transferee that is not an insured of the financial guaranty insurer under a similar policy.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Foreign Instruments and Obligations. A financial guaranty insurer that holds a certificate of authority for the purpose of transacting financial guaranty insurance may write financial guaranty insurance to insure non-United States dollar debt instruments or other monetary obligations denominated or payable in foreign currency, only for the categories listed in §A of this regulation, if:</text> <paragraph num="(1)"> <text>The currency is that of an Organization of Economic Cooperation and Development country or another country:</text> <paragraph num="(a)"> <text>Whose sovereign rating is investment grade; or</text> </paragraph> <paragraph num="(b)"> <text>Which is not disapproved by the Commissioner, in accordance with the standards of §C of this regulation, within 30 days after receipt of written notification;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Reserves required pursuant to Regulation .02 of this chapter in regard to these obligations are established and adjusted quarterly based on the then-current foreign exchange rates;</text> </paragraph> <paragraph num="(3)"> <text>The obligations do not exceed 25 percent of an insurer's aggregate net liability; and</text> </paragraph> <paragraph num="(4)"> <text>The aggregate and single risk limitations prescribed by Regulation .04B and C of this chapter are determined by applying the then-current foreign exchange rates.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Approval or Disapproval by Commissioner.</text> <paragraph num="(1)"> <text>The Commissioner may not disapprove the currency of a country under §B(1)(b) of this regulation if the financial guaranty insurer demonstrates that there is no undue risk associated with insuring the timely payment of the instruments or obligations.</text> </paragraph> <paragraph num="(2)"> <text>In making a determination, the Commissioner shall consider the financial guaranty insurer's outstanding liabilities on non-investment grade instruments and obligations in relation to:</text> <paragraph num="(a)"> <text>Its outstanding liabilities on all instruments and obligations; and</text> </paragraph> <paragraph num="(b)"> <text>The amount of its surplus to policyholders.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Disclosure Requirement. A financial guaranty insurer may issue a financial guaranty insurance policy only if any prospectus that makes mention of the insurance policy discloses that the insurance is not covered by the Property and Casualty Insurance Guaranty Corporation pursuant to Insurance Article, Title 9, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Credit Risk Exposure Limits."> <paragraph num="A."> <text>A financial guaranty insurer's outstanding total liability for municipal obligation bonds, special revenue bonds, and industrial development bonds shall be investment grade to the following extent:</text> <paragraph num="(1)"> <text>For financial guaranty insurers rated AAA by a nationally recognized statistical rating organization, at least 95 percent;</text> </paragraph> <paragraph num="(2)"> <text>For financial guaranty insurers rated AA by a nationally recognized statistical rating organization, at least 85 percent; and</text> </paragraph> <paragraph num="(3)"> <text>For financial guaranty insurers rated A by a nationally recognized statistical rating organization, at least 70 percent.</text> </paragraph> </paragraph> <paragraph num="B."> <text>By written request of a financial guaranty insurer, the Commissioner may approve any other level considered appropriate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Aggregate Risk Limits."> <paragraph num="A."> <text>A financial guaranty insurer shall at all times maintain capital, surplus, and contingency reserve in the aggregate not less than the sum of:</text> <paragraph num="(1)"> <text>0.3333 percent or 1/300th of the total liability under guaranties of municipal obligation bonds and special revenue bonds, including obligations demonstrated to the satisfaction of the Commissioner to be the functional equivalent of municipal obligation bonds or special revenue bonds, and investment grade utility first mortgage obligations; plus</text> </paragraph> <paragraph num="(2)"> <text>0.6666 percent or 1/150th of the total liability under guaranties of investment grade asset-backed securities; plus</text> </paragraph> <paragraph num="(3)"> <text>1.0 percent or 1/100th of the total liability under guaranties, to the extent secured by collateral or having a term of 7 years or less, of:</text> <paragraph num="(a)"> <text>Investment grade industrial development bonds; or</text> </paragraph> <paragraph num="(b)"> <text>Other investment grade obligations; plus</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>1.5 percent or 1/66.67th of the total liability under guaranties of other investment grade obligations; plus</text> </paragraph> <paragraph num="(5)"> <text>2.0 percent or 1/50th of the total liability under guaranties of:</text> <paragraph num="(a)"> <text>Non-investment grade consumer debt obligations; and</text> </paragraph> <paragraph num="(b)"> <text>Non-investment grade asset-backed securities; plus</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>2.5 percent or 1/40th of the total liability under guaranties of non-investment grade obligations to the extent secured by first mortgages on commercial real estate and having loan-to-value ratios of 80 percent or less; plus</text> </paragraph> <paragraph num="(7)"> <text>4.0 percent or 1/25th of the total liability under guaranties of other non-investment grade obligations.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the amount of collateral required by §A(1) of this regulation is no longer maintained, that proportion of the obligation insured that is not collateralized shall be subject to the aggregate limits specified in §A(2) of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Single Risk Limits."> <text>A financial guaranty insurer doing business in this State shall limit its exposure to loss, net of collateral and reinsurance, as follows:</text> <paragraph num="A."> <text>For municipal obligation bonds, special revenue bonds, and obligations demonstrated to the satisfaction of the Commissioner to be the functional equivalent of municipal obligation bonds or special revenue bonds:</text> <paragraph num="(1)"> <text>The insured average annual debt service with respect to any one entity and backed by a single revenue source may not exceed 10 percent of the aggregate of the corporation's capital, surplus, and contingency reserve; and</text> </paragraph> <paragraph num="(2)"> <text>The insured unpaid principal issued by a single entity and backed by a single revenue source may not exceed 75 percent of the aggregate of the corporation's capital, surplus, and contingency reserve;</text> </paragraph> </paragraph> <paragraph num="B."> <text>For each issue of asset-backed securities issued by a single entity and for each pool of consumer debt obligations, the lesser of:</text> <paragraph num="(1)"> <text>Insured average annual debt service; or</text> </paragraph> <paragraph num="(2)"> <text>Insured unpaid principal, reduced by the extent to which the unpaid principal of the supporting assets exceeds the insured unpaid principal, divided by nine, provided that:</text> <paragraph num="(a)"> <text>The insured unpaid principal, reduced by the extent to which the unpaid principal of the supporting assets exceeds the insured unpaid principal, divided by nine, does not exceed 10 percent of the aggregate of the corporation's capital, surplus, and contingency reserve;</text> </paragraph> <paragraph num="(b)"> <text>No asset in the pool supporting the asset-backed securities exceeds the single risk limits prescribed in §E of this regulation, if directly guaranteed; and</text> </paragraph> <paragraph num="(c)"> <text>If the issuer of the insured asset-backed securities is a special purpose corporation, trust, or other entity and the issuer has indebtedness outstanding with respect to any other pool of assets, either the other indebtedness shall be entitled to the benefits of a financial guaranty policy of the same insurer, or the other indebtedness:</text> <paragraph num="(i)"> <text>Shall be fully subordinated to the insured obligation, with respect to, or be non-recourse with respect to, the pool of assets that supports the insured obligation;</text> </paragraph> <paragraph num="(ii)"> <text>Shall be non-recourse to the issuer other than with respect to the asset pool securing the other indebtedness and excess proceeds; and</text> </paragraph> <paragraph num="(iii)"> <text>May not constitute a claim against the issuer to the extent that the asset pool securing the other indebtedness or excess proceeds is insufficient to pay the other indebtedness;</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>For obligations issued by a single entity and secured by commercial real estate, and not meeting the definition of asset-backed securities, the insured unpaid principal less 50 percent of the appraised value of the underlying real estate may not exceed 10 percent of the aggregate of the insurer's surplus to policyholders and contingency reserve;</text> </paragraph> <paragraph num="D."> <text>For utility first mortgage obligations, the insured average annual debt service may not exceed 10 percent of the aggregate of the corporation's capital, surplus, and contingency reserve; and</text> </paragraph> <paragraph num="E."> <text>For all other policies providing financial guaranty insurance with respect to obligations issued by a single entity and backed by a single revenue source, the insured unpaid principal may not exceed 10 percent of the aggregate of the financial guaranty insurer's capital, surplus, and contingency reserve.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Insurers That Exceed Limitations."> <paragraph num="A."> <text>Submission of Written Plan. Except as provided in §C of this regulation, if a financial guaranty insurer at any time exceeds any limitation prescribed by Regulation .03 or .04—.06 of this chapter, the financial guaranty insurer shall, within 30 days after the limitation is exceeded, submit a written plan to the Commissioner detailing the steps that the financial guaranty insurer will take or has taken to reduce its exposure to loss to not more than the permitted amounts.</text> </paragraph> <paragraph num="B."> <text>Notice and Hearing; Order. If, after notice and hearing, the Commissioner determines that a financial guaranty insurer has exceeded any limitation prescribed by Regulation .03 or .04—.06 of this chapter, the Commissioner may order the financial guaranty insurer to:</text> <paragraph num="(1)"> <text>Cease transacting any new financial guaranty insurance business until the financial guaranty insurer's exposure to loss no longer exceeds the limitations; or</text> </paragraph> <paragraph num="(2)"> <text>Limit its writing to investment grade obligations until such time as it is in compliance with the limitations.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Financial Guaranty Insurance Outstanding Before Effective Date of Chapter.</text> <paragraph num="(1)"> <text>Except as provided in §C(2) of this regulation, a financial guaranty insurer shall be in compliance with Regulations .03 and .04—.06 of this chapter by December 31, 2006.</text> </paragraph> <paragraph num="(2)"> <text>A financial guaranty insurer may not be deemed in violation of any limitation prescribed by Regulation .06 of this chapter with respect to a financial guaranty insurance policy that was outstanding before the effective date of this chapter, if the financial guaranty insurer was in compliance with the applicable single risk limit in effect in this State at the time that the financial guaranty insurance policy was issued.</text> </paragraph> <paragraph num="(3)"> <text>Failure to comply with Regulations .03 or .04—.06 of this chapter by the date established in §C(1) of this regulation shall result in a financial guaranty insurer being subject to the actions prescribed in §B of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Collateral."> <text>Collateral shall be:</text> <paragraph num="A."> <text>Deposited with the financial guaranty insurer;</text> </paragraph> <paragraph num="B."> <text>Held in trust by a trustee or custodian acceptable to the Commissioner for the benefit of the financial guaranty insurer; or</text> </paragraph> <paragraph num="C."> <text>Held in trust pursuant to the bond indenture or other trust arrangement for the benefit of security holders in the form of funds for the payment of insured obligations, sinking funds, or other reserves that may be used to pay the insured obligations and trustee and other administrative fees on a first priority basis established and continually maintained pursuant to the bond indenture or other trust arrangement by a trustee acceptable to the Commissioner.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §5-1005, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 15, 2003 (30:18 Md. R. 1260)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended as an emergency provision effective March 9, 2006 (33:7 Md. R. 667); amended permanently effective June 5, 2006 (33:11 Md. R. 954)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 repealed and new Regulation .04 adopted as an emergency provision effective March 9, 2006 (33:7 Md. R. 667); adopted permanently effective June 5, 2006 (33:11 Md. R. 954)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended as an emergency provision effective March 9, 2006 (33:7 Md. R. 667); amended permanently effective June 5, 2006 (33:11 Md. R. 954)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended as an emergency provision effective March 9, 2006 (33:7 Md. R. 667); amended permanently effective June 5, 2006 (33:11 Md. R. 954)</annotation> </annotations> </chapter> <chapter num="11" heading="Annual Financial Reporting"> <regulation prefix="Regulation" num=".01" heading="Purpose and Scope."> <paragraph num="A."> <text>Purpose. The purpose of this chapter is to improve the Maryland Insurance Administration's surveillance of the financial condition of insurers by requiring:</text> <paragraph num="(1)"> <text>An annual audit of financial statements reporting the financial position and the results of operations of insurers by independent certified public accountants;</text> </paragraph> <paragraph num="(2)"> <text>Communication of Internal Control Related Matters Noted in an Audit; and</text> </paragraph> <paragraph num="(3)"> <text>Management's Report on Internal Control over Financial Reporting.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Scope. Except as provided in §C of this regulation, an insurer is subject to this chapter.</text> </paragraph> <paragraph num="C."> <text>Exemptions.</text> <paragraph num="(1)"> <text>Insurers having direct premiums written in this State of less than $1,000,000 in any calendar year and less than 1,000 policyholders or certificate holders of direct written policies nationwide at the end of the calendar year are exempt from this chapter for the year, unless the Commissioner makes a specific finding that compliance is necessary for the Commissioner to carry out statutory responsibilities. Insurers having assumed premiums pursuant to contracts or treaties of reinsurance of $1,000,000 or more are not exempt.</text> </paragraph> <paragraph num="(2)"> <text>Foreign or alien insurers filing the audited financial report in another state, pursuant to that state's requirement for filing of audited financial reports, which has been found by the Commissioner to be substantially similar to the requirements herein, are exempt from Regulations .03—.12 of this chapter if:</text> <paragraph num="(a)"> <text>A copy of the audited financial report, Communication of Internal Control Related Matters Noted in an Audit, and the Accountant's Letter of Qualifications that are filed with the other state are filed with the Commissioner in accordance with the filing dates specified in Regulations .03, .10, and .11 of this chapter, or Canadian insurers may submit copies of the accountants' reports as filed with the Office of the Superintendent of Financial Institutions, Canada; and</text> </paragraph> <paragraph num="(b)"> <text>A copy of any Notification of Adverse Financial Condition Report filed with the other state is filed with the Commissioner within the time specified in Regulation .09 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Foreign or alien insurers required to file Management's Report on Internal Control over Financial Reporting in another state are exempt from filing the report in Maryland, provided the other state has substantially similar reporting requirements, and the report is filed with the Commissioner of the other state within the time specified.</text> </paragraph> </paragraph> <paragraph num="D."> <text>This chapter does not prohibit, preclude, or in any way limit the Maryland Insurance Commissioner from ordering or conducting or performing examinations of insurers under the rules and regulations of the Maryland Insurance Administration, and the practices and procedures of the Maryland Insurance Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accountant” or “independent certified public accountant” means:</text> <paragraph num="(a)"> <text>An independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants (AICPA) and in all states in which the accountant is licensed to practice; and</text> </paragraph> <paragraph num="(b)"> <text>For a Canadian or a British company, a Canadian-chartered or British-chartered accountant.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Affiliate of”, or person “affiliated with”, a specific person, means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.</text> </paragraph> <paragraph num="(3)"> <text>Audit Committee.</text> <paragraph num="(a)"> <text>“Audit committee” means a committee, or equivalent body, established by the board of directors of an entity for the purpose of overseeing the:</text> <paragraph num="(i)"> <text>Accounting and financial reporting processes of an insurer or group of insurers;</text> </paragraph> <paragraph num="(ii)"> <text>Internal audit function of an insurer or group of insurers; and</text> </paragraph> <paragraph num="(iii)"> <text>External audits of financial statements of the insurer or group of insurers.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Audit committee” at the election of the controlling person pursuant to Regulation .13H—J of this chapter, may, for one or more controlled insurers, be deemed to be the audit committee of any entity that controls a group of insurers.</text> </paragraph> <paragraph num="(c)"> <text>“Audit committee” means the insurer's entire board of directors, if an audit committee is not designated by the insurer.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Audited financial report” means and includes those items specified in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Group of insurers” means those insurers included in the reporting requirements of Insurance Article, §7-601, Annotated Code of Maryland, or a set of insurers as identified by management, for the purpose of assessing the effectiveness of internal control over financial reporting.</text> </paragraph> <paragraph num="(6)"> <text>“Indemnification” means an agreement of indemnity or a release from liability where the intent or effect is to shift or limit in any manner the potential liability of the person or firm for failure to adhere to applicable auditing or professional standards, whether or not resulting in part from knowing of other misrepresentations made by the insurer or its representatives.</text> </paragraph> <paragraph num="(7)"> <text>“Independent board member” has the same meaning as described in Regulation .13E and F of this chapter.</text> </paragraph> <paragraph num="(8)"> <text>Insurer.</text> <paragraph num="(a)"> <text>“Insurer” means an insurer holding a certificate of authority issued by the Commissioner, or authorized to engage in the insurance business in this State, as defined in Insurance Article, §§1-101(v) and 4-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Insurer” includes:</text> <paragraph num="(i)"> <text>The Maryland Automobile Insurance Fund;</text> </paragraph> <paragraph num="(ii)"> <text>The Medical Mutual Liability Insurance Society of Maryland;</text> </paragraph> <paragraph num="(iii)"> <text>Nonprofit health service plans;</text> </paragraph> <paragraph num="(iv)"> <text>Dental plan organizations;</text> </paragraph> <paragraph num="(v)"> <text>Health maintenance organizations;</text> </paragraph> <paragraph num="(vi)"> <text>Managed care organizations; and</text> </paragraph> <paragraph num="(vii)"> <text>Provider-sponsored organizations.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Internal audit function” means a person or persons that provide independent, objective, and reasonable assurance designed to add value and improve an organization’s operations and accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management and control and governance processes.</text> </paragraph> <paragraph num="(10)"> <text>“Internal control over financial reporting” means a process effected by an entity's board of directors, management, and other personnel designed to provide reasonable assurance regarding the reliability of the financial statements, that is, those items specified in Regulation .04B(2)—(6) of this chapter, and includes those policies and procedures that:</text> <paragraph num="(a)"> <text>Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;</text> </paragraph> <paragraph num="(b)"> <text>Provide reasonable assurance that:</text> <paragraph num="(i)"> <text>Transactions are recorded as necessary to permit preparation of the financial statements, that is, those items specified in Regulation .04B(2)—(6) of this chapter; and</text> </paragraph> <paragraph num="(ii)"> <text>Receipts and expenditures are being made only in accordance with authorizations of management and directors; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements, that is, those items specified in Regulation .04B(2)—(6) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“NAIC” means the National Association of Insurance Commissioners.</text> </paragraph> <paragraph num="(12)"> <text>“SEC” means the United States Securities and Exchange Commission.</text> </paragraph> <paragraph num="(13)"> <text>“Section 404” means Section 404 of the Sarbanes-Oxley Act of 2002, and the SEC's rules and regulations promulgated under it.</text> </paragraph> <paragraph num="(14)"> <text>“Section 404 report” means Management's Report on Internal Control over Financial Reporting as defined by the SEC, and the related attestation report of the independent certified public accountant as described in §B(1) of this regulation.</text> </paragraph> <paragraph num="(15)"> <text>“SOX compliant entity” means an entity that either is required to be compliant with, or voluntarily is compliant with, all of the following provisions of the Sarbanes-Oxley Act of 2002:</text> <paragraph num="(a)"> <text>The preapproval requirements of §201 (§10A(i) of the Securities Exchange Act of 1934);</text> </paragraph> <paragraph num="(b)"> <text>The audit committee independence requirements of §301 (§10A(m)(3) of the Securities Exchange Act of 1934); and</text> </paragraph> <paragraph num="(c)"> <text>The internal control over financial reporting requirements of §404 (Item 308 of SEC Regulation S—K).</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>Workpapers.</text> <paragraph num="(a)"> <text>“Workpapers” means the records kept by the independent certified public accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to the accountant's audit of the financial statements of an insurer.</text> </paragraph> <paragraph num="(b)"> <text>“Workpapers” may include the following documents prepared or obtained by the independent certified public accountant in the course of an audit of the financial statements of an insurer and which support the accountant's opinion:</text> <paragraph num="(i)"> <text>Audit planning documentation;</text> </paragraph> <paragraph num="(ii)"> <text>Work programs;</text> </paragraph> <paragraph num="(iii)"> <text>Analyses;</text> </paragraph> <paragraph num="(iv)"> <text>Memoranda;</text> </paragraph> <paragraph num="(v)"> <text>Letters of confirmation and representation;</text> </paragraph> <paragraph num="(vi)"> <text>Abstracts of company documents; and</text> </paragraph> <paragraph num="(vii)"> <text>Schedules or commentaries.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing and Extensions for Filing Audited Financial Reports; Audit Committee Appointment."> <paragraph num="A."> <text>Insurers shall have an annual audit by an independent certified public accountant, and shall file an audited financial report with the Commissioner for the year ended December 31 immediately preceding, for:</text> <paragraph num="(1)"> <text>Nonprofit health service plans, on or before March 1 of each year;</text> </paragraph> <paragraph num="(2)"> <text>Dental plan organizations, on or before April 1 of each year;</text> </paragraph> <paragraph num="(3)"> <text>Health maintenance organizations, on or before June 1 of each year, or if approved by the Commissioner, within 150 days after the date their fiscal year ends; and</text> </paragraph> <paragraph num="(4)"> <text>All other insurers, on or before June 1 of each year.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Extensions of the filing date may be granted by the Commissioner for up to 30-day periods upon a showing by the insurer and its independent certified public accountant of the reasons for requesting an extension and determination by the Commissioner of good cause for an extension.</text> </paragraph> <paragraph num="C."> <text>The request for extension shall be submitted in writing not less than 10 days prior to the due date in sufficient detail to permit the Commissioner to make an informed decision with respect to the requested extension.</text> </paragraph> <paragraph num="D."> <text>If an extension is granted in accordance with the provisions in §§B and C of this regulation, a similar extension of 30 days is granted to the filing of Management's Report on Internal Control over Financial Reporting.</text> </paragraph> <paragraph num="E."> <text>An insurer required to file an annual audited financial report pursuant to this chapter shall designate a group of individuals as constituting its audit committee, as defined in Regulation .02B(3) of this chapter.</text> </paragraph> <paragraph num="F."> <text>The audit committee of an entity that controls an insurer may be deemed to be the insurer's audit committee for purposes of this chapter at the election of the controlling person.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Contents of Annual Audited Financial Report."> <paragraph num="A."> <text>The annual audited financial report shall report the financial position of the insurer as of the end of the most recently ended calendar year and the results of its operations, cash flows, and changes in capital and surplus for the year then ended in conformity with statutory accounting practices prescribed, or otherwise permitted, by the department of insurance of the state of domicile.</text> </paragraph> <paragraph num="B."> <text>The annual audited financial report shall include the following:</text> <paragraph num="(1)"> <text>Report of independent certified public accountant;</text> </paragraph> <paragraph num="(2)"> <text>Balance sheet reporting admitted assets, liabilities, capital, and surplus;</text> </paragraph> <paragraph num="(3)"> <text>Statement of operations;</text> </paragraph> <paragraph num="(4)"> <text>Statement of cash flow;</text> </paragraph> <paragraph num="(5)"> <text>Statement of changes in capital and surplus; and</text> </paragraph> <paragraph num="(6)"> <text>Notes to financial statements, which shall:</text> <paragraph num="(a)"> <text>Be those required by the appropriate NAIC Annual Statement Instructions and the NAIC Accounting Practices and Procedures Manual; and</text> </paragraph> <paragraph num="(b)"> <text>Include a reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed with the Commissioner, with a written description of the nature of these differences.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Form.</text> <paragraph num="(1)"> <text>Except as provided in §C(2) of this regulation, the financial statements included in the audited financial report shall:</text> <paragraph num="(a)"> <text>Be prepared in a form and using language and groupings substantially the same as the relevant sections of the annual statement of the insurer filed with the Commissioner; and</text> </paragraph> <paragraph num="(b)"> <text>Be comparative, presenting the amounts as of December 31 of the most recently ended year, and the amounts as of the immediately preceding December 31.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In the first year in which an insurer is required to file an audited financial report, the comparative data may be omitted.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Designation of Independent Certified Public Accountant."> <paragraph num="A."> <text>An insurer required by this chapter to file an annual audited financial report shall, within 60 days after becoming subject to the requirement:</text> <paragraph num="(1)"> <text>Register with the Commissioner in writing the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit set forth in this regulation; or</text> </paragraph> <paragraph num="(2)"> <text>Register the name and address of their retained independent certified public accountant not less than 6 months before the date when the first audited financial report is to be filed if the insurer has not retained an independent certified public accountant on the effective date of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The insurer shall obtain a letter from the accountant, and file a copy with the Commissioner:</text> <paragraph num="(1)"> <text>Stating that the accountant is aware of the provisions of the insurance code and the regulations of the insurance department of the state of domicile that relate to accounting and financial matters; and</text> </paragraph> <paragraph num="(2)"> <text>Affirming that the accountant will express an opinion on the financial statements in terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by that insurance department, specifying such exceptions as the accountant may believe appropriate.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns, the insurer shall:</text> <paragraph num="(1)"> <text>Within 5 business days notify the Commissioner of this event;</text> </paragraph> <paragraph num="(2)"> <text>Furnish the Commissioner with a separate letter within 10 business days of the above notification stating whether in the 24 months preceding the event there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him to make reference to the subject matter of the disagreement in connection with his opinion;</text> </paragraph> <paragraph num="(3)"> <text>In writing, request the former accountant to furnish a letter addressed to the insurer stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for which the accountant does not agree; and</text> </paragraph> <paragraph num="(4)"> <text>Furnish the responsive letter from the former accountant to the Commissioner together with its own letter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Disagreements.</text> <paragraph num="(1)"> <text>The disagreements required to be reported under §C(2) of this regulation include both those resolved to the former accountant's satisfaction and those not resolved to the former accountant's satisfaction.</text> </paragraph> <paragraph num="(2)"> <text>Disagreements contemplated by §C(2) of this regulation are those that occur at the decision-making level, that is, between personnel of the insurer responsible for presentation of its financial statements and personnel of the accounting firm responsible for rendering its report.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Qualifications of Independent Certified Public Accountant."> <paragraph num="A."> <text>The Commissioner may not recognize a person or firm as a qualified independent certified public accountant if the person or firm:</text> <paragraph num="(1)"> <text>Is not in good standing with the American Institute of Certified Public Accountants (AICPA) and in all states in which the accountant is licensed to practice, or, for a Canadian or British company, that is not a chartered accountant; or</text> </paragraph> <paragraph num="(2)"> <text>Has either directly or indirectly entered into an agreement of indemnity or release from liability, collectively referred to as indemnification, with respect to the audit of the insurer.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Except as otherwise provided in this chapter, the Commissioner shall recognize an independent certified public accountant as qualified as long as the accountant conforms to the standards of the profession, as contained in:</text> <paragraph num="(1)"> <text>The Code of Professional Ethics of the AICPA; and</text> </paragraph> <paragraph num="(2)"> <text>Either:</text> <paragraph num="(a)"> <text>The rules and regulations, code of ethics, and rules of professional conduct of the Maryland Board of Public Accountancy; or</text> </paragraph> <paragraph num="(b)"> <text>A similar code.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>A qualified independent certified public accountant may enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration. However, in the event of a delinquency proceeding commenced against the insurer under the Insurance Article, Title 9, Annotated Code of Maryland, the mediation or arbitration provisions shall operate at the option of the statutory successor.</text> </paragraph> <paragraph num="D."> <text>Lead or Coordinating Audit Partner.</text> <paragraph num="(1)"> <text>The lead or coordinating audit partner having primary responsibility for the audit may not act in that capacity for more than 5 consecutive years. The person shall be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of 5 consecutive years.</text> </paragraph> <paragraph num="(2)"> <text>An insurer may make application to the Commissioner for relief from the rotation requirement in §D(1) of this regulation on the basis of unusual circumstances.</text> </paragraph> <paragraph num="(3)"> <text>The application for relief from the rotation requirement in §D(1) of this regulation shall be made at least 30 days before the end of the calendar year. The Commissioner may consider the following factors in determining if the relief should be granted:</text> <paragraph num="(a)"> <text>Number of partners, expertise of the partners, or the number of insurance clients in the currently registered firm;</text> </paragraph> <paragraph num="(b)"> <text>Premium volume of the insurer; or</text> </paragraph> <paragraph num="(c)"> <text>Number of jurisdictions in which the insurer transacts business.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The insurer shall file, with its annual statement filing, the approval for relief from §D(1) of this regulation with the states that it is licensed in or doing business in, and with the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Commissioner may not recognize as a qualified independent certified public accountant, or accept an annual audited financial report, prepared in whole or in part by, a natural person who:</text> <paragraph num="(1)"> <text>Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§1961—1968, or any dishonest conduct or practices under federal or state law;</text> </paragraph> <paragraph num="(2)"> <text>Has been found to have violated the insurance laws of Maryland with respect to any previous reports submitted under this regulation;</text> </paragraph> <paragraph num="(3)"> <text>Has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this chapter; or</text> </paragraph> <paragraph num="(4)"> <text>Has violated any provisions of Business Occupations and Professions Article, Title 2, Annotated Code of Maryland, or any rule of professional conduct established by the State Board of Public Accountancy.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Hearing to Determine Qualifications.</text> <paragraph num="(1)"> <text>The Commissioner may, as provided in Insurance Article, §4-118, Annotated Code of Maryland, hold a hearing to determine whether an independent certified public accountant is qualified.</text> </paragraph> <paragraph num="(2)"> <text>After considering the evidence presented, the Commissioner may:</text> <paragraph num="(a)"> <text>Rule that the accountant is not qualified for purposes of expressing an opinion on the financial statements in the annual audited financial report made pursuant to this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Accountants That Provide Non-Audit Services.</text> <paragraph num="(1)"> <text>The Commissioner may not recognize as a qualified independent certified public accountant, or accept an annual audited financial report, prepared in whole or in part, by an accountant who provides to an insurer, contemporaneously with the audit, the following non-audit services:</text> <paragraph num="(a)"> <text>Bookkeeping or other services related to the accounting records or financial statements of the insurer;</text> </paragraph> <paragraph num="(b)"> <text>Financial information systems design and implementation;</text> </paragraph> <paragraph num="(c)"> <text>Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;</text> </paragraph> <paragraph num="(d)"> <text>Actuarially oriented advisory services involving the determination of amounts recorded in the financial statements;</text> </paragraph> <paragraph num="(e)"> <text>Internal audit outsourcing services;</text> </paragraph> <paragraph num="(f)"> <text>Management functions or human resources;</text> </paragraph> <paragraph num="(g)"> <text>Broker or dealer, investment adviser, or investment banking services;</text> </paragraph> <paragraph num="(h)"> <text>Legal services or expert services unrelated to the audit; or</text> </paragraph> <paragraph num="(i)"> <text>Any other services that the Commissioner determines, by regulation, are impermissible.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The actuarially oriented advisory services under §G(1)(d) of this regulation do not include an accountant assisting an insurer in understanding the methods, assumptions, and inputs used in the determination of amounts recorded in the financial statement only if it is reasonable to conclude that the services provided will not be subject to audit procedures during an audit of the insurer's financial statements.</text> </paragraph> <paragraph num="(3)"> <text>The actuarially oriented advisory services under §G(1)(d) of this regulation do not include an accountant's actuary issuing an actuarial opinion or certification opinion on an insurer's reserves if the following conditions are met:</text> <paragraph num="(a)"> <text>Neither the accountant nor the accountant's actuary has performed any management functions or made any management decisions;</text> </paragraph> <paragraph num="(b)"> <text>The insurer has competent personnel, or engages a third-party actuary, to estimate the reserves for which management takes responsibility; and</text> </paragraph> <paragraph num="(c)"> <text>The accountant's actuary tests the reasonableness of the reserves after the insurer's management has determined the amount of the reserves.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In general, the principles of independence with respect to services provided by the qualified independent certified public accountant are largely predicated on three basic principles, violations of which would impair the accountant's independence. The principles are that accountants cannot function in the role of management, cannot audit their own work, and cannot serve in an advocacy role for the insurer.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Exemptions.</text> <paragraph num="(1)"> <text>Insurers having direct written and assumed premiums of less than $100,000,000 in any calendar year may request an exemption from §G(1) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The insurer shall file with the Commissioner a written statement discussing the reasons why the insurer should be exempt from these provisions.</text> </paragraph> <paragraph num="(3)"> <text>If the Commissioner finds, upon review of this statement, that compliance with this chapter would constitute a financial or organizational hardship upon the insurer, an exemption may be granted.</text> </paragraph> </paragraph> <paragraph num="I."> <text>A qualified independent certified public accountant who performs the audit may engage in other non-audit services, including tax services, that are not described in §G(1) of this regulation or that do not conflict with §G(2) of this regulation, only if the activity is approved in advance by the audit committee, in accordance with §§J and K of this regulation.</text> </paragraph> <paragraph num="J."> <text>All auditing services and non-audit services provided to an insurer by the qualified independent certified public accountant of the insurer shall be preapproved by the audit committee.</text> </paragraph> <paragraph num="K."> <text>The preapproval requirement is waived with respect to non-audit services if:</text> <paragraph num="(1)"> <text>The insurer is a SOX compliant entity, or a direct or indirect wholly owned subsidiary of a SOX compliant entity; or</text> </paragraph> <paragraph num="(2)"> <text>All of the following conditions are met:</text> <paragraph num="(a)"> <text>The aggregate amount of all such non-audit services provided to the insurer constitutes not more than 5 percent of the total amount of fees paid by the insurer to its qualified independent certified public accountant during the fiscal year in which the non-audit services are provided;</text> </paragraph> <paragraph num="(b)"> <text>The services were not recognized by the insurer at the time of the engagement to be non-audit services; and</text> </paragraph> <paragraph num="(c)"> <text>The services are promptly brought to the attention of the audit committee and approved prior to the completion of the audit by the audit committee or by one or more members of the audit committee who are the members of the board of directors to whom authority to grant such approvals has been delegated by the audit committee.</text> </paragraph> </paragraph> </paragraph> <paragraph num="L."> <text>Preapproval.</text> <paragraph num="(1)"> <text>The audit committee may delegate to one or more designated members of the audit committee the authority to grant the preapprovals required by §§J and K of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The decisions of any member to whom this authority is delegated shall be presented to the full audit committee at each of its scheduled meetings.</text> </paragraph> </paragraph> <paragraph num="M."> <text>Independent Certified Public Accountant Conflicts.</text> <paragraph num="(1)"> <text>Section M(2) of this regulation applies only to partners and senior managers involved in the audit.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may not recognize an independent certified public accountant as qualified for a particular insurer if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for that insurer, was employed by the independent certified public accountant and participated in the audit of that insurer during the 1-year period preceding the date that the most current statutory opinion is due.</text> </paragraph> <paragraph num="(3)"> <text>An insurer may make application to the Commissioner for relief from the requirement in §M(2) of this regulation, on the basis of unusual circumstances.</text> </paragraph> <paragraph num="(4)"> <text>The insurer shall file, with its annual statement filing, the approval for relief from §M(2) of this regulation, with the states that it is licensed in, or doing business in, and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Consolidated or Combined Audits."> <paragraph num="A."> <text>An insurer may make written application to the Commissioner for approval to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies that utilizes a pooling or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves, and the insurer cedes all of its direct and assumed business to the pool.</text> </paragraph> <paragraph num="B."> <text>When an insurer makes a written application as allowed by §A of this regulation, a columnar consolidating or combining worksheet shall be filed with the report, as follows:</text> <paragraph num="(1)"> <text>Amounts shown on the consolidated or combined audited financial report shall be shown on the worksheet;</text> </paragraph> <paragraph num="(2)"> <text>Amounts for each insurer subject to this section shall be stated separately;</text> </paragraph> <paragraph num="(3)"> <text>Noninsurance operations may be shown on the worksheet on a combined or individual basis;</text> </paragraph> <paragraph num="(4)"> <text>Explanations of consolidating and eliminating entries shall be included; and</text> </paragraph> <paragraph num="(5)"> <text>A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the annual statements of the insurers.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Scope of Audit and Report of Independent Certified Public Accountant."> <paragraph num="A."> <text>Financial statements furnished pursuant to Regulation .04 of this chapter shall be examined by the independent certified public accountant. The audit of the insurer's financial statements shall be conducted in accordance with generally accepted auditing standards.</text> </paragraph> <paragraph num="B."> <text>The independent certified public accountant shall obtain an understanding of internal control sufficient to plan the audit in accordance with AU Section 319 of the Professional Standards of the AICPA, Consideration of Internal Control in a Financial Statement Audit.</text> </paragraph> <paragraph num="C."> <text>To the extent required by AU 319, for those insurers required to file a Management’s Report of Internal Control over Financial Reporting pursuant to Regulation .16 of this chapter, the independent certified public accountant should consider, as that term is defined in Statement on Auditing Standards (SAS) No. 102, Defining Professional Requirements in Statements on Auditing Standards or its replacement, the most recently available report in planning and performing the audit of the statutory financial statements.</text> </paragraph> <paragraph num="D."> <text>The independent certified public accountant shall give consideration as he deems necessary to the procedures illustrated in the Financial Condition Examiners Handbook promulgated by the NAIC.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Notification of Adverse Financial Condition."> <paragraph num="A."> <text>The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to report, in writing, within 5 business days to the board of directors or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the Commissioner as of the balance sheet date currently under audit, or that the insurer does not meet the minimum capital and surplus requirement of Insurance Article, Annotated Code of Maryland, as of that date.</text> </paragraph> <paragraph num="B."> <text>An insurer that has received a report pursuant to §A of this regulation shall forward a copy of the report to the Commissioner within 5 business days of receipt of the report and shall provide the independent certified public accountant making the report with evidence of the report being furnished to the Commissioner.</text> </paragraph> <paragraph num="C."> <text>If the independent certified public accountant fails to receive the evidence within the required 5 business day period, the independent certified public accountant shall furnish to the Commissioner a copy of its report within the next 5 business days.</text> </paragraph> <paragraph num="D."> <text>An independent certified public accountant is not liable in any manner to any person for any statement made in connection with §A, B, or C of this regulation, if the statement is made in good faith in compliance with those sections.</text> </paragraph> <paragraph num="E."> <text>If an accountant, subsequent to the date of the audited financial report filed pursuant to this chapter, becomes aware of facts that might have affected the accountant's report, the Commissioner notes the obligation of the accountant to take such action as prescribed in Volume 1, Section AU 561 of the Professional Standards of the AICPA.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Communication of Internal Control Related Matters Noted in an Audit."> <paragraph num="A."> <text>In addition to the annual audited financial report, each insurer shall furnish the Commissioner with a written communication as to any unremediated material weaknesses in its internal control over financial reporting noted during the audit.</text> </paragraph> <paragraph num="B."> <text>The communication in §A of this regulation, shall be prepared by the accountant within 60 days after the filing of the annual audited financial report, and shall contain a description of any unremediated material weakness, as the term material weakness is defined by Statement on Auditing Standard 60, Communication of Internal Control Related Matters Noted in an Audit, or its replacement, as of the immediately preceding December 31, so as to coincide with the audited financial report discussed in Regulation .03A of this chapter in the insurer's internal control over financial reporting noted by the accountant during the course of their audit of the financial statements.</text> </paragraph> <paragraph num="C."> <text>If no unremediated material weaknesses were noted, the communication from §A shall so state.</text> </paragraph> <paragraph num="D."> <text>The insurer shall provide a description of remedial actions taken or proposed to correct unremediated material weaknesses, if the actions are not described in the accountant's communication.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Accountant's Letter of Qualifications."> <paragraph num="A."> <text>The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter as provided in §B of this regulation.</text> </paragraph> <paragraph num="B."> <text>The letter shall state:</text> <paragraph num="(1)"> <text>That the accountant is independent with respect to the insurer, and conforms to the standards of the accountant's profession as contained in:</text> <paragraph num="(a)"> <text>The Code of Professional Ethics and pronouncements of the AICPA; and</text> </paragraph> <paragraph num="(b)"> <text>The rules of professional conduct of the Maryland Board of Public Accountancy or similar code;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The background and experience in general, and the experience in audits of insurers of the staff assigned to the engagement and whether each is an independent certified public accountant;</text> </paragraph> <paragraph num="(3)"> <text>That the accountant understands the annual audited financial report, and the opinion thereon will be filed in compliance with this regulation, and that the Commissioner will be relying on this information in the monitoring and regulation of the financial position of insurers;</text> </paragraph> <paragraph num="(4)"> <text>That the accountant consents to the requirements of Regulation .12 of this chapter, and that the accountant consents and agrees to make available for review by the Commissioner, or the Commissioner's designee or appointed agent, the workpapers, as defined in Regulation .12 of this chapter;</text> </paragraph> <paragraph num="(5)"> <text>That the accountant is properly licensed by an appropriate state licensing authority and is a member in good standing in the AICPA; and</text> </paragraph> <paragraph num="(6)"> <text>A representation that the accountant is in compliance with the requirements of Regulation .06 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Nothing within this chapter may be construed as prohibiting the accountant from utilizing such staff as the accountant deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Definition, Availability, and Maintenance of Independent Certified Public Accountant's Workpapers."> <paragraph num="A."> <text>An insurer required to file an audited financial report pursuant to this chapter shall require the accountant to make available for review by the Maryland Insurance Administration examiners, all workpapers prepared in the conduct of the accountant's audit, and any communications related to the audit between the accountant and the insurer, at the offices of the insurer, at the Maryland Insurance Administration, or at any other reasonable place designated by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The insurer shall require that the accountant retain the audit workpapers and communications until the Maryland Insurance Administration has filed a report on examination covering the period of the audit but not longer than 7 years from the date of the audit report.</text> </paragraph> <paragraph num="C."> <text>In the conduct of the periodic review described in §A of this regulation, the Maryland Insurance Administration may make and retain photocopies of pertinent audit workpapers.</text> </paragraph> <paragraph num="D."> <text>The reviews described in §A of this regulation, shall be considered investigations and all working papers and communications obtained during the course of the investigations shall be afforded the same confidentiality as other examination workpapers generated by the Maryland Insurance Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Requirements for Audit Committees."> <paragraph num="A."> <text>This regulation does not apply to:</text> <paragraph num="(1)"> <text>Foreign or alien insurers licensed in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>An insurer that is a SOX compliant entity; or</text> </paragraph> <paragraph num="(3)"> <text>A direct or indirect wholly owned subsidiary of a SOX compliant entity.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The audit committee shall be directly responsible for the appointment, compensation, and oversight of the work of any accountant, including resolution of disagreements between management and the accountant regarding financial reporting, for the purpose of preparing or issuing the audited financial report or related work pursuant to this regulation.</text> </paragraph> <paragraph num="C."> <text>The audit committee of an insurer or group of insurers shall be responsible for:</text> <paragraph num="(1)"> <text>Overseeing the insurer’s internal audit function; and</text> </paragraph> <paragraph num="(2)"> <text>Granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by Regulation .14 of this chapter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The accountant shall report directly to the audit committee.</text> </paragraph> <paragraph num="E."> <text>A member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to §I of this regulation and Regulation .02B(3) of this chapter.</text> </paragraph> <paragraph num="F."> <text>In order to be considered independent for purposes of this regulation, a member of the audit committee may not, other than in the member's capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory, or other compensatory fee from the entity, or be an affiliated person of the entity, or any subsidiary of the entity.</text> </paragraph> <paragraph num="G."> <text>If law requires board participation by an otherwise non-independent member, that law shall prevail and the member may participate in the audit committee and be designated as independent for audit committee purposes, unless the member is an officer or employee of the insurer or one of its affiliates.</text> </paragraph> <paragraph num="H."> <text>If a member of the audit committee ceases to be independent for reasons outside the member's reasonable control, that person, with notice by the responsible entity to the Commissioner, may remain an audit committee member of the responsible entity until the earlier of the next annual meeting of the responsible entity or 1 year from the occurrence of the event that caused the member to be no longer independent.</text> </paragraph> <paragraph num="I."> <text>To exercise the election of the controlling person to designate the audit committee for purposes of this regulation, the ultimate controlling person shall provide written notice to the commissioners of the affected insurers.</text> </paragraph> <paragraph num="J."> <text>Notification of the election of the controlling person shall be made timely prior to the issuance of the statutory audit report and include a description of the basis for the election. The election may be changed through notice to the Commissioner by the insurer, which shall include a description of the basis for the change.</text> </paragraph> <paragraph num="K."> <text>The election of the controlling person to designate the audit committee for purposes of this regulation shall remain in effect for perpetuity, until rescinded.</text> </paragraph> <paragraph num="L."> <text>Audit Committee Reports.</text> <paragraph num="(1)"> <text>The audit committee shall require the accountant that performs for an insurer any audit required by this chapter to timely report to the audit committee in accordance with the requirements of SAS 61, Communication with Audit Committees, or its replacement, including:</text> <paragraph num="(a)"> <text>All significant accounting policies and material permitted practices;</text> </paragraph> <paragraph num="(b)"> <text>All material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the accountant; and</text> </paragraph> <paragraph num="(c)"> <text>Other material written communications between the accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an insurer is a member of an insurance holding company system, the reports required by §L(1) of this regulation may be provided to the audit committee on an aggregate basis for insurers in the holding company system, provided that any substantial differences among insurers in the system are identified to the audit committee.</text> </paragraph> </paragraph> <paragraph num="M."> <text>The proportion of independent audit committee members shall meet or exceed the following criteria:</text> <paragraph num="(1)"> <text>Table.</text> </paragraph> <paragraph num="(2)"> <text>Note A. The Commissioner has authority afforded by State law to require the entity's board to enact improvements to the independence of the audit committee membership if the insurer is in a RBC action level event, meets one or more of the standards of an insurer considered to be in hazardous financial condition, or otherwise exhibits qualities of a troubled insurer.</text> </paragraph> <paragraph num="(3)"> <text>Note B. All insurers with less than $500,000,000 in prior year direct written and assumed premiums are encouraged to structure their audit committees with at least a supermajority of independent audit committee members.</text> </paragraph> <paragraph num="(4)"> <text>Note C. Prior calendar year direct written and assumed premiums shall be the combined total of direct premiums and assumed premiums from non-affiliates for the reporting entities.</text> </paragraph> </paragraph> <paragraph num="N."> <text>An insurer with direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000 may make application to the Commissioner for a waiver from the requirements of Regulation .13 of this chapter based upon hardship.</text> </paragraph> <paragraph num="O."> <text>The insurer shall file, with its annual statement filing, the approval for relief from Regulation .13 of this chapter with the states that it is licensed in or doing business in and the NAIC. If the nondomestic state accepts electronic filing with the NAIC, the insurer shall file the approval in an electronic format acceptable to the NAIC.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Internal Audit Function Requirements."> <paragraph num="A."> <text>An insurer is exempt from the requirements of this section if:</text> <paragraph num="(1)"> <text>The insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and</text> </paragraph> <paragraph num="(2)"> <text>The insurer is a member of a group of insurers and the group has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Function.</text> <paragraph num="(1)"> <text>The insurer or group of insurers shall establish an internal audit function providing independent, objective, and reasonable assurance to the audit committee and insurer management regarding the insurers’:</text> <paragraph num="(a)"> <text>Governance;</text> </paragraph> <paragraph num="(b)"> <text>Risk management; and</text> </paragraph> <paragraph num="(c)"> <text>Internal controls.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The reasonable assurance shall be provided by performing general and specific audits, reviews, and tests and by employing other techniques deemed necessary to:</text> <paragraph num="(a)"> <text>Protect assets;</text> </paragraph> <paragraph num="(b)"> <text>Evaluate control effectiveness and efficiency; and</text> </paragraph> <paragraph num="(c)"> <text>Evaluate compliance with policies and regulations.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Independence.</text> <paragraph num="(1)"> <text>In order to ensure that internal auditors remain objective, the internal audit function shall be organizationally independent.</text> </paragraph> <paragraph num="(2)"> <text>The internal audit function may not defer ultimate judgement on audit matters to others and shall appoint an individual to head the internal audit function who will have direct and unrestricted access to the board of directors.</text> </paragraph> <paragraph num="(3)"> <text>Organizational independence does not preclude dual-reporting relationships.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Reporting.</text> <paragraph num="(1)"> <text>The head of the internal audit function shall report to the audit committee on:</text> <paragraph num="(a)"> <text>The periodic audit plan;</text> </paragraph> <paragraph num="(b)"> <text>Factors that may adversely impact the internal audit function’s independence or effectiveness;</text> </paragraph> <paragraph num="(c)"> <text>Material findings from completed audits; and</text> </paragraph> <paragraph num="(d)"> <text>The appropriateness of corrective actions implemented by management as a result of audit findings.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The reporting shall be done regularly, but on no less than an annual basis.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Additional Requirements. If an insurer is a member of an insurance holding company system or included in a group of insurers, the insurer may satisfy the internal audit function requirements set forth in this regulation at the:</text> <paragraph num="(1)"> <text>Ultimate controlling parent level;</text> </paragraph> <paragraph num="(2)"> <text>Intermediate holding company level; or</text> </paragraph> <paragraph num="(3)"> <text>Individual legal entity level.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Conduct of Insurer in Connection with the Preparation of Required Reports and Documents."> <paragraph num="A."> <text>A director or officer of an insurer may not, directly or indirectly:</text> <paragraph num="(1)"> <text>Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review, or communication required under this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in light of the circumstances under which the statements were made, not misleading to an accountant in connection with any audit, review, or communication required under this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An officer or director of an insurer, or any other person acting under the direction thereof, may not directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence any accountant engaged in the performance of an audit pursuant to this regulation if that person knew or should have known that the action, if successful, could result in rendering the insurer's financial statements materially misleading.</text> </paragraph> <paragraph num="C."> <text>For purposes of §B of this regulation, actions that, “if successful, could result in rendering the insurer's financial statements materially misleading” include, but are not limited to, actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead, or fraudulently influence an accountant:</text> <paragraph num="(1)"> <text>To issue or reissue a report on an insurer's financial statements that is not warranted in the circumstances, due to material violations of statutory accounting principles prescribed by the Commissioner, generally accepted auditing standards, or other professional or regulatory standards;</text> </paragraph> <paragraph num="(2)"> <text>Not to perform audit, review, or other procedures required by generally accepted auditing standards or other professional standards;</text> </paragraph> <paragraph num="(3)"> <text>Not to withdraw an issued report; or</text> </paragraph> <paragraph num="(4)"> <text>Not to communicate matters to an insurer's audit committee.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Management's Report on Internal Control over Financial Reporting."> <paragraph num="A."> <text>An insurer required to file an audited financial report pursuant to this chapter that has annual direct written and assumed premiums, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of $500,000,000 or more shall prepare a report (Management's Report on Internal Control over Financial Reporting) of the insurer's or group of insurers' internal control over financial reporting, as these terms are defined in Regulation .02 of this chapter.</text> </paragraph> <paragraph num="B."> <text>The report shall be filed with the Commissioner along with the Communication of Internal Control Related Matters Noted in an Audit described under Regulation .10 of this chapter. Management's Report on Internal Control over Financial Reporting shall be as of the immediately preceding December 31.</text> </paragraph> <paragraph num="C."> <text>Notwithstanding the premium threshold in §A of this regulation, the Commissioner may require an insurer to file Management's Report on Internal Control over Financial Reporting if the insurer is in any risk-based capital (RBC) level event, or meets any one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Insurance Article, Title 9, Annotated Code of Maryland.</text> </paragraph> <paragraph num="D."> <text>Alternative Filing.</text> <paragraph num="(1)"> <text>An insurer or a group of insurers that is directly subject to Section 404, part of a holding company system whose parent is directly subject to Section 404, not directly subject to Section 404 but is a SOX compliant entity, or a member of a holding company system whose parent is not directly subject to Section 404 but is a SOX compliant entity, may file its or its parent's Section 404 report and an addendum in satisfaction of this regulation if the internal controls of the insurer or group of insurers having a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in Regulation .04B(2)—(6) of this chapter) were included in the scope of the Section 404 report.</text> </paragraph> <paragraph num="(2)"> <text>The addendum shall be a positive statement by management that there are no material processes with respect to the preparation of the insurer's or group of insurers' audited statutory financial statements (those items included in Regulation .04B(2)—(6) of this chapter) excluded from the Section 404 report.</text> </paragraph> <paragraph num="(3)"> <text>If there are internal controls of the insurer or group of insurers that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements and those internal controls were not included in the scope of the Section 404 report, the insurer or group of insurers may either file:</text> <paragraph num="(a)"> <text>A Management's Report on Internal Control over Financial Reporting; or</text> </paragraph> <paragraph num="(b)"> <text>The Section 404 report and a Management's Report on Internal Control over Financial Reporting for those internal controls that have a material impact on the preparation of the insurer's or group of insurers' audited statutory financial statements not covered by the Section 404 report.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Management's Report on Internal Control over Financial Reporting shall include:</text> <paragraph num="(1)"> <text>A statement that management is responsible for establishing and maintaining adequate internal control over financial reporting;</text> </paragraph> <paragraph num="(2)"> <text>A statement that management has established internal control over financial reporting and an assertion, to the best of management's knowledge and belief, after diligent inquiry, as to whether its internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles;</text> </paragraph> <paragraph num="(3)"> <text>A statement that briefly describes the approach or processes by which management evaluated the effectiveness of its internal control over financial reporting;</text> </paragraph> <paragraph num="(4)"> <text>A statement that briefly describes the scope of work that is included and whether any internal controls were excluded;</text> </paragraph> <paragraph num="(5)"> <text>Disclosure of any unremediated material weaknesses in the internal control over financial reporting identified by management as of the immediately preceding December 31;</text> </paragraph> <paragraph num="(6)"> <text>A statement regarding the inherent limitations of internal control systems; and</text> </paragraph> <paragraph num="(7)"> <text>Signatures of the chief executive officer and the chief financial officer, or individuals with equivalent position and title.</text> </paragraph> </paragraph> <paragraph num="F."> <text>With regard to §E(5) of this regulation, management is not permitted to conclude that the internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of financial statements in accordance with statutory accounting principles if there is one or more unremediated material weaknesses in its internal control over financial reporting.</text> </paragraph> <paragraph num="G."> <text>Management shall document and make available upon financial condition examination the basis upon which its assertions, required in §E of this regulation, are made.</text> </paragraph> <paragraph num="H."> <text>Management may base its assertions, in part, upon its review, monitoring, and testing of internal controls undertaken in the normal course of its activities.</text> </paragraph> <paragraph num="I."> <text>Management shall have discretion as to the nature of the internal control framework used, and the nature and extent of documentation, in order to make its assertion in a cost effective manner and, as such, may include assembly of or reference to existing documentation.</text> </paragraph> <paragraph num="J."> <text>Management's Report on Internal Control over Financial Reporting, required by §§A and B of this regulation, and any documentation provided in support thereof during the course of a financial condition examination, shall be kept confidential by the Maryland Insurance Administration.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Exemptions and Effective Dates."> <paragraph num="A."> <text>Upon written application of any insurer, the Commissioner may grant an exemption from compliance with provisions of this chapter if:</text> <paragraph num="(1)"> <text>The exemption is not prohibited by statute; and</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner finds, upon review of the application, that compliance with this chapter would constitute a financial or organizational hardship upon the insurer.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner may grant exemption at any time and from time to time for a specified period or periods.</text> </paragraph> <paragraph num="C."> <text>The insurer may request in writing a hearing on its application for an exemption within 10 days from a denial of an insurer's written request for an exemption from this chapter.</text> </paragraph> <paragraph num="D."> <text>The hearing requested in §C of this regulation, shall be held in accordance with COMAR 31.02.01.</text> </paragraph> <paragraph num="E."> <text>Domestic insurers retaining a certified public accountant on the effective date of this chapter who qualify as independent shall comply with this chapter for the year ending December 31, 2010, and each year thereafter, unless the Commissioner permits otherwise:</text> </paragraph> <paragraph num="F."> <text>Domestic insurers not retaining a certified public accountant on the effective date of this chapter who qualifies as independent shall meet the following schedule for compliance unless the Commissioner permits otherwise.</text> <paragraph num="(1)"> <text>As of December 31, 2010, file with the Commissioner an audited financial report; and</text> </paragraph> <paragraph num="(2)"> <text>For the year ending December 31, 2010, and each year thereafter, file with the Commissioner all reports and communication required by this regulation.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Foreign insurers shall comply with this regulation for the year ending December 31, 2010, and each year thereafter, unless the Commissioner permits otherwise.</text> </paragraph> <paragraph num="H."> <text>The requirements of Regulation .06D of this chapter shall become effective July 1, 2010, and shall be in effect for audits of the year beginning January 1, 2010, and thereafter.</text> </paragraph> <paragraph num="I."> <text>The requirements of Regulation .13 of this chapter are to be in effect January 1, 2010.</text> </paragraph> <paragraph num="J."> <text>An insurer or group of insurers that is not required pursuant to Regulation .13 of this chapter to have independent audit committee members or only a majority of independent audit committee members, as opposed to a supermajority, because the total written and assumed premium is below the threshold and subsequently becomes subject to one of the independence requirements due to changes in premium, shall have 1 year following the year the threshold is exceeded, but not earlier than January 1, 2010, to comply with the independence requirements.</text> </paragraph> <paragraph num="K."> <text>An insurer that becomes subject to one of the independence requirements of Regulation .13 of this chapter as a result of a business combination shall have 1 calendar year following the date of acquisition or combination to comply with the independence requirements.</text> </paragraph> <paragraph num="L."> <text>Reporting Requirements.</text> <paragraph num="(1)"> <text>The requirements of Regulation .16 of this chapter are effective beginning with the reporting period ending December 31, 2010, and each year thereafter.</text> </paragraph> <paragraph num="(2)"> <text>An insurer or group of insurers that is not required to file a report because the total written premium is below the threshold and subsequently becomes subject to the reporting requirements, shall have 2 years following the year the threshold is exceeded (but not earlier than December 31, 2010) to file a report.</text> </paragraph> <paragraph num="(3)"> <text>An insurer acquired in a business combination shall have 2 calendar years following the date of acquisition or combination to comply with the reporting requirements.</text> </paragraph> </paragraph> <paragraph num="M."> <text>The requirements of Regulation .14 of this chapter are effective as of January 1, 2019. If an insurer or group of insurers that are exempt from Regulation .14 of this chapter no longer qualifies for that exemption, it shall have one year after the year the threshold is exceeded to comply with the requirements of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Canadian and British Companies."> <paragraph num="A."> <text>In the case of Canadian and British insurers, the annual audited financial report shall be defined as the annual statement of total business on the form filed by such companies with their supervision authority duly audited by an independent chartered accountant.</text> </paragraph> <paragraph num="B."> <text>For such insurers, the letter required in Regulation .05B of this chapter shall state that the accountant is aware of the requirements relating to the annual audited financial report filed with the Commissioner pursuant to Regulation .03 of this chapter, and shall affirm that the opinion expressed is in conformity with those requirements.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 2-205, 4-116, 14-118, 14-121, 14-413, 15-605, 24-211, and 24-304, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 10, 2009 (36:16 Md. R. 1252)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 27, 2017 (44:4 Md. R. 255)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective December 6, 2018 (45:24 Md. R. 1163)</annotation> </annotations> </chapter> <chapter num="12" heading="Property and Casualty Actuarial Opinion"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to property and casualty insurance companies:</text> <paragraph num="(1)"> <text>Domiciled in this State; or</text> </paragraph> <paragraph num="(2)"> <text>Authorized to do business in this State.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Property and casualty insurance companies include:</text> <paragraph num="(1)"> <text>The Maryland Automobile Insurance Fund; and</text> </paragraph> <paragraph num="(2)"> <text>The Medical Mutual Liability Insurance Society of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Actuarial Opinion of Reserves and Supporting Documentation."> <paragraph num="A."> <text>A property and casualty insurance company doing business in this State, unless otherwise exempted by the company's domiciliary Commissioner, shall annually submit the opinion of the company's appointed actuary entitled “Statement of Actuarial Opinion”.</text> </paragraph> <paragraph num="B."> <text>The Statement of Actuarial Opinion required by §A of this regulation shall be filed in accordance with the appropriate National Association of Insurance Commissioners' (NAIC) Property and Casualty Annual Statement Instructions.</text> </paragraph> <paragraph num="C."> <text>Actuarial Opinion Summary.</text> <paragraph num="(1)"> <text>A property and casualty insurance company domiciled in this State that is required to submit a Statement of Actuarial Opinion shall annually submit an Actuarial Opinion Summary, written by the company's Appointed Actuary.</text> </paragraph> <paragraph num="(2)"> <text>The Actuarial Opinion Summary required by §C(1) of this regulation, shall be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions, and shall be considered as a document supporting the Statement of Actuarial Opinion required in §A of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>A property and casualty insurance company licensed but not domiciled in this State shall provide the Actuarial Opinion Summary upon request of the Commissioner.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Actuarial Report and Workpapers.</text> <paragraph num="(1)"> <text>An Actuarial Report and underlying workpapers as required by the appropriate NAIC Property and Casualty Annual Statement Instructions shall be prepared by the appointed actuary to support each Statement of Actuarial Opinion.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may engage a qualified actuary at the expense of the property and casualty insurance company to review the Statement of Actuarial Opinion and the basis for the opinion, and prepare the supporting Actuarial Report or workpapers underlying the Actuarial Report if:</text> <paragraph num="(a)"> <text>The property and casualty insurance company fails to provide a supporting Actuarial Report or workpapers underlying the Actuarial Report at the request of the Commissioner; or</text> </paragraph> <paragraph num="(b)"> <text>The Commissioner determines that the supporting Actuarial Report or workpapers underlying the Actuarial Report provided by the property and casualty insurance company is otherwise unacceptable to the Commissioner.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Confidentiality."> <paragraph num="A."> <text>The Statement of Actuarial Opinion shall be provided with the Annual Statement in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions, and shall be treated as a public document.</text> </paragraph> <paragraph num="B."> <text>Documents, materials, or other information in the possession or control of the Maryland Insurance Administration that are considered an Actuarial Report, workpapers underlying the Actuarial Report, or an Actuarial Opinion Summary provided pursuant to Regulation .02 of this chapter, and any other material provided by the property and casualty insurance company to the Commissioner in connection with the Actuarial Report, workpapers underlying the Actuarial Report, or Actuarial Opinion Summary, shall be considered to have been generated pursuant to an analysis or examination conducted under Insurance Article, §2-205, Annotated Code of Maryland, and shall be confidential and privileged pursuant to Insurance Article, §2-209, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>Documents, materials, or other information in the possession or control of the Maryland Insurance Administration pursuant to §B this regulation, and any other material provided by the company to the Commissioner in connection with the Actuarial Report, workpapers underlying the Actuarial Report, or Actuarial Opinion Summary are not subject to:</text> <paragraph num="(1)"> <text>Disclosure under Maryland's Public Information Act pursuant to State Government Article, Title 10, Subtitle 6, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Subpoena; and</text> </paragraph> <paragraph num="(3)"> <text>Discovery or admissible in evidence in any private civil action.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The provisions of §§B and C of this regulation may not be construed to limit the Commissioner's authority to release the documents to the Actuarial Board for Counseling and Discipline (ABCD) so long as the material is required for the purpose of professional disciplinary proceedings, and the ABCD establishes procedures satisfactory to the Commissioner for preserving the confidentiality of the documents.</text> </paragraph> <paragraph num="E."> <text>The provisions of §§B and C of this regulation may not be construed to limit the Commissioner's authority to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as part of the Commissioner's official duties.</text> </paragraph> <paragraph num="F."> <text>The Commissioner or any person who received documents, materials, or other information while acting under the authority of the Commissioner may not be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to this regulation.</text> </paragraph> <paragraph num="G."> <text>In order to assist in the performance of the Commissioner's duties, the Commissioner may:</text> <paragraph num="(1)"> <text>Share documents, materials, or other information, including the confidential and privileged documents, materials, or other information subject to this regulation with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information, and has the legal authority to maintain confidentiality;</text> </paragraph> <paragraph num="(2)"> <text>Receive documents, materials, or other information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material or information; and</text> </paragraph> <paragraph num="(3)"> <text>Enter into agreements governing sharing and use of information consistent with this chapter.</text> </paragraph> </paragraph> <paragraph num="H."> <text>As a result of disclosure to the Commissioner or of sharing by the Commissioner of documents, materials, or other information under this regulation, no waiver of an applicable privilege or claim of confidentiality in the documents, materials, or other information occurs.</text> </paragraph> <paragraph num="I."> <text>All documents, materials, or other information that are considered an Actuarial Report, workpapers underlying the Actuarial Report, or an Actuarial Opinion Summary provided to the Commissioner by a property and casualty insurance company, and any other material provided by a company to the Commissioner in connection with the Actuarial Report, workpapers underlying the Actuarial Report or Actuarial Opinion Summary, shall be marked “Confidential”.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Effective Date."> <text>This Act shall take effect January 1, 2010.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 2-205, 2-209, and 4-116; State Government Article, Title 10, Subtitle 6; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 2010 (36:24 Md. R. 1860)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective February 27, 2017 (44:4 Md. R. 255)</annotation> </annotations> </chapter> </subtitle> <subtitle num="06" heading="Taxes and Fees"> <chapter num="01" heading="Allocation and Taxation of Premiums"> <regulation prefix="Regulation" num=".01" heading="Authority and Purpose."> <paragraph num="A."> <text>Pursuant to the authority contained in Insurance Article, Title 6, Subtitle 1, Annotated Code of Maryland, the State Insurance Commissioner prescribes by this chapter the methods of allocating the gross direct premium for business transacted by insurers.</text> </paragraph> <paragraph num="B."> <text>The purpose of this chapter is to establish a uniform method for determining how premiums are to be allocated for premium tax purposes, and to make clear what that method is.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Method."> <text>Beginning with the annual statement for the calendar year 1970, to be filed on or before March 1, 1971, each insurer shall allocate its premiums in accordance with the following:</text> <paragraph num="A."> <text>Property and Casualty.</text> </paragraph> <paragraph num="B."> <text>Life.</text> </paragraph> <paragraph num="C."> <text>Accident and Health.</text> </paragraph> <paragraph num="D."> <text>Annuity Allocations. Insofar as annuity considerations are taxable, they shall be allocated by the same method as that adopted for life insurance premiums.</text> </paragraph> <paragraph num="E."> <text>Title Allocations. Title insurance premiums are to be allocated to location of risk.</text> </paragraph> <paragraph num="F."> <text>Federal Areas Allocations. Business done at Army, Navy, or Air Force bases, and other similar federal installations, shall be allocated to the jurisdiction of the insured's residence, as listed on the application.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Waiver By Commissioner."> <text>The method of allocation of gross direct premiums set forth above may be altered or waived in whole or in part by the Commissioner upon application by any insurer and a finding by the Commissioner that the proposed method of allocation justly and fairly determines the portion of the premiums derived from, or reasonably attributable to, the insurer's business in this State.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Taxes on Premiums Received."> <paragraph num="A."> <text>Authority. This regulation is deemed necessary as an aid to effectuation of Insurance Article, §6-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Applicability. This regulation applies to all domestic insurers.</text> </paragraph> <paragraph num="C."> <text>Taxes on Premiums Received by Domestic Companies Which Are Not Taxed by Another State. In determining the amount of direct premiums taxable in this State, premiums written, procured, or received in this State shall be deemed written on property or risks located or resident in this State, except such premiums as are properly allocated or proportioned and reported as taxable premiums of any other state or states.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 6-102—6-104, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 effective December 1, 1969</annotation> <annotation type="History" subtype="Administrative History">Regulation .01A amended effective October 23, 1995 (22:21 Md. R. 1615)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 effective August 1, 1970</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.12 to COMAR 31.06.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="02" heading="Retaliatory Tax"> <regulation prefix="Regulation" num=".01" heading="Premium Tax Report."> <text>Beginning with the return for the calendar year 1967, to be filed on or before March 15, 1968, each foreign and alien insurer licensed to do business in Maryland shall prepare, as part of the annual premium tax report, an analysis in the aggregate of the applicable taxes, licenses, and other fees payable by a Maryland insurer transacting the same lines of business to any agency or department of the foreign or alien insurer’s state of domicile. An analysis, in the aggregate, shall also be prepared of all the applicable taxes, licenses, and other fees payable by the foreign or alien insurer to any agency or department of Maryland. On the basis of these analyses, the company shall compute the retaliatory tax and include the payment of the total due if any in its remittance for premium taxes, payable to the Maryland Insurance Administration on or before March 15th in each calendar year, the time fixed by statute for filing the premium tax report. A composite tax form will be made available to all affected insurers.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Audit."> <text>The Maryland Insurance Administration shall perform an audit of the retaliatory tax with its audit of the annual premium tax report and in addition shall compute and bill for any additional retaliatory tax due from companies domiciled in a state where by statute or ordinance taxes, licenses, or fees are payable to political subdivisions of that state. If the amount of retaliatory tax computed by the Maryland Insurance Administration is greater than the amount shown on the report, the excess shall be assessed by the Maryland Insurance Administration and a notice of the assessment shall be mailed to the insurance company filing the report. The assessment shall be made within 3 years from the date the report was due, except in the case of failure to file a report or of a fraudulent report, in which case the excess may be assessed at any time.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Credit to Calendar Year."> <text>For the purpose of computing the obligations imposed by Maryland on foreign and alien insurers, payments made to the Unsatisfied Claim and Judgment Fund, the Maryland Automobile Insurance Fund, and any other Maryland special purpose fund which comes within the provisions of the retaliatory tax statute, shall be credited to the calendar year in which the payments were actually made, regardless of the premium payment year on which assessment is based.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Domicile."> <text>For the purposes of this chapter, the domicile of an insurer formed under the Laws of Canada or a province of Canada shall be deemed to be that of the province in which its head office is situated. All other alien insurers shall be deemed to be domiciled in that state in which is located its principal place of business in the United States.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 6, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 1, 1967</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 amended effective November 6, 1995 (22:22 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.13 to COMAR 31.06.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective August 15, 2016 (43:16 Md. R. 901)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective August 15, 2016 (43:16 Md. R. 901)</annotation> </annotations> </chapter> <chapter num="03" heading="Risk Retention Groups and Purchasing Groups—Fees"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>This chapter is promulgated to aid in the effectuation of Insurance Article, Title 25, Subtitle 1, Annotated Code of Maryland, and establishes reasonable fees to defray the costs incurred by the Insurance Administration in carrying out these requirements.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter shall apply to all:</text> <paragraph num="A."> <text>Risk retention groups seeking to be chartered in this State;</text> </paragraph> <paragraph num="B."> <text>Risk retention groups chartered in a state other than this State and seeking to do business in this State; and</text> </paragraph> <paragraph num="C."> <text>Purchasing groups which intend to do business in this State.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Registration Fees."> <paragraph num="A."> <text>Domestic risk retention groups shall pay the following nonrefundable fees to the Commissioner:</text> <paragraph num="(1)"> <text>Submission of plan of operation or feasibility study—$50;</text> </paragraph> <paragraph num="(2)"> <text>Certificate of authority—$200;</text> </paragraph> <paragraph num="(3)"> <text>Filing annual statement—$25;</text> </paragraph> <paragraph num="(4)"> <text>Annual continuation of certificate of authority—$25.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Foreign risk retention groups shall pay the following nonrefundable fees to the Commissioner:</text> <paragraph num="(1)"> <text>Submission of plan of operation or feasibility study—$50;</text> </paragraph> <paragraph num="(2)"> <text>Filing annual statement—$25.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Purchasing groups shall pay to the Commissioner a nonrefundable registration fee of $100 upon submission of intent to do business in Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 25-102, 25-103, and 25-106(c), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 6, 1989 (16:2 Md. R. 158)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.78 to COMAR 31.06.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="04" heading="Premium Tax — Required Filings, Payments, Penalties, and Interest"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to any person who is subject to the taxation of premiums in the State under Insurance Article, §§6-101 and 6-102.1, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Declaration of Estimated Tax and Quarterly Payments."> <paragraph num="A."> <text>Each taxpayer subject to premium tax under Insurance Article, §6-101, Annotated Code of Maryland, shall declare an estimated annual tax if the taxpayer’s total tax for the current tax year is reasonably expected to exceed $1,000.</text> </paragraph> <paragraph num="B."> <text>The declaration of estimated annual tax shall be:</text> <paragraph num="(1)"> <text>Filed with the Insurance Administration, on a form or in a manner approved by the Commissioner, on or before April 15 of the tax year; and</text> </paragraph> <paragraph num="(2)"> <text>A reasonable estimate of the expected annual tax liability for that year.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The taxpayer shall pay to the Insurance Administration at least 25 percent of the estimated annual tax liability at the time the declaration of annual tax is filed, on or before April 15 of the tax year.</text> </paragraph> <paragraph num="D."> <text>Thereafter, the taxpayer shall file a quarterly payment report with the Insurance Administration, on a form or in a manner approved by the Commissioner, and pay to the Insurance Administration at least 25 percent of the estimated annual tax each quarter, on or before June 15, September 15, and December 15 of the tax year.</text> </paragraph> <paragraph num="E."> <text>A reasonable estimate of the annual tax shall be either:</text> <paragraph num="(1)"> <text>100 percent of premium tax liability for the prior year as shown on the prior year's Final Report on the line stating “Premium Tax Due — Entire Calendar Year”; or</text> </paragraph> <paragraph num="(2)"> <text>90 percent of the amount of the current year tax liability.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Final Report."> <paragraph num="A."> <text>On or before March 15 following the end of the tax year, a person subject to premium tax shall file a Final Report with the Insurance Administration on a form or in a manner approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The Final Report of premium taxes required under Insurance Article, §6-107, Annotated Code of Maryland, shall contain:</text> <paragraph num="(1)"> <text>Either:</text> <paragraph num="(a)"> <text>A report of the new and renewal gross direct premiums less returned premiums written by the taxpayer during the preceding calendar year, including, for Maryland domiciled taxpayers, premiums written in a state where the taxpayer is not licensed; or</text> </paragraph> <paragraph num="(b)"> <text>If the taxpayer issues perpetual policies of fire insurance, a report of the average amount of deposits held by the taxpayer during the preceding calendar year in connection with perpetual policies of fire insurance issued on property in the State and in force during any part of that year;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A calculation of retaliatory tax owed to Maryland under COMAR 31.06.02;</text> </paragraph> <paragraph num="(3)"> <text>A calculation of any applicable credits against premium tax allowed by Insurance Article, Title 6, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(4)"> <text>Credit, if any, for overpayment of premium tax paid in prior tax years.</text> </paragraph> </paragraph> <paragraph num="C."> <text>On or before March 15 following the end of the tax year, the Assessment Form shall be filed to report the assessment amount pursuant to Insurance Article, §6-102.1, Annotated Code of Maryland, and shall contain:</text> <paragraph num="(1)"> <text>A report of the gross amount of all health and accident & health insurance premiums written during the preceding calendar year;</text> </paragraph> <paragraph num="(2)"> <text>An itemization of allowed excluded premiums during the preceding calendar year;</text> </paragraph> <paragraph num="(3)"> <text>A calculation of the assessment; and</text> </paragraph> <paragraph num="(4)"> <text>Any other information or documentation required by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Remittance.</text> <paragraph num="(1)"> <text>The taxpayer shall remit the following with the Final Report required by §B of this regulation:</text> <paragraph num="(a)"> <text>The total amount of premium tax due, after crediting the amount of taxes paid under Regulation .02 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Any retaliatory tax due under COMAR 31.06.02.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The amount remitted under §C(1) of this regulation shall be the net amount due after any applicable credits are applied against the premium tax that are allowed by Insurance Article, Title 6, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Taxpayers shall maintain in their files, and shall make available to the Commissioner on request, supporting documentation for:</text> <paragraph num="(a)"> <text>The retaliatory tax due on the Final Report, consisting of the applicable taxes, licenses, and other fees that are part of the computation of the retaliatory tax due; and</text> </paragraph> <paragraph num="(b)"> <text>Any credits against premium tax taken by the taxpayer that are allowed under Insurance Article, Title 6, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>An entity subject to assessment pursuant to Insurance Article, §6-102.1, Annotated Code of Maryland, shall remit the assessment amount due with the Assessment Form as required by §C of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>The payment of premium taxes as required by §D(1) of this regulation and the payment of the assessment as required by §D(4) of this regulation shall be remitted separately and not combined in one remittance.</text> </paragraph> <paragraph num="(6)"> <text>A managed care organization may remit quarterly payments of the assessment required by Insurance Article, §6-102.1, Annotated Code of Maryland, equal to at least 25 percent of the assessment due on or before March 15, June 15, September 15, and December 15.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Interest and Penalties."> <paragraph num="A."> <text>Each taxpayer is subject to the assessment of a penalty of 5 percent of the amount not paid when due and interest at the rate specified in Tax-General Article, §13-604(b)(1), Annotated Code of Maryland, from the date the tax was due until payment is made to the Commissioner when the taxpayer fails to remit or remits less than:</text> <paragraph num="(1)"> <text>The amount due with:</text> <paragraph num="(a)"> <text>The declaration of estimated annual tax in accordance with Regulation .02C of this chapter; or</text> </paragraph> <paragraph num="(b)"> <text>Each quarterly payment report in accordance with Regulation .02D of this chapter; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The total premium tax due to be paid with the Final Report in accordance with Regulation .03 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Notwithstanding §A(1) of this regulation, the Commissioner may not assess a penalty or interest under §A(1) if:</text> <paragraph num="(1)"> <text>The taxpayer's declaration of estimated annual tax is at least 90 percent of the premium liability for the current year or 100 percent of the premium tax liability due for the prior tax year as shown on the Final Report on the line stating “Premium Tax Due—Entire Calendar Year”; and</text> </paragraph> <paragraph num="(2)"> <text>The taxpayer pays at least 25 percent of the estimated annual tax on or before April 15, June 15, September 15, and December 15 of the tax year.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Interest will be assessed at the rate of 6 percent per year from the due date of the Final Report until payment is made to the Commissioner if, following an audit by the Commissioner, an additional amount of premium tax is found to be due.</text> </paragraph> <paragraph num="D."> <text>Penalties for Failure to Pay Retaliatory Tax.</text> <paragraph num="(1)"> <text>The Commissioner shall assess a penalty of 5 percent of the amount not paid when due and interest at the rate specified in Tax-General Article, §13-604(b)(1), Annotated Code of Maryland, if the taxpayer fails to pay the retaliatory tax under COMAR 31.06.02 within 30 days after the Commissioner issues a notice to the taxpayer specifying the amount due.</text> </paragraph> <paragraph num="(2)"> <text>The penalty and interest imposed under §D(1) of this regulation shall be from the 31st day after the Commissioner issues the notice until the tax is paid to the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Notwithstanding §A, B, C, or D of this regulation, the Commissioner may not impose a penalty or interest if the total amount of the interest and penalty is less than $20.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 6-101—6-103, and 6-106—6-109, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 17, 2001 (28:18 Md. R. 1622)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective January 13, 2020 (47:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective January 13, 2020 (47:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective January 13, 2020 (47:1 Md. R. 19)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective August 15, 2016 (43:16 Md. R. 901)</annotation> </annotations> </chapter> </subtitle> <subtitle num="07" heading="Insurance Rating Law"> <chapter num="01" heading="Property, Casualty, Surety, and Marine Rating, and Supplementary Information Filings"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>Pursuant to Insurance Article, §§11-206, 11-307, 11-329, and 11-330, Annotated Code of Maryland, rate filings made by individual insurers may incorporate the experience of rating organizations. The experience includes statistical data, prospective loss costs, and supporting information, as defined in this chapter. The purpose of this chapter is to establish what additional information shall be provided to the Commissioner by insurers which incorporate, in whole or in part, filings made by rating organizations.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter applies to rate filings made pursuant to Insurance Article, Title 11, Subtitle 2 and Subtitle 3, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Expenses” means that portion of a rate attributable to acquisition, field supervision, collection and general expenses, taxes, licenses, and fees.</text> </paragraph> <paragraph num="(2)"> <text>“Prospective loss cost” means that portion of a rate exclusive of profit or expenses, other than loss adjustment expenses, which is based on historical aggregate losses and loss adjustment expenses adjusted through development to their ultimate value and projected through trending to a future point in time.</text> </paragraph> <paragraph num="(3)"> <text>“Rate” has the meaning stated in Insurance Article, §11-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Rating organization” has the meaning stated in Insurance Article, §11-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Supplementary rate information” has the meaning stated in Insurance Article, §11-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Supporting information” means:</text> <paragraph num="(a)"> <text>The experience and judgment of the insurer;</text> </paragraph> <paragraph num="(b)"> <text>The experience or data of other insurers or rating organizations relied upon by the insurer;</text> </paragraph> <paragraph num="(c)"> <text>The interpretation of any statistical data relied upon by the insurer;</text> </paragraph> <paragraph num="(d)"> <text>Descriptions of methods used in making the rates; and</text> </paragraph> <paragraph num="(e)"> <text>Other similar information required to be filed by the Commissioner.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Rating Organization Reference Filings of Advisory Prospective Loss Costs."> <paragraph num="A."> <text>Rating organizations may develop and make reference filings containing advisory prospective loss costs. These filings shall contain the statistical data and supporting information, calculations, and assumptions underlying those prospective loss costs. Reference filings shall be filed and become effective in accordance with the provisions of Insurance Article, §§11-206, 11-307, 11-329, and 11-330, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>An insurer may satisfy its obligation to make rate filings by:</text> <paragraph num="(1)"> <text>Becoming a member of, or a subscriber to, a licensed rating organization which makes reference filings of advisory prospective loss costs;</text> </paragraph> <paragraph num="(2)"> <text>Filing with the Commissioner the information required in Regulation .05 of this chapter; and</text> </paragraph> <paragraph num="(3)"> <text>Authorizing the Commissioner by the filing of a reference filing adoption form, to accept the reference filings on its behalf.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The insurer's rates shall be the currently effective prospective loss costs filed by the rating organization, combined with the loss cost adjustments which are filed in accordance with Regulation .05 of this chapter and are in effect for the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Required Documents."> <paragraph num="A."> <text>An insurer filing which refers to or incorporates a rating organization's reference filing of prospective loss costs shall include the following:</text> <paragraph num="(1)"> <text>Reference filing adoption form as set forth in Regulation .08 of this chapter, or the NAIC Loss Cost Filing Documents titled “Other than Workers' Compensation”, “For Workers' Compensation”, and “NAIC Expense Constant Supplement”;</text> </paragraph> <paragraph num="(2)"> <text>Summary of supporting information as set forth in Regulation .08 of this chapter; and</text> </paragraph> <paragraph num="(3)"> <text>Expense constant supplement as set forth in Regulation .08 of this chapter if expense constants are utilized.</text> </paragraph> </paragraph> <paragraph num="B."> <text>To the extent that an insurer's final rates are determined solely by applying its loss cost adjustments, as presented in the reference filing adoption form, to the prospective loss costs contained in a rating organization's reference filing and printed in the rating organization's rating manual, the insurer need not develop or file its final rate pages with the Commissioner. If an insurer chooses to print and distribute final rate pages for its own use, based solely upon the application of its filed loss cost adjustments to a rating organization's prospective loss costs, the insurer need not file those pages with the Commissioner. If the rating organization does not print the loss costs in its rating manual, the insurer must submit its rates to the Commissioner.</text> </paragraph> <paragraph num="C."> <text>With the initial prospective loss cost reference filing, rating organizations will no longer develop or file minimum premiums. If an insurer wishes to use minimum premiums it shall file the minimum premiums it will use.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Rating Organization Filings of Advisory Supplementary Rate Information."> <paragraph num="A."> <text>Rating organizations may develop and make filings of supplementary rate information in accordance with Insurance Article, §§11-206 and 11-307, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>An insurer may satisfy its obligation to make filings of supplementary rate information by becoming a member of, or a subscriber to, a licensed rating organization and by authorizing the Commissioner to accept the filings on its behalf. The insurer's supplementary rate information shall be that filed by the rating organization, subject to any modifications filed by the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Existing Rates and Deviations Remain in Effect Until Disapproved, Replaced, or Modified."> <text>Nothing in these regulations shall be construed to require any rating organization or member or subscriber insurer to refile any rates in effect. Any member or subscriber to a licensed rating organization is authorized to continue to use all rates and deviations in effect until such time as these rates are disapproved, replaced, or modified or the insurer submits an independent filing to change its rates or files a reference filing form adopting the rating organization's prospective loss costs, or modification of them.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Forms."> <paragraph num="A."> <text>Reference Filing Adoption Form.</text> </paragraph> <paragraph num="1."> <text>Line, Subline, Coverage, Territory, Class, etc.</text> </paragraph> <paragraph num="2."> <text>Loss Cost Modification:</text> <paragraph num="A."> <text>The insurer hereby files to adopt the prospective</text> </paragraph> <paragraph num="B."> <text>LOSS COST MODIFICATION Expressed as a Factor: _______</text> </paragraph> </paragraph> <paragraph num="3."> <text>Development of Expected Loss Ratio. (Attach exhibit detailing insurer expense data and/or other supporting information.)</text> </paragraph> <paragraph num="1."> <text>Development of Expected Loss Ratio. (Attach exhibit</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 11-206, and 11-218, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 12, 1927</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter, Industrial Life, Health, and Accident Insurance Agents—Employment on Debit on Which He Previously Worked, repealed effective February 22, 1988 (15:4 Md. R. 472)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08, Property, Casualty, Surety, and Marine Rating, and Supplementary Information Filings, adopted as an emergency provision effective July 1, 1990 (17:15 Md. R. 1845); emergency status expired October 31, 1990; adopted permanently effective November 12, 1990 (17:22 Md. R. 2655)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective March 25, 1996 (23:6 Md. R. 475)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.21 to COMAR 31.07.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective November 17, 2008 (35:23 Md. R. 2017)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective November 17, 2008 (35:23 Md. R. 2017)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective November 17, 2008 (35:23 Md. R. 2017)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective November 17, 2008 (35:23 Md. R. 2017)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective November 17, 2008 (35:23 Md. R. 2017)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective November 17, 2008 (35:23 Md. R. 2017)</annotation> </annotations> </chapter> <chapter num="02" heading="Filing of Rate Level Index Information Forms" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: January 28, 1985 (12:2 Md. R. 139)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 amended as an emergency provision effective July 1, 1989 (16:13 Md. R. 1413); emergency status expired August 31, 1989; amended permanently effective October 30, 1989 (16:21 Md. R. 2261)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended and Appendices A—C repealed effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 adopted effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 adopted effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.64 to COMAR 31.07.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective November 13, 2000 (27:22 Md. R. 2061)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective April 12, 2004 (31:7 Md. R. 587)</annotation> </annotations> </chapter> <chapter num="03" heading="Review of Automobile Rating Territories"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to ensure that all insurers that use territory as a factor in establishing automobile insurance rates in the State, including the Maryland Automobile Insurance Fund, file statements with the Commissioner that satisfy the requirements of Insurance Article, §§11-216 and 11-319, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Triannual Review of Territories."> <text>Each insurer that uses territory as a factor in establishing automobile insurance rates in the State, including the Maryland Automobile Insurance Fund, shall conduct a review of its territories every 3 years.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing Requirements."> <paragraph num="A."> <text>Each insurer that uses territory as a factor in establishing automobile insurance rates in the State, including the Maryland Automobile Insurance Fund, shall file with the Commissioner a certification statement.</text> </paragraph> <paragraph num="B."> <text>The certification statement shall be on the form adopted by the Commissioner in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="C."> <text>The certification statement shall be filed:</text> <paragraph num="(1)"> <text>On or before June 1, 2007;</text> </paragraph> <paragraph num="(2)"> <text>Upon completion of each review required by the Commissioner pursuant to Regulation .02 of this chapter; and</text> </paragraph> <paragraph num="(3)"> <text>Contemporaneously with each rate filing that indicates a modification of territorial rating factors.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Certification Statement for Automobile Insurers."> <paragraph num="A."> <text>Certification Statement for Insurers and Rating Organizations.</text> <paragraph num="1."> <text>The use of territories as a factor in rating by the above-named (insurer or rating organization) has been reviewed within the previous 3 years; and</text> </paragraph> <paragraph num="2."> <text>Use of the territories on file, or as set forth in this filing, are actuarially justified. I understand that the Maryland Insurance Administration will rely on this certification, and if it is determined that this certification is materially false or incorrect, the insurer may be subject to administrative action, including appropriate penalties.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Certification Statement for Insurers Adopting the Certification Statement of a Rating Organization.</text> <paragraph num="1."> <text>_____________(insurer) is a member of or subscriber to _________________ (rating organization), a licensed rating organization, and has authorized the Commissioner to accept filings from ______________ (rating organization) on its behalf or has filed to adopt _______________ (rating organization's) filings.</text> </paragraph> <paragraph num="2."> <text>________________(insurer) has filed no deviations relating to territory from the automobile rate filings submitted by ____________(rating organization).</text> </paragraph> <paragraph num="3."> <text>_____________ (rating organization) has filed with the Commissioner the certification statement required by Insurance Article, §11-216 or 11-319, Annotated Code of Maryland, and COMAR 31.07.03.03.</text> </paragraph> <paragraph num="4."> <text>____________________(insurer) hereby adopts the statements made in the certification statement.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Filings Made By Rating Organizations."> <paragraph num="A."> <text>A licensed rating organization that files on behalf of its members or subscribers automobile insurance rates that use territory as a factor in establishing automobile insurance rates in the State shall comply with the provisions of Regulations .02—.04 of this chapter.</text> </paragraph> <paragraph num="B."> <text>An insurer that is required to file a certification statement may utilize the certification statement in Regulation .04B of this chapter if:</text> <paragraph num="(1)"> <text>The insurer is a member or subscriber of a licensed rating organization which has been authorized to make filings on the insurer's behalf or the insurer has filed to adopt the rating organization's filing; and</text> </paragraph> <paragraph num="(2)"> <text>The insurer has not filed with the Commissioner a deviation from the rates, loss costs, or both, filed by the rating organization relating to the use of territories.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 11-216, 11-319, and 11-339, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 15, 2007 (34:1 Md. R. 33)</annotation> </annotations> </chapter> </subtitle> <subtitle num="08" heading="Property and Casualty Insurance"> <chapter num="01" heading="Antiarson Application"> <regulation prefix="Regulation" num=".01" heading="General—Applicability."> <paragraph num="A."> <text>This chapter applies to commercial monoline fire policies, designated occupancies, and areas of the State that are found by the Insurance Commissioner, after a public hearing, to have an abnormally high incidence of arson, except a one to four family owner-occupied dwelling, for loss due to fire as provided in Insurance Article, Title 19, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>This chapter also applies to any existing insurance policy which is assigned because of the transfer of a major financial interest in the insured property.</text> </paragraph> <paragraph num="C."> <text>An applicant is considered to hold a substantial interest or a major financial interest in any property or mortgage when the value held in a property or mortgage is equal to 10 percent of the ownership interest.</text> </paragraph> <paragraph num="D."> <text>An antiarson application may be used for commercial monoline fire policies, designated occupancies, and designated areas of the State, based upon a finding by the Insurance Commissioner, after a public hearing, that these commercial monoline fire policies, designated occupancies, and areas of the State have an abnormally high incidence of arson.</text> </paragraph> <paragraph num="E."> <text>The Insurance Commissioner may extend the application of these regulations to other than commercial monoline fire policies if the Insurance Commissioner finds, after public hearing, that the properties insured through those other types of policies are especially prone to arson.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Antiarson Application."> <paragraph num="A."> <text>Each insurer or producer soliciting insurance requiring the use of an antiarson application shall obtain from the applicant the information required by the form of application designated as Standard Antiarson Application Part 1 as set forth in Regulation .03 of this chapter. The completed application shall be obtained before the risk is bound.</text> </paragraph> <paragraph num="B."> <text>The insurer or producer may not bind the risk or issue the coverage unless the applicant returns a completed and signed antiarson application.</text> </paragraph> <paragraph num="C."> <text>If the Part 1 application indicates that further information is necessary, the insurer or producer shall require the applicant to complete the Standard Antiarson Application Part 2, as set forth in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="D."> <text>The insurer may cancel the policy or binder under either of the following circumstances by giving the insured a notice of cancellation stating the specific reason for the action:</text> <paragraph num="(1)"> <text>If the applicant does not furnish the insurer a completed and signed Antiarson Application Part 2 within 20 days after being requested to do so; or</text> </paragraph> <paragraph num="(2)"> <text>Under the conditions stated in Insurance Article, §19-309, Annotated Code of Maryland, within 90 days from receipt by the insurer of the Antiarson Application Part 2.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Changes In Information Given In Antiarson Application.</text> <paragraph num="(1)"> <text>In delivering any policy in connection with which an antiarson application was received, the insurer shall notify the policyholder that the policyholder is required to inform the insurer in writing of any change in the information originally given in an Antiarson Application, Part 1 or Part 2.</text> </paragraph> <paragraph num="(2)"> <text>The failure of the policyholder to notify the insurer in writing of any material change within 20 days of the change, shall be considered grounds to rescind the policy.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Standard Antiarson Application—Part 1."> <text>STATE OF MARYLAND</text> <text>STANDARD ANTIARSON APPLICATION</text> <text>PART I</text> <text>NAME OF APPLICANT/INSURED ______________________________________</text> <text>LOCATION OF STRUCTURE __________________________________________</text> <text>PRESENT OCCUPANCY OF STRUCTURE _________________________________</text> <text>Amount of Insurance __________ Applicant is:</text> <text>Owner Occupant [ ] Absentee Owner [ ] Tenant [ ]</text> <paragraph num="A."> <text>VALUATION: This information helps to explain the amount of insurance selected at the time of application, but does not determine the value at the time of loss.</text> <paragraph num="1."> <text>Purchase Information: Date _________________ Price $_______</text> </paragraph> <paragraph num="2."> <text>Estimated Replacement Cost $_____________________________</text> </paragraph> <paragraph num="3."> <text>For rental properties, indicate the Annual Rental Income</text> </paragraph> <paragraph num="4."> <text>Check the valuation method used to establish the amount of insurance:</text> </paragraph> <paragraph num="5."> <text>Who determined the value?________________________________</text> </paragraph> </paragraph> <paragraph num="B."> <text>UNDERWRITING INFORMATION: If the answer to any of the following is “yes”, complete Part 2.</text> <paragraph num="1."> <text>Is the applicant other than an individual or sole proprietorship?</text> </paragraph> <paragraph num="2."> <text>Are there any taxes unpaid or overdue for 1 or more years?</text> </paragraph> <paragraph num="3."> <text>Are there any tax liens against the property or business?</text> </paragraph> <paragraph num="4."> <text>Has anyone with a financial interest in this property been convicted for arson, fraud, or other crime related to loss on property owned now or during the last 10 years?</text> </paragraph> <paragraph num="5."> <text>Is the mortgagee other than a federal or State chartered lending institution?</text> </paragraph> <paragraph num="6."> <text>Have there been losses over the last 10 years with regard to any property in which the applicant held a substantial financial interest including a partnership interest or a mortgage and where any fire loss was in excess of 25% of the insured value?</text> </paragraph> <paragraph num="7."> <text>Is any portion of the building or any apartment vacant, unoccupied, or used on a seasonal basis?</text> </paragraph> <paragraph num="8."> <text>Has any coverage or policy on this property been declined, cancelled, or nonrenewed in the last 3 years?</text> </paragraph> <paragraph num="9."> <text>Is there any other insurance in force or to be secured on this property?</text> </paragraph> <paragraph num="10."> <text>Has the applicant owned this property for less than 3 years?</text> </paragraph> <aftertext>THE PROPOSED INSURED DECLARES THAT THE INFORMATION PROVIDED ON THIS AND ANY OTHER APPLICATION, IS TRUE, COMPLETE, AND CORRECT BASED ON HIS/HER RECORDS, KNOWLEDGE AND BELIEF. THE PROPOSED INSURED AGREES THAT THESE APPLICATIONS SHALL CONSTITUTE A PART OF ANY POLICY ISSUED AND THAT ANY WILLFUL CONCEALMENT OR</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Standard Antiarson Application—Part 2."> <text>STATE OF MARYLAND</text> <text>STANDARD ANTIARSON APPLICATION</text> <text>PART 2</text> <paragraph num="A."> <text>Ownership Information:</text> <paragraph num="1."> <text>Check the type of ownership for the insured property:</text> </paragraph> <paragraph num="2."> <text>Complete the following for all those possessing an ownership interest of 10% or more, except that all owners should be listed for closed corporations and beneficiaries.</text> </paragraph> <paragraph num="3."> <text>Have any of the owners listed above:</text> <paragraph num="a."> <text>Within the past ten years, claimed any fire loss for the destruction of 25% or more of any insured property?</text> </paragraph> <paragraph num="b."> <text>Been convicted of any crimes?</text> </paragraph> </paragraph> <paragraph num="4."> <text>Mortgage Payments:</text> </paragraph> <paragraph num="5."> <text>Unrecorded Mortgages:</text> </paragraph> <paragraph num="6."> <text>Taxes (include Real Estate, Water, Sewer, Special Privilege, etc.):</text> </paragraph> <paragraph num="7."> <text>Is the building for sale?</text> </paragraph> </paragraph> <paragraph num="B."> <text>Vacancy.</text> <paragraph num="1."> <text>Indicate seasonal period (if any) when building is unused:</text> </paragraph> <paragraph num="2."> <text>For apartment buildings indicate:</text> </paragraph> <paragraph num="3."> <text>For other buildings indicate percent vacant:_____</text> </paragraph> <paragraph num="4."> <text>For all buildings indicate the following:</text> <paragraph num="a."> <text>Reason for vacancy/unoccupancy:______________</text> </paragraph> <paragraph num="b."> <text>Anticipated date of occupancy:_______________</text> </paragraph> <paragraph num="c."> <text>If the building is vacant or unoccupied, indicate how it is protected from unauthorized entry_________________</text> </paragraph> </paragraph> <aftertext>________________________________________________________</aftertext> </paragraph> <paragraph num="C."> <text>Additional Property Description:</text> <paragraph num="1."> <text>Is water, sewage, electricity, or heat out of service?</text> </paragraph> <paragraph num="2."> <text>Is there unrepaired damage or have items been stripped from the building?</text> </paragraph> <paragraph num="3."> <text>Are any violations outstanding with regard to the Fire, Building or Health Code?</text> </paragraph> <paragraph num="4."> <text>Is there a governmental order to vacate or destroy the building or has the building been classified uninhabitable or structurally unsafe?</text> </paragraph> </paragraph> <paragraph num="D."> <text>Other Policies:</text> <paragraph num="1."> <text>List all other policies which insure this property against fire loss:</text> </paragraph> <paragraph num="2."> <text>List all real estate transactions during last 3 years involving this property:</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 19, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 1, 1983 (10:6 Md. R. 556)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.60 to COMAR 31.08.01effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A—C amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="02" heading="Toll-Free Telephone Number"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to the purchase of private passenger automobile insurance only.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Establishment of Toll-Free Telephone Number."> <paragraph num="A."> <text>The Insurance Commissioner shall establish a toll-free telephone number to assist and educate consumers concerning the purchase of private passenger automobile insurance.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may provide to callers educational materials that may include a rate guide or list of insurance producers and insurers.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may not recommend to callers specific insurers or insurance producers.</text> </paragraph> <paragraph num="D."> <text>The toll-free telephone number shall be published in the private passenger automobile insurance rate guide prepared by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Data."> <paragraph num="A."> <text>The Commissioner shall maintain a record of calls received on the toll-free telephone number set forth in Regulation .02A of this chapter which includes the following information:</text> <paragraph num="(1)"> <text>The zip code and county of the caller; and</text> </paragraph> <paragraph num="(2)"> <text>The date and summary of the purpose of the call.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner shall prepare a quarterly report which includes the information required in §A of this regulation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 6, 1996 (23:9 Md. R. 670)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.14 to COMAR 31.08.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B, C amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="03" heading="Notices of Cancellation, Nonrenewal, Premium Increase, and Reduction in Coverage"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to ensure that all insurers issuing private passenger motor vehicle liability insurance policies in Maryland include in their notices of cancellation, nonrenewal, premium increase, or reduction in coverage, a statement concerning the insured's right to protest the proposed action of the insurer within 30 days after the date of mailing of the notice in accordance with Insurance Article, §§27-613 and 27-614, Annotated Code of Maryland, which is incorporated by reference.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter applies to all motor vehicle liability insurers authorized to write private passenger motor vehicle liability insurance policies in Maryland, other than the Maryland Automobile Insurance Fund.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affiliated insurer” means an insurer that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another insurer.</text> </paragraph> <paragraph num="(2)"> <text>“Control” means the direct or indirect possession of the power to direct, or cause the direction of, the management and policies of an insurer, regardless of whether the power is exercised by:</text> <paragraph num="(a)"> <text>Ownership of voting securities or of securities convertible into voting securities;</text> </paragraph> <paragraph num="(b)"> <text>Contract, other than a commercial contract for goods or nonmanagement services; or</text> </paragraph> <paragraph num="(c)"> <text>Any other means.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“General increase in premiums” means an increase in premiums because of a change in an insurer's rates or a modification of the insurer's rating plan.</text> </paragraph> <paragraph num="(4)"> <text>“MIA Form 1006-A” means the notice of premium increase form in Regulation .07 of this chapter that insurers may use for premium increases of 15 percent or less for an entire policy.</text> </paragraph> <paragraph num="(5)"> <text>“MIA Form 1006-B” means the notice of premium increase form in Regulation .08 of this chapter that insurers may use for premium increases of greater than 15 percent for an entire policy.</text> </paragraph> <paragraph num="(6)"> <text>“Rating symbol” means a symbol assigned to a make or model of vehicle to reflect the loss experience of that make or model of vehicle.</text> </paragraph> <paragraph num="(7)"> <text>Reclassification.</text> <paragraph num="(a)"> <text>“Reclassification” means the placement of an insured by an insurer into a different classification based on one or more of the following criteria:</text> <paragraph num="(i)"> <text>Age, sex, or marital status of an insured;</text> </paragraph> <paragraph num="(ii)"> <text>Accident or driving record of an insured;</text> </paragraph> <paragraph num="(iii)"> <text>Usage, including mileage driven, of an insured vehicle; or</text> </paragraph> <paragraph num="(iv)"> <text>Performance classification (high performance, intermediate performance, and sports type) of an insured vehicle.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Reclassification” does not include an offer of coverage through an affiliated insurer.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Reduction in Coverage.</text> <paragraph num="(a)"> <text>“Reduction in coverage” includes:</text> <paragraph num="(i)"> <text>A reduction of any limit for liability coverage, uninsured motorist coverage, or personal injury protection if the limit is greater than the statutorily required minimum;</text> </paragraph> <paragraph num="(ii)"> <text>An increase in the deductible for or elimination of comprehensive coverage; or</text> </paragraph> <paragraph num="(iii)"> <text>A reduction or elimination of towing coverage, rental coverage, or any other coverage.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Reduction in coverage” does not include:</text> <paragraph num="(i)"> <text>The elimination of any coverage that is no longer offered by an insurer in accordance with its filed rating plan; or</text> </paragraph> <paragraph num="(ii)"> <text>Any reduction or elimination of coverage made at the request of the insured.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Procedure and Requirements Regarding Cancellation or Nonrenewal."> <text>A notice of cancellation or nonrenewal sent by an insurer to its insured in accordance with Insurance Article, §§ 27-601.2 and 27-613, Annotated Code of Maryland, shall be sent by certified mail, delivered to an electronic mail address at which the insured has consented to receive mail, or posted to an electronic network with a separate notice to the insured directed to the electronic mail address at which the insured has consented to receive notice of the posting. In addition to the information required under §27-613, the notice shall include the following on the first page of the notice in 12-point bold type:</text> <text>IMPORTANT</text> <text>“Right of Protest”</text> <text>The “Right of Protest” does not apply to cancellation or nonrenewal due to nonpayment of premium.</text> <text>You may protest the action proposed by this notice as provided under Insurance Article, § 27-613, Annotated Code of Maryland by mail, facsimile, or electronically to the Insurance Commissioner. You must file your protest within thirty (30) days after this notice was sent to you in order for your protest to be considered by the Insurance Commissioner. If you send your protest by mail or facsimile you, the named insured, must sign a copy of this notice and send it to:</text> <text>Insurance Commissioner</text> <text>Maryland Insurance Administration</text> <text>200 St. Paul Place</text> <text>Suite 2700</text> <text>Baltimore, Maryland 21202</text> <text>Fax Number 410-468-2307</text> <text>You may file your protest electronically by uploading a copy at the following link:</text> <text>https://enterprise.insurance.maryland.gov/consumer/ConsumerPortalWelcomePage.aspx</text> <text>Your timely filed protest stays the action proposed by this notice. Accordingly, your insurance policy will remain in effect with the same coverages and premium that applied on the date this notice was sent to you until a determination is made by the Insurance Commissioner. In order to keep your policy in effect, however, you must timely pay any authorized premium due or becoming due before the determination is issued.</text> <text>The Insurance Commissioner will determine whether your protest has merit. You will then be notified in writing whether the proposed action is disallowed or your protest is dismissed.</text> <text>If the protest is dismissed, you then have the right, within thirty (30) days after the date on which the Commissioner sends you the determination, to request a hearing.</text> <text>If you request a hearing, you will be notified in writing of the time and place of the hearing at least ten (10) days before the hearing. The Commissioner shall order the insurer to pay reasonable attorney fees incurred by you for representation at the hearing if the Commissioner finds that: (1) the actual reason for the proposed action is not stated in the notice or the proposed action is not in accordance with §27-501 of the Insurance Article, the insurer's filed rating plan, its underwriting standards, or the lawful terms and conditions of the policy related to a cancellation or nonrenewal; and (2) the insurer's conduct in maintaining or defending the proceeding was in bad faith or the insurer acted willfully in the absence of a bona fide dispute.</text> <text>I protest the action proposed by the insurer.</text> <text>My reasons for protesting the action are:</text> <text>______________________________________________________</text> <text>Signature (Named Insured) – required if protest submitted by mail or fax: __________________________</text> <text>Date: _____________</text> <text>Insured’s Daytime Phone Number: __________________________</text> <text>Insured’s Email Address: __________________________________</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Procedure and Requirements Regarding a Reduction in Coverage."> <text>A notice of cancellation or nonrenewal sent by an insurer to its insured in accordance with Insurance Article, §§ 27-601.2 and 27-613, Annotated Code of Maryland, shall be sent by certified mail, delivered to an electronic mail address at which the insured has consented to receive mail, or posted to an electronic network with a separate notice to the insured directed to the electronic mail address at which the insured has consented to receive notice of the posting. In addition to the information required under §27-613, the notice shall include the following on the first page of the notice in 12-point bold type:</text> <text>IMPORTANT</text> <text>“Right of Protest”</text> <text>The “Right of Protest” does not apply to cancellation or nonrenewal due to nonpayment of premium.</text> <text>You may protest the action proposed by this notice as provided under Insurance Article, § 27-613, Annotated Code of Maryland by mail, facsimile, or electronically to the Insurance Commissioner. You must file your protest within thirty (30) days after this notice was sent to you in order for your protest to be considered by the Insurance Commissioner. If you send your protest by mail or facsimile you, the named insured, must sign a copy of this notice and send it to:</text> <text>Insurance Commissioner</text> <text>Maryland Insurance Administration</text> <text>200 St. Paul Place</text> <text>Suite 2700</text> <text>Baltimore, Maryland 21202</text> <text>Fax Number 410-468-2307</text> <text>You may file your protest electronically by uploading a copy at the following link:</text> <text>https://enterprise.insurance.maryland.gov/consumer/ConsumerPortalWelcomePage.aspx</text> <text>Your timely filed protest stays the action proposed by this notice. Accordingly, your insurance policy will remain in effect with the same coverages and premium that applied on the date this notice was sent to you until a determination is made by the Insurance Commissioner. In order to keep your policy in effect, however, you must timely pay any authorized premium due or becoming due before the determination is issued.</text> <text>The Insurance Commissioner will determine whether your protest has merit. You will then be notified in writing whether the proposed action is disallowed or your protest is dismissed.</text> <text>If the protest is dismissed, you then have the right, within thirty (30) days after the date on which the Commissioner sends you the determination, to request a hearing.</text> <text>If you request a hearing, you will be notified in writing of the time and place of the hearing at least ten (10) days before the hearing. The Commissioner shall order the insurer to pay reasonable attorney fees incurred by you for representation at the hearing if the Commissioner finds that: (1) the actual reason for the proposed action is not stated in the notice or the proposed action is not in accordance with §27-501 of the Insurance Article, the insurer's filed rating plan, its underwriting standards, or the lawful terms and conditions of the policy related to a cancellation or nonrenewal; and (2) the insurer's conduct in maintaining or defending the proceeding was in bad faith or the insurer acted willfully in the absence of a bona fide dispute.</text> <text>I protest the action proposed by the insurer.</text> <text>My reasons for protesting the action are:</text> <text>______________________________________________________</text> <text>Signature (Named Insured) – required if protest submitted by mail or fax: __________________________</text> <text>Date: _____________</text> <text>Insured’s Daytime Phone Number: __________________________</text> <text>Insured’s Email Address: __________________________________</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Procedures and Requirements Regarding an Increase in Premium."> <paragraph num="A."> <text>Scope.</text> <paragraph num="(1)"> <text>Except as provided in §A(2) of this regulation, this regulation applies to any increase in premium by an insurer.</text> </paragraph> <paragraph num="(2)"> <text>This regulation does not apply to an increase in premium due to:</text> <paragraph num="(a)"> <text>A general increase in premiums filed with the Commissioner if the increase in premium of the insured does not result from a reclassification of the insured;</text> </paragraph> <paragraph num="(b)"> <text>The addition of a motor vehicle to a policy;</text> </paragraph> <paragraph num="(c)"> <text>A change of motor vehicle covered by a policy;</text> </paragraph> <paragraph num="(d)"> <text>A change in vehicle usage that results in a change in driver class;</text> </paragraph> <paragraph num="(e)"> <text>A change of territory;</text> </paragraph> <paragraph num="(f)"> <text>A change in the age, sex, or marital status of an insured.</text> </paragraph> <paragraph num="(g)"> <text>An increase in coverage limits requested by the insured;</text> </paragraph> <paragraph num="(h)"> <text>The addition of a driver;</text> </paragraph> <paragraph num="(i)"> <text>The removal of a multi-policy discount;</text> </paragraph> <paragraph num="(j)"> <text>Any request by an insured that results in a change in coverage, decrease in deductible, or other change to a policy;</text> </paragraph> <paragraph num="(k)"> <text>The removal or reduction of a discount unless the discount is removed or reduced wholly or partly due to:</text> <paragraph num="(i)"> <text>An accident;</text> </paragraph> <paragraph num="(ii)"> <text>A violation of the Maryland Vehicle Law or the vehicle law of another state;</text> </paragraph> <paragraph num="(iii)"> <text>The claims history of the insured;</text> </paragraph> <paragraph num="(iv)"> <text>A retiering of the insured; or</text> </paragraph> <paragraph num="(v)"> <text>The application of a program that measures the operation of an insured vehicle during the current policy period as referenced in Insurance Article, §11-318, Annotated Code of Maryland;</text> </paragraph> </paragraph> <paragraph num="(l)"> <text>The change or modification of a rating symbol;</text> </paragraph> <paragraph num="(m)"> <text>The recalculation of a premium by an insurer during the 45-day underwriting period in accordance with Insurance Article, §12-106(d)(2) and (3), Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(n)"> <text>Any other cause for an increase in premium for which the Commissioner waives the notice requirement.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Notice.</text> <paragraph num="(1)"> <text>Before an insurer may increase a premium, the insurer shall comply with the notice requirements of Insurance Article, §27-614, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>The insurer shall send a notice of premium increase to its insured using a first-class mail tracking method.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Form of Notice.</text> <paragraph num="(1)"> <text>If an increase in premium is 15 percent or less for an entire policy, the insurer shall use MIA Form 1006-A in Regulation .07 of this chapter or a substantially similar form.</text> </paragraph> <paragraph num="(2)"> <text>If an increase in premium is greater than 15 percent for an entire policy, the insurer shall use MIA Form 1006-B in Regulation .08 of this chapter or a substantially similar form.</text> </paragraph> <paragraph num="(3)"> <text>If an insurer uses a form other than MIA Form 1006-A or MIA Form 1006-B, the insurer shall submit the form to the Commissioner for approval before the insurer may use the form.</text> </paragraph> <paragraph num="(4)"> <text>In order to be considered substantially similar to MIA Form 1006-A or MIA Form 1006-B, a form shall:</text> <paragraph num="(a)"> <text>At a minimum, contain the same information that is contained in MIA Form 1006-A or MIA Form 1006-B;</text> </paragraph> <paragraph num="(b)"> <text>Be printed in 12-point word processing point size in Arial, Universal, or another font that is as large or larger in size and spacing; and</text> </paragraph> <paragraph num="(c)"> <text>Contain the language of the “Right to Protest” section from MIA Form 1006-A or MIA Form 1006-B starting on the first page of the form.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="MIA Form 1006-A."> <text>FORM ADD AT END OF CHAPTER</text> </regulation> <regulation prefix="Regulation" num=".08" heading="MIA Form 1006-B."> <text>FORM ADDED AT END OF CHAPTER</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Statement of Actual Reason."> <paragraph num="A."> <text>Applicability to Binders. This regulation applies to a binder only if the binder has been in effect for at least 45 days.</text> </paragraph> <paragraph num="B."> <text>Contents of Statement. If an insurer cancels, refuses to renew, increases a premium for, or reduces coverage under a policy or binder of private passenger motor vehicle liability insurance, the statement of actual reason required by Insurance Article, §§27-613 or 27-614, Annotated Code of Maryland, shall include at a minimum:</text> <paragraph num="(1)"> <text>If the action of the insurer is due wholly or partly to an accident:</text> <paragraph num="(a)"> <text>The name of the driver;</text> </paragraph> <paragraph num="(b)"> <text>The date of the accident; and</text> </paragraph> <paragraph num="(c)"> <text>If fault is a material factor for the insurer's action, a statement that the driver was at fault.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the action of the insurer is due wholly or partly to a violation of Maryland vehicle law or the vehicle laws of another state:</text> <paragraph num="(a)"> <text>The name of the driver;</text> </paragraph> <paragraph num="(b)"> <text>The date of the violation; and</text> </paragraph> <paragraph num="(c)"> <text>A description of the violation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the action of the insurer is due wholly or partly to the claims history of an insured:</text> <paragraph num="(a)"> <text>The date that the claim that is the basis of the insurer's action occurred; and</text> </paragraph> <paragraph num="(b)"> <text>A description of each claim, such as:</text> <paragraph num="(i)"> <text>“Theft of vehicle on [date]”;</text> </paragraph> <paragraph num="(ii)"> <text>“Vandalism of vehicle on [date]”; or</text> </paragraph> <paragraph num="(iii)"> <text>“Towing claim on [date]”; or</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the action of the insurer is due wholly or partly to a reason other than those described in §B(1)—(3) of this regulation or to a violation of the terms and conditions of the policy or the underwriting standards of the insurer, a description of the action of the insured that is the basis of the insurer's action, such as:</text> <paragraph num="(a)"> <text>“Insured loans the insured vehicle to an excluded driver”; or</text> </paragraph> <paragraph num="(b)"> <text>“Insured loans the insured vehicle to a non-listed driver”.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>In addition to the information required by §B of this regulation, with respect to a cancellation or nonrenewal, the statement of actual reason required by Insurance Article, §27-613, Annotated Code of Maryland, shall include a statement that the action by the insured that is the basis of the cancellation or nonrenewal violates the insurer's rating criteria or underwriting standards.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Record Retention Requirements."> <paragraph num="A."> <text>Length of Retention. An insurer that provides a notice of cancellation, nonrenewal, premium increase, or reduction in coverage pursuant to Insurance Article, §27-613 or 27-614, Annotated Code of Maryland, and this chapter, shall retain a copy of the notice and its proof of mailing for at least 3 years from the effective date of the notice.</text> </paragraph> <paragraph num="B."> <text>Form of Records. An insurer may maintain a copy of a notice and the proof of mailing required to be retained by §A of this regulation in paper, photographic, microprocessed, magnetic, mechanical, electronic, digital, or any other medium, if the copy of the notice and proof of mailing are maintained in a manner that:</text> <paragraph num="(1)"> <text>Is clear and legible;</text> </paragraph> <paragraph num="(2)"> <text>Accurately reproduces the original document in its entirety, including any attachments to the document;</text> </paragraph> <paragraph num="(3)"> <text>Is capable of producing a clear and legible hard copy of the original document; and</text> </paragraph> <paragraph num="(4)"> <text>Preserves evidence of any signature contained on the document.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 11-318, 27-609, 27-613, and 27-614, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 1, 1979 (6:13 Md. R. 1125)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 repealed and new Regulation .01 adopted effective February 4, 1991 (18:2 Md. R. 149)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended and .04 adopted effective December 17, 1984 (11:25 Md. R. 2133)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 4, 1991 (18:2 Md. R. 149)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective February 4, 1991 (18:2 Md. R. 149)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective October 1, 1997 (24:22 Md. R. 1550); revised permanently effective March 23, 1998 (25:6 Md. R. 487)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.34 to COMAR 31.08.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 2003 (29:20 Md. R. 1591) (This revision applies to all cancellations of, failure to renew, increase in premiums for, and reductions in coverage under a policy of motor vehicle liability insurance that are effective on or after January 1, 2003)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 14, 2005 (32:5 Md. R. 582)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective March 14, 2005 (32:5 Md. R. 582)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective November 3, 2005 (32:25 Md. R. 1939); amended permanently effective March 13, 2006 (33:5 Md. R. 523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective March 14, 2005 (32:5 Md. R. 582)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended as an emergency provision effective November 3, 2005 (32:25 Md. R. 1939); amended permanently effective March 13, 2006 (33:5 Md. R. 523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective March 14, 2005 (32:5 Md. R. 582)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended as an emergency provision effective November 3, 2005 (32:25 Md. R. 1939); amended permanently effective March 13, 2006 (33:5 Md. R. 523)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective March 14, 2005 (32:5 Md. R. 582)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed effective March 14, 2005 (32:5 Md. R. 582)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective January 11, 2008 (35:3 Md. R. 287); revised permanently effective March 10, 2008 (35:5 Md. R. 642)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective February 22, 2021 (48:4 Md. R. 178); November 15, 2021 (48:23 Md. R. 982); June 1, 2025 (52:3 Md. R. 161)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective February 22, 2021 (48:4 Md. R. 178); November 15, 2021 (48:23 Md. R. 982); June 1, 2025 (52:3 Md. R. 161)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective June 9, 2014 (41:11 Md. R. 606)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A, B amended effective November 15, 2021 (48:23 Md. R. 982)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective March 1, 2016 (42:22 Md. R. 1380); February 22, 2021 (48:4 Md. R. 178); June 1, 2025 (52:3 Md. R. 161)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective March 1, 2016 (42:22 Md. R. 1380); February 22, 2021 (48:4 Md. R. 178); June 1, 2025 (52:3 Md. R. 161)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective November 15, 2021 (48:23 Md. R. 982)</annotation> </annotations> </chapter> <chapter num="04" heading="Motor Vehicle Insurance—Out-of-State Coverage"> <regulation prefix="Regulation" num=".01" heading="Out-Of-State Motor Vehicle Coverage."> <text>On and after the effective date of these regulations each insurer issuing a motor vehicle liability insurance policy covering a Maryland resident shall include in the policy a provision regarding out-of-State insurance coverage at least as favorable to the insured as the following:</text> <text>"It is agreed that, subject to all the provisions of the policy except where modified herein, the following provision is added:</text> <text>“If, under the provisions of the motor vehicle financial law or the motor vehicle compulsory insurance law or any similar law of the District of Columbia or of any state or province, a nonresident is required to maintain insurance with respect to the operation or use of a motor vehicle in such jurisdiction and such insurance requirements are greater than the insurance provided by the policy, the limits of the company's liability and the kinds of coverage afforded by the policy shall be as set forth in such law, in lieu of the insurance otherwise provided by the policy, but only to the extent required by such law and only with respect to the operation or use of a motor vehicle in such jurisdiction; provided that the insurance under this provision shall be reduced to the extent that there is other valid and collectible insurance under this or any other motor vehicle insurance policy. In no event shall any person be entitled to receive duplicate payments for the same elements of loss.”</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Existing Policies."> <text>On the effective date of these regulations each insurer which has a motor vehicle liability insurance policy covering a Maryland resident in force which does not have coverage as favorable to the insured as that in Regulation .01 of this chapter shall amend the policy to provide the coverage of Regulation .01 of this chapter. The insurer may make an additional charge for any coverage added under the requirements of this regulation subject to a rate filing approved by the Insurance Commissioner.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-101(k), 2-108, 2-109, and 19-101(a) and (b), Title 11, Subtitle 2, and Title 19, Subtitle 5; Transportation Article, Title 17, Subtitle 1; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01 and .02 adopted as an emergency provision</annotation> <annotation type="History" subtype="Administrative History">effective November 1, 1983 (10:22 Md. R. 1963); adopted permanently</annotation> <annotation type="History" subtype="Administrative History">effective March 1, 1984 (11:1 Md. R. 43)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.63 to COMAR 31.08.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="05" heading="Addition, Reduction, or Elimination in Coverage Notice Requirement"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>Often when a property and casualty policy is renewed, coverage is reduced or eliminated or deductibles are increased. There may also be automatic increases in policy limits pursuant to construction or inflation indices. The purpose of this chapter is to require all property and casualty insurers who intend to reduce or eliminate coverage, change a deductible or increase policy limits to clearly notify the policyholder of the action that has been taken.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Notice Requirement."> <paragraph num="A."> <text>This regulation does not apply to:</text> <paragraph num="(1)"> <text>A change in coverage that is made at the request of the insured;</text> </paragraph> <paragraph num="(2)"> <text>A change in coverage to a commercial risk that uses the services of a risk manager, broker, or insurance adviser;</text> </paragraph> <paragraph num="(3)"> <text>A reduction in coverage for a policy of private passenger motor vehicle liability insurance that is subject to Insurance Article, §27-613, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(4)"> <text>The recalculation of a premium by an insurer during the 45-day underwriting period in accordance with Insurance Article, §12-106(d)(2) and (3), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In this regulation, “delivery by electronic means” includes:</text> <paragraph num="(1)"> <text>Delivery to an electronic mail address at which a party has consented to receive notice; and</text> </paragraph> <paragraph num="(2)"> <text>Posting on an electronic network, together with separate notice to a party directed to the electronic mail address at which the party has consented to receive notice of the posting.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An insurer shall provide notice to an insured in accordance with §§D and E of this regulation if the insurer proposes to:</text> <paragraph num="(1)"> <text>Eliminate or reduce coverage under a primary property or casualty policy, including a reduction in coverage caused by an increase in a deductible; or</text> </paragraph> <paragraph num="(2)"> <text>Automatically add or increase coverage under a primary property or casualty policy pursuant to policy terms that allow for any inflation or construction increases.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An insurer that is required to provide notice under §C of this regulation shall include in the notice a clear and specific description of each change in coverage that identifies:</text> <paragraph num="(1)"> <text>The type of coverage that will be changed; and</text> </paragraph> <paragraph num="(2)"> <text>The dollar amount of the change in coverage.</text> </paragraph> </paragraph> <paragraph num="E."> <text>At least 45 days before the change in coverage is scheduled to take effect, the insurer shall send the notice to the insured by:</text> <paragraph num="(1)"> <text>First class mail; or</text> </paragraph> <paragraph num="(2)"> <text>Delivery by electronic means in accordance with Insurance Article, §27-601.2, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If an insurer that proposes to eliminate or reduce coverage under a primary property or casualty policy fails to provide the notice that is required by §C of this regulation in accordance with the requirements of §§D and E of this regulation, the insurer may not implement the proposed elimination or reduction in coverage and may be subject to administrative action.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-113, and 27-216, and Title 11, Subtitle 2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 30, 1981 (8:12 Md. R. 1060)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.32 to COMAR 31.08.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A amended effective January 26, 2009 (36:2 Md. R. 102)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 repealed and new Regulation .02 adopted effective November 11, 2013 (40:22 Md. R. 1878)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 repealed effective November 11, 2013 (40:22 Md. R. 1878)</annotation> </annotations> </chapter> <chapter num="06" heading="Nation-Wide Marine Definition and Plan for Interpretation"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>The Nation-Wide Marine Definition which was approved by the National Association of Insurance Commissioners on June 12, 1953, is hereby adopted for use in Maryland, and all insurance policies issued or renewed on or after September 1, 1953, were and shall be subject to the provisions of the Nation-Wide Marine Definition.</text> </paragraph> <paragraph num="B."> <text>The purpose of this chapter is to describe the kinds of risks and coverages which may be classified or identified under State Insurance Laws as marine, inland marine, or transportation insurance, but does not include all of the kinds of risks and coverages which may be written, classified, or identified under marine, inland marine, or transportation insuring powers. This chapter may not be construed to mean that the kinds of risks and coverages are solely marine, inland marine, or transportation insurance in all instances.</text> </paragraph> <paragraph num="C."> <text>This chapter may not be construed to restrict or limit in any way the exercise of any insuring powers granted under charters and license whether used separately, in combination or otherwise.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Coverage."> <paragraph num="A."> <text>Marine or transportation policies, or both, may cover under the following conditions provided in this regulation.</text> </paragraph> <paragraph num="B."> <text>Imports.</text> <paragraph num="(1)"> <text>A shipment on consignment means property consigned and intrusted to a factor or agent to be held in his care, or under his control for sale for account of another or for exhibit or trial or approval or auction, and if not disposed of, to be returned.</text> </paragraph> <paragraph num="(2)"> <text>Imports on consignment may be covered wherever the property may be and without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation.</text> </paragraph> <paragraph num="(3)"> <text>Imports not on consignment in such places of storage as are usually employed by importers, provided the coverage of the issuing companies includes hazards of transportation.</text> </paragraph> <paragraph num="(4)"> <text>These policies may also include the same coverage in respect to property purchased on C. I. F. terms or spot purchases for inclusion with or in substitution for bona fide importations.</text> </paragraph> <paragraph num="(5)"> <text>An import, as a proper subject of marine or transportation insurance, shall be deemed to maintain its character as such so long as the property remains segregated in the original form or package in such a way that it can be identified and has not become incorporated and mixed with the general mass of property in the United States, and shall be deemed to have been completed when the property has been:</text> <paragraph num="(a)"> <text>Sold and delivered by the importer, factor or consignee;</text> </paragraph> <paragraph num="(b)"> <text>Removed from place of storage as described in §B(3) of this regulation and placed on sale as part of importer's stock in trade at a point of sale-distribution; or</text> </paragraph> <paragraph num="(c)"> <text>Delivered for manufacture, processing, or change in form to premises of the importer or of another used for these purposes.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Exports.</text> <paragraph num="(1)"> <text>Exports may be covered whenever the property may be without restriction as to time, provided the coverage of the issuing companies includes hazards of transportation.</text> </paragraph> <paragraph num="(2)"> <text>An export, as a proper subject of marine or transportation insurance, shall be deemed to acquire its character as such when designated or while being prepared for export and retain that character unless diverted for domestic trade, and when so diverted, the provisions of §D of this regulation respecting domestic shipments shall apply, provided, however, that this provision does not apply to long established methods of insuring certain commodities, for example, cotton.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Domestic Shipments.</text> <paragraph num="(1)"> <text>Domestic shipments on consignment, provided the coverage of the issuing companies includes hazards of transportation:</text> <paragraph num="(a)"> <text>Property shipped on consignment for sale or distribution, while in transit and not exceeding 120 days after arrival at consignee's premises or other place of storage or deposit; and</text> </paragraph> <paragraph num="(b)"> <text>Property shipped on consignment for exhibit, or trial, or approval or auction, while in transit, while in the custody of others and while being returned.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Domestic shipments not on consignment, provided the coverage of the issuing companies includes hazards of transportation, beginning and ending within the United States, provided that these shipments may not be covered at manufacturing premises or after arrival at premises owned, leased, or operated by assured or purchaser, or for more than 90 days at other place of storage or deposit, except in premises of transportation companies or freight forwarders, when the storage is incident to transportation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Bridges, Tunnels, and Other Instrumentalities of Transportation and Communication.</text> <paragraph num="(1)"> <text>Bridges, tunnels, and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents, and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot, or civil commotion are the only hazards to be covered. Piers, wharves, docks, and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot, or civil commotion. Other aids to navigation and transportation, including dry docks and marine railways, against all risks.</text> </paragraph> <paragraph num="(2)"> <text>The foregoing includes:</text> <paragraph num="(a)"> <text>Bridges, tunnels, other similar instrumentalities, unless fire, lightning, windstorm, sprinkler leakage, hail, explosion, earthquake, riot, or civil commotion are the only perils to be covered;</text> </paragraph> <paragraph num="(b)"> <text>Piers, wharves, docks, and slips, but excluding the risks of fire, lightning, windstorm, sprinkler leakage, hail, explosion, earthquake, riot, or civil commotion;</text> </paragraph> <paragraph num="(c)"> <text>Pipelines, including on-line propulsion, regulating and other equipment appurtenant to pipelines, but excluding all property at manufacturing, producing, refining, converting, treating, or conditioning plants;</text> </paragraph> <paragraph num="(d)"> <text>Power transmission and telephone and telegraph lines, excluding all property at generating, converting, or transforming stations, sub-stations, and exchanges;</text> </paragraph> <paragraph num="(e)"> <text>Radio and television communication equipment in commercial use as such including towers and antennae with auxiliary equipment, and appurtenant electrical operating and control apparatus but excluding buildings, their improvements and betterments, furniture and furnishings, and supplies held in storage in the building;</text> </paragraph> <paragraph num="(f)"> <text>Outdoor cranes, loading bridges, and similar equipment used to load, unload, and transport.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Personal Property Floater Risks—Individuals.</text> <paragraph num="(1)"> <text>Tourists floater, personal effects floater policies.</text> </paragraph> <paragraph num="(2)"> <text>The personal property floater.</text> </paragraph> <paragraph num="(3)"> <text>Government service floaters.</text> </paragraph> <paragraph num="(4)"> <text>Personal fur floaters.</text> </paragraph> <paragraph num="(5)"> <text>Personal jewelry floaters.</text> </paragraph> <paragraph num="(6)"> <text>Wedding present floaters for not exceeding 90 days after the date of the wedding.</text> </paragraph> <paragraph num="(7)"> <text>Silverware floaters.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Personal Property Floater Risks—General Coverage.</text> <paragraph num="(1)"> <text>Fine Arts Floaters, Stamp and Coin Floaters. To cover objects of art such as pictures, statuary, bronzes and antiques, rare manuscripts and books, articles of virtu, etc.</text> </paragraph> <paragraph num="(2)"> <text>Musical Instrument Floaters. Radios, televisions, record players, and combinations thereof are not deemed musical instruments.</text> </paragraph> <paragraph num="(3)"> <text>Radium Floaters.</text> </paragraph> <paragraph num="(4)"> <text>Physicians' and Surgeons' Instrument Floaters. These policies may include coverage of the furniture, fixtures, and tenant assured's interest in the improvements and betterments of buildings as are located in that portion of the premises occupied by the assured in the practice of his profession.</text> </paragraph> <paragraph num="(5)"> <text>Pattern and die floaters, excluding coverage on the owner's premises.</text> </paragraph> <paragraph num="(6)"> <text>Theatrical floaters, excluding buildings and their improvements and betterments, and furniture and fixtures that do not travel about with theatrical troupes.</text> </paragraph> <paragraph num="(7)"> <text>Film floaters, including builders' risk during the production and coverage on completed negatives and positives and sound records.</text> </paragraph> <paragraph num="(8)"> <text>Salesmen's samples floaters.</text> </paragraph> <paragraph num="(9)"> <text>Jewelers' block policies, including tenant assured's interest in improvements and betterments of buildings, furniture, fixtures, tools, machinery, patterns, molds, and dies.</text> </paragraph> <paragraph num="(10)"> <text>Exhibition policies on property while on exhibition and in transit to or from the exhibitions.</text> </paragraph> <paragraph num="(11)"> <text>Live animal floaters, covering wherever animals, wagons, and mobile equipment may be.</text> </paragraph> <paragraph num="(12)"> <text>Installation Risks.</text> <paragraph num="(a)"> <text>Installation risks, covering machinery and equipment including plumbing, heating, cooling and electrical systems (as distinguished from building materials) while in transit to place of installation and during the period of installation and testing. Coverage shall cease when whichever of the following first occurs:</text> <paragraph num="(i)"> <text>When the property is insured for the account of the seller or installer, when the interest of the insured ceases; or</text> </paragraph> <paragraph num="(ii)"> <text>Not later than when the property has been accepted as satisfactory.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Building materials (e.g., structural steel, lumber, bricks and mortar), while in transit to place of installation and after arrival thereat but the coverage shall terminate when the materials are installed and have become a physical part of the realty or when the seller's interest ceases, whichever first occurs.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>Mobile articles, machinery, and equipment floaters (excluding motor vehicles designed for highway use and auto homes, trailers, and semitrailers except when hauled by tractors not designed for highway use and snowplows constructed exclusively for highway use), covering identified property of a mobile or floating nature, not on sale or consignment, or in course of manufacture, which has come into the custody or control of parties who intend to use the property for the purpose for which it was manufactured or created. These policies do not cover furniture and fixtures not customarily used away from premises where the property is usually kept.</text> </paragraph> <paragraph num="(14)"> <text>Bailees.</text> <paragraph num="(a)"> <text>Property in transit to or from and in the custody of:</text> <paragraph num="(i)"> <text>Bleacheries, throwsters, fumigatories, dyers, cleaners, laundries, and similar bailees;</text> </paragraph> <paragraph num="(ii)"> <text>Needleworkers;</text> </paragraph> <paragraph num="(iii)"> <text>Other bailees (not owned, controlled, or operated by the bailor) for the purpose of performing work thereon (as distinguished from the making of a complete article) including the treatment of, or assemblage of property on the premises of bailees.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>These policies do not cover bailee's property at his premises.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>Installment Sales and Leased Property. Policies covering property sold under conditional contract of sale, partial payment contract, installment sales contract, or leased but excluding motor vehicles designed for highway use. These policies shall cover in transit but may not extend beyond the termination of the seller's or lessor's interest. This subsection is not intended to include machinery and equipment under certain “lease-back” contracts.</text> </paragraph> <paragraph num="(16)"> <text>Garment contractors floaters.</text> </paragraph> <paragraph num="(17)"> <text>Furriers or fur storer's customer's policies (that is, policies under which certificates or receipts are issued by furriers or fur storers) covering specified articles the property of customers.</text> </paragraph> <paragraph num="(18)"> <text>Accounts receivable policies, valuable papers and records policies.</text> </paragraph> <paragraph num="(19)"> <text>Cold storage locker plant policies, covering merchandise of customers consisting principally of meats, game, fish, poultry, fruit, vegetables, and property of a similar nature.</text> </paragraph> <paragraph num="(20)"> <text>Floor plan policies, covering property for sale while in possession of dealers under a floor plan or any similar plan under which the dealer borrows money from a bank or lending institution with which to pay the manufacturer, provided:</text> <paragraph num="(a)"> <text>That:</text> <paragraph num="(i)"> <text>The merchandise is specifically identifiable as encumbered to the bank or lending institution;</text> </paragraph> <paragraph num="(ii)"> <text>The dealer's right to sell or otherwise dispose of the merchandise is conditioned upon its being released from encumbrance by the bank or lending institution;</text> </paragraph> <paragraph num="(iii)"> <text>The policies cover in transit and do not extend beyond the termination of the dealer's interest.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>That the policies may not cover automobiles or motor vehicles; merchandise for which the dealer's collateral is the stock or inventory as distinguished from merchandise specifically identifiable as encumbered to the lending institution.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>Sign and Street Clock Policies, covering neon signs, automatic or mechanical signs, street clocks, while in use as such.</text> </paragraph> <paragraph num="(22)"> <text>Inland Marine Policies.</text> <paragraph num="(a)"> <text>The following policies covering property which, when sold to the ultimate purchaser, may be covered specifically, by the owner, under Inland Marine Policies:</text> <paragraph num="(i)"> <text>Musical Instrument Dealers' Policies, covering property consisting principally of musical instruments, and their accessories. Radios, televisions, record players and combinations thereof are not deemed musical instruments.</text> </paragraph> <paragraph num="(ii)"> <text>Camera Dealers' Policies, covering property consisting principally of cameras and their accessories.</text> </paragraph> <paragraph num="(iii)"> <text>Furrier's Dealers' Policies, covering property consisting principally of fur and fur garments.</text> </paragraph> <paragraph num="(iv)"> <text>Equipment Dealers' Policies, covering mobile equipment consisting of binders, reapers, tractors, harvesters, harrows, tedders, and other similar agricultural equipment and accessories; construction equipment consisting of bulldozers, road scrapers, tractors, compressors, pneumatic tools, and similar equipment and accessories; but excluding motor vehicles designed for highway use.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>These policies may include coverage of tenant assured's interest in improvements and betterments of building and of furniture, fixtures, tools, machinery, patterns, molds, and dies.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>Wool Growers' Floaters.</text> </paragraph> <paragraph num="(24)"> <text>Domestic Bulk Liquids Policies, covering domestic bulk liquids stored in tanks provided the risks of fire and inherent explosion, windstorm, sprinkler leakage, earthquake, hail, explosion, riot, or civil commotion are excluded from the policy.</text> </paragraph> <paragraph num="(25)"> <text>Furniture Shipment Policies, covering furniture, fixtures, and equipment in bona fide course of shipment from one location to another location of the owner including in place of deposit incident to the transportation while awaiting determination or availability of final destination, in which event they shall cover at time of issuance transportation to or from the place of deposit but may not cover after delivery at destination.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Unless otherwise permitted, nothing in the foregoing shall be construed to permit marine or transportation policies to cover:</text> <paragraph num="(1)"> <text>Storage of assured's merchandise, except as provided above;</text> </paragraph> <paragraph num="(2)"> <text>Merchandise in course of manufacture, the property of and on the premises of the manufacturer;</text> </paragraph> <paragraph num="(3)"> <text>Furniture and fixtures and improvements and betterments to buildings;</text> </paragraph> <paragraph num="(4)"> <text>Merchandise in a permanent location, sold under partial payment, contract of sale, or installment sales contract, which involves protection of the purchaser's interest after seller's interest ceases;</text> </paragraph> <paragraph num="(5)"> <text>Monies or securities, or both, in safes, vaults, safety deposit vaults, bank or assured's premises, except while in course of transportation;</text> </paragraph> <paragraph num="(6)"> <text>Risks of fire, windstorm, sprinkler leakage, earthquake, hail, explosion, riot, or civil commotion on buildings, structures, wharves, piers, docks, bulkheads, and sheds and other fixed real property on land or over water, except as provided above.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Inland Marine Insurance.</text> <paragraph num="(1)"> <text>The following property, when owned and used for pleasure and not for business, hire, or other commercial use, shall be classified as Inland Marine Insurance:</text> <paragraph num="(a)"> <text>Outboard motors, including their equipment and appurtenances;</text> </paragraph> <paragraph num="(b)"> <text>Rowboats, canoes and boats not exceeding 16 feet in overall length, measured on the centerline and designed exclusively to be propelled by one or more outboard motors;</text> </paragraph> <paragraph num="(c)"> <text>Equipment and appurtenances, including boat carriers and trailers, used or designed for use with the above.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Coverage of any of the property specified in §I(1) of this regulation in conjunction with vessels not falling within §I(1)(b) need not be classified as inland marine insurance.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-101(y), (z), and (qq) and 2-109, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 1, 1953</annotation> <annotation type="History" subtype="Administrative History">Amended effective December 1, 1959; January 1, 1964; November 1, 1965; May</annotation> <annotation type="History" subtype="Administrative History">1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.14 to COMAR 31.08.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="07" heading="Medical Malpractice—Closed Claims Surveys" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: July 12, 1987 (14:14 Md. R. 1571)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.72 to COMAR 31.08.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective October 27, 2003 (30:21 Md. R. 1531)</annotation> </annotations> </chapter> <chapter num="08" heading="Lead Poisoning"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter establishes requirements for liability insurance concerning lead hazards for affected property.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Affected Property;</text> <paragraph num="(a)"> <text>“Affected property” means:</text> <paragraph num="(i)"> <text>A residential rental property constructed before 1950 that contains not more than one rental dwelling unit;</text> </paragraph> <paragraph num="(ii)"> <text>A residential rental property that contains not more than one rental dwelling unit for which the owner makes an election under Environment Article, §6-803(a)(2), Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(iii)"> <text>An individual rental dwelling unit within a residential rental property constructed before 1950 that contains more than one rental dwelling unit, or a residential rental property that contains more than one rental dwelling unit for which the owner makes an election under Environment Article, §6-803(a)(2), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Affected property” does not include property exempted under the Environment Article, §6-803(b), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Authorized insurer” means an insurer that:</text> <paragraph num="(a)"> <text>Holds a certificate of authority in this State;</text> </paragraph> <paragraph num="(b)"> <text>Issues, or issues for delivery in this State, third-party bodily injury liability insurance under:</text> <paragraph num="(i)"> <text>Homeowners' coverage,</text> </paragraph> <paragraph num="(ii)"> <text>Owners', landlords', and tenants' coverage, or</text> </paragraph> <paragraph num="(iii)"> <text>Other premises liability coverage; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Is subject to regulation by the Maryland Insurance Administration.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Claim” means the notice provided to an insured that a person at risk has an elevated blood lead level under Environment Article, §6-828(b)(1), Annotated Code of Maryland, for the purpose of:</text> <paragraph num="(a)"> <text>Informing the insured that a person at risk has an elevated blood level; and</text> </paragraph> <paragraph num="(b)"> <text>Triggering the authorized insurer's duty to respond on behalf of the insured in accordance with Environment Article, Title 6, Subtitle 8, Part V, Annotated Code of Maryland, subject to reasonable notice provisions in a contract or insurance policy.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Person at risk” means a child younger than 6 years old or a pregnant woman who resides or regularly spends at least 24 hours per week in an affected property.</text> </paragraph> <paragraph num="(5)"> <text>“Rental dwelling unit” has the meaning stated in Environment Article, §6-801(t), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Coverage."> <text>A lead hazard exclusion contained in a contract of insurance issued or renewed on or after January 1, 1995, shall be waived with respect to an affected property which is covered under the policy to the extent of a qualified offer made or to be made under Environment Article, Title 6, Subtitle 8, Part V, Annotated Code of Maryland, if:</text> <paragraph num="A."> <text>The affected property is in compliance with the provisions of Environment Article, Title 6, Subtitle 8, Part III, Annotated Code of Maryland;</text> </paragraph> <paragraph num="B."> <text>Without regard to whether a change in occupancy has occurred, and at the election of the insured, the affected property:</text> <paragraph num="(1)"> <text>Passes the test for lead-contaminated dust under Environment Article, §6-816, Annotated Code of Maryland, or</text> </paragraph> <paragraph num="(2)"> <text>Has undergone the lead hazard reduction treatments and complies with the risk reduction standards under Environment Article, §6-815(a)(2), Annotated Code of Maryland; and</text> </paragraph> </paragraph> <paragraph num="C."> <text>The insured, under Environment Article, §6-818, Annotated Code of Maryland, submits to the authorized insurer a current verified report of an accredited inspector certifying that the affected property complies with the standards set forth in §B of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Claim."> <text>If coverage exists, an insurer shall defend all claims for which the insured is potentially liable when a claim is made against an insured.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Deductible."> <paragraph num="A."> <text>An authorized insurer providing lead hazard coverage under Insurance Article, §19-704, Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>Shall offer the coverage without a deductible for the lead hazard coverage; and</text> </paragraph> <paragraph num="(2)"> <text>May offer the coverage with a deductible for the lead hazard coverage.</text> </paragraph> </paragraph> <paragraph num="B."> <text>When an insurer pays a claim on the policy with a deductible, the:</text> <paragraph num="(1)"> <text>Insurer shall pay the claim, including any applicable deductible; and</text> </paragraph> <paragraph num="(2)"> <text>Insured shall reimburse the insurer for any amount paid up to the limit of any applicable deductible.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Cancellation, Nonrenewal, or Reimposition of an Exclusion."> <paragraph num="A."> <text>An insurer may cancel or not renew lead hazard coverage or reimpose an exclusion only if the:</text> <paragraph num="(1)"> <text>Insured fails to:</text> <paragraph num="(a)"> <text>Pay the applicable premium,</text> </paragraph> <paragraph num="(b)"> <text>Provide reasonable access to the affected property for purposes of inspection for the presence or condition of lead by the insurer or the insurer's designee,</text> </paragraph> <paragraph num="(c)"> <text>Comply with the terms or conditions of the policy, or</text> </paragraph> <paragraph num="(d)"> <text>Perform lead hazard reduction treatments as set forth in Environment Article, §6-815(a), Annotated Code of Maryland; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Affected property fails to comply or maintain compliance with the risk reduction standards under Environment Article, §6-815(a)(2), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An insurer may cancel or not renew lead hazard coverage or reimpose an exclusion under §A(1)(d) or (2) of this regulation only if the insurer provides the insured with:</text> <paragraph num="(1)"> <text>Written notice that the insurer intends to cancel or not renew lead hazard coverage or intends to reimpose the exclusion; and</text> </paragraph> <paragraph num="(2)"> <text>An opportunity to correct the violation within 30 days after the mailing of the notice by the insurer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In addition to any other contractual requirement, the insured shall provide the insurer with a certification under Environment Article, §6-815(c) or 6-816, Annotated Code of Maryland, that the violation has been corrected and the property is in compliance with Environment Article, §6-815(a), Annotated Code of Maryland, within 30 days after the mailing of the notice by the insurer.</text> </paragraph> <paragraph num="D."> <text>Lead hazard coverage remains in effect if the violation is corrected and the property is in compliance with Environment Article, §6-815(a), Annotated Code of Maryland, within 30 days after the mailing of the notice by the insurer.</text> </paragraph> <paragraph num="E."> <text>Lead hazard coverage may be canceled or not renewed, or a lead hazard exclusion may be reimposed, on the 31st day after the mailing of the notice by the insurer if the insured does not provide the insurer with the certification required under §C of this regulation.</text> </paragraph> <paragraph num="F."> <text>The insurer shall include in its endorsement for lead hazard coverage that the lead hazard coverage may be canceled or not renewed pursuant to the conditions set forth in this regulation.</text> </paragraph> <paragraph num="G."> <text>This regulation does not preclude the insurer from canceling a policy for any other reason as allowed by Insurance Article, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Notice of Cancellation, Nonrenewal, or Reimposition of an Exclusion."> <paragraph num="A."> <text>If an insurer intends to not renew or cancel lead hazard coverage, or intends to reimpose a lead hazard exclusion, pursuant to Regulation .06B of this chapter, which is not at the request of the insured, the insurer shall give the insured written notice of this change. This notice shall include, at a minimum, the following information:</text> <paragraph num="(1)"> <text>The insurer intends to not renew or cancel lead hazard coverage, or intends to reimpose a lead hazard exclusion;</text> </paragraph> <paragraph num="(2)"> <text>How the insured failed to perform lead hazard reduction treatments as set forth in Environment Article, §6-815(a), Annotated Code of Maryland, or how the affected property failed to comply or maintain compliance with the risk reduction standards under Environment Article, §6-815(a)(2), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>The date by which the insured shall provide to the insurer certification under Environment Article, §6-815(a) or 6-816, Annotated Code of Maryland, that the violation is corrected, which date should be 30 days after the mailing of the notice by the insurer; and</text> </paragraph> <paragraph num="(4)"> <text>The location of the affected property of which the insurer intends to not renew or cancel lead hazard coverage, or intends to reimpose a lead hazard exclusion.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The insurer, or the insurer's authorized representative, shall mail or deliver to the insured or a person designated by the insured on the policy, the notice prescribed in §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>If an insurer fails to provide the notice required by Regulation .04B of this chapter and §A of this regulation, the lead hazard coverage remains in effect.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 19, Subtitle 7, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 adopted as an emergency provision effective November 30, 1994 (21:26 Md. R. 2181)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 adopted effective March 13, 1995 (22:5 Md. R. 367)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 22, 1997 (24:19 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.08 to COMAR 31.08.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="09" heading="Group Self-Insurance for Workers' Compensation"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies only to workers' compensation self-insurance groups (“group” or “groups”) organized pursuant to Insurance Article, Title 25, Subtitle 3, Annotated Code of Maryland, and not to groups organized pursuant to Labor and Employment Article, §9-402(a), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>All terms defined in Insurance Article, Title 25, Subtitle 3, Annotated Code of Maryland, which are used in this chapter have the same meaning as in Insurance Article, Title 25, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Insolvent” or “insolvency” means the inability of a group to pay its outstanding lawful obligations as they mature in the regular course of business as may be shown either by an excess of its required reserves and other liabilities over its assets or by its not having sufficient assets to reinsure all of its outstanding liabilities after paying all accrued claims owed by it.</text> </paragraph> <paragraph num="(2)"> <text>“Net premium” means premium derived from standard premium adjusted by any advance premium discounts.</text> </paragraph> <paragraph num="(3)"> <text>“Standard premium” means the premium derived from the pure loss manual rate adjusted by the expense factors and by experience modification factors, but before advance premium discounts.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Incorporation by Reference."> <text>The Basic Manual for Workers' Compensation and Employees Liability Insurance (2001 Edition), published by the National Council on Compensation Insurance (NCCI) is incorporated by reference.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Business and Industry Classifications."> <paragraph num="A."> <text>A group may be formed only by employers who are engaged in the same or a similar type of business or who are members of the same bona fide trade or professional association which has been in existence for not less than 5 years.</text> </paragraph> <paragraph num="B."> <text>For the first 5 years of its existence or until such time as the self-insured group's experience is such that its data becomes fully credible, a group shall classify employees as set forth in the Basic Manual for Workers' Compensation and Employees Liability Insurance (2001 Edition), published by the National Council on Compensation Insurance (NCCI).</text> </paragraph> <paragraph num="C."> <text>If the group submits justification to the Commissioner showing that it has fully credible data from which a change in classification could be supported from an actuarial perspective and what the deviation from the NCCI classification would be and the Commissioner approves same, then the group may use such classifications.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Minimum Premium Amounts."> <paragraph num="A."> <text>During a group's first year of operation it shall have an annual premium of at least $500,000, all of which shall have been paid to the group not later than the end of the ninth month of the group's first year of operation.</text> </paragraph> <paragraph num="B."> <text>For each year after the first year of operation, the annual premium shall be at least $500,000 unless the Commissioner determines that a greater amount is required based on the Commissioner's examination of the group's annual statement of financial condition.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Surety Bonds."> <paragraph num="A."> <text>Each group shall obtain and maintain a surety bond for the protection of group members and their employees in an amount not less than $500,000 unless the Commissioner specifies a different amount.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may, in the Commissioner's discretion, waive the requirement of §A of this regulation and permit a group to deposit and maintain in trust with the State Treasurer, for the protection of group members, employees and creditors, cash or government securities of the type described in Insurance Article, §5-701(b), Annotated Code of Maryland, in an amount not less than the amount specified in §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>Each administrator and service company shall obtain a fidelity bond in an amount not less than $100,000, and a performance bond in an amount not less than $50,000, before providing services to a workers' compensation self-insurance group.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Excess Insurance Coverage."> <paragraph num="A."> <text>Each group shall maintain excess insurance coverage in an amount not less than $1,000,000 per occurrence and not less than $5,000,000 in the aggregate over a commercially available and reasonable attachment point subject to review of the Commissioner.</text> </paragraph> <paragraph num="B."> <text>A group shall send a copy of its excess insurance policy to the Commissioner in the following circumstances:</text> <paragraph num="(1)"> <text>Within 60 days of the renewal or replacement of an existing policy unless, within 90 days after its inception date, such policy will be provided to the Commissioner pursuant to §B(3) of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>Within 60 days of an amendment to an existing policy unless, within 90 days after its inception date, such amended policy will be provided to the Commissioner pursuant to §B(3) of this regulation;</text> </paragraph> <paragraph num="(3)"> <text>Annually as provided in COMAR 31.08.09.13B; or</text> </paragraph> <paragraph num="(4)"> <text>Upon request of the Commissioner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner may, in the Commissioner's discretion, take the following actions by notifying the group in writing:</text> <paragraph num="(1)"> <text>Increase the minimum amount of excess insurance coverage to assure adequacy of coverage for each group; and</text> </paragraph> <paragraph num="(2)"> <text>Require the group to obtain and maintain excess coverage with a specified attachment point upon consideration of, but not limited to, the following factors relating to the group:</text> <paragraph num="(a)"> <text>Size of group, that is, the number of members and premium volume;</text> </paragraph> <paragraph num="(b)"> <text>Financial condition of group;</text> </paragraph> <paragraph num="(c)"> <text>Group's risk versus surplus position;</text> </paragraph> <paragraph num="(d)"> <text>Group's loss development history; and</text> </paragraph> <paragraph num="(e)"> <text>The availability of reinsurance at specific attachment points at economically feasible rates.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Instead of maintaining excess insurance coverage as set forth in §A of this regulation, a group may deposit and maintain in trust with the State Treasurer, cash or government securities of the type described in Insurance Article, §5-701(b), Annotated Code of Maryland, in an amount at least equal to the minimum excess insurance coverage required by §A of this regulation.</text> </paragraph> <paragraph num="E."> <text>A policy of excess insurance may not be recognized by the Commissioner unless the policy is:</text> <paragraph num="(1)"> <text>Issued by an insurer admitted to do business in Maryland unless the Commissioner, in his discretion, allows the coverage to be placed with an approved surplus lines carrier; and</text> </paragraph> <paragraph num="(2)"> <text>Not subject to cancellation or nonrenewal for any reason except nonpayment of premium except upon 45 days notice sent by certified mail to the group and to the Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Application for Certificate of Authority."> <paragraph num="A."> <text>A person or entity may not act as a workers' compensation self-insurance group except as so authorized by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Application for a certificate of authority shall be made to the Commissioner on a form prescribed by him and shall include a $25 nonrefundable filing fee.</text> </paragraph> <paragraph num="C."> <text>The application form shall be accompanied by the following:</text> <paragraph num="(1)"> <text>A list of the names of the members of the group, to include each member’s:</text> <paragraph num="(a)"> <text>Corporate name;</text> </paragraph> <paragraph num="(b)"> <text>Main business address;</text> </paragraph> <paragraph num="(c)"> <text>State of domicile; and</text> </paragraph> <paragraph num="(d)"> <text>Date upon which the member’s fiscal year ends;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Proof of compliance with the requirements of these regulations;</text> </paragraph> <paragraph num="(3)"> <text>A copy of the group's articles of association, if any;</text> </paragraph> <paragraph num="(4)"> <text>A copy of agreements with the administrator and with any service company;</text> </paragraph> <paragraph num="(5)"> <text>A copy of the group's bylaws, which shall contain, at a minimum:</text> <paragraph num="(a)"> <text>A copy of or written description of the underwriting standards for acceptance and continuance in the group;</text> </paragraph> <paragraph num="(b)"> <text>A copy of or written description of the method for selecting the board of trustees and administrator of the group;</text> </paragraph> <paragraph num="(c)"> <text>A list of the members of the board of trustees and the term of office of the board of trustees; and</text> </paragraph> <paragraph num="(d)"> <text>A copy of or written description of the method for amending the group's bylaws;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A copy of regulations adopted by the trustees, which shall be binding on the administrator and service company and which shall contain, at a minimum:</text> <paragraph num="(a)"> <text>A description of the manner in which excess funds and claim reserves shall be invested;</text> </paragraph> <paragraph num="(b)"> <text>A description of the frequency and extent of loss control and safety engineering services provided to members of the group;</text> </paragraph> <paragraph num="(c)"> <text>The size of the common claim fund;</text> </paragraph> <paragraph num="(d)"> <text>A schedule for the collection of premiums, including a definition of “delinquent premium”;</text> </paragraph> <paragraph num="(e)"> <text>A copy of or written description of the membership, admission, and expulsion procedures;</text> </paragraph> <paragraph num="(f)"> <text>A copy of or written description of the delineation of authority granted to the administrator, board of trustees, and service company; and</text> </paragraph> <paragraph num="(g)"> <text>A copy of the procedures for handling disputes regarding premium payments by members;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>A copy of the agreement between the group and each member securing the payment of workers' compensation benefits;</text> </paragraph> <paragraph num="(8)"> <text>A list of the initial board of trustees and administrator of the group;</text> </paragraph> <paragraph num="(9)"> <text>The address in this State where the books and records of the group will be maintained at all times;</text> </paragraph> <paragraph num="(10)"> <text>A financial statement on a form acceptable to the Commissioner showing the financial ability of the group to pay the workers' compensation obligations of its members;</text> </paragraph> <paragraph num="(11)"> <text>Proof of payment to the group by each member of not less than 25 percent of that member's first year estimated annual net premium on a date prescribed by the Commissioner;</text> </paragraph> <paragraph num="(12)"> <text>A statement outlining the guidelines used to determine the types of businesses eligible for membership in the group;</text> </paragraph> <paragraph num="(13)"> <text>Copies of executed agreements with each member assuming joint and several liability for obligations of the group in the event of insolvency of the Self-Insurers' Guaranty Fund;</text> </paragraph> <paragraph num="(14)"> <text>A description of the arrangements whether in-house or under contract, for handling claims; and</text> </paragraph> <paragraph num="(15)"> <text>A report on the financial condition of each member in a format acceptable to the Commissioner, based on each member’s most recent fiscal year-end data, which shall include the following information for each member:</text> <paragraph num="(a)"> <text>Total assets;</text> </paragraph> <paragraph num="(b)"> <text>Total liabilities and net worth;</text> </paragraph> <paragraph num="(c)"> <text>Total sales or revenues;</text> </paragraph> <paragraph num="(d)"> <text>Net profit;</text> </paragraph> <paragraph num="(e)"> <text>The member’s fiscal year-end date; and</text> </paragraph> <paragraph num="(f)"> <text>The basis for reporting the financial information, including whether the report was prepared by a certified public accountant and presented in conformity with generally accepted accounting principles.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>At the request of the Commissioner, the group shall submit additional financial information or financial statements for any or all members of the group.</text> </paragraph> <paragraph num="E."> <text>To obtain and maintain its certificate of authority, a group shall comply with the following requirements, as well as with any other requirements established by law or regulation:</text> <paragraph num="(1)"> <text>Provide notice to the Commissioner as soon as practicable of any change in the information required to be filed under §B or C of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Maintain combined net assets of all members of at least $1,000,000 as shown by the most recent annual financial report of one or more members, each of which is prepared by an independent certified public accountant and in conformity with generally accepted accounting principles, and submitted on behalf of the group as a whole.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Commissioner Attorney for Service of Process on Groups."> <text>Every group shall be deemed to have appointed the Commissioner its attorney to receive service of legal process issued against it in this State and this appointment shall be irrevocable, shall bind any successor in interest and shall remain in effect for so long as there is any obligation or liability of the group in this State for workers' compensation benefits.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Termination of Certificate of Authority."> <text>The Commissioner may not grant the request of any group to terminate its certificate of authority until the group has insured or reinsured all incurred workers' compensation obligations, including both known claims and expenses associated with them, with an authorized insurer under an agreement filed with and approved in writing by the Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Merger of Groups."> <paragraph num="A."> <text>The Commissioner may approve a merger of groups engaged in the same or a similar type of business only if the resulting group assumes in full all obligations of the merging groups.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall hold a hearing on the merger, pursuant to Insurance Article, §§2-203 and 2-210—2-214, Annotated Code of Maryland, if requested to do so by a member of either group.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Fiscal Examinations."> <paragraph num="A."> <text>The Commissioner may make an examination of the affairs, transactions, records, and assets of any group as often as the Commissioner deems necessary to determine the group's financial solvency and for the protection of the interest of the people of Maryland, but the examination may not be less frequent than once every 5 years.</text> </paragraph> <paragraph num="B."> <text>Each group shall pay to the Commissioner an annual sum of $500 to be used to defray the cost of examinations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Annual Submission of Financial Reports and Other Reports."> <paragraph num="A."> <text>On or before 90 days following the end of a group's fiscal year, each group shall submit to the Commissioner a fiscal year-end audited financial report, prepared by an independent certified public accountant, in conformity with generally accepted accounting principles, which shall be on a form prescribed by the Commissioner which shall include, but not be limited to:</text> <paragraph num="(1)"> <text>Actuarially appropriate reserves for:</text> <paragraph num="(a)"> <text>Known claims and expenses associated with them;</text> </paragraph> <paragraph num="(b)"> <text>Claims incurred but not reported and expenses associated with them;</text> </paragraph> <paragraph num="(c)"> <text>Unearned premiums; and</text> </paragraph> <paragraph num="(d)"> <text>Bad debts, for which reserves shall be shown as liabilities;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An actuarial opinion in compliance with the current edition of the Financial Analysis Handbook published by the National Association of Insurance Commissioners and given by a member of the American Academy of Actuaries or a person who has otherwise demonstrated his or her actuarial competence to the satisfaction of the Commissioner, regarding reserves for:</text> <paragraph num="(a)"> <text>Known claims and expenses associated with them; and</text> </paragraph> <paragraph num="(b)"> <text>Claims incurred but not reported and expenses associated with them.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A copy of a group’s excess insurance policy for the current calendar year shall be submitted with the fiscal year-end audited financial report required by §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>On or before 90 days following the end of a group's fiscal year, each group shall submit to the Commissioner a report, in a format acceptable to the Commissioner, regarding the financial condition of each member based on the member’s most recent fiscal year-end data, containing the information described in COMAR 31.08.09.08C(15). The report shall be signed by an executive officer of the group.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Rebates and Temporary Suspension of Member Contributions."> <paragraph num="A."> <text>Any monies for a fund year in excess of the amount necessary to fund all undiscounted losses and loss adjustment expenses for that fund year, actuarially determined by a member of the American Academy of Actuaries or a person who has otherwise demonstrated his or her actuarial competence to the satisfaction of the Commissioner, may be rebated to members of the group.</text> </paragraph> <paragraph num="B."> <text>A rebate for any fund year shall be paid only to those employers who remain participants in the group for the entire fund year.</text> </paragraph> <paragraph num="C."> <text>Instead of rebating excess monies, a group may temporarily suspend premium contributions for a period of time calculated to result in no excess for the succeeding fund year.</text> </paragraph> <paragraph num="D."> <text>No rebates or suspension of premium contributions shall be made when a group is insolvent or otherwise causes the group to be considered in a financially hazardous condition pursuant to §9-102 of the Insurance Article of the Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Prohibited Unfair Trade Practices."> <paragraph num="A."> <text>The following actions by a group are prohibited unfair trade practices and are violations of this regulation:</text> <paragraph num="(1)"> <text>Excluding an employer from a group for any reason based in whole or in part upon race, color, creed, sex, or blindness of the employer or its employees, or for any arbitrary, capricious, or unfairly discriminatory reason;</text> </paragraph> <paragraph num="(2)"> <text>Excluding an employer from a group by the application of standards which are not reasonably related to the group's economic and business purposes; and</text> </paragraph> <paragraph num="(3)"> <text>Requiring the existence of special conditions, facts, or situations as a condition to acceptance or continuance in a group of a particular employer in an arbitrary, capricious, or unfairly discriminatory manner based in whole or in part upon race, creed, color, sex, religion, national origin, place of residency, or blindness or other physical handicap or disability of the employer or its employees.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If, after written notice and opportunity for a hearing, the Commissioner finds that a group has committed a prohibited unfair trade practice, as defined in this regulation, the Commissioner may exercise the powers conferred upon him by Insurance Article, §25-308, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108, 2-109, 9-102, Title 25, Subtitle 3, and 27-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 26, 1988 (15:26 Md. R. 2982)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.73 to COMAR 31.08.09 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective October 28, 2002 (29:23 Md. R. 1809); amended permanently effective February 3, 2003 (30:2 Md. R. 76)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A, B amended as an emergency provision effective October 28, 2002 (29:23 Md. R. 1809); amended permanently effective February 3, 2003 (30:2 Md. R. 76)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended as an emergency provision effective October 28, 2002 (29:23 Md. R. 1809); amended permanently effective February 3, 2003 (30:2 Md. R. 76)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective June 30, 2008 (35:13 Md. R. 1182)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14A amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14D adopted effective January 1, 2018 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="10" heading="Medical Professional Insurers Online Claim Survey Reporting Requirements"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Amount paid to claimant” means the amount of claim settlements and claim awards.</text> </paragraph> <paragraph num="(2)"> <text>“Closed claim” means a claim filed with the Director of the Health Care Alternative Dispute Resolution Office under Courts and Judicial Proceedings Article, §3-2A-04, Annotated Code of Maryland, that has resulted in:</text> <paragraph num="(a)"> <text>A final judgment in any amount;</text> </paragraph> <paragraph num="(b)"> <text>A settlement in any amount; or</text> </paragraph> <paragraph num="(c)"> <text>A final disposition that does not result in payment on behalf of the insured.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Confidential information” means “confidential commercial information”, “confidential financial information”, and “financial information” as those terms are used in State Government Article, §10-617(d) and (f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Financial information report” means an annual report as described in Regulation .02 of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Insurer” means each insurer that provides professional liability insurance to a physician, nurse, dentist, podiatrist, optometrist, or chiropractor licensed under Health Occupations Article, Annotated Code of Maryland, or a hospital licensed under Health—General Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Neutral expert” has the meaning stated in Courts and Judicial Proceedings Article, §3-2A-09(d)(2), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Financial Information Report."> <paragraph num="A."> <text>Scope. An insurer that issues professional liability insurance to health care providers in the State shall submit to the Commissioner a financial information report.</text> </paragraph> <paragraph num="B."> <text>Confidential Information.</text> <paragraph num="(1)"> <text>An insurer that submits a financial information report shall notify the Commissioner at the time of the submission of any information contained in the report that the insurer considers to be proprietary information.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner, in accordance with State Government Article, §10-617(d) and (f), Annotated Code of Maryland, shall deny inspection of any part of a report submitted under this chapter that the Commissioner determines contains confidential commercial information or confidential financial information.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Filing Requirements.</text> <paragraph num="(1)"> <text>Insurers shall submit a financial information report by April 30 of each year for the preceding calendar year.</text> </paragraph> <paragraph num="(2)"> <text>The financial information report shall state, in the aggregate:</text> <paragraph num="(a)"> <text>The nature and cost of reinsurance for the insurer for the preceding calendar year;</text> </paragraph> <paragraph num="(b)"> <text>The claims experience, by category, of health care providers insured by the insurer during the preceding calendar year;</text> </paragraph> <paragraph num="(c)"> <text>The amount paid by the insurer under claim settlements and claim awards in the preceding calendar year;</text> </paragraph> <paragraph num="(d)"> <text>The amount of reserves for claims incurred and for incurred but unreported claims held by the insurer at the close of the preceding calendar year; and</text> </paragraph> <paragraph num="(e)"> <text>The number of claims settled by the insurer during the preceding calendar year that included structured settlement payments.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Closed Claim Survey."> <paragraph num="A."> <text>Scope. Each insurer that issues professional liability insurance in the State shall complete and submit to the Commissioner a closed claim survey form, as described in Regulation .04 of this chapter, for each closed claim.</text> </paragraph> <paragraph num="B."> <text>Within 90 days after the end of each calendar quarter, an insurer shall complete and submit to the Commissioner the closed claim survey forms for claims closed by the insurer in that quarter.</text> </paragraph> <paragraph num="C."> <text>The closed claim survey forms shall be submitted to the Commissioner using an online survey tool made available by the Maryland Insurance Administration.</text> </paragraph> <paragraph num="D."> <text>A closed claim that is covered under a primary policy and one or more excess policies shall be reported only by the insurer that issued the primary policy. The insurer that issued the primary policy shall report the total amount, if any, paid with respect to the closed claim, including any amount paid under an excess policy and any amount paid by the health care provider subject to the claim or by a person other than an insurer on behalf of that health care provider.</text> </paragraph> <paragraph num="E."> <text>A closed claim survey form shall be completed and submitted only for a closed claim that arises out of an act or omission alleged to have occurred in the State or that was covered under a policy of professional liability insurance issued in the State. If the act, omission, or injury alleged in the closed claim allegedly occurred outside the State but was subject to resolution under the substantive laws of the State, a closed claim survey form is not to be submitted on that closed claim, unless the closed claim was covered under a policy of professional liability insurance issued in the State.</text> </paragraph> <paragraph num="F."> <text>A single closed claim survey form shall be filed for any closed claim that arises out of the same alleged acts or omissions of a health care provider and asserts the same injury, regardless of the number of claimants seeking damages on account of that injury. Any amounts identified on the closed claim survey form in connection with such a closed claim shall reflect all amounts paid to all claimants in that closed claim.</text> </paragraph> <paragraph num="G."> <text>If the insurer did not close any claims during a calendar quarter, the insurer need not submit a closed claim survey form but shall so notify the Commissioner in writing within 90 days after the end of the calendar quarter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Required Information."> <text>The following information shall be reported on a closed claim survey form:</text> <paragraph num="A."> <text>Name of insurer;</text> </paragraph> <paragraph num="B."> <text>Name of insurer group;</text> </paragraph> <paragraph num="C."> <text>Claim file identification (ID);</text> </paragraph> <paragraph num="D."> <text>Name of person completing the form;</text> </paragraph> <paragraph num="E."> <text>Telephone number, including area code, of person completing the form;</text> </paragraph> <paragraph num="F."> <text>Date form completed;</text> </paragraph> <paragraph num="G."> <text>Date of injury;</text> </paragraph> <paragraph num="H."> <text>Date injury reported to insurer;</text> </paragraph> <paragraph num="I."> <text>Date claim closed;</text> </paragraph> <paragraph num="J."> <text>Whether the claim was previously reported;</text> </paragraph> <paragraph num="K."> <text>Age of injured person at time of injury;</text> </paragraph> <paragraph num="L."> <text>Gender of injured person at time of injury;</text> </paragraph> <paragraph num="M."> <text>Type of injury, such as wrongful death, permanent disability, or other bodily injury;</text> </paragraph> <paragraph num="N."> <text>Description of injury;</text> </paragraph> <paragraph num="O."> <text>Name of health facility where injury occurred;</text> </paragraph> <paragraph num="P."> <text>Type of medical professional liability policy, such as occurrence, claims made—basic, or claims made—tail;</text> </paragraph> <paragraph num="Q."> <text>Type of patient, such as inpatient, emergency room outpatient, or other outpatient;</text> </paragraph> <paragraph num="R."> <text>Physician Insurance Services Office Incorporated (ISO) classification or equivalent classification;</text> </paragraph> <paragraph num="S."> <text>Type of health care provider, such as physician-no surgery, surgeon, psychiatrist and related specialties, nurse, nurse midwife, optometrist, pharmacist, chiropractor, podiatrist, psychologist, dentist, hospital, other health care facility, or nurse anesthetist;</text> </paragraph> <paragraph num="T."> <text>Physician and surgeon classification, including name of specialty;</text> </paragraph> <paragraph num="U."> <text>Health care provider name;</text> </paragraph> <paragraph num="V."> <text>Health care provider license number;</text> </paragraph> <paragraph num="W."> <text>Policy limits for each claim or medical incident;</text> </paragraph> <paragraph num="X."> <text>Policy limits for annual aggregate;</text> </paragraph> <paragraph num="Y."> <text>If known, the facility, office, or county where the injury occurred;</text> </paragraph> <paragraph num="Z."> <text>Whether the claim is a zero payment claim file;</text> </paragraph> <paragraph num="AA."> <text>Full name and location of the court where the suit was filed and the case was tried;</text> </paragraph> <paragraph num="BB."> <text>Case or docket number;</text> </paragraph> <paragraph num="CC."> <text>Whether settlement was reached or award was made at one of the following stages:</text> <paragraph num="(1)"> <text>Arbitration;</text> </paragraph> <paragraph num="(2)"> <text>Mediation before suit was filed;</text> </paragraph> <paragraph num="(3)"> <text>After suit was filed, but before trial;</text> </paragraph> <paragraph num="(4)"> <text>During trial, but before court verdict;</text> </paragraph> <paragraph num="(5)"> <text>Court verdict;</text> </paragraph> <paragraph num="(6)"> <text>After verdict; or</text> </paragraph> <paragraph num="(7)"> <text>After appeal was filed;</text> </paragraph> </paragraph> <paragraph num="DD."> <text>If settlement was reached or award was made by court verdict, whether the result was:</text> <paragraph num="(1)"> <text>Directed verdict for plaintiff;</text> </paragraph> <paragraph num="(2)"> <text>Directed verdict for defendant;</text> </paragraph> <paragraph num="(3)"> <text>Judgment notwithstanding the verdict for plaintiff;</text> </paragraph> <paragraph num="(4)"> <text>Judgment notwithstanding the verdict for defendant;</text> </paragraph> <paragraph num="(5)"> <text>Judgment for plaintiff;</text> </paragraph> <paragraph num="(6)"> <text>Judgment for defendant;</text> </paragraph> <paragraph num="(7)"> <text>Judgment for plaintiff, after appeal;</text> </paragraph> <paragraph num="(8)"> <text>Judgment for defendant, after appeal; or</text> </paragraph> <paragraph num="(9)"> <text>Any other;</text> </paragraph> </paragraph> <paragraph num="EE."> <text>If there was no final judgment or settlement, the date of the final disposition;</text> </paragraph> <paragraph num="FF."> <text>If there was no final judgment or settlement, the reason for the final disposition;</text> </paragraph> <paragraph num="GG."> <text>If case did go to trial, whether the case was tried by a jury or tried by a judge;</text> </paragraph> <paragraph num="HH."> <text>Total amount paid to the claimant;</text> </paragraph> <paragraph num="II."> <text>Amount paid by the insurer;</text> </paragraph> <paragraph num="JJ."> <text>Amount paid by the insured due to retention or deductible;</text> </paragraph> <paragraph num="KK."> <text>If known, the amount paid by an excess carrier;</text> </paragraph> <paragraph num="LL."> <text>If known, the amount paid by the insured due to settlement or award in excess of policy limits, not including deductible or retention amounts;</text> </paragraph> <paragraph num="MM."> <text>If known, the amount paid by the insurer due to settlement or award in excess of policy limits, not including deductible or retention amounts;</text> </paragraph> <paragraph num="NN."> <text>If known, the amount paid by other defendants or contributors;</text> </paragraph> <paragraph num="OO."> <text>A summary of the occurrence from which the claim or action arose;</text> </paragraph> <paragraph num="PP."> <text>A description of the misdiagnosis or alleged misdiagnosis made, if any, of the patient's actual condition;</text> </paragraph> <paragraph num="QQ."> <text>A description of the procedure giving rise to the claim;</text> </paragraph> <paragraph num="RR."> <text>A description of the principal injury giving rise to the claim;</text> </paragraph> <paragraph num="SS."> <text>The amount of past medical expenses claimed by the plaintiff;</text> </paragraph> <paragraph num="TT."> <text>The amount of future medical expenses claimed by the plaintiff;</text> </paragraph> <paragraph num="UU."> <text>The amount of past lost wages claimed by the plaintiff;</text> </paragraph> <paragraph num="VV."> <text>The amount of future lost wages claimed by the plaintiff;</text> </paragraph> <paragraph num="WW."> <text>The amount of noneconomic damages claimed by the plaintiff;</text> </paragraph> <paragraph num="XX."> <text>The amount of other damages claimed by the plaintiff;</text> </paragraph> <paragraph num="YY."> <text>Whether a structured settlement or periodic payment was used, and if so:</text> <paragraph num="(1)"> <text>The amount of immediate payment;</text> </paragraph> <paragraph num="(2)"> <text>The present value of the projected total future payout, that is, the price of the annuity, if purchased;</text> </paragraph> <paragraph num="(3)"> <text>The projected total future payout; and</text> </paragraph> <paragraph num="(4)"> <text>The cost of the structure;</text> </paragraph> </paragraph> <paragraph num="ZZ."> <text>If a neutral expert was used, the findings of a neutral expert witness regarding future medical expenses;</text> </paragraph> <paragraph num="AAA."> <text>If a neutral expert was used, the findings of a neutral expert witness regarding future loss of earning;</text> </paragraph> <paragraph num="BBB."> <text>If case was tried to verdict:</text> <paragraph num="(1)"> <text>The amount awarded for past medical expenses;</text> </paragraph> <paragraph num="(2)"> <text>The amount awarded for future medical expenses;</text> </paragraph> <paragraph num="(3)"> <text>The amount awarded for past lost wages;</text> </paragraph> <paragraph num="(4)"> <text>The amount awarded for future lost wages;</text> </paragraph> <paragraph num="(5)"> <text>The amount awarded for noneconomic damages; and</text> </paragraph> <paragraph num="(6)"> <text>The amount awarded for other damages;</text> </paragraph> </paragraph> <paragraph num="CCC."> <text>The total allocated loss adjustment expense;</text> </paragraph> <paragraph num="DDD."> <text>Of the total allocated loss adjustment expense, the amount representing fees paid to defense counsel;</text> </paragraph> <paragraph num="EEE."> <text>Of the total allocated loss adjustment expense, the amount of expenses not included in the defense counsel fees;</text> </paragraph> <paragraph num="FFF."> <text>Whether there was a claim made for extra contractual damages;</text> </paragraph> <paragraph num="GGG."> <text>The amount claimed for extra contractual damages;</text> </paragraph> <paragraph num="HHH."> <text>Whether a suit was filed or claim was made for extra contractual damages; and</text> </paragraph> <paragraph num="III."> <text>Where the suit for the extra contractual damages claim was filed, including:</text> <paragraph num="(1)"> <text>The full name of the court where the suit was filed and the case was tried;</text> </paragraph> <paragraph num="(2)"> <text>The case number or docket number;</text> </paragraph> <paragraph num="(3)"> <text>Whether the claim settled or was tried;</text> </paragraph> <paragraph num="(4)"> <text>If tried, whether the trial was before a judge or jury;</text> </paragraph> <paragraph num="(5)"> <text>The amount paid for the extra contractual damages claim; and</text> </paragraph> <paragraph num="(6)"> <text>Whether the claim was previously reported to the Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Penalties."> <text>Failure to report in accordance with this chapter may result in the imposition by the Commissioner of a civil penalty of up to $5,000.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§4-401 and 4-405, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 22, 2006 (33:10 Md. R. 882)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 1, 2018 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="11" heading="Liability of Insurer — Failure to Act in Good Faith" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 adopted as an emergency provision effective October 17, 2007 (34:23 Md. R. 2022); emergency status extended at 35:9 Md. R. 896; emergency status extended at 35:17 Md. R. 1483</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 adopted effective October 20, 2008 (35:21 Md. R. 1828)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective October 11, 2013 (40:22 Md. R. 1875)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A, E amended effective October 11, 2013 (40:22 Md. R. 1875)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 repealed effective March 27, 2017 (44:6 Md. R. 328)</annotation> </annotations> </chapter> <chapter num="12" heading="Temporary Moratoriums and Weather Events"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to ensure that all authorized insurers that utilize temporary moratoriums on the writing of property and casualty insurance, the addition of endorsements for additional coverages, or other policy changes do so in a way that balances the interests of consumers, insurers, producers, and Maryland businesses.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Filing a Temporary Moratorium Protocol."> <paragraph num="A."> <text>An insurer that intends to activate a temporary moratorium in response to an event or emergency listed in Regulation .03C of this chapter shall file its moratorium protocol with the Administration.</text> </paragraph> <paragraph num="B."> <text>The moratorium protocol shall:</text> <paragraph num="(1)"> <text>Be filed with the Commissioner as an underwriting standard or as a rating rule prior to its use;</text> </paragraph> <paragraph num="(2)"> <text>Be filed for all lines of insurance business to which the underwriting standard or rating rule applies;</text> </paragraph> <paragraph num="(3)"> <text>Identify the events or emergencies listed in Regulation .03C of this chapter that will trigger the activation of the temporary moratorium; and</text> </paragraph> <paragraph num="(4)"> <text>Identify the events that will result in the deactivation of the temporary moratorium.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If a moratorium protocol under §B of this regulation is not filed with the Administration, a temporary moratorium as described in §A of this regulation is not valid and may subject the insurer to appropriate administrative action.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Moratorium Protocol."> <paragraph num="A."> <text>An insurer shall design a temporary moratorium protocol to have the least impact on the conduct of insurance business throughout the State as reasonably possible.</text> </paragraph> <paragraph num="B."> <text>An insurer may not utilize the activation of a temporary moratorium to suspend the binding or writing of all of its lines of insurance business unless the suspension is reasonably related to the event or emergency that triggered the activation of the temporary moratorium.</text> </paragraph> <paragraph num="C."> <text>A temporary moratorium may not become effective until triggered by at least one of the following events or emergencies:</text> <paragraph num="(1)"> <text>The National Weather Service issues a hurricane or tropical storm watch, warning, or advisory for part of the State or the entire State. For the purpose of this subsection, the “National Weather Service” shall mean the National Weather Service, National Hurricane Center in Miami, Florida, and its regional National Weather Service Forecast Office covering a part of the State.</text> </paragraph> <paragraph num="(2)"> <text>The Governor or other governmental entity declares a state of emergency for part of the State or the entire State;</text> </paragraph> <paragraph num="(3)"> <text>The announcement of an evacuation, whether mandatory or voluntary, for part of the State or the entire State;</text> </paragraph> <paragraph num="(4)"> <text>The imposition of a special curfew for part of the State or the entire State; or</text> </paragraph> <paragraph num="(5)"> <text>The onset of an earthquake that is in an area within:</text> <paragraph num="(a)"> <text>50 miles of the epicenter of an earthquake that measures 5.0 to 5.9 on the Richter scale; or</text> </paragraph> <paragraph num="(b)"> <text>100 miles of the epicenter of an earthquake that measures greater than 5.9 on the Richter scale.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The temporary moratorium shall be limited to parts of the State:</text> <paragraph num="(1)"> <text>For which the National Weather Service has issued a hurricane or tropical storm watch, warning, or advisory;</text> </paragraph> <paragraph num="(2)"> <text>That are included within a government-declared state of emergency;</text> </paragraph> <paragraph num="(3)"> <text>That are under an evacuation order, whether mandatory or voluntary;</text> </paragraph> <paragraph num="(4)"> <text>That are under a special curfew; or</text> </paragraph> <paragraph num="(5)"> <text>That are within:</text> <paragraph num="(a)"> <text>50 miles of the epicenter of an earthquake that measures 5.0 to 5.9 on the Richter scale; or</text> </paragraph> <paragraph num="(b)"> <text>100 miles of the epicenter of an earthquake that measures greater than 5.9 on the Richter scale.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>A temporary moratorium shall apply only to lines of insurance business that are reasonably expected to be affected by the events or emergencies listed in §C of this regulation that triggered the activation of the temporary moratorium.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Exceptions."> <text>An insurer may not utilize the activation of a temporary moratorium to deny binding authority or coverage for the following transactions:</text> <paragraph num="A."> <text>Property insurance that was bound prior to the activation of the temporary moratorium;</text> </paragraph> <paragraph num="B."> <text>Automobile liability insurance purchased in connection with the purchase of a new or used motor vehicle by a consumer;</text> </paragraph> <paragraph num="C."> <text>Issuance of a policy for which the risk of loss is unrelated to the events or emergencies listed Regulation .03C of this chapter; or</text> </paragraph> <paragraph num="D."> <text>The purchase of additional coverages, endorsements, or limits for an existing policy during its renewal period, subject to any change becoming effective on the renewal date of the policy. For the purpose of section, “renewal period” means the 45-day period immediately prior to the renewal date of a policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Deactivating a Temporary Moratorium."> <paragraph num="A."> <text>An insurer shall regularly monitor its activated temporary moratorium.</text> </paragraph> <paragraph num="B."> <text>A temporary moratorium that is activated based on an event listed under Regulation .03C(1) of this chapter may not continue for more than 24 hours after the termination of the last hurricane or tropical storm watch, warning, or advisory issued by the National Weather Service for part of the State or the entire State.</text> </paragraph> <paragraph num="C."> <text>Earthquake.</text> <paragraph num="(1)"> <text>A temporary moratorium that is activated because of an earthquake under Regulation .03C(5) of this chapter shall be deactivated no later than 72 hours after the onset of the earthquake.</text> </paragraph> <paragraph num="(2)"> <text>An aftershock that measures 5.0 or greater on the Richter scale that occurs during a temporary moratorium that was activated because of an earthquake under Regulation .03C(5) of this chapter may be treated as the onset of a new earthquake, resulting in the beginning of a new 72-hour period during which an insurer may continue to suspend binding authority.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Except as otherwise provided under §G of this Regulation, a temporary moratorium that is activated based on a declaration of a State of Emergency by the Governor or other governmental entity for part of the State or the entire State ends at the expiration of the State of Emergency.</text> </paragraph> <paragraph num="E."> <text>Except as otherwise provided under §G of this Regulation, a temporary moratorium that is activated based on the announcement of an evacuation, whether mandatory or voluntary, for part of the State or the entire State ends at the expiration of the evacuation period.</text> </paragraph> <paragraph num="F."> <text>Except as otherwise provided under §G of this Regulation, a temporary moratorium that is activated based on the imposition of a special curfew for part of the State or the entire State ends at the expiration of the special curfew.</text> </paragraph> <paragraph num="G."> <text>The Commissioner may order the end of a temporary moratorium before the expiration of a State of Emergency, evacuation period, or special curfew, if the Commissioner determines that there is no longer a need for the temporary moratorium for purposes of enforcing the Insurance Article.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108, 2-109, 19-107, and 27-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 22, 2010 (37:6 Md. R. 480)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective April 14, 2014 (41:7 Md. R. 423)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective April 14, 2014 (41:7 Md. R. 423)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective April 14, 2014 (41:7 Md. R. 423)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective April 14, 2014 (41:7 Md. R. 423)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective April 14, 2014 (41:7 Md. R. 423)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 repealed effective November 24, 2016 (43:23 Md. R. 1281)</annotation> </annotations> </chapter> <chapter num="13" heading="Application of a Percentage Deductible in the Case of a Hurricane"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to implement Insurance Article, §§19-209 and 19-209.1, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <paragraph num="A."> <text>This chapter applies to all property and casualty insurers authorized to write homeowner’s insurance policies in Maryland.</text> </paragraph> <paragraph num="B."> <text>This chapter applies to any policy of homeowner’s insurance that provides a percentage deductible.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Delivery by electronic means” includes:</text> <paragraph num="(a)"> <text>Delivery to an electronic mail address at which a party has consented to receive notice; and</text> </paragraph> <paragraph num="(b)"> <text>Posting on an electronic network, together with separate notice to a party directed to the electronic mail address at which the party has consented to receive notice of the posting.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Homeowner’s Insurance.</text> <paragraph num="(a)"> <text>“Homeowner’s insurance” means insurance for residential property that provides one or more of the following coverages:</text> <paragraph num="(i)"> <text>Fire;</text> </paragraph> <paragraph num="(ii)"> <text>Extended coverage;</text> </paragraph> <paragraph num="(iii)"> <text>Vandalism and malicious mischief;</text> </paragraph> <paragraph num="(iv)"> <text>Burglary;</text> </paragraph> <paragraph num="(v)"> <text>Theft; or</text> </paragraph> <paragraph num="(vi)"> <text>Personal liability.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Homeowner’s insurance” does not include:</text> <paragraph num="(i)"> <text>An umbrella policy; or</text> </paragraph> <paragraph num="(ii)"> <text>Property insurance or casualty insurance issued to an individual, a sole proprietor, partnership, corporation, limited liability company, or similar entity and intended to insure against loss arising from the business pursuits of the insured entity.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Hurricane warning” means a warning by the National Hurricane Center of the National Weather Service that hurricane conditions are expected in any part of the State.</text> </paragraph> <paragraph num="(4)"> <text>“National Hurricane Center of the National Weather Service” includes:</text> <paragraph num="(a)"> <text>The National Hurricane Center in Miami, Florida; and</text> </paragraph> <paragraph num="(b)"> <text>A regional National Weather Service Forecast Office covering any part of the State.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Percentage deductible” means a deductible equal to a percentage of the Coverage A — Dwelling Limit of a homeowner’s insurance policy.</text> </paragraph> <paragraph num="(6)"> <text>Residential Property.</text> <paragraph num="(a)"> <text>“Residential property” means property that is used primarily as a residence.</text> </paragraph> <paragraph num="(b)"> <text>“Residential property” includes:</text> <paragraph num="(i)"> <text>A residence written on a personal farmowner’s policy form;</text> </paragraph> <paragraph num="(ii)"> <text>A condominium unit;</text> </paragraph> <paragraph num="(iii)"> <text>A mobile home; and</text> </paragraph> <paragraph num="(iv)"> <text>A multiunit building if one of the units is occupied by the owner of the building and not more than three units are occupied by tenants.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Residential property” does not include a boat.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Underwriting standards” means:</text> <paragraph num="(a)"> <text>Underwriting manuals, including any amendments or supplements to underwriting manuals; and</text> </paragraph> <paragraph num="(b)"> <text>The generally accepted practices of an insurer contained in written underwriting instructions, guidelines, and rules that the insurer provides for use by its underwriters and insurance producers as standards for acceptance of risk.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Underwriting Standard."> <paragraph num="A."> <text>An insurer may not adopt or amend an underwriting standard that requires a hurricane percentage deductible that exceeds 5 percent unless the insurer has filed the underwriting standard or the amendment to the underwriting standard with the Commissioner.</text> </paragraph> <paragraph num="B."> <text>If an insurer withdraws an underwriting standard that requires a percentage deductible that exceeds 5 percent, the insurer shall notify the Commissioner in writing within 10 days of the withdrawal.</text> </paragraph> <paragraph num="C."> <text>An insurer that makes a filing under §A of this regulation shall include the following information in the filing:</text> <paragraph num="(1)"> <text>The insurer’s NAIC number;</text> </paragraph> <paragraph num="(2)"> <text>A copy of the underwriting standard the insurer proposes to adopt, the amendment to an underwriting standard currently in use, or notice of withdrawal of an underwriting standard currently in use;</text> </paragraph> <paragraph num="(3)"> <text>The date on which the insurer intends to adopt, amend, or withdraw the underwriting standard;</text> </paragraph> <paragraph num="(4)"> <text>All of the data on which the insurer relied in developing the proposed underwriting standard, amendment to the underwriting standard, or withdrawal of the underwriting standard;</text> </paragraph> <paragraph num="(5)"> <text>A copy of each page in the insurer’s rating manual that relates to the underwriting standard;</text> </paragraph> <paragraph num="(6)"> <text>A copy of any underwriting standard with a percentage deductible currently in use by the insurer for homeowner’s insurance, including any SERFF tracking number associated with the underwriting standard, or a statement that the insurer does not currently have an underwriting standard with a percentage deductible for homeowner’s insurance; and</text> </paragraph> <paragraph num="(7)"> <text>Any other information the Commissioner considers necessary.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 19-209, and 19-209.1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 23, 2014 (41:12 Md. R. 669)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 10, 2017 (44:7 Md. R. 357)</annotation> </annotations> </chapter> <chapter num="14" heading="Coverage for Loss Caused by Water That Backs Up Through Sewers or Drains"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter does not apply to loss that is caused by a flood.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Backs up” means reverses course, discharges, escapes, overfills, or overflows.</text> </paragraph> <paragraph num="(2)"> <text>“Drain” means a line, pipe, or any other part of a system that:</text> <paragraph num="(a)"> <text>Is located inside or outside of a dwelling; and</text> </paragraph> <paragraph num="(b)"> <text>Drains water away from the dwelling.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Dwelling coverage” means coverage under a policy of homeowner’s insurance for losses resulting from damage to:</text> <paragraph num="(a)"> <text>The dwelling of the policyholder; and</text> </paragraph> <paragraph num="(b)"> <text>Any structure of the policyholder that is attached to the dwelling.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Flood.</text> <paragraph num="(a)"> <text>“Flood” means a general and temporary condition of partial or complete inundation of normally dry land areas from:</text> <paragraph num="(i)"> <text>The overflow of inland or tidal waters;</text> </paragraph> <paragraph num="(ii)"> <text>The unusual and rapid accumulation or runoff of surface water from any source; or</text> </paragraph> <paragraph num="(iii)"> <text>Mudslides that are proximately caused by the unusual and rapid accumulation or runoff of surface water from any source and are similar to a river of liquid and flowing mud on the surface of normally dry land areas, as when earth is carried by a current of water and deposited along the path of the current.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Flood” includes a general and temporary condition of partial or complete inundation of normally dry land areas from the overflow of inland or tidal waters due to the collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by:</text> <paragraph num="(i)"> <text>Waves or currents of water exceeding anticipated cyclical levels or suddenly caused by an unusually high water level in a natural body of water, accompanied by a severe storm;</text> </paragraph> <paragraph num="(ii)"> <text>An unanticipated force of nature, such as a flash flood or abnormal tidal surge; or</text> </paragraph> <paragraph num="(iii)"> <text>A similarly unusual and unforeseeable event.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>Homeowner’s Insurance.</text> <paragraph num="(a)"> <text>“Homeowner’s insurance” means insurance for residential property provided under:</text> <paragraph num="(i)"> <text>A homeowner’s policy;</text> </paragraph> <paragraph num="(ii)"> <text>A condominium owner’s policy;</text> </paragraph> <paragraph num="(iii)"> <text>A mobile homeowner’s policy;</text> </paragraph> <paragraph num="(iv)"> <text>A renter’s policy; or</text> </paragraph> <paragraph num="(v)"> <text>A noncommercial farm owner’s policy.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Homeowner’s insurance” does not include an umbrella policy.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Loss-of-use coverage” means coverage under a policy of homeowner’s insurance for loss of use of the policyholder’s dwelling.</text> </paragraph> <paragraph num="(7)"> <text>“Other structure coverage” means coverage under a policy of homeowner’s insurance for losses resulting from damage to a structure of the policyholder that is on the same property as the policyholder’s dwelling, but is not attached to the dwelling.</text> </paragraph> <paragraph num="(8)"> <text>“Personal property coverage” means coverage under a policy of homeowner’s insurance for losses resulting from damage to personal property that is owned by the policyholder or used by the policyholder.</text> </paragraph> <paragraph num="(9)"> <text>“Sewer” means an underground conduit used to carry off water and waste matter.</text> </paragraph> <paragraph num="(10)"> <text>“Water” includes sewage and other waterborne waste matter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Offer of Coverage."> <paragraph num="A."> <text>An insurer that issues, sells, or delivers a policy of homeowner’s insurance in the State shall at the time of application and renewal offer in writing to provide coverage for loss that:</text> <paragraph num="(1)"> <text>Is caused by or results from water that backs up into a dwelling or other covered structure through a sewer or drain, regardless of the origin of the water; and</text> </paragraph> <paragraph num="(2)"> <text>Is not caused by the negligence of the insured.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An insurer that is required to offer coverage under §A of this regulation shall offer the coverage for loss that is caused by or results from water that backs up through a sewer or drain with limits equal to the limits of liability for dwelling coverage, other structure coverage, personal property coverage, and loss-of-use coverage under the policy of homeowner’s insurance.</text> </paragraph> <paragraph num="C."> <text>If an insurer makes an offer of coverage that meets the requirements of §B of this regulation, the insurer also may offer the coverage for loss that is caused by or results from water that backs up through a sewer or drain with:</text> <paragraph num="(1)"> <text>Limits that are less than the limits for dwelling coverage, other structure coverage, personal property coverage, and loss-of-use coverage under the policy of homeowner’s insurance; or</text> </paragraph> <paragraph num="(2)"> <text>A combined single limit for dwelling coverage, other structure coverage, personal property coverage, and loss-of-use coverage that is equal to or less than the highest limit of liability under the policy of homeowner’s insurance.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The offer of coverage required by §A of this regulation may be met by using the form under COMAR 31.08.18.02.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 19-202, and 19-216(d), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 2015 (41:21 Md. R. 1261)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D adopted effective November 6, 2017 (44:22 Md. R. 1038)</annotation> </annotations> </chapter> <chapter num="15" heading="Underwriting Period"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies only to a binder or policy, other than a renewal policy, of personal insurance, commercial property insurance, or commercial liability insurance.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Delivery by electronic means” includes:</text> <paragraph num="(a)"> <text>Delivery to an electronic mail address at which a party has consented to receive notice; and</text> </paragraph> <paragraph num="(b)"> <text>Posting on an electronic network, together with separate notice to a party directed to the electronic mail address at which the party has consented to receive notice of the posting.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Material Risk Factor.</text> <paragraph num="(a)"> <text>“Material risk factor” means a risk factor that:</text> <paragraph num="(i)"> <text>Was incorrectly recorded or not disclosed by the insured in an application for insurance;</text> </paragraph> <paragraph num="(ii)"> <text>Was in existence on the date of the application; and</text> </paragraph> <paragraph num="(iii)"> <text>Modifies the premium charged on the policy or binder in accordance with the rates and supplementary rating information filed by the insurer under Insurance Article, Title 11, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Material risk factor” does not include:</text> <paragraph num="(i)"> <text>Information that constitutes a material misrepresentation; or</text> </paragraph> <paragraph num="(ii)"> <text>A change initiated by an insured, including any request by the insured that results in a change in coverage, change in deductible, or other change to a policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Personal insurance” means property insurance or casualty insurance issued to an individual, trust, estate, or similar entity that is intended to insure against loss arising principally from the personal, noncommercial activities of the insured.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Underwriting Period."> <paragraph num="A."> <text>A binder or policy is subject to a 45-day underwriting period beginning on the effective date of coverage.</text> </paragraph> <paragraph num="B."> <text>With respect to an account that contains multiple binders or policies, each binder or policy in the account is subject to a separate 45-day underwriting period beginning on the effective date of coverage for that binder or policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Discovery of Material Risk Factor During Underwriting Period."> <paragraph num="A."> <text>If an insurer discovers a material risk factor during the underwriting period, the insurer shall recalculate the premium for the policy or binder based on the material risk factor as long as the risk continues to meet the underwriting standards of the insurer in accordance with the rates and supplementary rating information filed under Insurance Article, Title 11, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Notice of Recalculated Premium.</text> <paragraph num="(1)"> <text>The amount of the recalculated premium;</text> </paragraph> <paragraph num="(2)"> <text>The reason for the increase or reduction in the premium in accordance with §C of this regulation; and</text> </paragraph> <paragraph num="(3)"> <text>That the insured has the right to terminate the policy and receive a pro rata refund of any premium paid by notifying the insurer of the termination.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Reason for Increase or Reduction in Premium.</text> <paragraph num="(1)"> <text>In stating the reasons for the increase or reduction in the premium, the insurer shall identify each material risk factor that was discovered during the 45-day underwriting period and,</text> </paragraph> <paragraph num="(2)"> <text>Examples of acceptable reasons required by §C(1) of this regulation include, but are not limited to:</text> <paragraph num="(a)"> <text>Premium recalculated due to [NAME OF DRIVER] moving violation on [DATE OF EVENT];</text> </paragraph> <paragraph num="(b)"> <text>Safe driver discount removed due to [NAME OF DRIVER] at fault loss on [DATE OF EVENT];</text> </paragraph> <paragraph num="(c)"> <text>[NAME OF DRIVER] was not listed on the application. Policy must be re-rated or signed driver exclusion must be completed;</text> </paragraph> <paragraph num="(d)"> <text>Applicant does not currently have an automobile policy with the Company, Multi Policy Discount removed;</text> </paragraph> <paragraph num="(e)"> <text>Policy was issued without the auto/home discount; or</text> </paragraph> <paragraph num="(f)"> <text>Premium recalculated due to lack of a central alarm system.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The use of generalized phrases such as “change in prior insurance status,” “change in vehicle symbol,” or “change in protection code” does not meet the requirements of §C(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Form of Notice.</text> <paragraph num="(1)"> <text>An insurer that is required to provide a notice of recalculated premium under §B of this regulation shall provide the notice to an insured on:</text> <paragraph num="(a)"> <text>The form contained in Regulation .05 of this chapter; or</text> </paragraph> <paragraph num="(b)"> <text>A form that is filed with and approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an insurer utilizes a form other than the one contained in Regulation .05 of this chapter, the form shall:</text> <paragraph num="(a)"> <text>Include a statement that the insured may contact the insurer or, if applicable, the insured’s insurance producer for additional information concerning the reason for the insurer’s action and how the action affected the premium charged; and</text> </paragraph> <paragraph num="(b)"> <text>Provide the telephone number for the insurer that the insured may use to obtain additional information about the insurer’s action, or, in lieu of the insurer’s contact information, provide the telephone number for the insured’s insurance producer.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If an insurer includes a notice of recalculated premium on a form that contains other information, the insurer shall:</text> <paragraph num="(a)"> <text>Place the notice of recalculated premium in a conspicuous location on the form; and</text> </paragraph> <paragraph num="(b)"> <text>Print the text of the notice of recalculated premium in at least 12-point type.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Delivery of Notice.</text> <paragraph num="(1)"> <text>An insurer that is required to provide a written notice under §B of this regulation shall send the notice to the policyholder not later than the end of the 45-day underwriting period by:</text> <paragraph num="(a)"> <text>First-class mail tracking method; or</text> </paragraph> <paragraph num="(b)"> <text>Delivery by electronic means in accordance with Insurance Article, §27-601.2, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer may send the notice required under §B of this regulation to the policyholder with the policy, declarations page, or any other document that the insurer sends to the policyholder.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Notice of Recalculated Premium Form."> <text>FORM AT END OF CHAPTER</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Cancellation of Binder or Policy During Underwriting Period."> <paragraph num="A."> <text>An insurer may cancel a binder or policy during the 45-day underwriting period if the risk does not meet the underwriting standards of the insurer.</text> </paragraph> <paragraph num="B."> <text>Cancellation for Reason Other than Nonpayment of Premium.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, an insurer that cancels a policy or binder under this regulation for a reason other than nonpayment of premium shall:</text> <paragraph num="(a)"> <text>Provide the insured with a written notice of cancellation that clearly and specifically states the insurer’s actual reason for the cancellation; and</text> </paragraph> <paragraph num="(b)"> <text>Send the notice of cancellation to the named insured’s last known address by a first- class mail tracking method not less than 15 days before the effective date of the cancellation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>With respect to workers’ compensation insurance, an insurer that cancels a policy or binder under this regulation for a reason other than nonpayment of premium shall:</text> <paragraph num="(a)"> <text>Provide the insured with a written notice of cancellation that clearly and specifically states the insurer’s actual reason for the cancellation;</text> </paragraph> <paragraph num="(b)"> <text>Send the notice of cancellation to the named insured’s last known address by a first-class mail tracking method not less than 15 days before the effective date of the cancellation; and</text> </paragraph> <paragraph num="(c)"> <text>File a copy of the notice of cancellation with the designee of the Workers’ Compensation Commission.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Cancellation for Nonpayment of Premium.</text> <paragraph num="(1)"> <text>An insurer that cancels a policy or binder under this regulation for nonpayment of premium shall:</text> <paragraph num="(a)"> <text>Provide the insured with a written notice of cancellation that states the insurer’s intent to cancel the policy or binder for nonpayment of premium; and</text> </paragraph> <paragraph num="(b)"> <text>Send the notice of cancellation to the named insured’s last known address by a first-class mail tracking method not less than 10 days before the effective date of the cancellation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In the case of a policy or binder of workers’ compensation insurance, the insurer shall comply with the requirements of §C(1) of this regulation and shall file a copy of the notice of cancellation with the designee of the Workers’ Compensation Commission.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Refund of Premium."> <text>If an insured terminates a policy following receipt of a notice of recalculated premium, the insurer shall refund to the insured any premium paid by the insured on a pro rata basis.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Notice of Ability to Cancel Binder or Policy or Recalculate Premium."> <text>At the time of application or when a binder or policy is issued, an insurer shall provide written notice of its ability to cancel a binder or policy or recalculate the premium from the effective date of the policy during the underwriting period.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Premium Audit."> <text>Nothing in this chapter prohibits an insurer from:</text> <paragraph num="A."> <text>Conducting an audit in accordance with the provisions of a policy; or</text> </paragraph> <paragraph num="B."> <text>Charging and collecting the appropriate premium based on the results of the audit in accordance with the rates and supplementary rating information filed by the insurer under Insurance Article, Title 11, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 11-205, 11-306, 12-106, and 19-406, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 9, 2014 (41:11 Md. R. 606)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective January 14, 2019 (46:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 14, 2019 (46:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B, C amended effective November 6, 2017 (44:22 Md. R. 1038)</annotation> </annotations> </chapter> <chapter num="16" heading="Notice of Amount of Renewal and Expiring Policy Premiums"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to ensure that an insurer properly notifies the named insured and insurance producer of the amount of a policy’s renewal and expiring premiums in accordance with Insurance Article, §27-607, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter applies to all policies of personal insurance and insurance issued under the Maryland Property Insurance Availability Act or any similar act instituted to ensure the availability of property insurance.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Expiring premium” means:</text> <paragraph num="(a)"> <text>The dollar amount of the premium charged at the beginning of the expiring policy term; and</text> </paragraph> <paragraph num="(b)"> <text>If different, the dollar amount of the premium:</text> <paragraph num="(i)"> <text>Charged at the time the insurer issues the notice required by Regulation .04 of this chapter; and</text> </paragraph> <paragraph num="(ii)"> <text>Stated on an annualized basis.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Insurer” means an authorized property or casualty insurer that issues or delivers a policy of personal insurance in the State or a policy issued under the Maryland Property Insurance Availability Act or any similar act instituted to ensure the availability of property insurance.</text> </paragraph> <paragraph num="(3)"> <text>“Maryland Property Insurance Availability Act” means insurance described in Insurance Article, Title 25, Subtitle 4, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Personal insurance” means a policy of property insurance or casualty insurance as defined by Insurance Article, §27-601(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Renewal premium” means the dollar amount of the premium to be charged for the next policy term.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Procedures and Requirements."> <paragraph num="A."> <text>At least 45 days prior to the renewal date of a policy subject to this chapter, an insurer shall send written notice to the named insured and the insurance producer of the policy.</text> </paragraph> <paragraph num="B."> <text>The notice required under §A of this regulation:</text> <paragraph num="(1)"> <text>Shall be clear and specific;</text> </paragraph> <paragraph num="(2)"> <text>Shall state the dollar amount or amounts of the policy’s expiring premium;</text> </paragraph> <paragraph num="(3)"> <text>Shall state the dollar amount of the policy’s renewal premium;</text> </paragraph> <paragraph num="(4)"> <text>Shall be sent either by first class mail or delivered by electronic means pursuant to the requirements of Insurance Article, §27-601.2, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(5)"> <text>May be sent together with the renewal policy and may be included on the declarations page of the renewal policy.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Penalties."> <text>Penalties for violations of these regulations shall be assessed in accordance with Insurance Article, §§4-113 and 27-612, Annotated Code of Maryland.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-113, 27-607, and 27-612, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 2015 (41:21 Md. R. 1261)</annotation> </annotations> </chapter> <chapter num="17" heading="Statement of Actual Reason for Cancellation or Nonrenewal of Commercial Insurance Policy"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies only to policies of commercial insurance.</text> </paragraph> <paragraph num="B."> <text>This chapter does not apply to:</text> <paragraph num="(1)"> <text>A policy in effect for 45 days or less, as provided in Insurance Article, §12-106, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(2)"> <text>A policy issued to an exempt commercial policyholder under Insurance Article, §11-206, Annotated Code of Maryland, if the policy provides for written notice of not less than 30 days of the insurer’s intent to cancel or refusal to renew.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter the following term has the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Commercial Insurance Defined.</text> <paragraph num="(1)"> <text>“Commercial insurance” means property insurance or casualty insurance:</text> <paragraph num="(a)"> <text>Issued to an individual, sole proprietor, partnership, corporation, limited liability company, or similar entity; and</text> </paragraph> <paragraph num="(b)"> <text>Intended to insure against loss arising from the business pursuits of the insured entity.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Commercial insurance” does not include:</text> <paragraph num="(a)"> <text>A policy issued by the Maryland Automobile Insurance Fund;</text> </paragraph> <paragraph num="(b)"> <text>A policy issued by the Joint Insurance Association;</text> </paragraph> <paragraph num="(c)"> <text>Workers’ compensation insurance; or</text> </paragraph> <paragraph num="(d)"> <text>Title Insurance.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Statement of Actual Reason."> <paragraph num="A."> <text>Whenever an insurer cancels or refuses to renew a policy of commercial insurance for a reason other than nonpayment of premium, the insurer shall provide to the named insured a written statement of the actual reason for the cancellation or refusal to renew.</text> </paragraph> <paragraph num="B."> <text>An insurer shall include in a statement of actual reason:</text> <paragraph num="(1)"> <text>An offer to provide additional information in support of the proposed action on the written request of the insured;</text> </paragraph> <paragraph num="(2)"> <text>A notice that if the insured would like additional information in support of the proposed action, the insured is required to send the written request for additional information within 30 days after the date of the statement of actual reason; and</text> </paragraph> <paragraph num="(3)"> <text>An address for the insured to submit the written request for additional information.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-605, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 17, 2014 (41:5 Md. R. 348)</annotation> </annotations> </chapter> <chapter num="18" heading="Homeowner's Insurance Notice"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide the form that insurers may use to comply with the requirements of Insurance Article, §§19-202, 19-205(a)(4)(vii), 19-210(f), 19-214(a), 19-216, and 27-501(n)(2), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Homeowner’s Insurance Notice — Form."> <text>Form located at end of chapter</text> </regulation> <regulation prefix="Regulation" num=".03" heading="No Private Cause of Action."> <text>This chapter does not create a private cause of action for a violation of this chapter.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §19-216, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 6, 2017 (44:22 Md. R. 1038)</annotation> </annotations> </chapter> </subtitle> <subtitle num="09" heading="Life Insurance and Annuities"> <chapter num="01" heading="Wholesale Life Insurance"> <regulation prefix="Regulation" num=".01" heading="Definition."> <paragraph num="A."> <text>“Wholesale life insurance” means life insurance distributed on a mass merchandising basis and administered by group methods provided, with or without evidence of insurability, by individual policies and made available to employees or members under a program sponsored by:</text> <paragraph num="(1)"> <text>An employer;</text> </paragraph> <paragraph num="(2)"> <text>An association of employers;</text> </paragraph> <paragraph num="(3)"> <text>A union or association of unions;</text> </paragraph> <paragraph num="(4)"> <text>An association of persons having the same occupation or profession;</text> </paragraph> <paragraph num="(5)"> <text>An association of civil service employees;</text> </paragraph> <paragraph num="(6)"> <text>A religious, charitable, recreational, educational, civic, or fraternal organization or association;</text> </paragraph> <paragraph num="(7)"> <text>A school;</text> </paragraph> <paragraph num="(8)"> <text>A sports team;</text> </paragraph> <paragraph num="(9)"> <text>A volunteer fire department; or</text> </paragraph> <paragraph num="(10)"> <text>Any substantially similar group approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The program may also cover dependents of the employees or members.</text> </paragraph> <paragraph num="C."> <text>As used in this chapter, the term “wholesale life insurance policy” does not include policies issued in connection with:</text> <paragraph num="(1)"> <text>Employee benefit trusts and plans forming part of a retirement, stock bonus, pension, profit-sharing, annuity, deferred compensation, disability, or death benefit plan established by an employer for the benefit of some or all of his employees or their dependents or beneficiaries qualified or exempt under the United States Internal Revenue Code of 1954, as amended from time to time;</text> </paragraph> <paragraph num="(2)"> <text>Employee trusts and plans established under the Federal Self-Employed Individuals Tax Retirement Act of 1962;</text> </paragraph> <paragraph num="(3)"> <text>Tax sheltered annuity programs for certain organizations exempt from federal income tax and for public schools; and</text> </paragraph> <paragraph num="(4)"> <text>Buy-and-sell agreements.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An arrangement for premium payment such as salary deduction, salary savings, or payroll allotment may not in and of itself cause a policy to be classified as wholesale life insurance. Except where the context indicates otherwise, references to policy in this chapter shall refer to a wholesale life insurance policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Plan of Insurance."> <text>Wholesale life insurance policies may be issued on the yearly or more frequently renewable term plan or on any other term or on any whole life or endowment plan. If the policy is issued on the yearly or more frequently renewable term plan or any other term plan, it shall contain the right of renewal to at least age 65 nearest birthday (subject, however, to the insurer's right to refuse renewal in accordance with Regulation .05 of this chapter), and shall contain the right to convert to a whole life or endowment plan after termination of the final term period. However, the policy need not provide the privilege of renewal of term insurance on a dependent child beyond age 19 nearest birthday. Whenever the policy is not eligible for renewal as a wholesale life insurance policy, it shall contain such additional conversion rights as are hereinafter set forth if written on a yearly or more frequently renewable term basis or, if written on other than a yearly or more frequently renewable term basis, shall give the insured employee or member the right to continue the insurance under the original policy at the same premium, or at a stated higher premium which may not exceed rates charged by the insurer for ordinary policies issued under the same policy plan of insurance for the same class of risk.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Premium Rates."> <paragraph num="A."> <text>Premium rates for wholesale life insurance policies may be less than rates customarily charged by the insurer for ordinary policies issued under the same policy plan of insurance for the same class of risk.</text> </paragraph> <paragraph num="B."> <text>Policies Issued on the Yearly or More Frequently Renewable Term Plan. The policy shall contain a table of renewable premiums for all ages up to the limiting age for renewal. Ages may be grouped for the purpose of premium rates either by one group for ages under 40 or by decennial (10-year) or smaller age groupings for ages under 40, and by quinquennial (5-year) or smaller age groupings for ages 40 to 75. The insurer may reserve the right to change the table of rates upon 30 days prior written notice to the sponsor and to the insured employee or member, the change to become effective on a premium due date or on a policy renewal date specified in the notice, but an increase in rates may not become effective within 1 year after issue of the policy or after the effective date of any prior change in the table of rates.</text> </paragraph> <paragraph num="C."> <text>Policies Issued on Other Than the Yearly or More Frequently Renewable Term Plan. A policy issued on other than the yearly or more frequently renewable term plan shall have premium rates guaranteed in the policy. These rates may not be changed while the policy is continued as a wholesale life insurance policy. However, the insurer may make a change in its schedule of premium rates to be effective for policies issued after the effective date of the change to employees or members of the same sponsor.</text> </paragraph> <paragraph num="D."> <text>Nondiscrimination. Premium rates shall be self-supporting on reasonable assumptions as to mortality, interest, and expense and may not unfairly discriminate between any class or classes of persons insured.</text> </paragraph> <paragraph num="E."> <text>Experience Refund. An insurer may grant experience refunds to a case either retrospectively or prospectively, if all wholesale life insurance cases of the same class are experience rated by the insurer on a equitable basis taking into consideration size, credibility, and other relevant factors.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Permissible Cases."> <paragraph num="A."> <text>Evidence of Insurability. The insurer may require evidence of insurability on individual lives.</text> </paragraph> <paragraph num="B."> <text>Contributory and Noncontributory. Premiums for the policies may be paid by the sponsor or by the employee or member insured, or partly by the sponsor and partly by the employee or member insured.</text> </paragraph> <paragraph num="C."> <text>Employer Sponsored Case.</text> <paragraph num="(1)"> <text>The class or classes of persons to be insured initially shall consist of not less than two employees. An employer sponsored case which meets the qualifications for a group life insurance policy under Insurance Article, Title 17, Annotated Code of Maryland, as amended to date, and under which more than 32 employees are initially eligible, may not be written on a wholesale life insurance basis. The term “employees” may include:</text> <paragraph num="(a)"> <text>Directors and officers, if the employer is a corporation;</text> </paragraph> <paragraph num="(b)"> <text>An individual proprietor or partner, if the employer is an individual proprietor or a partnership;</text> </paragraph> <paragraph num="(c)"> <text>Elected or appointed officials, if the employer is a government unit, department, or agency; and</text> </paragraph> <paragraph num="(d)"> <text>Retired employees.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For purposes of this chapter, employees of affiliated corporations, proprietorships, or partnerships under common control may be regarded as employees of the employer.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Other Sponsors. If a sponsor is other than an employer, the case may be written only if the persons, excluding dependents, to be initially insured shall number at least five, and if the number of persons, excluding dependents, initially eligible exceeds 32, only if the case does not qualify for a group life insurance policy under Insurance Article, Title 17, Annotated Code of Maryland, as amended to date.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Right to Refuse Renewal."> <paragraph num="A."> <text>The insurer may reserve the right to nonrenew a policy in the wholesale life insurance category only for one or more of the following reasons as may be specified in the policy:</text> <paragraph num="(1)"> <text>Nonpayment of premium;</text> </paragraph> <paragraph num="(2)"> <text>Termination of the employee's employment with the sponsor, or the termination of his employment in an eligible class of employees of the sponsor;</text> </paragraph> <paragraph num="(3)"> <text>The termination of membership in the sponsor, or the termination of membership in an eligible class of membership of the sponsor, or when a member ceases to practice the profession or occupation with respect to which the policy was issued;</text> </paragraph> <paragraph num="(4)"> <text>The maturity of the policy, or the attainment of the limiting age for renewal stated in the policy;</text> </paragraph> <paragraph num="(5)"> <text>The nonrenewal at the request of the sponsor of all policies issued in the case;</text> </paragraph> <paragraph num="(6)"> <text>The nonrenewal by the insurer of all policies issued to employees or members of the sponsors, the nonrenewal to be effective on a premium due date or on a renewal date following the insurer's giving at least 60 days prior written notice to the sponsor and to each employee or member insured; or</text> </paragraph> <paragraph num="(7)"> <text>Any other condition for nonrenewal approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Written notice under §A of this regulation may be given by timely mailing of the notice to the employee or member insured at his most recent address known to the insurer or to the sponsor.</text> </paragraph> <paragraph num="C."> <text>Effective Date of Nonrenewal. Termination or nonrenewal of a wholesale life insurance policy for a reason other than nonpayment of premium may not be made effective on a date other than a premium due date or a policy renewal date.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Notice of Conversion."> <text>Whenever a conversion privilege is available under the policy or whenever a policy which is not eligible for renewal as a wholesale life insurance policy may be continued by payment of an increased premium, the insurer shall give the individual employee or member insured written notice of the right to convert or continue. The notice shall be given not more than 60 days before or more than 15 days after the termination or nonrenewal of insurance under the wholesale life insurance policy. If the notice is given more than 15 days after termination or nonrenewal of insurance, the time allowed for the exercise of the privilege of conversion or payment of the increased premium shall be extended for 15 days after the giving of the notice, but not beyond 90 days after the termination or nonrenewal of insurance. An extension of the time to convert or continue the policy does not operate to extend the coverage beyond the period stated in the policy, unless the policy specifically provides for an extension of the coverage. Written notice under this provision may be given by timely mailing of the notice to the employee or member insured at the employee's or member's most recent address known to the insurer or to the sponsor. Notice described in this regulation is not required when the policy may be continued as a wholesale life insurance policy with the same sponsor at an increased premium which is called for in the policy's schedule of premiums because of an increase in the attained age of the person insured or because of a change in the table of rates stated in the policy. In event of a change in the table of rates, notice shall be given as set forth in Regulation .03B of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Brief Description."> <text>Each wholesale life insurance policy shall have legibly inscribed on the first page a brief description which shall include the word “wholesale” and such other information as may be required by Insurance Article, §16-213, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Policy Provisions."> <paragraph num="A."> <text>With respect to each insured employee or member, an individual policy which identifies the insured employee or member by name shall be issued covering himself or his dependents, or both. The policy shall contain all of the provisions required by §§B—M of this regulation, except that any provision or portion thereof which in the opinion of the Commissioner is not applicable to the plan of insurance shall, to the extent inapplicable, not be incorporated in the policy. In lieu of any of the provisions required by this chapter, the Commissioner may approve any provision which he deems more favorable to the policyholder.</text> </paragraph> <paragraph num="B."> <text>Grace Period. A grace period of not less than 30 days shall be allowed within which the payment of any premium payable under the policy (except the first premium) may be made, during which grace period the policy shall continue in full force. If a claim arises under the policy during the grace period, the insurer may deduct the amount of any premium due from the policy proceeds.</text> </paragraph> <paragraph num="C."> <text>Incontestability. The policy shall be incontestable as to life insurance benefits (exclusive of additional benefits relating to disability or accidental death), except for nonpayment of premium, after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue.</text> </paragraph> <paragraph num="D."> <text>Entire Contract. The policy shall provide that it, or it together with any application for a policy if a copy of the application is endorsed upon or attached to the policy when issued, shall constitute the entire contract between the insurer and the policyholder, and if the application is so made a part of the policy, that all statements contained in the application shall, in the absence of fraud, be deemed representations and not warranties.</text> </paragraph> <paragraph num="E."> <text>Misstatement of Age. The policy shall provide that if the age of the insured or any other person whose age is considered in determining the premium or benefit has been misstated, any amount payable or benefit accruing under the policy shall be such as the premium would have purchased at the correct age or ages.</text> </paragraph> <paragraph num="F."> <text>Payment of Claims. The policy shall provide that any benefits becoming payable by reason of the death of the insured shall be made to the person entitled to them upon receipt of due proof of death.</text> </paragraph> <paragraph num="G."> <text>Beneficiary. The policy shall have endorsed on it, or on an application attached to it, the name of the beneficiary and reserve to the policy owner the right to change the beneficiary unless the owner elects to designate a beneficiary irrevocably. The policy may also provide that if the beneficiary designated in the policy does not make a claim under the policy or does not surrender the policy with due proof of death within the period stated in the policy, which may not be less than 30 days after the death of the insured, or if the beneficiary is the estate of the insured, or is a minor, or dies before the insured, or is not legally competent to give a valid release, then the insurer may make any payment under the policy to the estate of the insured, or to any relative of the insured by blood or legal adoption or connection by marriage, or to any person appearing to the insurer to be equitably entitled to payment by reason of having been named beneficiary, or by reason of having incurred expense for the maintenance, medical attention, or burial of the insured. The policy may also include a similar provision applicable to any other payment due under the policy. At the option of the insurer, the policy may also provide that no designation or change of beneficiary shall be binding on the insurer until endorsed on the policy by the insurer, or otherwise accepted by the insurer, and that the insurer may refuse to endorse the name of any proposed beneficiary who does not appear to the insurer to have an insurable interest in the life of the insured. If the policy provides that the proceeds may be payable in installments or as an annuity, the policy shall include a table showing the amount and period of the installment or annuity if determinable at issue.</text> </paragraph> <paragraph num="H."> <text>Reinstatement. The policy shall provide that unless it has been surrendered for its cash surrender value, or its cash surrender value has been exhausted by reason of policy indebtedness, or the paid-up term insurance, if any, has expired, the policy may be reinstated at any time within 3 years from the due date of the first premium in default upon written application to the insurer and the production of evidence of insurability satisfactory to the insurer, and the payment of all premiums in arrears and payment or reinstatement of any other indebtedness to the insurer upon the policy and the payment of interest at a specified rate not exceeding an effective rate of 6 percent per annum compounded annually on all premiums in arrears and indebtedness.</text> </paragraph> <paragraph num="I."> <text>Nonforfeiture Values. The policy shall contain nonforfeiture provisions not less favorable to the policyholder in every respect than those required under Insurance Article, Title 16, Subtitle 3, Annotated Code of Maryland, for a policy of ordinary life insurance issued on the same plan of insurance and containing the same benefits.</text> </paragraph> <paragraph num="J."> <text>Policy Loans. The policy shall contain a provision that after 3 full years premiums have been paid and after the policy has a cash surrender value and while no premium is in default beyond the grace period for payment, the insurer will advance, on proper assignment or pledge of the policy and on the sole security of the policy, at a specified rate of interest not exceeding an effective rate of 6 percent per annum, an amount equal to or, at the option of the person entitled to payment, less than the loan value of the policy. The loan value of the policy shall be at least equal to the cash surrender value at the end of the then current policy year, provided that the insurer may deduct, either from the loan value or from the proceeds of the loan, any existing indebtedness not already deducted in determining the cash surrender value including any interest then accrued but not due, any unpaid balance of the premium for the current policy year, and interest on the loan to the end of the current policy year. The policy may also provide that if interest on any indebtedness is not paid when due, it shall then be added to the existing indebtedness and shall bear interest at the same rate, and that if and when the total indebtedness on the policy, including interest due or accrued, equals or exceeds the amount of the loan value of the policy, then the policy shall terminate and become void, but not until at least 30 days notice has been mailed by the insurer to the last known address of the insured or policy owner and of any assignee of record at the home office of the insurer. The policy shall reserve to the insurer the right to defer the granting of a loan, other than for the payment of any premium to the insurer, for 6 months after application therefor. The policy, at the insurer's option, may provide for automatic premium loan, subject to an election of the person entitled to elect. At the option of the insurer, this provision may be omitted in a policy of term life insurance.</text> </paragraph> <paragraph num="K."> <text>Dividends.</text> <paragraph num="(1)"> <text>If the policy is issued on a participating basis, it shall provide that the insurer shall annually ascertain and apportion any divisible surplus under the policy which will accrue on the policy anniversary or other dividend date specified in the policy and that dividends arising from this apportionment shall be credited annually beginning not later than the end of the third policy year. The payment of any dividend payable on or after the end of the third policy year may not be made contingent upon the payment of any premium due on or after the date when the dividend becomes payable.</text> </paragraph> <paragraph num="(2)"> <text>The policy shall provide that the person entitled to the dividend shall have the right, at his option, to have the dividend arising from the participation:</text> <paragraph num="(a)"> <text>Paid in cash;</text> </paragraph> <paragraph num="(b)"> <text>Applied to the payment of premium if any then be due;</text> </paragraph> <paragraph num="(c)"> <text>Applied to provide paid-up additions to the policy; or</text> </paragraph> <paragraph num="(d)"> <text>Left to accumulate at a rate of interest not less than that specified in the policy.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>However, in the case of a term policy, the policy need not provide the options of §K(2)(c) or (d) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The policy shall further provide that a specified option shall become effective if the person entitled to the dividend fails to notify the insurer in writing of his election not later than 30 days following the date on which any dividend is payable.</text> </paragraph> </paragraph> <paragraph num="L."> <text>Conversion on Termination of Eligibility. A yearly or more frequently renewable term wholesale life insurance policy shall contain a provision that if the coverage is not continued as a wholesale life insurance policy because the employee or dependent has attained the limiting age or because of termination of employment with the sponsor or termination in an eligible class of employees, or termination of membership in the sponsor, or termination of membership in an eligible class of membership of the sponsor or where a member ceases to practice the profession or occupation with respect to which the policy was issued, the persons covered under the policy shall be entitled to have issued to them by the insurer, without evidence of insurability, individual policies of life insurance without disability or accidental death benefits, provided:</text> <paragraph num="(1)"> <text>Application for the individual policy shall be made and the first premium paid to the insurer within 31 days after the termination or attainment of a limiting age;</text> </paragraph> <paragraph num="(2)"> <text>The individual policy shall, at the option of the person, be on any one of the forms, except term insurance, then customarily issued by the insurer at the age and for the amount applied for;</text> </paragraph> <paragraph num="(3)"> <text>The individual policy shall be in an amount not in excess of the amount of life insurance which is discontinued under the wholesale life insurance policy, less the amount of any life insurance for which the person is or becomes eligible under the same or any other wholesale life or group life insurance policy within 31 days after the discontinuance; and</text> </paragraph> <paragraph num="(4)"> <text>The premium on the individual policy shall be at the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which the person then belongs, and to his age attained on the effective date of the individual policy.</text> </paragraph> </paragraph> <paragraph num="M."> <text>Conversion on Termination or Nonrenewal of Case. A yearly or more frequently renewable term wholesale life insurance policy shall contain a provision that if the policy is not continued as a wholesale life insurance policy because of nonrenewal of the case by the insurer or by the sponsor, every employee, member, or dependent insured at the date of discontinuance who has been so insured for at least 5 years before discontinuance shall be entitled to have issued to him by the insurer an individual policy of life insurance subject to the same conditions provided in §L of this regulation, except that the amount of insurance on that person under the converted policy may not exceed the smaller of:</text> <paragraph num="(1)"> <text>The amount of the person's protection terminating under the wholesale life insurance policy less the amount of any life insurance for which he is or becomes eligible under any group life or wholesale life insurance policy issued or reinstated by the same or another insurer within 31 days after discontinuance; or</text> </paragraph> <paragraph num="(2)"> <text>$2,000.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Combination of Life and Health Insurance."> <text>A wholesale life insurance policy may include, or may provide by rider, health insurance benefits, in which case the policy shall contain provisions relating to the health insurance which may not be less favorable to the insured employee or member than the applicable provisions required under Insurance Article, Title 15, Annotated Code of Maryland, and under any applicable regulations issued thereunder for a policy providing similar benefits. Upon discontinuance of the policy as a wholesale life insurance policy, any health insurance benefits originally provided may not be included in any conversion privilege unless the insurer, at its option, shall so provide, in which case the provision in the policy regarding the conversion privilege shall clearly indicate the extent of health insurance benefits which may be continued after the policy ceases to be a wholesale life insurance policy.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Policy Restrictions."> <paragraph num="A."> <text>Prohibited Provisions. A wholesale life insurance policy may not contain any provision which is prohibited under Insurance Article, §12-209 or 16-216, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Limitations of Liability. A wholesale life insurance policy may not contain any limitation of liability which is less favorable to the policyholder than limitations permitted under Insurance Article, §16-215, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>Separate Agreements. A separate agreement may not be entered into between the insurer and the sponsor which would purport to change the terms and conditions of any wholesale life insurance policy delivered to an employee or member.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Validity of Noncomplying Forms."> <text>Any wholesale life insurance policy hereafter issued and otherwise valid which contains any condition or provision not in compliance with the requirements of Insurance Article, Annotated Code of Maryland, and of any applicable regulations may not be thereby rendered invalid, but shall be construed in accordance with conditions and provisions at least as favorable as those required under Insurance Article, Annotated Code of Maryland, and the applicable regulations.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Effective Date."> <text>This chapter shall take effect January 1, 1969, provided, however, that for any case in existence before the effective date of this chapter and for any new case initially made effective before June 1, 1969, the insurer may issue policy forms approved by the Maryland Insurance Administration before January 1, 1969, for use as wholesale life insurance policies which approval was in effect on the initial effective date of that case, and, unless the Commissioner otherwise prescribes pursuant to the provisions of Insurance Article, Annotated Code of Maryland, and §3 of Chapter 553 of the Acts of the 1963 General Assembly of Maryland, the insurer may hereafter continue to issue those policy forms to employees or members newly insured under that case.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 16-102, and 16-217, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1969</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.48 to COMAR 31.09.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="02" heading="Variable Life Insurance"> <regulation prefix="Regulation" num=".01" heading="Authority and Purpose."> <text>This chapter, applicable to variable life insurance policies, is promulgated under authority of Insurance Article, §§2-109 and 16-601—16-603, Annotated Code of Maryland. The issuance or delivery of life insurance policies on a variable basis in Maryland in any manner not in compliance with this chapter shall be deemed contrary to the requirements of Insurance Article, §§16-601—16-603, Annotated Code of Maryland, and, further, shall be deemed to constitute the transaction of insurance business hazardous to policyholders and the public and contrary to the public interest.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following words have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affiliate" of an insurer means:</text> <paragraph num="(a)"> <text>A person, directly or indirectly, controlling, controlled by, or under common control with the insurer;</text> </paragraph> <paragraph num="(b)"> <text>A person who regularly furnishes investment advice to the insurer with respect to its variable life insurance separate accounts for which a specific fee or commission is charged; or</text> </paragraph> <paragraph num="(c)"> <text>A director, officer, partner, or employee of the insurer, controlling or controlled person, or person providing investment advice or any member of the immediate family of this person.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Agent” means a person licensed in this State as an agent or broker with respect to the sale of life insurance.</text> </paragraph> <paragraph num="(3)"> <text>“Assumed investment rate” means the rate of investment return which would be required to be credited to a variable life insurance policy, after deduction of charges for taxes, investment expenses, and mortality and expense guarantees to maintain the variable death benefit equal at all times to the amount of death benefit, other than incidental insurance benefits, which would be payable under the plan of insurance if the death benefit did not vary according to the investment experience of the separate account.</text> </paragraph> <paragraph num="(4)"> <text>“Benefit base” means the amount not less than the amount specified under Regulation .06B(2) of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Commissioner” means the Insurance Commissioner of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>Control.</text> <paragraph num="(a)"> <text>“Control”, “controlling”, “controlled by”, and “under common control with” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person.</text> </paragraph> <paragraph num="(b)"> <text>“Control” shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing more than 10 percent of the voting securities of any other person. This presumption may be rebutted by a showing made to the satisfaction of the Commissioner that control does not exist in fact. The Commissioner may determine, after furnishing all persons in interest notice of an opportunity to be heard, and making specific findings of fact to support the determination that control exists in fact, notwithstanding the absence of a presumption to that effect.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Flexible premium policy” means any variable life insurance policy other than a scheduled premium policy as specified under §B(15) of this regulation.</text> </paragraph> <paragraph num="(8)"> <text>“General account” means all assets of the insurer other than assets in separate accounts established pursuant to Insurance Article, §§5-512 and 16-601—16-603, Annotated Code of Maryland, or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign insurer or the state of entry of an alien insurer, whether or not the separate account is established for variable life insurance.</text> </paragraph> <paragraph num="(9)"> <text>“Incidental insurance benefit” means all insurance benefits in a variable life insurance policy, other than the variable death benefit and the minimum death benefit, including but not limited to accidental death and dismemberment benefits, disability income benefits, guaranteed insurability options, family income, or fixed benefit term riders.</text> </paragraph> <paragraph num="(10)"> <text>“May” is permissive.</text> </paragraph> <paragraph num="(11)"> <text>“Minimum death benefit” means the amount of the guaranteed death benefit, other than incidental insurance benefits, payable under a variable life insurance policy regardless of the investment performance of the separate account.</text> </paragraph> <paragraph num="(12)"> <text>“Net investment return” means the rate of investment return in a separate account to be applied to the benefit base after deduction of charges for taxes, investment expenses, and mortality and expense guarantees in accordance with the terms of the policy.</text> </paragraph> <paragraph num="(13)"> <text>“Person” means an individual, corporation, partnership, association, trust, or fund.</text> </paragraph> <paragraph num="(14)"> <text>“Policy processing day” means the day on which charges authorized in the policy are deducted from the cash value of the policy.</text> </paragraph> <paragraph num="(15)"> <text>“Scheduled premium policy” means a variable life insurance policy under which both the amount and timing of premium payments are fixed by the insurer.</text> </paragraph> <paragraph num="(16)"> <text>“Separate account” means a separate account established for variable life insurance pursuant to Insurance Article, §§16-601—16-603, Annotated Code of Maryland, or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign insurer or the state of entry of an alien insurer.</text> </paragraph> <paragraph num="(17)"> <text>“Shall” is mandatory.</text> </paragraph> <paragraph num="(18)"> <text>“Variable death benefit” means the amount of the death benefit, other than incidental insurance benefits, payable under a variable life insurance policy dependent on the investment performance of the separate account which the insurer would have to pay in the absence of the minimum death benefit.</text> </paragraph> <paragraph num="(19)"> <text>“Variable life insurance policy” means an individual policy which provides for life insurance which varies according to the investment experience of a separate account or accounts established and maintained by the insurer as to this policy, pursuant to Insurance Article, §§16-601—16-603, Annotated Code of Maryland, or pursuant to a corresponding section of the insurance laws of the state of domicile of a foreign insurer or the state of entry of an alien insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Qualification of Insurer to Issue Variable Life Insurance."> <paragraph num="A."> <text>The requirements of this regulation are applicable to all insurers either seeking authority to issue variable life insurance in this State or which have authority to issue variable life insurance in this State.</text> </paragraph> <paragraph num="B."> <text>Licensing and Approval to Do Business in This State. An insurer may not deliver or issue for delivery in this State any variable life insurance policy, unless the insurer is authorized to engage in the life insurance business in this State, and either:</text> <paragraph num="(1)"> <text>The state of domicile of the insurer requires that permissible investments be substantially the same as provided in Regulation .06C of this chapter and that changes in the investment policy of the variable life insurance separate account be regulated in a manner substantially similar to that required under Regulation .06 of this chapter for separate accounts operated by insurers domiciled in this State; or</text> </paragraph> <paragraph num="(2)"> <text>The insurer's investment policy, as described in the statement required to be filed under §C(3) of this regulation, conforms to Regulation .06C of this chapter and the Commissioner is satisfied that the procedures for changing the investment policy of a variable life insurance separate account as described in the statement required to be filed under §C(3) of this regulation provide safeguards consistent with those provided under Regulation .06F of this chapter, and the insurer has obtained the written approval of the Commissioner for the issuance of variable life insurance policies in this State. The Commissioner shall grant the written approval only after he has found that:</text> <paragraph num="(a)"> <text>The plan of operation for the issuance of variable life insurance policies is not unsound;</text> </paragraph> <paragraph num="(b)"> <text>The general character, reputation, and experience of the management and those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer are such as to reasonably assure competent operation of the variable life insurance business of the insurer in this State;</text> </paragraph> <paragraph num="(c)"> <text>The insurer has surplus in addition to that required under Insurance Article, §4-105, Annotated Code of Maryland, as of the end of the preceding calendar year of at least 5 million dollars; and</text> </paragraph> <paragraph num="(d)"> <text>The present and foreseeable future financial condition of the insurer and its method of operation in connection with the issuance of the policies is not likely to render its operation hazardous to the public or its policyholders in this State. The Commissioner shall consider, among other things:</text> <paragraph num="(i)"> <text>The history of operation and financial condition of the insurer; and</text> </paragraph> <paragraph num="(ii)"> <text>The qualifications, fitness, character, responsibility, reputation, and experience of the officers and directors and other management of the insurer and those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer;</text> </paragraph> <paragraph num="(iii)"> <text>The applicable law and regulations under which the insurer is authorized in its state of domicile to issue variable life insurance policies. The state of entry of an alien insurer shall be deemed its state of domicile for this purpose; and</text> </paragraph> <paragraph num="(iv)"> <text>If the insurer is a subsidiary of, or is affiliated by common management or ownership with another company, its relationship to the other company and the degree to which the requesting insurer, as well as the other company, meet these standards.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Filing for Approval to Do Business in This State. Before an insurer shall deliver or issue for delivery a variable life insurance policy in this State, it shall file with the Commissioner the following information for the consideration of the Commissioner in making the determination required by §B of this regulation:</text> <paragraph num="(1)"> <text>Copies of and a general description of the variable life insurance policies it intends to issue.</text> </paragraph> <paragraph num="(2)"> <text>A general description of the methods of operation of the variable life insurance business of the insurer, including the names of those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer.</text> </paragraph> <paragraph num="(3)"> <text>With respect to a separate account maintained by an insurer for a variable life insurance policy, a statement of the investment policy the insurer intends to follow for the investment of the assets held in the separate account, and a statement of the procedures for changing the investment policy. The statement of investment policy shall include a description of the investment objective and orientation intended for the separate account.</text> </paragraph> <paragraph num="(4)"> <text>A description of any investment advisory services contemplated as required by Regulation .06J of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>If requested by the Commissioner, a copy of the statutes and regulations of the state of domicile of the insurer under which it is authorized to issue variable life insurance policies.</text> </paragraph> <paragraph num="(6)"> <text>Biographical data with respect to officers and directors of the insurer on the National Association of Insurance Commissioners Uniform Biographical Data Form.</text> </paragraph> <paragraph num="(7)"> <text>A statement of an actuary appointed by the insurer describing the mortality and expense risks which the insurer will bear under the policy.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Standards of Suitability. An insurer seeking approval to enter into the variable life insurance business in this State shall adopt by formal action of its board of directors and file with the Commissioner a written statement specifying the standards of suitability to be used by the insurer and applicable to its officers, directors, employees, affiliates, and agents with respect to the suitability of variable life insurance for the applicant. These standards of suitability shall be binding on the insurer and those to whom it refers, and shall specify that no recommendations shall be made to an applicant to purchase a variable life insurance policy and that no variable life insurance policy may be issued in the absence of reasonable grounds to believe that the purchase of the policy is suitable for the applicant on the basis of information furnished after reasonable inquiry of the applicant concerning the applicant's insurance and investment objectives, financial situation and needs, and any other information known to the insurer or to the agent making the recommendation. Lapse rates for variable life insurance within the first 2 policy years which are significantly higher than both those encountered by the insurer, or an affiliate of the insurer, for corresponding fixed benefit life insurance policies and lapse rates of other insurers issuing variable life insurance policies shall be considered by the Commissioner in determining whether the guidelines adopted by the insurer are reasonable and also whether the insurer and its agents are engaging, as a general business practice, in the sale of variable life insurance to persons for whom it is unsuitable. For purposes of this section, conversions from variable life insurance to fixed benefit life insurance policies pursuant to this chapter will not be considered lapses.</text> </paragraph> <paragraph num="E."> <text>Use of Sales Materials.</text> <paragraph num="(1)"> <text>An insurer authorized to transact variable life insurance business in this State may not use sales material, advertising material, or descriptive literature or other materials of any kind in connection with its variable life insurance business in this State which is false, misleading, deceptive, or inaccurate.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner shall require an insurer to cease the use of sales materials, advertising materials, descriptive literature, or other materials of any kind upon finding that the materials are false, deceptive, inaccurate, misleading, or have a tendency to mislead or be ambiguous.</text> </paragraph> <paragraph num="(3)"> <text>Variable life insurance sales material, advertising material, and descriptive literature shall include but is not limited to:</text> <paragraph num="(a)"> <text>Printed and published material, audiovisual material, and descriptive literature of an insurer used in direct mail, newspapers, magazines, radio scripts, TV and film scripts, billboards, and similar displays for variable life insurance;</text> </paragraph> <paragraph num="(b)"> <text>Descriptive literature and sales aids of all kinds used to sell variable life insurance by or on behalf of an insurer or any person authorized to sell variable life insurance for presentation to members of the insurance-buying public, including but not limited to circulars, leaflets, booklets, depictions, illustrations, and form letters; and</text> </paragraph> <paragraph num="(c)"> <text>Prepared sales talks, presentations, and materials for use in the sale of variable life insurance by a person authorized to sell variable life insurance.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Requirements Applicable to Contractual Services.</text> <paragraph num="(1)"> <text>A contract between an insurer and suppliers of consulting, investment, administrative, sales, marketing, custodial, or other services which are material with respect to variable life insurance operations shall be in writing and provide that the supplier of these services shall furnish the Commissioner with any information or reports in connection with the services which the Commissioner may request in order to ascertain whether the variable life insurance operations of the insurer are being conducted in a manner consistent with these regulations and any other applicable law or regulations.</text> </paragraph> <paragraph num="(2)"> <text>The contract shall be fair and equitable to all parties and not endanger policyholders of the insurer in this State.</text> </paragraph> <paragraph num="(3)"> <text>The contract may not relieve the insurer from any responsibilities or obligations imposed upon the operations of its variable life insurance business by this chapter or any other law or regulation.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Reports to the Commissioner.</text> <paragraph num="(1)"> <text>An insurer authorized to transact the business of variable life insurance in this State shall submit to the Commissioner, in addition to any other materials which may be required by this chapter or any other applicable laws or regulations:</text> <paragraph num="(a)"> <text>An annual statement of the business of its variable life insurance separate account or accounts in such form as may be prescribed by the National Association of Insurance Commissioners;</text> </paragraph> <paragraph num="(b)"> <text>Before the use in this State, any information furnished to applicants as provided for in Regulation .07 of this chapter;</text> </paragraph> <paragraph num="(c)"> <text>Before the use in this State, the form of any of the reports to policyholders as provided for in Regulation .09 of this chapter; and</text> </paragraph> <paragraph num="(d)"> <text>Such additional information concerning its variable life insurance operations or its variable life insurance separate accounts as the Commissioner deems necessary.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Material submitted to the Commissioner under this section shall be disapproved if it is found to be false, deceptive, inaccurate, misleading, or have a tendency to mislead, or ambiguous in any respect and, if previously distributed, the Commissioner shall require the distribution of an amended report.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Authority of Commissioner to Disapprove. Material required to be filed with the Commissioner, or approved by him, shall be subject to disapproval if at any time it is found by him not to comply with the standards established by this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Insurance Policy Requirements—Policy Qualification."> <paragraph num="A."> <text>The Commissioner may not approve a variable life insurance form filed pursuant to this chapter unless it conforms to the requirements of this regulation.</text> </paragraph> <paragraph num="B."> <text>Filing of Variable Life Insurance Policies.</text> <paragraph num="(1)"> <text>All variable life insurance policies, and all riders, endorsements, applications, and other documents which are to be attached to and made a part of the policy and which relate to the variable nature of the policy, shall be filed with the Commissioner and approved by him in writing before delivery or issuance for delivery in this State.</text> </paragraph> <paragraph num="(2)"> <text>The procedures and requirements for the filing and approval shall be, to the extent appropriate and not inconsistent with this chapter, the same as those otherwise applicable to other life insurance policies (for example, see particularly Insurance Article, §§12-102, 12-103, 12-203—12-205, and 12-209, Annotated Code of Maryland, and COMAR 31.04.17).</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner may approve variable life insurance policies and related forms with provisions the Commissioner deems to be not less favorable to the policyholder and the beneficiary than those required by this chapter.</text> </paragraph> <paragraph num="(4)"> <text>The requirements of §§C(1), C(4), D(5)(a), and D(16) of this regulation do not apply to variable life insurance policies and related forms issued in connection with pension, profit-sharing, and retirement plans if separate accounts for the policies are exempt pursuant to the federal Investment Company Act of 1940, §3(c)(11).</text> </paragraph> </paragraph> <paragraph num="C."> <text>Mandatory Policy Benefit and Design Requirements. Variable life insurance policies delivered or issued for delivery in this State shall comply with the following minimum requirements:</text> <paragraph num="(1)"> <text>Coverage shall be provided for the lifetime of the insured with the mortality and expense risk borne by the insurer. The mortality and expense charges shall be subject to the maximums stated in the policy.</text> </paragraph> <paragraph num="(2)"> <text>Gross premiums for death benefits shall be a level amount for the duration of the premium payment period, but this subsection may not be construed to prohibit temporary or permanent additional premiums for incidental insurance benefits or substandard risks. This subsection may not be deemed to prohibit the use of fixed benefit preliminary term insurance for a period not to exceed 120 days from the date of the application for a variable life insurance policy. The premium rate for the preliminary term insurance shall be stated separately in the application or receipt.</text> </paragraph> <paragraph num="(3)"> <text>A minimum death benefit for scheduled premium policies shall be provided in an amount at least equal to the initial face amount of the policy as long as premiums are duly paid, subject to the provisions of §E(2)(d) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The amount payable upon the death of the insured as long as premiums are duly paid, subject to the provisions of §E(2) of this regulation, shall be not less than a minimum multiple of the gross premium payable in that year, exclusive of that portion allocable to any incidental insurance benefit, by a person who meets standard underwriting requirements, as shown in the following table:</text> </paragraph> <paragraph num="(5)"> <text>The policy shall provide that the variable death benefit shall reflect the investment experience of the variable life insurance separate account established and maintained by the insurer and that the excess, positive or negative, of the net investment return over the assumed investment rate, as applied to the benefit base of each variable life insurance policy, shall be used to provide either:</text> <paragraph num="(a)"> <text>Fully paid-up variable life insurance providing coverage for the same period as the basic insurance under the policy or fully paid-up term insurance amounts for a term of annual periods of not less than 1 year or more than 5 years, positive or negative, as the case may be, or a combination thereof; or</text> </paragraph> <paragraph num="(b)"> <text>Variable life insurance amounts, positive or negative, as the case may be, so that the reserve maintains the same percentage relationship to the variable death benefit as it would have on a corresponding fixed benefit policy.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Each variable life insurance policy shall be credited with the full amount of the net investment return applied to the benefit base.</text> </paragraph> <paragraph num="(7)"> <text>Changes in variable death benefits of each variable life insurance policy shall be determined at least annually.</text> </paragraph> <paragraph num="(8)"> <text>The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits, as described either in the policy or in a statement filed with the Commissioner of the state in which the policy is delivered, or issued for delivery, shall be in accordance with actuarial procedures that recognize the variable nature of the policy. The method of computation shall be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values and other nonforfeiture benefits shall be at least equal to the minimum values required by Insurance Article, Title 16, Subtitle 3, Annotated Code of Maryland, for a fixed benefit policy with the premiums and benefits. The assumed investment rate may not exceed the maximum interest rate permitted under the Standard Nonforfeiture Law of this State. The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include, for example, but are not to be limited to, a guarantee that the amount payable at death or maturity shall be at least equal to the amount that otherwise would have been payable if the net investment return credited to the policy at all times from the date of issue had been equal to the assumed investment rate.</text> </paragraph> <paragraph num="(9)"> <text>The computation of values required for each variable life insurance policy may be based upon such reasonable and necessary approximations as are acceptable to the Commissioner.</text> </paragraph> <paragraph num="(10)"> <text>Adjusted Premiums.</text> <paragraph num="(a)"> <text>If the gross premiums for any variable life insurance policy delivered or issued for delivery in this State produce an excess of(a) over (B) as defined in §C(10)(b) of this regulation the present value as of the date of issue of the adjusted premiums used in determining the minimum cash values required by §C(8) of this regulation shall be decreased by this excess by decreasing each adjusted premium by a uniform percentage.</text> </paragraph> <paragraph num="(b)"> <text>The excess of(a) over (B) referred to in §C(10)(a) of this regulation shall be determined as of the date of issue on the basis of the mortality table and maximum rate of interest permitted by Insurance Article, Title 16, Subtitle 3, Annotated Code of Maryland; and(a) is the present value of the gross premiums for the policy, decreased by one dollar per thousand of equivalent uniform amount for policies with an equivalent uniform amount of less than ten thousand, payable on an annual basis (exclusive of those portions of the gross premiums allocable to any incidental insurance benefits) by a person who meets standard underwriting requirements; and (B) is the product of(1) times (2) where(1) is the present value of the maximum premium rates per thousand of insurance shown below payable at the beginning of each policy year to attained age 65 of the insured for issue ages below age 51, for 15 years for issue ages 51 to 70 and for life for issue ages above age 70 and (2) is the ratio of(i) the present value of the benefits under the policy to (ii) the present value of an insurance of one thousand for the whole of life.</text> </paragraph> <paragraph num="(c)"> <text>For purposes of this subsection, the portion of the premium set aside to support a guarantee that the surrender value will not be less than a specified amount or for any other benefit that the Commissioner deems excludable, will not be included.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>In determining the net investment return to be applied to the benefit base, the insurer may deduct only the charges described in Regulation .06G(1), (2), (4), and (5) of this chapter.</text> </paragraph> <paragraph num="(12)"> <text>While the provisions of §C(2), (4), and (10) of this regulation are intended to apply to a variable life insurance policy on which level premiums are payable for life, a variable life insurance policy issued on a single premium or other premium payment plan may be delivered or issued for delivery in this State if, in the opinion of the Commissioner, the policy is in no respect less favorable to the policyholder than a policy on which level premiums are payable for life and which meets the requirements of this regulation, and if the policy issued on a single premium or other premium payment plan is otherwise issued and administered in conformity with and as prescribed by this chapter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Mandatory Policy Provisions.</text> <paragraph num="(1)"> <text>Every variable life insurance policy filed for approval in this State shall be plainly printed in a type size not less than 10 point with a lower case unspaced alphabet length not less than 120 point, and shall contain at least the following:</text> <paragraph num="(a)"> <text>The cover page or pages corresponding to the cover page of each policy that shall contain:</text> <paragraph num="(i)"> <text>A prominent statement in either contrasting color or in boldface type at least four points larger than the type size of the largest type used in the text of any provision on that page, that the death benefit may be variable or fixed under specified conditions;</text> </paragraph> <paragraph num="(ii)"> <text>A prominent statement in either contrasting color or in boldface type at least four points larger than the type size of the largest type size used in the text of any provision on that page that cash values may increase or decrease in accordance with the experience of the separate account subject to any specified minimum guarantees;</text> </paragraph> <paragraph num="(iii)"> <text>A statement that the minimum death benefit will be at least equal to the initial face amount at the date of issue if premiums are duly paid and if there are no outstanding policy loans, partial withdrawals, or partial surrenders;</text> </paragraph> <paragraph num="(iv)"> <text>The rule, or a reference to the policy provision, which describes the method for determining the variable amount of insurance payable at death;</text> </paragraph> <paragraph num="(v)"> <text>A captioned provision which provides that the policyholder may return the variable life insurance policy within 45 days of the date of the execution of the application or within 10 days of receipt of the policy by the policyholder, whichever is later, and receive a refund of all premium payments for the policy; and</text> </paragraph> <paragraph num="(vi)"> <text>Other items that are currently required for fixed benefit life insurance policies and which are not inconsistent with this chapter;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A provision regarding the policy grace period as follows:</text> <paragraph num="(i)"> <text>For scheduled premium policies, the grace period shall be not less than 31 days from the premium due date and when the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date;</text> </paragraph> <paragraph num="(ii)"> <text>For flexible premium policies, the grace period shall begin on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges in accordance with the terms of the policy and end on a date not less than 61 days after the mailing date of the report to policyholders required by Regulation .09C of this chapter;</text> </paragraph> <paragraph num="(iii)"> <text>For all policies, the death benefit payable during the grace period shall equal the death benefit in effect immediately prior to such period less any overdue charges; and</text> </paragraph> <paragraph num="(iv)"> <text>For all policies, if the policy processing day occurs monthly, the insurer may require the payment of not more than three times the charges that were due on the policy processing day on which the amounts available under the policy were insufficient to pay all charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A provision that the policy will be reinstated at any time within 2 years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising after the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:</text> <paragraph num="(i)"> <text>All overdue premiums with interest at a specified rate not exceeding the rate of interest set forth in Insurance Article, §16-210, Annotated Code of Maryland, and any indebtedness in effect at the end of the grace period following the date of default with interest at a specified rate not exceeding the rate set forth in Insurance Article, §16-210, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(ii)"> <text>One hundred and ten percent of the increase in cash surrender value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a specified rate not exceeding the rate set forth in Insurance Article, §16-210, Annotated Code of Maryland;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>A full description of the benefit base and of the method of calculation and application of any factors used to adjust variable benefits under the policy;</text> </paragraph> <paragraph num="(e)"> <text>A provision designating the separate account to be used and stating that:</text> <paragraph num="(i)"> <text>The separate account shall be used to fund only variable life insurance benefits, except to the extent permitted by §F(3)(f) of this regulation;</text> </paragraph> <paragraph num="(ii)"> <text>The assets of the separate account shall be available to cover the liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life insurance policies supported by the separate account; and</text> </paragraph> <paragraph num="(iii)"> <text>The assets of the separate account shall be valued at least as often as any policy benefits vary, but at least monthly;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>A provision that at any time during the first 18 months of the variable life insurance policy, as long as premiums are duly paid, the owner may exchange the policy for a policy of permanent fixed benefit life insurance on the life of the insured for the same initial amount of insurance as the variable life insurance policy, and on a plan of insurance specified in the policy, provided that the new policy:</text> <paragraph num="(i)"> <text>Bears the same date of issue and age at issue as the original variable life insurance policy;</text> </paragraph> <paragraph num="(ii)"> <text>Is issued on a substantially comparable plan of permanent insurance offered in this state by the insurer or an affiliate on the date of issue of the variable life insurance policy and at the premium rates in effect on that date for the same class of insurance;</text> </paragraph> <paragraph num="(iii)"> <text>Includes riders and incidental insurance benefits which were included in the original policy if the riders and incidental insurance benefits are issued with the fixed benefit policy;</text> </paragraph> <paragraph num="(iv)"> <text>Is issued subject to an equitable premium or cash value adjustment that takes appropriate account of the premiums and cash values under the original and new policies. A detailed statement of the method of computing the adjustment shall be filed with the Commissioner;</text> </paragraph> <paragraph num="(v)"> <text>Does not require evidence of insurability for this exchange;</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>A provision that the policy and any papers attached by the insurer, including the application if attached, constitute the entire insurance contract;</text> </paragraph> <paragraph num="(h)"> <text>A designation of the officers of the insurer who are empowered to make an agreement or representation on behalf of the insurer and an indication that statements by the insured, or on his behalf, shall be considered as representations and not warranties;</text> </paragraph> <paragraph num="(i)"> <text>An identification of the owner of the insurance contract;</text> </paragraph> <paragraph num="(j)"> <text>A provision setting forth conditions or requirements as to the designation, or change of designation, of a beneficiary and a provision for disbursement of benefits in the absence of a beneficiary designation;</text> </paragraph> <paragraph num="(k)"> <text>A statement of conditions or requirements concerning the assignment of the policy;</text> </paragraph> <paragraph num="(l)"> <text>A description of any adjustments in policy values to be made in the event of misstatement of age or sex of the insured;</text> </paragraph> <paragraph num="(m)"> <text>A provision that the policy shall be incontestable by the insurer after it has been in force for 2 years during the lifetime of the insured, notwithstanding that any increase in the amount of the policy’s death benefits subsequent to the policy issue date, which occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured’s insurability, shall be incontestable after the increase has been in force, during the lifetime of the insured, for 2 years from the date of issue of increase;</text> </paragraph> <paragraph num="(n)"> <text>A provision stating that the investment policy of the separate account may not be changed without the approval of the Insurance Commissioner of the state of domicile of the insurer, and that the approval process is on file with the Commissioner of this State;</text> </paragraph> <paragraph num="(o)"> <text>A provision that payment of variable death benefits in excess of the minimum death benefits, cash values, policy loans, or partial withdrawals, except when used to pay premiums, or partial surrenders may be deferred:</text> <paragraph num="(i)"> <text>For up to 6 months from the date of request, if these payments are based on policy values which do not depend on the investment performance of the separate account; or</text> </paragraph> <paragraph num="(ii)"> <text>Otherwise, for any period during which the New York Stock Exchange is closed for trading, except for normal holiday closing, or when the Securities and Exchange Commission has determined that a state of emergency exists which may make payment impractical;</text> </paragraph> </paragraph> <paragraph num="(p)"> <text>Settlement options which shall be provided on a fixed basis only;</text> </paragraph> <paragraph num="(q)"> <text>A description of the basis for computing the cash surrender value under the policy shall be included, with the surrender value expressed as either:</text> <paragraph num="(i)"> <text>A schedule of cash value amounts per $1,000 of variable face amount at each attained age or policy year for at least 20 years from issue, or for the premium paying period, if less than 20 years; or</text> </paragraph> <paragraph num="(ii)"> <text>One cash value schedule as described in §D(17)(a) of this regulation for the death benefit, or for each $1,000 of death benefit, which would be in effect if the net investment return is always equal to the assumed investment rate and a second schedule applicable to any adjustments to the death benefit, disregarding the minimum death benefit guarantee and term insurance amounts, if the net investment return does not equal the assumed investment rate at each age for at least 20 years from issue, or for the premium paying period if it is less than 20 years;</text> </paragraph> </paragraph> <paragraph num="(r)"> <text>Premiums for incidental insurance benefits shall be stated separately;</text> </paragraph> <paragraph num="(s)"> <text>Any other policy provisions required by this chapter;</text> </paragraph> <paragraph num="(t)"> <text>Such other items as are currently required for fixed benefit life insurance policies and are not inconsistent with this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Nonforfeiture, Partial Withdrawal, Policy Loan, and Partial Surrender Provisions. A variable life insurance policy delivered or issued for delivery in this State shall contain provisions which are not less favorable to the policyholder than the following:</text> <paragraph num="(1)"> <text>Nonforfeiture Benefits:</text> <paragraph num="(a)"> <text>A provision for nonforfeiture insurance benefits so that at least one benefit is offered on a fixed basis from the due date of the premium in default;</text> </paragraph> <paragraph num="(b)"> <text>Variable extended term insurance may not be offered;</text> </paragraph> <paragraph num="(c)"> <text>A given nonforfeiture option need not be offered on both a fixed and variable basis;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A provision for policy loans after 3 full years' premiums have been paid (which may at the option of the insurer be entitled and referred to as a partial withdrawal provision) not less favorable to the policyholder than the following:</text> <paragraph num="(a)"> <text>Up to 75 percent but if the loan is made from the general account not more than 90 percent of the policy's cash value may be borrowed;</text> </paragraph> <paragraph num="(b)"> <text>The amount borrowed, or any repayment thereof, does not affect the amount of the premium payable under the policy;</text> </paragraph> <paragraph num="(c)"> <text>The amount borrowed shall bear interest at a rate not to exceed the rate stated in Insurance Article, §16-207, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Any indebtedness shall be deducted from the proceeds payable on death;</text> </paragraph> <paragraph num="(e)"> <text>Any indebtedness shall be deducted from the cash value upon surrender or in determining any nonforfeiture benefit;</text> </paragraph> <paragraph num="(f)"> <text>If the indebtedness exceeds the cash value for scheduled premium policies, the insurer shall give notice of intent to cancel the policy if the excess indebtedness is not repaid within 31 days after the date of mailing of the notice;</text> </paragraph> <paragraph num="(g)"> <text>The policy may provide that if, at any time, as long as premiums are duly paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the policyholder may increase the variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110 percent of the corresponding increase in cash value and by furnishing such evidence of insurability as the insurer may request;</text> </paragraph> <paragraph num="(h)"> <text>The policy may specify a reasonable minimum amount which may be borrowed at any time, but this minimum does not apply to any automatic premium loan provision;</text> </paragraph> <paragraph num="(i)"> <text>A policy loan provision is not required if the policy is under the extended insurance nonforfeiture option;</text> </paragraph> <paragraph num="(j)"> <text>In addition to the foregoing, the policy may contain a partial surrender provision. However, this provision shall provide that the policyholder may request part of the cash value, and both the variable and minimum death benefits will be reduced in proportion to the percentage of the cash value received by the policyholder, and the premium for the remaining amount of insurance will also be reduced to the appropriate rates for the reduced amount of insurance. The policy may provide that a partial surrender provision may not require the insurer to reduce the amount of the minimum death benefit to less than the lowest amount of minimum death benefit which would have been issued to the insured under the insurance plans of the insurer at the time the policy was issued. The policy shall clearly provide that the policyholder has the option of electing to exercise the cash value privileges of the policy loan or partial withdrawal provision rather than the partial surrender provision;</text> </paragraph> <paragraph num="(k)"> <text>All policy loan, partial withdrawal, or partial surrender provisions shall be constructed so that variable life insurance policyholders who have not exercised these provisions are not disadvantaged by their exercise;</text> </paragraph> <paragraph num="(l)"> <text>Monies paid to the policyholders upon the exercise of a policy loan, partial withdrawal, or partial surrender provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment, except that a stock insurer may provide the monies for policy loans from the general account.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Other Policy Provisions. The following provisions may in substance be included in a variable life insurance policy or related form delivered or issued for delivery in this State:</text> <paragraph num="(1)"> <text>An exclusion for suicide within 2 years of the policy issue date, and an exclusion, to the extent of the increased death benefits only, for suicide within 2 years of any increase in death benefits which result from an application of the owner subsequent to the policy issue date;</text> </paragraph> <paragraph num="(2)"> <text>Incidental insurance benefits may be offered on a fixed basis only;</text> </paragraph> <paragraph num="(3)"> <text>Policies issued on a participating basis shall offer to pay dividend amounts in cash and may offer options so that the amount of the dividend may be:</text> <paragraph num="(a)"> <text>Credited against premium payments;</text> </paragraph> <paragraph num="(b)"> <text>Applied to provide paid-up amounts of additional fixed benefit whole life insurance;</text> </paragraph> <paragraph num="(c)"> <text>Applied to provide paid-up amounts of additional variable life insurance;</text> </paragraph> <paragraph num="(d)"> <text>Deposited in the general account at a specified minimum rate of interest;</text> </paragraph> <paragraph num="(e)"> <text>Applied to provide paid-up amounts of fixed benefit 1-year term insurance;</text> </paragraph> <paragraph num="(f)"> <text>Deposited as a variable deposit in the separate account if the separate account is exempt pursuant to the federal Investment Company Act of 1940, §3(c) (11);</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans or partial withdrawals under §E of this regulation, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Reserve Liabilities for Variable Life Insurance."> <paragraph num="A."> <text>Reserve liabilities for variable life insurance policies shall be established under Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland, in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.</text> </paragraph> <paragraph num="B."> <text>Reserve liabilities for the guaranteed minimum death benefit shall be the reserve needed to provide for the contingency of death occurring when the guaranteed minimum death benefit exceeds the death benefit that would be paid in the absence of the guarantee, and shall be maintained in the general account of the insurer, and shall be not less than the greater of the following minimum reserves:</text> <paragraph num="(1)"> <text>The aggregate total of the term costs, if any, covering a period of 1 full year from the valuation date of the guarantee on each variable life insurance contract, assuming an immediate one-third depreciation in the current value of the assets of the separate account followed by a net investment return equal to the assumed investment rate.</text> </paragraph> <paragraph num="(2)"> <text>The aggregate total of the attained age level reserves on each variable life insurance contract. The attained age level reserve on each variable life insurance contract may not be less than zero and shall equal the residue, as described in §B(2)(a) of this regulation of the prior year's attained age level reserve on the contract, with any such residue increased or decreased by a payment computed on an attained age basis as described in §B(2)(b) of this regulation.</text> <paragraph num="(a)"> <text>The residue of the prior year's attained age level reserve on each variable life insurance contract may not be less than zero and shall be determined by adding interest at the valuation interest rate to the prior year's reserve, deducting the tabular claims based on the excess, if any, of the guaranteed minimum death benefit over the death benefit that would be payable in the absence of the guarantee, and dividing the net result by the tabular probability of survival. The excess referred to in the preceding sentence shall be based on the actual level of death benefits that would have been in effect during the preceding year in the absence of the guarantee, taking appropriate account of the reserve assumptions regarding the distribution of death claim payments over the year.</text> </paragraph> <paragraph num="(b)"> <text>The payment referred to in §B(2) of this regulation shall be computed so that the present value of a level payment of that amount each year over the future premium paying period of the contract is equal to(a) minus (B) minus (C), when(a) is the present value of the future guaranteed minimum death benefit, (B) is the present value of the future death benefits that would be payable in the absence of the guarantee, and (C) is any residue, as described in §B(2)(a) of this regulation of the prior year's attained age level reserve on the variable life insurance contract. If the contract is paid up, the payment shall equal(a) minus (B) minus (C). The amounts of future death benefits referred to in (B) shall be computed assuming a net investment return of the separate account which may differ from the assumed investment rate or the valuation interest rate, or both, but may not exceed the maximum interest rate permitted for the valuation of life insurance contracts.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The valuation interest rate and mortality table used in computing the two minimum reserves described in §B(1) and (2) of this regulation shall conform to permissible standards for the valuation of life insurance contracts. In determining the minimum reserve, the company may employ suitable approximations and estimates, including but not limited to groupings and averages.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Reserve liabilities for all fixed incidental insurance benefits shall be maintained in the general account in amounts determined in accordance with the actuarial procedures appropriate to these benefits.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Separate Accounts."> <text>The following requirements apply to establishment and administration of variable life insurance separate accounts:</text> <paragraph num="A."> <text>Establishment and Administration of Separate Accounts.</text> <paragraph num="(1)"> <text>An insurer issuing variable life insurance in this State shall establish one or more separate accounts pursuant to Insurance Article, §§16-601—16-603, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Assets in the separate account shall be owned by the insurer and the insurer may not be, or hold itself out to be, a trustee with respect to these assets. If and to the extent so provided under the applicable contracts, that portion of the assets of the separate account equal to the reserves and other contract liabilities with respect to the account may not be chargeable with liabilities arising out of any other business the insurer may conduct.</text> </paragraph> <paragraph num="(3)"> <text>If no law or other regulation provides for the custody of separate account assets and if the insurer itself is not the custodian of these assets, all contracts for custody shall be in writing and the Commissioner of the insurer's state of domicile shall approve of both the terms of the contract and the proposed custodian before the transfer of custody.</text> </paragraph> <paragraph num="(4)"> <text>Without the prior written approval of the Commissioner, an insurer may not employ in any material connection with the handling of separate account assets any person who:</text> <paragraph num="(a)"> <text>Within the last 10 years has been convicted of any felony, or of a misdemeanor arising out of this person's conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities or involving violation of 18 U.S.C. §1341, 1342, or 1343;</text> </paragraph> <paragraph num="(b)"> <text>Within the last 10 years has been found by any state regulatory authority to have violated or has acknowledged violation of any provision of any state insurance law involving fraud, deceit, or knowing misrepresentation;</text> </paragraph> <paragraph num="(c)"> <text>Within the last 10 years has been found by federal or state regulatory authorities to have violated, or has acknowledged violation of, any provision of federal or state securities laws involving fraud, deceit, or knowing misrepresentation; or</text> </paragraph> <paragraph num="(d)"> <text>Within the past 10 years has signed a consent order with any federal or state regulatory authority that it will not in the future engage in any of the aforementioned violations.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A person with access to the cash, securities, or other assets of the separate account shall be under bond in an amount of not less than the greater of $500,000 or 25 percent of the assets to which the person has access, but the bond need not exceed 5 million dollars.</text> </paragraph> <paragraph num="(6)"> <text>If an insurer establishes more than one separate account for variable life insurance, justification for the establishment of each additional separate account shall also be filed with the Commissioner and shall be subject to the Commissioner's approval. The creation of additional separate accounts to avoid lower maximum charges against the separate account is prohibited.</text> </paragraph> <paragraph num="(7)"> <text>The assets of the separate accounts established for variable life insurance policies shall be valued at least as often as variable benefits are determined but in any event at least monthly.</text> </paragraph> <paragraph num="(8)"> <text>A separate account exempt pursuant to the federal Investment Company Act of 1940, §3(c)(11), because of the tax qualified status of the policies funded thereby, may not be used to fund other variable life insurance policies.</text> </paragraph> <paragraph num="(9)"> <text>Except for separate accounts exempt pursuant to the federal Investment Company Act of 1940, §3(c)(11), variable life insurance separate accounts may not be used for variable annuities or for the investment of funds corresponding to dividend accumulations or other policyholder liabilities not involving life contingencies.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Amounts in the Separate Account.</text> <paragraph num="(1)"> <text>The insurer shall maintain in each variable life insurance separate account assets with a fair market value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for the policies.</text> </paragraph> <paragraph num="(2)"> <text>The benefit base of any variable life insurance policy as of the beginning of any valuation period may not be less than the sum of the following factors after deducting amounts of any indebtedness pursuant to Regulation .04E(2) of this chapter:</text> <paragraph num="(a)"> <text>The valuation net premium for this period, for the variable portion of the policy, minus the discounted cost of term insurance for this period, based on the tabular mortality and interest rates used in determining valuation reserves; and</text> </paragraph> <paragraph num="(b)"> <text>The valuation terminal reserve, for the variable portion of the policy, at the end of the immediately preceding valuation period adjusted for the net investment return of the preceding period.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>In lieu of the minimum benefit base requirement specified in §B(1) and (2) of this regulation, an insurer may otherwise qualify under this section if it can be demonstrated, to the satisfaction of the Commissioner, that the policy benefits obtained over a 20-year period from the date of issue by the use of the insurer's benefit base are at least substantially equivalent in value to the benefits obtained by the use of the minimum benefit base specified above. The Commissioner may specify the range of net investment return to be used in this demonstration.</text> </paragraph> <paragraph num="(4)"> <text>Notwithstanding the actual reserve basis used for policies that do not meet standard underwriting requirements, the benefit base for these policies may be the same as for corresponding policies which do meet standard underwriting requirements.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Investments by the Separate Account.</text> <paragraph num="(1)"> <text>A sale, exchange, or other transfer of assets may not be made by an insurer or any of its affiliates between any of its separate accounts or between any other investment account and one or more of its separate accounts, unless:</text> <paragraph num="(a)"> <text>In case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the policies with respect to the separate account to which the transfer is made; and</text> </paragraph> <paragraph num="(b)"> <text>The transfer, whether into or from a separate account, is made by a transfer of cash, but other assets may be transferred if approved by the Commissioner in advance.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Assets allocated to a variable life insurance separate account shall be held in cash or investments having a reasonably ascertainable market price. For purposes of this subsection, only the following shall be considered investments having a reasonably ascertainable market price:</text> <paragraph num="(a)"> <text>Liens in favor of the insurer against separate account policy reserves resulting from use by policyholders of cash values.</text> </paragraph> <paragraph num="(b)"> <text>Securities listed and traded on the New York Stock Exchange, the American Stock Exchange, or regional stock exchanges or successors to these exchanges having the same or similar qualifications.</text> </paragraph> <paragraph num="(c)"> <text>Securities listed on the NASDAQ System.</text> </paragraph> <paragraph num="(d)"> <text>Shares of an investment company registered pursuant to the federal Investment Company Act of 1940. When the investment company issues book shares in lieu of share certificates, the book shares shall be deemed to be adequate evidence of ownership.</text> </paragraph> <paragraph num="(e)"> <text>Obligations of or guaranteed by the United States Government, the Canadian government, any state, or municipality or governmental subdivision of a state.</text> </paragraph> <paragraph num="(f)"> <text>Commercial paper issued by business corporations when the total of the paper issued by the corporation does not exceed in value a guaranteed short line of credit by a bank.</text> </paragraph> <paragraph num="(g)"> <text>Certificates of deposit issued by financial institutions the deposits of which are insured by the FDIC or FSLIC.</text> </paragraph> <paragraph num="(h)"> <text>New bond or debt issues which may reasonably be expected to be listed on an exchange regulated by the Securities Exchange Act of 1934.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Not more than 25 percent of the assets allocated to a variable life insurance separate account may be invested in non-dividend paying stock, and then only if the issuer of this stock has not had a net operating loss in more than two of its twelve fiscal quarters immediately preceding the date of purchase of the stock, or has not had a net operating loss in more than two of its fiscal quarters from the date of its incorporation if it has not been incorporated for at least 3 years before the date of purchase of the stock.</text> </paragraph> <paragraph num="(4)"> <text>Notwithstanding any other provision of law or the provisions of §C(2)of this regulation, assets allocated to a variable life insurance separate account may not be invested in:</text> <paragraph num="(a)"> <text>Commodities or commodity contracts;</text> </paragraph> <paragraph num="(b)"> <text>Put and call options or combinations of these options;</text> </paragraph> <paragraph num="(c)"> <text>Short sales;</text> </paragraph> <paragraph num="(d)"> <text>Purchases on margins;</text> </paragraph> <paragraph num="(e)"> <text>Letter or restricted stock;</text> </paragraph> <paragraph num="(f)"> <text>Units or other evidences of ownership of a separate account of another insurer, except those registered under the federal Investment Company Act of 1940; or</text> </paragraph> <paragraph num="(g)"> <text>Real estate or shares of a real estate investment trust except that up to 5 percent of the assets allocated to a variable life insurance separate account may be invested in the shares of real estate investment trusts listed as described in §C(2)(b) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Limitations on Ownership.</text> <paragraph num="(1)"> <text>A variable life insurance separate account may not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal and interest by the United States, if, immediately after this purchase or acquisition, the value of the investment, together with prior investments of the separate account in the security valued as required by these regulations, would exceed the greater of 5 percent of the value of the assets of the separate account or $10,000. The Commissioner may waive this limitation in writing if he believes the waiver will not render the operation of the separate account hazardous to the public or the policyholders in this State.</text> </paragraph> <paragraph num="(2)"> <text>A separate account may not purchase or otherwise acquire the voting securities of any issuer if as a result of the acquisition the insurer and its separate accounts, in the aggregate, will own more than 5 percent of the total issued and outstanding voting securities of the issuer. The Commissioner may waive this limitation in writing if he believes the waiver will not render the operation of the separate account hazardous to the public or the policyholders in this State or jeopardize the independent operation of the issuer of these securities.</text> </paragraph> <paragraph num="(3)"> <text>The percentage limitation specified in §D(1) of this regulation may not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered pursuant to the federal Investment Company Act of 1940, if the investments and investment policies of these investment companies comply substantially with the provisions of §C of this regulation, and other applicable portions of this regulation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Valuation of Assets of a Variable Life Insurance Separate Account.</text> <paragraph num="(1)"> <text>Market Value.</text> <paragraph num="(a)"> <text>Investments of the separate account shall be valued at their market value on the date of valuation.</text> </paragraph> <paragraph num="(b)"> <text>Market value for investments traded on the recognized exchanges means the last reported sale price on the date of valuation. If there has been no sale on that date, the market value means the last reported bid quotation on the date of valuation.</text> </paragraph> <paragraph num="(c)"> <text>Market value for investments listed on the NASDAQ System means the last representative bid quotation on the valuation date. If an investment ceases to be listed but continues to be traded over the counter, it shall be valued at the lowest bid quotation as it appears on the National Quotation Bureau sheets.</text> </paragraph> <paragraph num="(d)"> <text>If the valuation date referred to in §E(1)(b) and (c) of this regulation is a day when the exchange or the NASDAQ System is not open for business, the valuation date shall be the last date when the exchange or the NASDAQ System was open for business.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an investment ceases to be traded, it shall be valued at fair value as determined in good faith by or at the direction of the Board of Directors of the insurer but not in excess of the last reported bid quotation. Within 30 days, notification of cessation of trading of any investment shall be reported by the insurer to the insurance commissioner of the state of domicile of the insurer. That commissioner shall within a reasonable period of time determine the method of valuation or disposition of this investment.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Separate Account Investment Policy.</text> <paragraph num="(1)"> <text>The investment policy of a separate account operated by a domestic insurer filed under Regulation .03B(3) of this chapter may not be changed without the approval of the Insurance Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>With respect to changes of investment policy for which the Commissioner must give his approval, the following regulations shall apply:</text> <paragraph num="(a)"> <text>Approval shall be deemed to be given 60 days after the date the request for approval was filed with the Commissioner, unless he notified the insurer before the end of the 60-day period of his determination that the proposed change is a material change in the investment policy.</text> </paragraph> <paragraph num="(b)"> <text>If the change is deemed material by the Commissioner, he shall approve the change only if he determines, after a public hearing, that the change does not appear detrimental to the interest of the policyholders of the insurer.</text> </paragraph> <paragraph num="(c)"> <text>At least 30 days before any public hearing under §F(2)(b) of this regulation, the insurer shall mail a notice to each policyholder and to the insurance commissioner of each state in which the affected variable life insurance policies are being sold. This notice shall describe the proposed change in investment policy, list the reasons, designate the date and place of the public hearing, inform the policyholder of the procedures to be followed in commenting on the change, and describe the conduct of the meeting. This notice shall be in a form approved by the Commissioner.</text> </paragraph> <paragraph num="(d)"> <text>Within 60 days after the public hearing, the Commissioner shall approve or deny the proposed change in investment policy.</text> </paragraph> <paragraph num="(e)"> <text>If a policyholder objects to the proposed change and the change is allowed by the Commissioner, the objecting policyholder shall be given the option within 60 days of notification to the policyholder of the approval by the Commissioner of the change, of converting, without evidence of insurability, under one of the following options, to a fixed benefit life insurance policy issued by the insurer or an affiliate:</text> <paragraph num="(i)"> <text>If the policy is in force on a premium paying basis, either:</text> <paragraph num="(aa)"> <text>Conversion as of the original issue age to a substantially comparable permanent form of fixed benefit life insurance, based on the insurer's premium rates for fixed benefit life insurance at the original issue age, for an amount of insurance not exceeding the death benefit of the variable life insurance policy on the date of conversion; or</text> </paragraph> <paragraph num="(bb)"> <text>Conversion as of the attained age to a substantially comparable permanent form of fixed benefit life insurance for an amount of insurance not exceeding the excess of the death benefit of the variable life insurance policy on the date of conversion over its cash value on the date of conversion if the policyholder elects to surrender the variable life policy for its cash value, or the death benefit payable under any paid-up insurance option if the policyholder elects the nonforfeiture option under the variable life policy.</text> </paragraph> </paragraph> <paragraph num="(ii)"> <text>If the policy is in force as paid-up variable life insurance, then conversion will be to a substantially comparable paid-up fixed benefit life insurance policy for an amount of insurance not exceeding the death benefit of the variable life insurance policy on the date of conversion. If conversion is made pursuant to §F(2)(e)(i)(aa) or F(2)(e)(ii) of this regulation then:</text> <paragraph num="(aa)"> <text>If the cash value of the variable life insurance policy exceeds the cash value of the fixed benefit life insurance policy, the difference shall be paid to the policyholder;</text> </paragraph> <paragraph num="(bb)"> <text>If the cash value of the fixed benefit life insurance policy exceeds the cash value of the variable life insurance policy, the difference shall be paid by the policyholder; and</text> </paragraph> <paragraph num="(cc)"> <text>Any indebtedness under the variable life insurance policy shall become indebtedness under the fixed benefit policy, provided that any excess of this indebtedness over the cash value of the fixed benefit policy on the date of conversion shall be deducted from any amount otherwise payable to the policyholder.</text> </paragraph> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Charges Against a Variable Life Insurance Separate Account. The insurer shall disclose in writing, before or contemporaneously with delivery of the policy, each charge that may be made against the separate account, including:</text> <paragraph num="(1)"> <text>Taxes or reserves for taxes attributable to investment gains and income of the separate account;</text> </paragraph> <paragraph num="(2)"> <text>Actual cost of reasonable brokerage fees and similar direct acquisition and sales costs incurred in the purchase or sale of separate account assets;</text> </paragraph> <paragraph num="(3)"> <text>Actuarially determined costs of insurance (tabular costs) and the release of reserves and benefit base consistent with the release of separate account liabilities;</text> </paragraph> <paragraph num="(4)"> <text>Charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account;</text> </paragraph> <paragraph num="(5)"> <text>A charge, at a rate specified in the policy for mortality and expense guarantees;</text> </paragraph> <paragraph num="(6)"> <text>Any amounts in excess of those required to be held in the separate account; and</text> </paragraph> <paragraph num="(7)"> <text>Charges for incidental insurance benefits.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Standards of Conduct. An insurer seeking approval to enter into the variable life insurance business in this State shall adopt by formal action of its Board of Directors and file with the Commissioner a written statement specifying the standards of conduct of the insurer, its officers, directors, employees, and affiliates with respect to investments of variable life insurance separate accounts and variable life insurance operations. These standards of conduct shall be binding on the insurer and those to whom it refers and shall contain at a minimum the items contained in §I(2) of this regulation.</text> </paragraph> <paragraph num="I."> <text>Conflicts of Interest.</text> <paragraph num="(1)"> <text>Rules under any provision of the insurance laws of this State or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall apply also to members of any separate account's committee or other similar body. An officer or director of the company or any member of any managing committee or body of a separate account may not receive directly or indirectly a commission or other compensation with respect to the purchase or sale of assets of the separate account. The board of directors of the insurer shall be responsible for all acts concerning the separate account.</text> </paragraph> <paragraph num="(2)"> <text>Unless otherwise approved in writing by the Commissioner in advance of the transaction, with respect to variable life insurance separate accounts, an insurer or affiliate of an insurer may not:</text> <paragraph num="(a)"> <text>Sell to or purchase from any separate account established by the insurer any securities or other property, other than variable life insurance policies;</text> </paragraph> <paragraph num="(b)"> <text>Purchase or allow to be purchased for any separate account securities of which the insurer or an affiliate is the insurer, or securities of a corporation in which an officer or director of the insurer or an affiliate or any member of the managing committee or body owns 3 percent or more of the common stock or shares;</text> </paragraph> <paragraph num="(c)"> <text>Accept compensation, other than a regular salary or wages from the insurer or affiliate, for the sale or purchase of securities to or from any separate account other than as provided in §I(3)(c) of this regulation;</text> </paragraph> <paragraph num="(d)"> <text>Engage in a joint transaction, participation, or common undertaking by which the insurer of an affiliate participates with any separate account in a transaction in which an insurer or any of its affiliates obtains an advantage in the price of quality of the item purchased, in the service received, or in the cost of the service, and the insurer or any of its other affiliates is disadvantaged in any of these respects by the same transaction;</text> </paragraph> <paragraph num="(e)"> <text>Borrow money or securities from any separate account other than under a policy loan provision.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>No provision of this chapter may be construed to prohibit:</text> <paragraph num="(a)"> <text>The investment of separate account assets in securities issued by one or more investment companies registered pursuant to the federal Investment Company Act of 1940 which is sponsored or managed by the insurer or an affiliate, and the payment of investment management or advisory fees on the assets.</text> </paragraph> <paragraph num="(b)"> <text>The combination of orders for the purchase or sale of securities for the insurer, an affiliate, any separate accounts, or any one or more of them, which is for their mutual benefit or convenience as long as any securities so purchased or the proceeds of any sale of securities are allocated among the participants on some predetermined basis expressed in writing which is designed to assure the equitable treatment of all participants.</text> </paragraph> <paragraph num="(c)"> <text>An insurer or an affiliate to act as a broker or dealer in connection with the sale of securities to or by the separate account. However, a commission, fee, or remuneration charged may not exceed the minimum broker's commission established for any transaction by any national securities exchange through which the transaction could be effected, or when the charges are subject to negotiation, or when no minimum charge is applicable, then the charge shall be consistent with the charges prevailing in the ordinary course of business in the community where the transaction is effected.</text> </paragraph> <paragraph num="(d)"> <text>The rendering of investment management or investment advisory services by an insurer or affiliate, for a fee, subject to the provisions of this chapter.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Upon the written request of an insurer or an affiliate, the Commissioner may approve a particular transaction or series of proposed transactions which would otherwise be prohibited under §I(2) of this regulation, if the Commissioner determines that this transaction is not unfair or inequitable to persons affected under the circumstances of the transactions.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Investment Advisory Services to a Separate Account.</text> <paragraph num="(1)"> <text>An insurer may not enter into a contract under which any person undertakes, for a fee, to regularly furnish investment advice to the insurer with respect to its separate accounts maintained for variable life insurance policies, unless:</text> <paragraph num="(a)"> <text>The person providing the advice is registered as an investment adviser under the federal Investment Advisers Act of 1940; or</text> </paragraph> <paragraph num="(b)"> <text>The insurer has filed with the Commissioner and continues to file annually the following information and statements concerning the proposed adviser:</text> <paragraph num="(i)"> <text>The name and form of organization, state of organization, and its principal place of business;</text> </paragraph> <paragraph num="(ii)"> <text>The names and addresses of its partners, officers, directors, and persons performing similar functions, or, if this investment adviser is an individual, of the individual;</text> </paragraph> <paragraph num="(iii)"> <text>A written standard of conduct complying in substance with the requirements of §H of this regulation, which has been adopted by the investment adviser and is applicable to the investment adviser, its officers, directors, and affiliates;</text> </paragraph> <paragraph num="(iv)"> <text>A statement provided by the proposed adviser as to whether the adviser or a person associated with the adviser:</text> <paragraph num="(aa)"> <text>Has been convicted within 10 years of any felony, or of a misdemeanor arising out of this person's conduct as an employee, salesman, officer or director of an insurance company, a bank, an insurance agent, a securities broker, or an investment adviser, involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving the violation of 18 U.S.C. §1341, 1342, or 1343;</text> </paragraph> <paragraph num="(bb)"> <text>Has been permanently or temporarily enjoined by order, judgement, or decree of any court of competent jurisdiction from acting as an investment adviser, underwriter, broker, or dealer, or as an affiliated person or as an employee of an investment company, bank, or insurance company, or from engaging in or continuing conduct or practice in connection with any of these activities;</text> </paragraph> <paragraph num="(cc)"> <text>Has been found by federal or state regulatory authorities to have willfully violated, or has acknowledged willful violation of, any provision of federal or state securities laws or state insurance laws or of any rule or regulation under these laws;</text> </paragraph> <paragraph num="(dd)"> <text>The adviser or a person associated with the adviser has within the last 10 years signed a consent order with a federal or state regulatory authority that the adviser or associated person may not in the future engage in any of the aforementioned violations; or</text> </paragraph> <paragraph num="(ee)"> <text>Has been censured, denied an investment adviser registration, had a registration as an investment adviser revoked or suspended, or been barred or suspended from being associated with an investment adviser by order of federal or state regulatory authorities; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="(c)"> <text>The investment advisory contract shall be in writing and provide that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than 60 days' written notice to the investment adviser.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>After notice and opportunity for hearing, the Commissioner may require, by order, the investment advisory contract to be terminated if he deems continued operation to be hazardous to the public or the insurer's policyholders.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Information Furnished to Applicants."> <paragraph num="A."> <text>An insurer delivering or issuing for delivery in this State a variable life insurance policy shall deliver to the applicant for the policy, and obtain a written acknowledgement of receipt from the applicant coincident with or before the execution of the application, the following information:</text> <paragraph num="(1)"> <text>A summary explanation, in nontechnical terms, of the principal features of the policy, including a description of the manner in which the variable benefits will reflect the investment experience of the separate account and the factors which affect the variation. This explanation shall include notices of the provisions required by Regulation .04D(1)(e) and D(6) of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A statement of the investment policy of the separate account, including:</text> <paragraph num="(a)"> <text>A description of the investment objective and orientation intended for the separate account and the principal types of investments intended to be made; and</text> </paragraph> <paragraph num="(b)"> <text>Any restriction or limitations on the manner in which the operations of the separate account are intended to be conducted.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A statement of the net investment return of the separate account for each of the last 10 years for which the separate account was in existence.</text> </paragraph> <paragraph num="(4)"> <text>A statement describing, as an approximate percentage of an annual gross premium for each year and for the life of the policy, all commission or equivalent payments to be paid to all agents or other persons as a result of the proposed sale for each year of the policy for which payments are to be made. As used in this subsection, commissions means all monies and other valuable consideration, including but not limited to prizes, bonuses paid directly or indirectly to, for, or on behalf of the selling agent as compensation for services in the sale of variable life insurance.</text> </paragraph> <paragraph num="(5)"> <text>A statement of the annual taxes, brokerage fees, and similar costs, and the charges, expressed as an annual percentage, levied against the separate account during the previous year.</text> </paragraph> <paragraph num="(6)"> <text>A summary of the method to be used in valuing assets held by the separate account.</text> </paragraph> <paragraph num="(7)"> <text>A summary of the federal income tax liabilities of the policy applicable to the insured, the policy owner, and the beneficiary.</text> </paragraph> <paragraph num="(8)"> <text>If the applicant is furnished illustrations of benefits payable under a variable life insurance contract, these illustrations shall be prepared by the insurer and may not include projections of past investment experience into the future or attempted predictions of future investment experience, provided that nothing in this subsection prohibits the use of hypothetical assumed rates of return to illustrate possible levels of benefits if it is made clear that the assumed rates are hypothetical only.</text> </paragraph> <paragraph num="(9)"> <text>A prominent statement either in contrasting color or in boldface type at least four points larger than the type size of the largest type used in the text of any provision on the page, providing in substance the following information:</text> <paragraph num="(a)"> <text>The purpose of this variable life insurance policy is to provide insurance protection for the beneficiary named in the policy;</text> </paragraph> <paragraph num="(b)"> <text>A claim is not made that this variable life insurance policy is in any way similar or comparable to a systematic investment plan of mutual fund.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The requirements of this regulation shall be deemed to have been satisfied to the extent that a disclosure containing information required by this regulation is delivered, either in the form of:</text> <paragraph num="(1)"> <text>A prospectus included in a registration statement relating to the policies which satisfies the requirements of the federal Securities Act of 1933 and which was declared effective by the Securities and Exchange Commission; or</text> </paragraph> <paragraph num="(2)"> <text>All information and reports required by the federal Employee Retirement Income Security Act of 1974 if the policies are exempted from the registration requirements of the federal Securities Act of 1933 pursuant to §3(a)(2).</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Applications."> <text>The application for a variable life insurance policy shall contain:</text> <paragraph num="A."> <text>A prominent statement that the death benefit may be variable or fixed under specified conditions;</text> </paragraph> <paragraph num="B."> <text>A prominent statement that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees);</text> </paragraph> <paragraph num="C."> <text>Questions designed to elicit information which enables the insurer to determine the suitability of variable life insurance for the applicant.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Reports to Policyholders."> <text>An insurer delivering or issuing for delivery in this State a variable life insurance policy shall mail to each variable life insurance policyholder at his or her last known address the following reports:</text> <paragraph num="A."> <text>Within 30 days after each anniversary of the policy, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or policy loan, any interest charge, and any optional payments allowed pursuant to Regulation .04E of this chapter under the policy computed as of the policy anniversary date. This statement may be furnished within 30 days after a specified date in each policy year as long as the information contained in it is computed as of a date not more than 45 days before the mailing of the notice. This statement shall state in contrasting color or distinctive type that, in accordance with the investment experience of the separate account, the cash values and the variable death benefit may increase or decrease, and shall prominently identify any value described which may be recomputed before the next statement required by this section. If the policy guarantees that the variable death benefit on the next policy anniversary date will not be less than the variable death benefit specified in the statement, the statement shall be modified to indicate this. For flexible premium policies, the report required by this paragraph shall:</text> <paragraph num="(1)"> <text>Contain a reconciliation of the change since the previous report in cash value and cash surrender value, if different, because of payments made (less deductions for expense charges), withdrawals, investment experience, insurance charges, and any other changes made against the cash value; and</text> </paragraph> <paragraph num="(2)"> <text>Show the projected cash value and cash surrender value, if different, as of 1 year from the end of the period covered by the report assuming that:</text> <paragraph num="(a)"> <text>Planned periodic premiums, if any, are paid as scheduled;</text> </paragraph> <paragraph num="(b)"> <text>Guaranteed costs of insurance are deducted; and</text> </paragraph> <paragraph num="(c)"> <text>The net return is equal to the guaranteed rate or, in the absence of a guaranteed rate, is not greater than zero. If the projected value is less than zero, a warning message shall be included that states that the policy may be in danger of terminating without value in the next 12 months unless additional premium is paid.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Annually, a statement or statements including:</text> <paragraph num="(1)"> <text>A summary of the financial statement of the separate account based on the annual statement last filed with the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>The net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of 5 years when available;</text> </paragraph> <paragraph num="(3)"> <text>A list of investments held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the Commissioner;</text> </paragraph> <paragraph num="(4)"> <text>Charges, taxes, and brokerage fees determined on an accrual basis payable by the separate account during the previous year, each expressed as a dollar amount and a percentage and the total expressed as a dollar amount and as a percentage of the assets of the separate account;</text> </paragraph> <paragraph num="(5)"> <text>A statement of any change, since the last report, in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement applicable to the separate account, or in the investment adviser of the separate account;</text> </paragraph> <paragraph num="(6)"> <text>The name of each broker or dealer handling portfolio transactions on behalf of the separate account in which the insurer or an affiliate has a controlling interest and the nature of these transactions and the amount of compensation received by the broker or dealer from business originating with the separate account;</text> </paragraph> <paragraph num="(7)"> <text>The names and principal occupations of each principal executive officer and each director of the insurer; and</text> </paragraph> <paragraph num="(8)"> <text>The names of all parents of the insurer and the basis of control of the insurer, and the name of any person who is known to own, of record or beneficially, 10 percent or more of the outstanding voting securities of the company.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For flexible premium policies, if the amounts available under the policy on any processing day to pay the charges authorized by the policy are less than the amount necessary to keep the policy in force, until the next processing day, a report indicating the minimum payment required under the terms of the policy to keep it in force and the length of the grace period for payment of the amount.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Foreign Companies."> <text>If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public which is substantially similar to that provided by these regulations, the Commissioner may consider compliance with the law or regulation as compliance with these regulations.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Qualification of Producers for the Sale of Variable Life Insurance."> <paragraph num="A."> <text>Qualification to Sell Variable Life Insurance.</text> <paragraph num="(1)"> <text>A person may not sell or offer for sale in this State any variable life insurance policy unless the person is a producer and has filed with the Commissioner, in a form satisfactory to the Commissioner, evidence that the person holds a license and other authorizations which may be required by any federal or State securities law for the solicitation, sale, or negotiation of variable life insurance.</text> </paragraph> <paragraph num="(2)"> <text>A person may not solicit, sell, or act or aid in any manner in the negotiation of a variable life insurance policy unless such person has been so qualified in accordance with the provisions of Insurance Article, §§10-105 and 10-109, Annotated Code of Maryland, and is licensed by the Commissioner to act as a producer with life and variable lines of authority.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Reports of Disciplinary Actions and Criminal Prosecution. A person qualified in this State under this regulation to act as a producer of variable life insurance policies shall report to the Commissioner in accordance with Insurance Article, §§10-126(f) and (g), Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>Suspension or revocation of a producer license in any other state or territory of the United States;</text> </paragraph> <paragraph num="(2)"> <text>Imposition of disciplinary sanction, including suspension or expulsion from membership, suspension or revocation or denial of registration imposed upon the producer by any national securities exchange or national securities association or any federal, state, or territorial agency with jurisdiction over securities or variable life insurance;</text> </paragraph> <paragraph num="(3)"> <text>Judgment or injunction entered against the producer on the basis of conduct deemed to have involved fraud, deceit, misrepresentation, or violation of any insurance or securities law or regulation; or</text> </paragraph> <paragraph num="(4)"> <text>Criminal prosecution as described under Insurance Article, §10-126(g), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Refusal to Qualify Producer to Sell Variable Life Insurance — Suspension, Revocation, or Nonrenewal of Qualification. The Commissioner may reject an application or suspend, revoke, or refuse to renew a producer’s qualification under this regulation to solicit, sell, or negotiate variable life insurance policies upon any ground that would bar the applicant or producer from being licensed to solicit, sell, or negotiate life insurance policies in this State. The rules governing proceedings relating to the rejection of a producer’s application, suspension or revocation of a producer’s license or refusal to renew a producer’s license shall also govern proceedings under this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Voting Rights."> <text>To the extent an insurer deems it necessary to comply with any applicable state or federal laws, with respect to any separate account, including, without limitation, a separate account which is a management investment company or unit investment trust, the insurer may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of the account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with the company, to manage the business of the account.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Separability and Applicability of Other Regulations."> <paragraph num="A."> <text>If any provision of this chapter or its application to any person or circumstance is held to be invalid, the remainder of the chapter and the application of the provision to other persons or circumstances is not affected.</text> </paragraph> <paragraph num="B."> <text>The provisions of COMAR 31.09.04 and any other regulations promulgated by the Commissioner with reference to contracts on a variable basis or with reference to life insurance or the conduct of the business of life insurance shall apply to variable life insurance to the extent that the provisions of the other regulations are not in conflict with the requirements of this chapter.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 16-601—16-603, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 1, 1979 (6:10 Md. R. 841)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective December 27, 1983 (10:24 Md. R. 2189)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective August 22, 1988 (15:17 Md. R. 2048)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.43 to COMAR 31.09.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective May 21, 2018 (45:10 Md. R. 504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective May 21, 2018 (45:10 Md. R. 504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03E amended effective April 12, 2004 (31:7 Md. R. 587)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective May 21, 2018 (45:10 Md. R. 504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective August 6, 2012 (39:15 Md. R. 965)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06G amended effective October 11, 2004 (31:20 Md. R. 1487)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective May 21, 2018 (45:10 Md. R. 504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09C adopted effective May 21, 2018 (45:10 Md. R. 504)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective April 22, 2019 (46:8 Md. R. 402)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A amended effective July 27, 2020 (47:15 Md. R. 713)</annotation> </annotations> </chapter> <chapter num="03" heading="Industrial Life Insurance—Dividends Required"> <regulation prefix="Regulation" num=".01" heading="Dividends."> <text>All policies of industrial life insurance heretofore or hereafter issued by any life insurance company authorized to do business in Maryland and operating as a mutual insurer; and all policies of industrial life insurance issued by any life insurance company operating as a mutual insurer at the time the policies were issued but which the insurer subsequently operates as a stock insurer; and all policies of industrial life insurance issued on or after January 1, 1941, by any stock insurer, which policies do not specifically state that they are nonparticipating or do not specifically state that they do not share in the surplus earnings of the company, shall have apportioned to them in the form of dividends payable on each anniversary date of each of the policies occurring on and after January 1, 1941, an equitable share of the policies in the surplus earnings of the insurer unless the insurer furnishes proof satisfactory to the Commissioner that the policies have not contributed to the surplus earnings of the insurer during the calendar year immediately preceding the policy anniversary. With the approval of the Commissioner, and if not in conflict with policy provisions, the insurer may elect that the dividends be credited on a specified date on each calendar year rather than on policy anniversaries.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Manner of Payment of Dividends."> <text>The dividends shall be paid in the manner specified in the policy, or, if the policy does not specify a manner of payment, then the dividends shall, at the option of the insurer, or if the insurer does not make an election, then at the option of the policyholder, be:</text> <paragraph num="A."> <text>Applied to provide paid-up additions to the policy;</text> </paragraph> <paragraph num="B."> <text>Paid in cash;</text> </paragraph> <paragraph num="C."> <text>Left to accumulate at a rate of interest not less than 2-1/2 percent, the accumulated dividends and interest to be payable on termination of the insurance if not previously credited to increase an operative nonforfeiture benefit under the policy; or</text> </paragraph> <paragraph num="D."> <text>Applied to the payment of any premium payable under the policy or, if no further premiums are payable, the dividends shall be credited in accordance with one of the aforementioned methods.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 16-206, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 15, 1966</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.49 to COMAR 31.09.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="04" heading="Contracts on a Variable Basis"> <regulation prefix="Regulation" num=".01" heading="Authority and Purpose."> <text>The issuance or delivery of contracts on a variable basis (hereinafter sometimes referred to as “contracts”) in Maryland in any manner not in compliance with this chapter shall be deemed to be the transaction of insurance business hazardous to policyholders and the public, and contrary to the public interest.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Contracts on a variable basis” means annuity contracts, as defined in Insurance Article, §1-101(e), Annotated Code of Maryland, which provide for payments varying directly with the investment experience of a segregated asset account, hereinafter referred to as “variable contract account”, as distinguished from “fixed annuity contracts”. This definition does not include any of the forms of insurance prohibited by Insurance Article, §§16-112 and 27-207, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Fixed annuity contracts” or “guaranteed annuity contracts” means annuity contracts, as defined in Insurance Article, §1-101(e), Annotated Code of Maryland, which provide for payment of fixed dollar amounts guaranteed in the contract.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A participating annuity contract providing for payment by the insurer of dividends or participation in the divisible surplus accruing under the contract in addition to fixed dollar payments guaranteed in the contract shall be deemed a fixed annuity contract and not a contract on a variable basis if, according to assumptions made by the insurer at the time the contract is issued, at least 50 percent of the consideration for the contract is required to support the fixed dollar guarantees.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Qualifications of Producers."> <paragraph num="A."> <text>Qualification to Sell Variable Annuity Contracts.</text> <paragraph num="(1)"> <text>A person may not sell or offer for sale in this State any variable annuity contract unless the person is a producer and has filed with the Commissioner, in a form satisfactory to the Commissioner, evidence that the person holds a license and other authorizations which may be required by any federal or State securities law for the solicitation, sale, or negotiation of variable annuities.</text> </paragraph> <paragraph num="(2)"> <text>A person may not in this State solicit, sell, or act or aid in any manner in the negotiation of any variable contract unless the person has been so qualified in accordance with the provisions of Insurance Article, §§10-105 and 10-109, Annotated Code of Maryland, and is licensed by the Commissioner to act as a producer with life and variable lines of authority.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Reports of Disciplinary Actions and Criminal Prosecution. A person qualified in this State under this regulation to act as a producer of variable annuity contracts shall report to the Commissioner in accordance with Insurance Article, §§10-126(f) and (g), Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>Suspension or revocation of a producer license in any other state or territory of the United States;</text> </paragraph> <paragraph num="(2)"> <text>Imposition of disciplinary sanction, including:</text> <paragraph num="(a)"> <text>Suspension or expulsion from membership; or</text> </paragraph> <paragraph num="(b)"> <text>Suspension, revocation, or denial of registration imposed on the producer by any national securities exchange or national securities association or any federal, state, or territorial agency with jurisdiction over securities or variable annuity contracts;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Judgment or injunction entered against the producer on the basis of conduct deemed to have involved fraud, deceit, misrepresentation, or violation of any insurance or securities law or regulation; or</text> </paragraph> <paragraph num="(4)"> <text>Criminal prosecution as defined in Insurance Article, §10-126(g), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Refusal to Qualify Producer to Sell Variable Annuity Contracts—Suspension, Revocation, or Nonrenewal of Qualification. The Commissioner may reject an application or suspend, revoke, or refuse to renew producer’s qualification under this regulation to solicit, sell, or negotiate variable annuity contracts upon any ground that would bar the applicant or producer from being licensed to solicit, sell, or negotiate life insurance policies in this State. The rules governing proceedings relating to the rejection of a producer’s application, suspension or revocation of a producer’s license, or refusal to renew a producer’s license shall also govern proceedings under this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Qualifications of Insurers."> <paragraph num="A."> <text>An insurer may issue the contracts provided it:</text> <paragraph num="(1)"> <text>Otherwise qualifies as a life insurance company;</text> </paragraph> <paragraph num="(2)"> <text>Has surplus assets or funds (within the meaning of Insurance Article, §4-105, Annotated Code of Maryland) as of the end of the preceding calendar year of at least $1,000,000; and</text> </paragraph> <paragraph num="(3)"> <text>Complies with one of the following:</text> <paragraph num="(a)"> <text>Is limited by its charter and bylaws exclusively to the sale of contracts on a variable basis, including additional benefits operating to safeguard the contract from lapse, or to provide a special surrender value, or special benefit, or annuity, in the event of total and permanent disability of the holder. An insurance company so limited may not be disqualified by reason of being a subsidiary of a stock or mutual insurance company transacting other lines of business.</text> </paragraph> <paragraph num="(b)"> <text>Has assets in excess of $50,000,000 and has been licensed for the sale of life insurance and annuities in this State for at least 10 consecutive years immediately before the date of issuance of the contracts on a variable basis.</text> </paragraph> <paragraph num="(c)"> <text>Has capital and surplus funds in excess of $10,000,000, and has been continuously and actively engaged in the sale of contracts on a variable basis in its state of domicile for at least 5 consecutive years immediately before the effective date of the authorization to issue the contracts in Maryland.</text> </paragraph> <paragraph num="(d)"> <text>By reason of its capital structure, surplus, amount of business in force, and plan of operations, in the opinion of the Commissioner, substantially conforms to the requirements of §A(3)(a), (b), or (c) of this regulation, or affords equivalent protection to contract holders; and provided further that the insurer shall have been specifically authorized by the Commissioner to issue the contracts after demonstrating to the Commissioner's satisfaction that it is qualified to do so.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>In determining the qualifications of the insurer, the Commissioner shall consider, among other things:</text> <paragraph num="(1)"> <text>The history, reputation, and financial stability of the insurer;</text> </paragraph> <paragraph num="(2)"> <text>The character, experience, and competence of the directors and officers of the insurer;</text> </paragraph> <paragraph num="(3)"> <text>The proposed methods of advertising, soliciting, and selling the contracts; and</text> </paragraph> <paragraph num="(4)"> <text>Whether, in the case of a foreign or alien insurer, regulation under the laws of its state of domicile provides protection to the public and to contract holders substantially equal to that provided by the laws of Maryland and the regulations of the Maryland Insurance Administration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Filing, Approval of Forms."> <paragraph num="A."> <text>A contract on a variable basis may not be issued or delivered in this State unless the form of the contract has been filed with and approved by the Commissioner and unless the form of application for the contract, and of any certificate to be used with the contract issued on a group basis, have been filed with and approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall disapprove or withdraw previous approval of the form of contract, application, or certificate for any of the reasons specified in Insurance Article, §12-205, Annotated Code of Maryland, or if:</text> <paragraph num="(1)"> <text>Sales of the contracts are being solicited by any means of advertising, communication, or dissemination of information which involves misleading or inadequate description of the provisions of the contract or which involves illustrations of benefits under the contracts based on projection into the future of past investment experience or on attempted predictions of future investment experience;</text> </paragraph> <paragraph num="(2)"> <text>The procedures to be followed by the insurer in determining the dollar amount of variable benefits or other contractual payments or values under the contract are inequitable or unreasonable;</text> </paragraph> <paragraph num="(3)"> <text>The expense, mortality, or investment increment factors stated in the contract are unreasonable; or</text> </paragraph> <paragraph num="(4)"> <text>The contracts do not conform to or are issued contrary to this chapter or any other regulations promulgated by the Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Attainment of Balance."> <paragraph num="A."> <text>Before the issuance of any individual contract on a variable basis, the insurer shall reasonably satisfy itself that the total amounts being applied and proposed to be applied to provide the prospective annuitant with income on a variable basis will not substantially exceed the amount which would be required to purchase the income in a predetermined dollar amount which the annuitant can reasonably expect to receive.</text> </paragraph> <paragraph num="B."> <text>In determining the reasonably expectable fixed dollar income, the insurer may consider, alone or in combination, any direct source, such as a pension, annuity, Social Security benefit, or trust fund, as well as any indirect source, such as an asset having a principal amount expressed in fixed dollars and capable of being used to produce a fixed dollar income, as, for example bonds, mortgages or life insurance policies.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Contract Provisions."> <paragraph num="A."> <text>Any contract on a variable basis issued or delivered in this State shall contain a statement of the essential features of the procedure to be followed by the insurer in determining the dollar amount of variable benefits or other contractual payments or values under the contract and shall state in clear terms that this amount may decrease or increase according to this procedure. A contract, and any certificate evidencing variable benefits issued pursuant to the contract on a group basis, and any application for the contract or certificate shall have prominently printed on its first page in boldface type not less than 10 point, a clear statement that payments and termination values provided by the contract are variable and not guaranteed as to dollar amount.</text> </paragraph> <paragraph num="B."> <text>A contract issued or delivered in this State shall stipulate the expense, mortality, and investment increment factors to be used in computing the dollar amount of variable benefits or other contractual payments or values under the contract, and shall guarantee that expense and mortality experience will not adversely affect the dollar amount.</text> </paragraph> <paragraph num="C."> <text>A contract shall contain all of the standard or uniform provisions required by Insurance Article, Annotated Code of Maryland, except that the Commissioner will give consideration to waiving the requirements of former Article 48A, §408A, Annotated Code of Maryland (transferred to the Session Laws by §6, Ch. 57, Acts of 1997), upon a showing by the insurer satisfactory to the Commissioner that the requirements are inconsistent with the purposes of the contract.</text> </paragraph> <paragraph num="D."> <text>An individual contract on a variable basis may not be issued or delivered in this State unless it contains in substance the following provisions:</text> <paragraph num="(1)"> <text>That in event of default in payment of any consideration beyond the period of grace allowed by the contract for the payment thereof, the insurer will make payment of the value of the contract in accordance with an equitable plan specified in the contract, this payment to commence not later than the date contractual payments by the insurer would have begun if there had been no default.</text> </paragraph> <paragraph num="(2)"> <text>That upon request of the contract holder received by the insurer at least 90 days before the date contractual payments by the insurer would otherwise begin, the insurer will make payment of the value of the contract in accordance with an equitable plan specified in the contract which may be selected by the contract holder, this plan to become effective as of the date contractual payments under the contract would otherwise begin, unless another date is requested by the contract holder and agreed to by the insurer.</text> </paragraph> <paragraph num="(3)"> <text>That the insurer will mail to the contract holder at least once in each contract year, a report in a form approved by the Commissioner which shall include a statement of the number of units credited to the contract, the dollar value of a unit, and the dollar value of the total number of units credited, all this information to be furnished as of a stated date which shall be not more than 2 months before the date of mailing.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Administration and Accounting Procedures."> <paragraph num="A."> <text>Any domestic life insurer specifically authorized by the Commissioner to issue contracts on a variable basis and any foreign or alien life insurer specifically authorized by the Commissioner to deliver these contracts in Maryland may establish and operate one or, upon express approval by the Commissioner, more than one, segregated asset accounts to be known as variable contract accounts. An insurer which has established a separate investment account as defined in Insurance Article, §5-512, Annotated Code of Maryland, may, upon express approval by the Commissioner, use the same segregated asset account as both a separate investment account and a variable contract account.</text> </paragraph> <paragraph num="B."> <text>Except as may be otherwise specifically provided by the contract, all amounts received in connection with any contract on a variable basis shall be placed in the appropriate variable contract account, and all the liabilities of the contract shall be set up in that account.</text> </paragraph> <paragraph num="C."> <text>The investments and liabilities of a variable contract account at all times shall be clearly identifiable and distinguishable in the books or other records of the insurer from the other investments and liabilities of the insurer. An insurer may not hypothecate any of the assets of any variable contract account or borrow on the security of these assets. An investment, other than cash, in any variable contract account, in any separate account, or in the insurer's general investment account may not be transferred by sale, exchange, substitution, or otherwise from one account to another except with the Commissioner's approval.</text> </paragraph> <paragraph num="D."> <text>Assets allocated to a variable contract account shall be owned by the insurer and the insurer may not be, or hold itself out to be, a trustee with respect to these assets.</text> </paragraph> <paragraph num="E."> <text>An insurer issuing a contract on a variable basis shall, annually on or before March first, submit to the Commissioner a true statement for the business of its variable contract accounts. This statement shall be in such form and content as is approved or adopted for current use by the National Association of Insurance Commissioners or its successor organization and as supplemented for additional information required by the Commissioner and shall include details as to all of the income, disbursements, assets, and liability items associated with the variable contract accounts.</text> </paragraph> <paragraph num="F."> <text>The valuation of variable contract account assets for all purposes, including annual statements of the insurer to the Commissioner, shall be determined in accordance with the market value of the assets notwithstanding the application of other valuation methods to assets of the insurer other than the assets of the variable contract accounts. The valuation may be made as of such valuation dates as the insurer shall establish from time to time, except as otherwise required for the annual statements to the Commissioner. To accomplish the valuation at market value any equity security purchased for variable contract account shall be a security:</text> <paragraph num="(1)"> <text>Which is listed or admitted to trading on a securities exchange located in the United States of America or Canada; or</text> </paragraph> <paragraph num="(2)"> <text>Which is publicly held and traded in the over-the-counter market as defined by the Commissioner and as to which market quotations have been available.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The reserve liability for contracts on a variable basis shall be established by the Commissioner pursuant to the requirements of Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland, and in accordance with actuarial procedures that recognize the variable nature of the benefits provided.</text> </paragraph> <paragraph num="H."> <text>Investments.</text> <paragraph num="(1)"> <text>An insurer may not invest more than $10,000 or 5 percent of any one variable contract account, whichever is greater, in the stock or shares of any one corporation, mutual fund, or investment company, except that during the first year of operation of a variable contract account having total assets of less than one million dollars, the insurer may invest up to 10 percent of the account, or $10,000 if greater, in these stock or shares provided the account is not a segregated asset account which also serves as a separate investment account as defined in Insurance Article, §5-512, Annotated Code of Maryland. However, with express approval of the Commissioner, an insurer may invest a greater proportion of the assets of a variable contract account which does not serve as a separate investment account in the shares of a nonaffiliated open-end diversified management investment company registered with the Securities and Exchange Commission under the federal Investment Company Act of 1940, as amended (an open-end diversified management investment company so registered being hereinafter sometimes referred to as “management company”), if the investment policy of the nonaffiliated management company conforms to the investment requirements of this chapter. The term “affiliated” or “affiliate” as used in this chapter, except in Regulation .09 of this chapter, means an “affiliated person” as defined in the federal Investment Company Act of 1940, as amended.</text> </paragraph> <paragraph num="(2)"> <text>An insurer may not purchase for a variable contract account common stock or shares of any corporation in excess of 5 percent of the total issued and outstanding common stock or shares of that corporation. However, with express approval of the Commissioner, an insurer may purchase in excess of 5 percent of the total number of outstanding shares of an open-end diversified management investment company registered with the Securities and Exchange Commission under the federal Investment Company Act of 1940, as amended.</text> </paragraph> <paragraph num="(3)"> <text>An insurer may not purchase for a variable contract account common stock or shares of any corporation unless investment in the common stock or shares of any corporation is authorized as a permissible investment under Insurance Article, §§16-601—16-603, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>An insurer may not purchase for a variable contract account any securities of a corporation which is a subsidiary or affiliate of the insurer or in which a subsidiary or affiliate of the insurer or a director or officer of the insurer owns 3 percent or more of the common stock or shares.</text> </paragraph> <paragraph num="(5)"> <text>An insurer may purchase securities or other investments for its variable contract accounts through licensed brokers or by direct placement, but these purchases may not be made directly or indirectly from a director, officer, subsidiary, or affiliate of the insurer.</text> </paragraph> <paragraph num="(6)"> <text>Assets of a variable contract account may be sold for cash in a bona fide sale made directly to the purchasers or through licensed brokers but these sales may not be made directly or indirectly to any director, officer, subsidiary, or affiliate of the insurer.</text> </paragraph> <paragraph num="(7)"> <text>An insurer may not purchase or sell any of the investments of a variable contract account through a broker who is a director or officer of the insurer or of an affiliate or subsidiary of the insurer.</text> </paragraph> <paragraph num="(8)"> <text>To the extent approved by the Commissioner, the restrictions of §H(4), (5), (6), and (7) of this regulation are not applicable to investments in the shares of an affiliated open-end diversified management investment company registered with the Securities and Exchange Commission under the federal Investment Company Act of 1940, as amended, which management company has been approved by the Commissioner for the variable contract account in accordance with §I of this regulation.</text> </paragraph> </paragraph> <paragraph num="I."> <text>With the express approval of the Commissioner, an insurer may invest all or any portion of the assets of a variable contract account which does not serve as a separate investment account in the shares of an affiliated open-end diversified management investment company registered with the Securities and Exchange Commission under the federal Investment Company Act of 1940, as amended, if the insurer, the affiliated management company, and the sponsor and/or holding company, as the case may be, of the insurer and the affiliated management company agree that:</text> <paragraph num="(1)"> <text>The investments to be made by the affiliated open-end diversified management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, will conform to the requirements of §H of this regulation, which, except for the provisions of the insurer, would otherwise be required to observe had the investments been made for a variable contract account of the insurer;</text> </paragraph> <paragraph num="(2)"> <text>An investment, other than cash, may not be transferred by sale, exchange, substitution, or otherwise between the insurer, the affiliated management company, and any sponsor, parent, or holding company except with the Commissioner's approval;</text> </paragraph> <paragraph num="(3)"> <text>In determining compliance with the provisions of Regulation .05B(3) of this chapter, the sales load and other charges, if any, to be made by the affiliated management company shall be added to any charges made in the variable annuity contract of the insurer;</text> </paragraph> <paragraph num="(4)"> <text>The Commissioner may at any time conduct such examination of the affiliated management company and of the sponsor, parent, or holding company as he deems necessary, the cost of which is to be borne by the insurer in accordance with Insurance Article, §2-208, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(5)"> <text>The insurer and the affiliated management company will establish such additional procedures and restrictions as the Commissioner deems necessary to safeguard the interests of contract holders.</text> </paragraph> <paragraph num="(6)"> <text>Approval under this section shall, to the extent permitted by the Commissioner, supersede the restrictions contained in §H of this regulation. Any approval under this section may be withdrawn by the Commissioner upon 30 days written notice to the insurer, which notice shall specify the reason for the withdrawal. At any time during the 30-day period, the Commissioner may suspend approval under this section by written notice or by telegram, the suspension to become effective immediately upon receipt of the communication from the Commissioner. During suspension of approval, or following withdrawal of approval, the insurer may make no further investments in the affiliated management company unless approval is reinstated.</text> </paragraph> </paragraph> <paragraph num="J."> <text>While serving as an elected or appointed officer or as a director or trustee of an insurer authorized to issue contracts on a variable basis, a person may not receive directly or indirectly any commission on the business transactions of the insurer.</text> </paragraph> <paragraph num="K."> <text>In connection with the allocation of investment expenses, or in any other respect, an insurer may not discriminate unfairly between variable contract accounts, separate accounts, and the insurer's general investment account, but this provision does not require the insurer to follow uniform investment policies for all its accounts.</text> </paragraph> <paragraph num="L."> <text>Maximum Asset Deduction Charge.</text> <paragraph num="(1)"> <text>The maximum asset deduction charge which an insurer may make against a variable contract account that applies to individual variable contracts for investment expenses and annuity mortality guarantees may not exceed 1-1/2 percent in the aggregate. This maximum charge shall be reduced by the amount of any asset deduction charge for investment expenses made by an affiliated open-end diversified management investment company in which the assets of the variable contract account are invested in accordance with the provisions of §I of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The maximum asset deduction charge referred to in §L(1) of this regulation may be increased by the amount of any reasonable additional charge made for guaranteeing the asset values of individual accounts as of specified dates.</text> </paragraph> <paragraph num="(3)"> <text>The maximum charges allowable under §L(1) of this regulation shall be reduced to reasonably reflect any charges for annuity mortality guarantees made by the insurer by means of deductions from the gross premiums or contributions paid under the contract, if the deductions are not allocated to the variable contract account.</text> </paragraph> </paragraph> <paragraph num="M."> <text>For each contract on a variable basis, the insurer shall maintain a history record card, a ledger sheet or a comparable record, showing in addition to the usual stipulated payment or contract consideration information, each net annuity consideration applied and the increment and accumulated balance on either a unit or dollar value basis.</text> </paragraph> <paragraph num="N."> <text>Right to Vote.</text> <paragraph num="(1)"> <text>Variable annuity contract owners shall have the right to vote with respect to the following matters affecting the variable contract account:</text> <paragraph num="(a)"> <text>The election of members to the variable contract committee or board;</text> </paragraph> <paragraph num="(b)"> <text>Amendments to the investment policies or objectives of the variable contract account required to be submitted to a vote of contract owners in accordance with the federal Investment Company Act of 1940 as amended or under any other statute;</text> </paragraph> <paragraph num="(c)"> <text>The selection of auditors for the variable contract account; and</text> </paragraph> <paragraph num="(d)"> <text>Any other matters required or determined to be submitted to contract owners for approval or disapproval.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Notice of the voting rights of each contract owner shall be given by furnishing him with a prospectus containing the information or by other proper written notice.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Group Contracts."> <text>A contract on a variable basis may be issued as an individual contract or as a group contract, but any contract shall be considered as being issued on a group basis only if it conforms to the description in one of the following sections:</text> <paragraph num="A."> <text>A contract issued to an employer providing a plan of retirement annuities for covered employees on the date of issue, the stipulated payments on the contract to be remitted by the employer and to be paid either wholly by the employer or jointly by the employer and the employees. The employees eligible under the contract shall be all of the employees of the employer, or all of any class or classes of employees determined by conditions pertaining to employment, but the contract may exclude classes of employees determined by age. The contract may provide that the term “employees” shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietors, or partnerships if the business of the employer and of the affiliated corporations, proprietors, or partnerships is under common control. The contract may provide that the term “employees” shall include the individual proprietor or partners if the employer is an individual proprietor or a partnership. A director of a corporate employer may not be eligible under the contract unless the person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. An individual proprietor or partner may not be eligible under the contract unless he is actively engaged in and devotes a substantial part of his time to the conduct of the business of the proprietor or partnership.</text> </paragraph> <paragraph num="B."> <text>A contract issued to a labor union providing a plan of retirement annuities for at least 25 covered members on the date of issue, the stipulated payments under the contract to be remitted by the union and to be paid wholly from funds contributed by the union, or by the employer or employers of the persons covered, or by both, or partly from these funds and partly from funds contributed by members covered under the contract, but this contract may not require that the entire cost be derived from funds contributed by the insured members specifically for the stipulated payments under it. The members eligible under the contract shall be all of the members of the union or all of any specified class or classes of members determined by conditions pertaining to their employment, or to membership in the union, or to both, but the contract may exclude classes of members determined by age.</text> </paragraph> <paragraph num="C."> <text>A contract issued to the trustees of a fund established by an employer or by two or more employers, or by an association of employers which has been in existence for at least 5 years (or with express approval of the Commissioner if less than 5 years), or by one or more labor unions, or by one or more employers and one or more labor unions, providing a plan of retirement annuities for all of the employees of the employer or employers, or all of the employees of the member employers of the association, or all of any class or classes of the employees determined by conditions pertaining to their employment, or all of the members of the union or unions, or all of any class or classes of members determined by conditions pertaining to their employment or to membership in the union, or to both, but the contract may exclude classes of employees or members determined by age. The contract may provide that the term “employees” shall include the individual proprietor or partners if an employer is an individual proprietor or a partnership. A director of a corporate employer may not be eligible under the contract unless the person is otherwise eligible as a bona fide employee of the corporation by performing services other than the usual duties of a director. An individual proprietor or partner may not be eligible under the contract unless he is actively engaged in and devotes a substantial part of his time to the conduct of the business of the proprietor or partnership. The contract may provide that the term “employees” shall include the trustees or their employees, or both, if their duties are principally connected with the trusteeship. The contract shall cover at least 100 persons at date of issue. The contract shall provide that the stipulated payments shall be remitted by the trustees and shall be paid wholly from funds contributed by the employer or employers of the persons covered, or by the union or unions, or by both, or partly from these funds and partly from funds contributed by the persons covered under the contract, but this contract may not require that the entire cost be derived from funds contributed by the covered persons specifically for the stipulated payments under it.</text> </paragraph> <paragraph num="D."> <text>A contract issued to an association of persons having a common calling, occupation, or profession, which association was organized and maintained in good faith for purposes other than obtaining annuities and has been in existence for at least 5 years, or with express approval of the Commissioner if less than 5 years, or to the trustees of a fund established by the association, providing a plan of retirement annuities for all the members and employees of the association or all of any specified class or classes of the members and employees. The contract may provide that the terms “employees” or “members” shall include the trustees or their employees, or both, if their duties are principally connected with the trusteeship. The contract shall cover at least 100 persons at date of issue. The contract shall provide that the stipulated payments shall be remitted by the association or by the trustees and shall be paid wholly from funds contributed by the association, or partly from these funds and partly from funds contributed by the persons covered under the contract, or wholly from funds contributed specifically for that purpose by the persons covered under the contract.</text> </paragraph> <paragraph num="E."> <text>A contract issued to one or more departments of any federal or state government, or their subdivisions, or of any state college or university, or to an association of persons employed in any such department, which association was organized and maintained in good faith for purposes other than obtaining annuities and has been in existence for at least 5 years, or with express approval of the Commissioner if less than 5 years, or to the trustees of a fund established by a department or association, providing a plan of retirement annuities for all of the employees of the department or all of the members of the association or all of any specified class or classes of employees or members. The contract may provide that the terms “employees” or “members” shall include the trustees or their employees, or both, if their duties are principally connected with the trusteeship. The contract shall cover at least 100 persons at date of issue. The contract shall provide that the stipulated payments shall be remitted by the department, association, or trustees and shall be paid wholly from funds contributed by the department or association, or partly from these funds and partly from funds contributed by the persons covered under the contract, or wholly from funds contributed specifically for that purpose by the persons covered under the contract.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 8-442(d), and 16-601—16-603, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 1, 1965</annotation> <annotation type="History" subtype="Administrative History">Amended effective November 1, 1973</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective August 22, 1988 (15:17 Md. R. 2048)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.42 to COMAR 31.09.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 25, 2016 (43:8 Md. R. 498)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective April 6, 2020 (47:7 Md. R. 385)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08L amended effective April 25, 2016 (43:8 Md. R. 498)</annotation> </annotations> </chapter> <chapter num="05" heading="Replacement of Life Insurance and Annuities"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to:</text> <paragraph num="A."> <text>Regulate the activities of insurers and insurance producers with respect to the replacement of existing life insurance and annuities; and</text> </paragraph> <paragraph num="B."> <text>Protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement or financed purchase transactions by:</text> <paragraph num="(1)"> <text>Ensuring that purchasers receive information to make a decision in the purchasers' own best interests;</text> </paragraph> <paragraph num="(2)"> <text>Reducing the opportunity for misrepresentation and incomplete disclosure; and</text> </paragraph> <paragraph num="(3)"> <text>Establishing penalties for failure to comply with the requirements of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>“Direct Solicitation” Defined. In this regulation, the term “direct solicitation” does not include any group meeting:</text> <paragraph num="(1)"> <text>Held by an insurance producer solely for the purpose of educating individuals about or enrolling individuals in a plan or arrangement; or</text> </paragraph> </paragraph> <paragraph num="B."> <text>Exempted Transactions. Unless specifically included, this chapter does not apply to transactions involving the following:</text> <paragraph num="(1)"> <text>Credit life insurance;</text> </paragraph> <paragraph num="(2)"> <text>Group life insurance or group annuities if there is no direct solicitation of individuals by an insurance producer;</text> </paragraph> <paragraph num="(3)"> <text>An application to an insurer that issued an existing life insurance policy or existing annuity contract if:</text> <paragraph num="(a)"> <text>A contractual change or a conversion privilege is being exercised;</text> </paragraph> <paragraph num="(b)"> <text>The existing life insurance policy or existing annuity contract is being replaced by the same insurer under a program filed with and approved by the Commissioner; or</text> </paragraph> <paragraph num="(c)"> <text>A term conversion privilege is exercised among corporate affiliates;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same insurer;</text> </paragraph> <paragraph num="(5)"> <text>Except as provided in §C of this regulation, life insurance policies or annuity contracts used to fund:</text> <paragraph num="(a)"> <text>An employee pension or welfare benefit plan that is covered by ERISA;</text> </paragraph> <paragraph num="(b)"> <text>A plan described by 26 U.S.C. §401(a), 401(k), or 403(b), if the plan, for purposes of ERISA, is established or maintained by an employer;</text> </paragraph> <paragraph num="(c)"> <text>A governmental or church plan defined in 26 U.S.C. §414, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under 26 U.S.C. §457 of the Internal Revenue Code;</text> </paragraph> <paragraph num="(d)"> <text>A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor; or</text> </paragraph> <paragraph num="(e)"> <text>Any other benefit plan qualifying for income tax deductibility of premiums under Title 26 of the United States Code (Internal Revenue Code);</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>New coverage provided under a life insurance policy or annuity contract if the cost is borne wholly by the insured's employer or by an association of which the insured is a member;</text> </paragraph> <paragraph num="(7)"> <text>Existing life insurance that is a nonconvertible term life insurance policy that will expire in 5 years or less and cannot be renewed;</text> </paragraph> <paragraph num="(8)"> <text>Immediate annuities that are purchased with proceeds from an existing annuity contract; or</text> </paragraph> <paragraph num="(9)"> <text>Structured settlements.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Plan or Arrangement Funded Solely by Elective Employee Contributions. Notwithstanding §B(5) of this regulation, this chapter applies to a life insurance policy or annuity contract used to fund a plan or arrangement funded solely by contributions an employee elects to make, whether on a pretax or aftertax basis, if:</text> <paragraph num="(1)"> <text>The insurer has been notified that plan participants may choose from among two or more insurers; and</text> </paragraph> <paragraph num="(2)"> <text>There is a direct solicitation of an individual employee by an insurance producer for the purchase of an annuity contract or life insurance policy.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Section B(8) of this regulation does not exclude from this chapter an immediate annuity purchased with proceeds from an existing life insurance policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Direct-response solicitation” means a solicitation made:</text> <paragraph num="(a)"> <text>Through a sponsoring or endorsing entity; or</text> </paragraph> <paragraph num="(b)"> <text>Individually solely by mail, telephone, internet, or other mass communication medium.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“ERISA” means the federal Employee Retirement Income and Security Act of 1974.</text> </paragraph> <paragraph num="(3)"> <text>Existing Annuity Contract.</text> <paragraph num="(a)"> <text>“Existing annuity contract” means an annuity contract that is in force.</text> </paragraph> <paragraph num="(b)"> <text>“Existing annuity contract” includes an annuity contract that is within an unconditional refund period.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Existing insurer” means an insurer whose life insurance policy or annuity contract is or will be changed or affected in a manner described in §B(11) of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>Existing Life Insurance Policy.</text> <paragraph num="(a)"> <text>“Existing life insurance policy” means an individual life insurance policy that is in force.</text> </paragraph> <paragraph num="(b)"> <text>“Existing life insurance policy” includes a life insurance policy that is:</text> <paragraph num="(i)"> <text>Under a binding or conditional receipt;</text> </paragraph> <paragraph num="(ii)"> <text>Within a conditional refund period; or</text> </paragraph> <paragraph num="(iii)"> <text>On a paid-up or extended-term basis.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Financed purchase” means the purchase of a new life insurance policy involving the actual or intended use of funds obtained by the withdrawal, surrender, or borrowing from values of an existing life insurance policy contract to pay all or part of a premium due on the new life insurance policy.</text> </paragraph> <paragraph num="(7)"> <text>“Illustration” means a presentation or depiction that includes nonguaranteed elements of a life insurance policy over a period of years as defined in COMAR 31.09.09.</text> </paragraph> <paragraph num="(8)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101(u), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Policy summary” means:</text> <paragraph num="(a)"> <text>For life insurance policies or annuity contracts other than universal life insurance policies, a written statement regarding a life insurance policy or annuity contract that contains, to the extent applicable, the following information:</text> <paragraph num="(i)"> <text>Current death benefit;</text> </paragraph> <paragraph num="(ii)"> <text>Annual life insurance policy or annuity contract premium;</text> </paragraph> <paragraph num="(iii)"> <text>Current cash surrender value;</text> </paragraph> <paragraph num="(iv)"> <text>Current dividend;</text> </paragraph> <paragraph num="(v)"> <text>Application of current dividend; and</text> </paragraph> <paragraph num="(vi)"> <text>Amount of outstanding loan; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For universal life insurance policies, a written statement that contains at least the:</text> <paragraph num="(i)"> <text>Beginning and end date of the current report period;</text> </paragraph> <paragraph num="(ii)"> <text>Life insurance policy value at the end of the previous report period and at the end of the current report period;</text> </paragraph> <paragraph num="(iii)"> <text>Total amounts that have been credited or debited to the life insurance policy value during the current report period, identifying each by type, for example, interest, mortality, expense, and riders;</text> </paragraph> <paragraph num="(iv)"> <text>Current death benefit at the end of the current report period on each life covered by the life insurance policy;</text> </paragraph> <paragraph num="(v)"> <text>Net cash surrender value of the life insurance policy as of the end of the current report period; and</text> </paragraph> <paragraph num="(vi)"> <text>Amount of outstanding loans, if any, as of the end of the current report period.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Registered contract” means a variable annuity contract or variable life insurance policy subject to the prospectus delivery requirements of Title 15, Chapter 2A, Subchapter I of the United States Code (Securities Act of 1933).</text> </paragraph> <paragraph num="(11)"> <text>“Replacement” means a transaction in which a new life insurance policy or annuity contract is to be purchased, and it is known or should be known to the proposing insurance producer, or to the proposing insurer if there is no insurance producer, that by reason of the transaction, an existing life insurance policy or existing annuity contract has been or is to be:</text> <paragraph num="(a)"> <text>Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise terminated;</text> </paragraph> <paragraph num="(b)"> <text>Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other life insurance policy or annuity contract values;</text> </paragraph> <paragraph num="(c)"> <text>Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid;</text> </paragraph> <paragraph num="(d)"> <text>Reissued with any reduction in cash value; or</text> </paragraph> <paragraph num="(e)"> <text>Used in a financed purchase.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Replacing insurer” means an insurer that issues or proposes to issue a new life insurance policy or annuity contract:</text> <paragraph num="(a)"> <text>To replace an existing life insurance policy or existing annuity contract; or</text> </paragraph> <paragraph num="(b)"> <text>Through a financed purchase.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Sales material” means a sales illustration or any other written, printed, or electronically presented information that is:</text> <paragraph num="(a)"> <text>Created, completed, or provided by the insurer or insurance producer; and</text> </paragraph> <paragraph num="(b)"> <text>Used in the presentation to the owner of a life insurance policy or annuity contract related to the life insurance policy or annuity contract purchased.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Duties of Insurance Producer."> <paragraph num="A."> <text>Signed Statement. An insurance producer who initiates an application for a life insurance policy or annuity contract shall submit to the insurer, with or as part of the application, a statement signed by both the applicant and the insurance producer as to whether the applicant has any existing life insurance policy or existing annuity contract.</text> </paragraph> <paragraph num="B."> <text>Applicant Without Existing Life Insurance Policy or Existing Annuity Contract. If the applicant does not have an existing life insurance policy or existing annuity contract, the insurance producer's duties with respect to replacement are complete upon the fulfillment of the requirement in §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>Applicant With Existing Life Insurance Policy or Existing Annuity Contract.</text> <paragraph num="(1)"> <text>If the applicant has an existing life insurance policy or existing annuity contract, the insurance producer shall present and, unless declined, read to the applicant, not later than at the time of taking the application, a notice regarding replacement in the form contained in Regulation .10 of this chapter or other substantially similar notice approved by the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>Notwithstanding §C(1) of this regulation, approval is not required if amendments to the notice are limited to the omission of references not applicable to the product being sold or replaced.</text> </paragraph> <paragraph num="(3)"> <text>The notice shall be signed by both the applicant and the insurance producer attesting that the notice has been:</text> <paragraph num="(a)"> <text>Read aloud by the insurance producer or that the applicant did not wish the notice to be read aloud; and</text> </paragraph> <paragraph num="(b)"> <text>Left with the applicant.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Contents of Notice.</text> <paragraph num="(1)"> <text>The notice shall include a:</text> <paragraph num="(a)"> <text>List of each life insurance policy or annuity contract proposed to be replaced, properly identified by name of insurer, the insured or annuitant, and life insurance policy or annuity contract number if available; and</text> </paragraph> <paragraph num="(b)"> <text>Statement as to whether each life insurance policy or annuity contract will be replaced or whether a life insurance policy will be used as a source of financing for the new life insurance policy or annuity contract.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If a life insurance policy or annuity contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, shall be listed.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Sales Material.</text> <paragraph num="(1)"> <text>In connection with a replacement transaction, the insurance producer shall leave the original or a copy of all sales material with the applicant at the time an application for a new life insurance policy or annuity contract is completed.</text> </paragraph> <paragraph num="(2)"> <text>With respect to electronically presented sales material, the insurance producer shall provide to the owner of a life insurance policy or annuity contract the original or a copy of all sales material in printed form not later than the time of delivery of the life insurance policy or annuity contract.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Provision of Information to the Insurer. Except as provided in Regulation .06D of this chapter, in connection with a replacement transaction, the insurance producer shall submit to the insurer to which an application for a life insurance policy or annuity contract is presented:</text> <paragraph num="(1)"> <text>A copy of each document required by this regulation;</text> </paragraph> <paragraph num="(2)"> <text>A statement identifying any preprinted or electronically presented insurer-approved sales materials used; and</text> </paragraph> <paragraph num="(3)"> <text>Copies of individualized sales materials, including illustrations related to the specific life insurance policy or annuity contract purchased.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Duties of Insurers that Use Insurance Producers."> <paragraph num="A."> <text>System of Supervision and Control.</text> <paragraph num="(1)"> <text>An insurer shall maintain a system of supervision and control to ensure compliance with the requirements of this chapter that includes, at a minimum, procedures to:</text> <paragraph num="(a)"> <text>Inform its insurance producers of the requirements of this regulation and incorporate the requirements of this regulation into all relevant insurance-producer training manuals prepared by the insurer;</text> </paragraph> <paragraph num="(b)"> <text>Provide to each insurance producer a written statement of the insurer's position with respect to the acceptability of replacements that provides guidance to its insurance producer as to the appropriateness of these transactions;</text> </paragraph> <paragraph num="(c)"> <text>Review the appropriateness of each replacement transaction that the insurance producer does not indicate is in accord with §A(1)(b) of this regulation;</text> </paragraph> <paragraph num="(d)"> <text>Confirm that the requirements of this regulation have been met; and</text> </paragraph> <paragraph num="(e)"> <text>Detect transactions that are replacements of existing life insurance policies or existing annuity contracts by the existing insurer, but that have not been reported as replacements by the applicant or insurance producer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Compliance with this section may include systematic customer surveys, interviews, confirmation letters, and programs of internal monitoring.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Capacity to Monitor Replacements.</text> <paragraph num="(1)"> <text>An insurer shall:</text> <paragraph num="(a)"> <text>Have the capacity to monitor each insurance producer's life insurance policy and annuity contract replacements for that insurer; and</text> </paragraph> <paragraph num="(b)"> <text>On request, make all records regarding replacements available for inspection by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The capacity to monitor shall include the ability to produce records for each insurance producer's:</text> <paragraph num="(a)"> <text>Life insurance replacements, including financed purchases, as a percentage of the insurance producer's total annual sales for life insurance;</text> </paragraph> <paragraph num="(b)"> <text>Number of lapses of life insurance policies as a percentage of the insurance producer's total annual sales for life insurance;</text> </paragraph> <paragraph num="(c)"> <text>Annuity contract replacements as a percentage of the insurance producer's total annual annuity contract sales;</text> </paragraph> <paragraph num="(d)"> <text>Number of transactions that are unreported replacements of existing life insurance policies or existing annuity contracts by the existing insurer detected by the insurer's monitoring system as required by §A(1)(e) of this regulation; and</text> </paragraph> <paragraph num="(e)"> <text>Replacements, indexed by replacing insurance producer and existing insurer.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Signed Statement and Notice. An insurer shall require with or as a part of each application for life insurance or an annuity:</text> <paragraph num="(1)"> <text>A statement signed by the applicant and insurance producer indicating whether the applicant has an existing life insurance policy or existing annuity contract; and</text> </paragraph> <paragraph num="(2)"> <text>If the applicant has an existing life insurance policy or existing annuity contract, a completed notice regarding replacements as contained in Regulation .10 of this chapter.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Production of Information. If an applicant has an existing life insurance policy or existing annuity contract, an insurer shall be able to produce copies of the following items for at least 5 years after the termination or expiration of the proposed life insurance policy or annuity contract:</text> <paragraph num="(1)"> <text>The sales material required by Regulation .04F of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The basic illustration and any supplemental illustrations related to the specific life insurance policy or annuity contract that is purchased; and</text> </paragraph> <paragraph num="(3)"> <text>The insurance producer's and applicant's signed statements with respect to financing and replacement.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Sales Material and Illustrations. An insurer shall ascertain and ensure that the sales material and illustrations required by Regulation .04F of this chapter:</text> <paragraph num="(1)"> <text>Meet the requirements of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Are complete and accurate for the proposed life insurance policy or annuity contract.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Application That Does Not Meet Requirements. If an application does not meet the requirements of this regulation, an insurer shall:</text> <paragraph num="(1)"> <text>Notify the insurance producer and applicant; and</text> </paragraph> <paragraph num="(2)"> <text>Fulfill the outstanding requirements.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Record Keeping. An insurer shall maintain records in paper, photograph, microprocess, magnetic, mechanical, or electronic media, or by any process that accurately reproduces the actual document.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Duties of Replacing Insurers that Use Insurance Producers."> <paragraph num="A."> <text>In General. If a replacement is involved in a transaction, the replacing insurer shall:</text> <paragraph num="(1)"> <text>Verify that the required forms are received and are in compliance with this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Notify any other existing insurer that may be affected by the proposed replacement within 5 business days after:</text> <paragraph num="(a)"> <text>Receipt of a completed application indicating replacement at the home office of the replacing insurer; or</text> </paragraph> <paragraph num="(b)"> <text>A replacement is identified, if not indicated on the application;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Mail to an existing insurer a copy of the available illustration or life insurance policy summary for the proposed life insurance policy or available disclosure document for the proposed annuity contract within 5 business days after a request from the existing insurer;</text> </paragraph> <paragraph num="(4)"> <text>Be able to produce copies of the notification regarding replacement required by Regulation .04C of this chapter, indexed by insurance producer, for at least 5 years or until the next regular market conduct examination by the insurance department of an insurer's state of domicile, whichever is later; and</text> </paragraph> <paragraph num="(5)"> <text>Provide to the owner of the life insurance policy or annuity contract notice of the right to return the life insurance policy or annuity contract within 30 days after the delivery of the life insurance policy or annuity contract and receive:</text> <paragraph num="(a)"> <text>An unconditional full refund of all premiums or considerations paid on the life insurance policy or annuity contract, including any life insurance policy fees or charges; or</text> </paragraph> <paragraph num="(b)"> <text>In the case of a variable life insurance policy or variable annuity contract, a payment of:</text> <paragraph num="(i)"> <text>The cash surrender value provided under the variable life insurance policy or variable annuity contract; and</text> </paragraph> <paragraph num="(ii)"> <text>The fees and other charges deducted from the gross premiums or considerations or imposed under the variable life insurance policy or variable annuity contract, including surrender charges.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Registered Contract. With respect to a registered contract, an insurer need not comply with §A(3) of this regulation if the insurer provides to the existing insurer, within 5 business days after a request from the existing insurer:</text> <paragraph num="(1)"> <text>Premium or annuity contract contribution amounts; and</text> </paragraph> <paragraph num="(2)"> <text>Identification of the appropriate prospectus or offering circular.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Replacing Insurer and Existing Insurer Are the Same. If the replacing insurer and the existing insurer in a transaction are the same, or subsidiaries or affiliates under common ownership or control, the replacing insurer:</text> <paragraph num="(1)"> <text>Shall allow credit for the period of time that has elapsed under the incontestability and suicide period of the replaced life insurance policy or annuity contract up to the face amount of the existing life insurance policy or existing annuity contract; and</text> </paragraph> <paragraph num="(2)"> <text>With regard to financed purchases, may limit the credit to the amount that the face amount of the existing life insurance policy is reduced by the use of existing life insurance policy values to fund the new life insurance policy or annuity contract.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Insurer that Requires Use of Approved Sales Material. If an insurer prohibits the use of sales material other than materials approved by the insurer, as an alternative to the requirements made of an insurer under Regulation .04F of this chapter, the insurer may:</text> <paragraph num="(1)"> <text>Require with each application a statement signed by the insurance producer that:</text> <paragraph num="(a)"> <text>The insurance producer used only insurer-approved sales material; and</text> </paragraph> <paragraph num="(b)"> <text>Copies of all sales material were left with the applicant in accordance with Regulation .04E of this chapter;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Within 10 days after the issuance of the life insurance policy or annuity contract:</text> <paragraph num="(a)"> <text>Notify the applicant by written or by verbal communication by a person whose duties are separate from the marketing area of the insurer, that the insurance producer has stated that copies of all sales material have been left with the applicant in accordance with Regulation .04E of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Provide the applicant with a toll-free telephone number to contact insurer personnel involved in the compliance function if copies of all sales material have not been left with the applicant; and</text> </paragraph> <paragraph num="(c)"> <text>Stress to the applicant the importance of retaining copies of the sales material for future reference; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Be able to produce a copy of the letter or other verification in the life insurance policy or annuity contract file for at least 5 years after the termination or expiration of the life insurance policy or annuity contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Duties of Existing Insurer."> <paragraph num="A."> <text>In General. For replacement transactions, the existing insurer shall:</text> <paragraph num="(1)"> <text>Retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least 5 years or until the conclusion of the next regular market conduct examination conducted by the insurance department of the insurer's state of domicile, whichever is later; and</text> </paragraph> <paragraph num="(2)"> <text>Within 5 business days after receipt of a request from an owner of a life insurance policy or annuity contract, send a letter to the owner of the life insurance policy or annuity contract of the right to receive information regarding the existing life insurance policy or annuity contract values including, if available, an in-force illustration, or life insurance policy summary if an in-force illustration cannot be produced within 5 business days after receipt of a notice that an existing life insurance policy or annuity contract is being replaced.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Registered Contract. With respect to a registered contract, an insurer need not comply with §A(2) of this regulation if the insurer provides to the owner of the life insurance policy or annuity contract, within 5 business days after receipt of a request from the owner:</text> <paragraph num="(1)"> <text>Premium or annuity contract contribution amounts; and</text> </paragraph> <paragraph num="(2)"> <text>Identification of the appropriate prospectus or offering circular.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Request to Borrow, Surrender, or Withdraw Life Insurance Policy Values.</text> <paragraph num="(1)"> <text>Upon receipt of a request to borrow, surrender, or withdraw life insurance policy values, an existing insurer shall send a notice, within 14 business days after receipt of the request, advising the owner of the life insurance policy that the release of life insurance policy values may affect the guaranteed elements, nonguaranteed elements, face amount, or surrender value of the life insurance policy from which the values are released.</text> </paragraph> <paragraph num="(2)"> <text>The existing insurer shall send the notice separate from the check if the check is sent to anyone other than the owner of the life insurance policy.</text> </paragraph> <paragraph num="(3)"> <text>In the case of consecutive automatic premium loans, the existing insurer is required to send the notice only at the time of the first loan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Duties of Insurers with Respect to Direct Response Solicitations."> <paragraph num="A."> <text>Inquiry Regarding Intent. For an application initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a life insurance policy or annuity contract, a statement asking whether the applicant, by applying for the proposed life insurance policy or annuity contract, intends to replace, discontinue, or change an existing life insurance policy or existing annuity contract.</text> </paragraph> <paragraph num="B."> <text>Duties of Insurer if Replacement or Change Is Not Intended. If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the life insurance policy or annuity contract, the notice regarding replacement in Regulation .11 of this chapter, or other substantially similar notice approved by the Commissioner.</text> </paragraph> <paragraph num="C."> <text>Duties of Insurer if Insurer Proposes Replacement or if Replacement Intended.</text> <paragraph num="(1)"> <text>If an insurer has proposed a replacement or if the applicant indicates a replacement is intended, and the insurer continues with the replacement, the insurer shall:</text> <paragraph num="(a)"> <text>Provide an applicant or prospective applicant with the life insurance policy or annuity contract a notice, as described in Regulation .12 of this chapter, or other substantially similar notice approved by the Commissioner; and</text> </paragraph> <paragraph num="(b)"> <text>Comply with the requirements of Regulation .06A(2) and (3) of this chapter, if the applicant furnishes the names of the existing insurers, and the requirements of Regulation .06A(4) and (5) and C of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an insurer is required to provide a notice pursuant to §C(1)(a) of this regulation, the insurer may delete the references to the insurance producer, including the insurance producer's signature, and references not applicable to the product being sold or replaced, without having to obtain approval of the form from the Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>The insurer's obligation to obtain the applicant's signature shall be satisfied if the insurer can demonstrate that it has made a diligent effort to secure a signed copy of the notice required by §C(1)(a) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The requirement to make a diligent effort shall be satisfied if the insurer includes in the mailing a self-addressed postage-prepaid envelope with instructions for the return of the signed notice required by §C(1)(a) of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Violations and Penalties."> <paragraph num="A."> <text>Prohibition on Twisting. A failure to comply with this chapter is a violation of Insurance Article, §27-213, Annotated Code of Maryland, including:</text> <paragraph num="(1)"> <text>Deceptive or misleading information set forth in sales material;</text> </paragraph> <paragraph num="(2)"> <text>Failing to ask the applicant, in completing the application, the pertinent questions regarding the possibility of financing or replacement;</text> </paragraph> <paragraph num="(3)"> <text>Intentional incorrect recording of an answer;</text> </paragraph> <paragraph num="(4)"> <text>Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer; or</text> </paragraph> <paragraph num="(5)"> <text>Advising the owner of a life insurance policy or annuity contract to write directly to the insurer in such a way as to attempt to obscure the identity of the replacing insurance producer or insurer.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Intent to Finance New Policy With Existing Policy Value—Individual Transaction—Prima Facie Case.</text> <paragraph num="(1)"> <text>For purposes of a regulatory review of an individual transaction only, it is deemed prima facie evidence of a policyholder's intent to finance the purchase of a new life insurance policy with existing life insurance policy values if a withdrawal, surrender, or borrowing involving the life insurance policy values of an existing life insurance policy is used to pay premiums:</text> <paragraph num="(a)"> <text>On a new life insurance policy owned by the same policyholder and issued by the same insurer; and</text> </paragraph> <paragraph num="(b)"> <text>Within 4 months before or 13 months after the effective date of the new life insurance policy.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The prima facie standard established by §B(1) of this regulation is not intended to increase or decrease the monitoring obligations of an insurer under Regulation .05A(1)(e) of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Replacement After Indication That Replacement Not Intended—Pattern of Action—Prima Facie Case.</text> <paragraph num="(1)"> <text>The owner of a life insurance policy or annuity contract may replace an existing life insurance policy or existing annuity contract after indicating in, or as a part of, an application for new coverage that replacement is not the intention of the owner.</text> </paragraph> <paragraph num="(2)"> <text>Notwithstanding §C(1) of this regulation, if owners of life insurance policies or annuity contracts of the same insurance producer have a pattern of replacing life insurance policies or annuity contracts after indicating on the application that replacement is not their intention, the pattern of action is prima facie evidence of the insurance producer's:</text> <paragraph num="(a)"> <text>Knowledge that replacement was intended in connection with the identified transactions; and</text> </paragraph> <paragraph num="(b)"> <text>Intent to violate this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Provision of Information. If it is determined that the requirements of this regulation have not been met, the replacing insurer shall provide to the owner of the life insurance policy or annuity contract:</text> <paragraph num="(1)"> <text>An in-force illustration, if available, or life insurance policy summary for the replacement life insurance policy or available disclosure document for the replacement annuity contract; and</text> </paragraph> <paragraph num="(2)"> <text>The appropriate notice regarding replacements in Regulation .10 or .12 of this chapter.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Penalties.</text> <paragraph num="(1)"> <text>An insurance producer who violates this chapter is subject to:</text> <paragraph num="(a)"> <text>A penalty under Insurance Article, §10-126, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Forfeiture of commissions or compensation paid to the insurance producer as a result of a transaction in connection with which a violation occurred.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer that violates this chapter is subject to a penalty under Insurance Article, §4-113, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Replacement Form A."> <text>REPLACEMENT OF LIFE INSURANCE OR ANNUITIES</text> <text>This document shall be signed by the applicant and the insurance producer, if there is one, and a copy left with the applicant.</text> <text>You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing life insurance policy or annuity contract. If so, a replacement is occurring. Financed purchases are also considered replacements.</text> <text>A replacement occurs when a new life insurance policy or annuity contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing life insurance policy or annuity contract, or an existing life insurance policy or annuity contract is surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated or used in a financed purchase.</text> <text>A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the life insurance policy values, including accumulated dividends, of an existing life insurance policy to pay all or part of any premium or payment due on the new life insurance policy. A financed purchase is a replacement.</text> <text>You should carefully consider whether a replacement is in your best interest. You will pay acquisition costs and there may be surrender costs deducted from your life insurance policy or annuity contract. You may be able to make changes to your existing life insurance policy or annuity contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing life insurance policy and may reduce the amount paid upon the death of the insured.</text> <text>We want you to understand the effects of replacements before you make your purchase decision and ask that you answer the following questions and consider the questions on the back of this form.</text> <paragraph num="1."> <text>Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing life insurance policy or annuity contract?</text> </paragraph> <text>_____YES _____NO</text> <paragraph num="2."> <text>Are you considering using funds from your existing policies or annuity contracts to pay premiums due on the new life insurance policy or annuity contract?</text> </paragraph> <text>_____YES _____NO</text> <text>If you answered “yes” to either of the above questions, list each existing life insurance policy or annuity contract you are contemplating replacing (include the name of the insurer, the insured or annuitant, and the life insurance policy or annuity contract number if available) and whether each life insurance policy or annuity contract will be replaced or used as a source of financing:</text> <text>INSURERNAME ANNUITY CONTRACT ORLIFE INSURANCE POLICY # INSUREDANNUITANT REPLACED (R) ORFINANCING (F) 1. ______________________________________________________________________ 2. ______________________________________________________________________ 3._______________________________________________________________________</text> <text>Make sure you know the facts. Contact your existing company or its agent for information about the old life insurance policy or annuity contract. If you request one, an in-force illustration, life insurance policy summary, or available disclosure document must be sent to you by the existing insurer. Ask for and keep all sales material used by the insurance producer in the sales presentation. Be sure you make an informed decision.</text> <text>The existing life insurance policy or annuity contract is being replaced because:</text> <text>_______________________________________________________________________</text> <text>____________________________________________________________</text> <text>____________________________________________________________</text> <text>____________________________________________________________</text> <text>I certify that the responses herein are, to the best of my knowledge, accurate.</text> <text>________________________________</text> <text>Applicant's Printed Name</text> <text>________________________________</text> <text>Applicant's Signature</text> <text>_________________Date</text> <text>________________________________</text> <text>Insurance Producer's Printed Name</text> <text>________________________________</text> <text>Insurance Producer's Signature</text> <text>_________________Date</text> <text>I do not want this notice read aloud to me. (Applicants must initial only if they do not want the notice read aloud.)</text> <text>A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing life insurance policy or annuity contract and the proposed life insurance policy or annuity contract. One way to do this is to ask the company or insurance producer that sold you your existing life insurance policy or annuity contract to provide you with information concerning your existing life insurance policy or annuity contract. This may include an illustration of how your existing life insurance policy or annuity contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare life insurance policies or annuity contracts. You should discuss the following with your insurance producer to determine whether replacement or financing your purchase makes sense:</text> <text>PREMIUMS: Are they affordable?</text> <text>Could they change?</text> <text>You are older—are premiums higher for the proposed new life insurance policy?</text> <text>How long will you have to pay premiums on the new life insurance policy? On the old life insurance policy?</text> <text>LIFE INSURANCE POLICY VALUES: New policies usually take longer to build cash values and to pay dividends.</text> <text>Acquisition costs for the old life insurance policy may have been paid, and you will incur costs for the new one.</text> <text>What surrender charges do the policies have?</text> <text>What expense and sales charges will you pay on the new life insurance policy?</text> <text>Does the new life insurance policy provide more insurance coverage?</text> <text>INSURABILITY: If your health has changed since you bought your old life insurance policy, the new one could cost you more, or you could be turned down.</text> <text>You may need a medical exam for a new life insurance policy.</text> <text>Claims on most new policies for up to the first 2 years can be denied based on inaccurate statements.</text> <text>Suicide limitations may begin anew on the new coverage.</text> <text>IF YOU ARE KEEPING THE OLD LIFE INSURANCE POLICY AS WELL AS THE NEW LIFE INSURANCE POLICY:</text> <text>How are premiums for both policies being paid?</text> <text>How will the premiums on your existing life insurance policy be affected?</text> <text>Will a loan be deducted from death benefits?</text> <text>What values from the old life insurance policy are being used to pay premiums?</text> <text>IF YOU ARE SURRENDERING AN ANNUITY OR LIFE PRODUCT:</text> <text>Will you pay surrender charges on your old annuity contract?</text> <text>What are the interest rate guarantees for the new annuity contract?</text> <text>Have you compared the annuity contract charges or other life insurance policy expenses?</text> <text>OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:</text> <text>What are the tax consequences of buying the new life insurance policy?</text> <text>Is this a tax-free exchange? (See your tax advisor.)</text> <text>Is there a benefit from favorable “grandfathered” treatment of the old life insurance policy under the Internal Revenue Code?</text> <text>Will the existing insurer be willing to modify the old life insurance policy?</text> <text>How does the quality and financial stability of the new company compare with your existing company?</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Replacement Form B."> <text>REPLACING YOUR LIFE INSURANCE POLICY OR ANNUITY?</text> <text>Are you thinking about buying a new life insurance policy or annuity and discontinuing or changing an existing one? If you are, your decision could be a good one—or a mistake. You will not know for sure unless you make a careful comparison of your existing benefits and the proposed life insurance policy or annuity contract's benefits.</text> <text>Make sure you understand the facts. You should ask the company or insurance producer that sold you your existing life insurance policy or annuity contract to give you information about it.</text> <text>Hear both sides before you decide. This way you can be sure you are making a decision that is in your best interest.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Replacement Form C."> <text>IMPORTANT NOTICE:</text> <text>REPLACEMENT OF LIFE INSURANCE OR ANNUITIES</text> <text>You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing life insurance policy or annuity contract. If so, a replacement is occurring. Financed purchases are also considered replacements.</text> <text>A replacement occurs if a new life insurance policy or annuity contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing life insurance policy or annuity contract, or an existing life insurance policy or annuity contract is surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated or used in a financed purchase.</text> <text>A financed purchase occurs if the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the life insurance policy values, including accumulated dividends, of an existing life insurance policy, to pay all or part of a premium or payment due on the new life insurance policy. A financed purchase is a replacement.</text> <text>You should carefully consider whether a replacement is in your best interest. You will pay acquisition costs and there may be surrender costs deducted from your life insurance policy or annuity contract. You may be able to make changes to your existing life insurance policy or annuity contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing life insurance policy and may reduce the amount paid upon the death of the insured.</text> <text>We want you to understand the effects of replacements and ask that you answer the following questions and consider the questions on the back of this form.</text> <paragraph num="1."> <text>Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing life insurance policy or annuity contract?</text> </paragraph> <text>_____YES _____NO</text> <paragraph num="2."> <text>Are you considering using funds from your existing policies or annuity contracts to pay premiums due on the new life insurance policy or annuity contract?</text> </paragraph> <text>_____YES _____NO</text> <text>Please list each existing life insurance policy or annuity contract you are contemplating replacing (include the name of the insurer, the insured, and the life insurance policy or annuity contract number if available) and whether each life insurance policy or annuity contract will be replaced or used as a source of financing:</text> <text>INSURERNAME ANNUITY CONTRACT ORLIFE INSURANCE POLICY # INSUREDANNUITANT REPLACED (R) ORFINANCING (F) 1. ______________________________________________________________________ 2. ______________________________________________________________________ 3._______________________________________________________________________</text> <text>Make sure you know the facts. Contact your existing company or its insurance producer for information about the old life insurance policy or annuity contract. If you request one, an in-force illustration, life insurance policy summary, or available disclosure document must be sent to you by the existing insurer. Ask for and keep all sales material used by the insurance producer in the sales presentation. Be sure that you make an informed decision.</text> <text>I certify that the responses herein are, to the best of my knowledge, accurate.</text> <text>________________________________</text> <text>Applicant's Printed Name</text> <text>________________________________</text> <text>Applicant's Signature</text> <text>_________________Date</text> <text>A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing life insurance policy or annuity contract and the proposed life insurance policy or annuity contract. One way to do this is to ask the company or insurance producer that sold you your existing life insurance policy or annuity contract to provide you with information concerning your existing life insurance policy or annuity contract. This may include an illustration of how your existing life insurance policy or annuity contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or annuity contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase makes sense:</text> <text>PREMIUMS: Are they affordable?</text> <text>Could they change?</text> <text>You are older—are premiums higher for the proposed new life insurance policy?</text> <text>How long will you have to pay premiums on the new life insurance policy? On the old life insurance policy?</text> <text>LIFE INSURANCE POLICY VALUES: New policies usually take longer to build cash values and to pay dividends.</text> <text>Acquisition costs for the old life insurance policy may have been paid, and you will incur costs for the new one.</text> <text>What surrender charges do the policies have?</text> <text>What expense and sales charges will you pay on the new life insurance policy?</text> <text>Does the new life insurance policy provide more insurance coverage?</text> <text>INSURABILITY: If your health has changed since you bought your old life insurance policy, the new one could cost you more, or you could be turned down.</text> <text>You may need a medical exam for a new life insurance policy.</text> <text>Claims on most new policies for up to the first 2 years can be denied based on inaccurate statements.</text> <text>Suicide limitations may begin anew on the new coverage.</text> <text>IF YOU ARE KEEPING THE OLD LIFE INSURANCE POLICY AS WELL AS THE NEW LIFE INSURANCE POLICY:</text> <text>How are premiums for both policies being paid?</text> <text>How will the premiums on your existing life insurance policy be affected?</text> <text>Will a loan be deducted from death benefits?</text> <text>What values from the old life insurance policy are being used to pay premiums?</text> <text>IF YOU ARE SURRENDERING AN ANNUITY OR LIFE PRODUCT:</text> <text>Will you pay surrender charges on your old annuity contract?</text> <text>What are the interest rate guarantees for the new annuity contract?</text> <text>Have you compared the annuity contract charges or other life insurance policy expenses?</text> <text>OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:</text> <text>What are the tax consequences of buying the new life insurance policy?</text> <text>Is this a tax-free exchange? (See your tax advisor.)</text> <text>Is there a benefit from favorable “grandfathered” treatment of the old life insurance policy under the Internal Revenue Code?</text> <text>Will the existing insurer be willing to modify the old life insurance policy?</text> <text>How does the quality and financial stability of the new company compare with your existing company?</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-213, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 1, 1962</annotation> <annotation type="History" subtype="Administrative History">Amended effective August 1, 1967; March 1, 1968; May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 1980 (6:15 Md. R. 1278)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 1, 1985 (12:3 Md. R. 244)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.31 to COMAR 31.09.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.12 repealed and new Regulations .01—.12 adopted effective January 1, 2002 (28:15 Md. R. 1401)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective March 10, 2008 (35:5 Md. R. 642)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective October 14, 2002 (29:20 Md. R. 1594)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective October 14, 2002 (29:20 Md. R. 1594); October 8, 2018 (45:20 Md. R. 921)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective October 14, 2002 (29:20 Md. R. 1594)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective October 14, 2002 (29:20 Md. R. 1594)</annotation> </annotations> </chapter> <chapter num="06" heading="Notice of Nonforfeiture Provisions in Lapsed Life Policies"> <regulation prefix="Regulation" num=".01" heading="Notice Requirement."> <text>For any industrial or ordinary policy of insurance on the life of a resident of this State issued by any life insurance company or fraternal benefit society operating in Maryland, when the policy has a cash, paid-up, or extended insurance or other equity at the time of lapse and when none of these equities is automatically granted by the policy without application by the insured, upon lapse of the policy, written notice shall be mailed to the last known address of the insured within not less than 30 days before the expiry of the period within which the insured may apply for the equity value. This notice shall state the nature of the equity to which the insured is entitled and the date before which application for the equity is required to be made.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 16, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 27, 1941</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.50 to COMAR 31.09.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective October 24, 2016 (43:21 Md. R. 1169)</annotation> </annotations> </chapter> <chapter num="07" heading="Charitable Gift Annuities"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <paragraph num="A."> <text>This chapter is applicable to annuity agreements issued to donors who are Maryland residents, under a special permit in accordance with Insurance Article, §16-114, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>This chapter is applicable to any charitable gift annuity issued to a Maryland resident after the effective date of these regulations.</text> </paragraph> <paragraph num="C."> <text>This chapter is applicable to organizations in or outside Maryland if the organization solicits annuity agreements in Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Commissioner” means the Insurance Commissioner of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Organization” means every educational or religious organization, hospital, or community foundation authorized to issue annuities under a permit issued in accordance with Insurance Article, §16-114(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Qualified actuary” means an individual who is a member in good standing of the American Academy of Actuaries and is qualified to sign statements of actuarial opinion in accordance with the American Academy of Actuaries’ standards.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Reserves."> <paragraph num="A."> <text>The organization shall maintain assets at least equal to the sum of the reserves on its outstanding annuity agreements.</text> </paragraph> <paragraph num="B."> <text>The reserves on the outstanding annuity agreements shall be consistent with the assumptions underlying the rates adopted by the American Council on Gift Annuities which are in effect at the time of issuance of the gift annuity.</text> </paragraph> <paragraph num="C."> <text>In determining the appropriate reserves, a deduction shall be made for all or any portion of an annuity risk which is reinsured by an authorized insurer or accredited reinsurer.</text> </paragraph> <paragraph num="D."> <text>As part of the organization’s annual audit report, the organization shall submit a statement by a certified public accountant or qualified actuary verifying the existence of adequate reserves among the organization’s assets.</text> </paragraph> <paragraph num="E."> <text>The statement required under §D of this regulation may be incorporated into a certified public accountant's annual audit report.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Investment Requirements."> <paragraph num="A."> <text>The reserve assets shall be segregated.</text> </paragraph> <paragraph num="B."> <text>The segregated reserve assets shall be invested in the same manner and subject to the same standards as are applicable under Estates and Trust Article, §15-402, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>The general assets of the organization shall be liable for annuity agreements to the extent that the segregated fund is inadequate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Disclosure Requirements."> <paragraph num="A."> <text>Before accepting consideration for an annuity agreement the organization shall obtain separate signed statements from a prospective donor acknowledging that the prospective donor has been informed that:</text> <paragraph num="(1)"> <text>Payments made under charitable gift annuities are backed solely by the full faith and credit of the organization; and</text> </paragraph> <paragraph num="(2)"> <text>Payments made under charitable gift annuities are not insured or otherwise guaranteed by any government entity.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The requirement under §A of this regulation may be satisfied by having the acknowledgement be part of the annuity agreement which is signed by the donor.</text> </paragraph> <paragraph num="C."> <text>The organization shall retain the annuity agreement or, if applicable, the separate signed statement for so long as the obligation to pay annuity benefits continues.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Filing Requirements for Special Permits."> <text>The following material shall be submitted by an organization applying for a special permit to issue charitable gift annuities:</text> <paragraph num="A."> <text>Proof of exemption under §501 of the Internal Revenue Code;</text> </paragraph> <paragraph num="B."> <text>Description of the organization's activities and number of years of active operation in this State;</text> </paragraph> <paragraph num="C."> <text>Copy of the most recent independently audited financial statement;</text> </paragraph> <paragraph num="D."> <text>Payout rates proposed to be provided under the charitable immediate and deferred gift annuity agreements;</text> </paragraph> <paragraph num="E."> <text>Description of the proposed investment of contributed funds;</text> </paragraph> <paragraph num="F."> <text>Copy of the organization's bylaws;</text> </paragraph> <paragraph num="G."> <text>Copy of the statement required by Regulation .05A of this chapter;</text> </paragraph> <paragraph num="H."> <text>Copy of the organization's forms used as charitable gift annuity contracts;</text> </paragraph> <paragraph num="I."> <text>Copies of any solicitation material or descriptive literature proposed to be used with charitable gift annuities; and</text> </paragraph> <paragraph num="J."> <text>Other material requested by the Commissioner in order to determine that the applicant is an organization which is eligible for the special permit in accordance with Insurance Article, §16-114(b), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Withdrawal of Permit."> <text>The permit issued to an organization may be withdrawn by the Commissioner upon a finding that the organization failed to comply with the standards established by this chapter after an appropriate notice to and opportunity for the organization to conform to the standards set forth.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 16-114, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 14, 1995 (22:16 Md. R. 1221)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.03 to COMAR 31.09.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 6, 2020 (47:7 Md. R. 385)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective November 7, 2016 (43:22 Md. R. 1223)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D amended effective April 6, 2020 (47:7 Md. R. 385)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective December 19, 2016 (43:25 Md. R. 1386)</annotation> </annotations> </chapter> <chapter num="08" heading="Group Annuity Contracts"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to regulate the issuance of group annuity contracts with the objective of providing that they not be issued on an impracticable basis or in a manner which may be hazardous to policyholders and the public.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter is applicable to all group annuity contracts whether issued on a fixed or a variable basis or on any basis providing a combination of both fixed and variable benefits.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Exceptions."> <paragraph num="A."> <text>These regulations do not apply to:</text> <paragraph num="(1)"> <text>An annuity contract issued on an individual basis providing annuity benefits to individual or joint owners and providing further annuity benefits to one or more other individuals on the death of the original annuitant or joint annuitants;</text> </paragraph> <paragraph num="(2)"> <text>An annuity contract issued on an individual basis to provide annuity benefits to one or more persons on the death of a named individual;</text> </paragraph> <paragraph num="(3)"> <text>Annuity benefits provided as settlement options under individual life insurance policies; or</text> </paragraph> <paragraph num="(4)"> <text>Annuity benefits provided as settlement options under group policies of whole life insurance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>These regulations are not applicable to annuity agreements with donors issued under a special permit in accordance with Insurance Article, §16-114, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Definition."> <text>“Group annuity” means a contract:</text> <paragraph num="A."> <text>Purporting to provide annuity benefits to more than one individual;</text> </paragraph> <paragraph num="B."> <text>Issued to:</text> <paragraph num="(1)"> <text>An employer or two or more employers in the same industry;</text> </paragraph> <paragraph num="(2)"> <text>An association of employers which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement;</text> </paragraph> <paragraph num="(3)"> <text>A labor union;</text> </paragraph> <paragraph num="(4)"> <text>An association of labor unions;</text> </paragraph> <paragraph num="(5)"> <text>An association composed of one or more labor unions and one or more employers;</text> </paragraph> <paragraph num="(6)"> <text>An association of persons having a common calling, occupation, or profession, which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement;</text> </paragraph> <paragraph num="(7)"> <text>One or more departments of the federal government or of a state government or their subdivisions;</text> </paragraph> <paragraph num="(8)"> <text>An association of persons employed in one or more departments of the federal government or of a state government or their subdivisions which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement;</text> </paragraph> <paragraph num="(9)"> <text>A college or university;</text> </paragraph> <paragraph num="(10)"> <text>An association of persons employed in a college or university, which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement;</text> </paragraph> <paragraph num="(11)"> <text>An association of alumni of a college or university, which association was organized and maintained in good faith for purposes other than obtaining annuities and which has been in existence for at least 5 years, unless the Commissioner expressly waives the 5-year requirement; or</text> </paragraph> <paragraph num="(12)"> <text>The trustees of a:</text> <paragraph num="(a)"> <text>Fund established by an entity referred to in §B(1)—(11) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>Trust which permits individuals for whom contributions are made to individual retirement annuities or similar programs for which favorable federal income tax treatment exists under §403b or 408b of the Internal Revenue Code of 1954; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Issued for the purpose of providing annuity benefits to:</text> <paragraph num="(1)"> <text>If the plan is noncontributory:</text> <paragraph num="(a)"> <text>Employees of the employer or employers,</text> </paragraph> <paragraph num="(b)"> <text>Members of the labor union or association, or</text> </paragraph> <paragraph num="(c)"> <text>A class or classes of the employees or members;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the plan is contributory, the employees or members who agree to contribute to the cost of the annuity; or</text> </paragraph> <paragraph num="(3)"> <text>Individuals under a trust described in §B(12)(b) of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Employees."> <text>In addition to those persons traditionally considered to be employees, employees may include:</text> <paragraph num="A."> <text>If the employer is an individual proprietor or partnership, the proprietor or the partner;</text> </paragraph> <paragraph num="B."> <text>If the employer is a corporation, the directors of the corporation;</text> </paragraph> <paragraph num="C."> <text>If the business of the employer and any affiliated corporations, proprietorships, or partnerships is under common control, the employees of one or more affiliated corporations, proprietorships, or partnerships;</text> </paragraph> <paragraph num="D."> <text>Independent contractors under contract to the employer and employees of the independent contractor;</text> </paragraph> <paragraph num="E."> <text>Retired and terminated employees; and</text> </paragraph> <paragraph num="F."> <text>Employees of a trustee under a trust referred to in Regulation .04B(12) of this chapter if their principal duties are connected with the trusteeship.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Members."> <text>Members may, but need not, include:</text> <paragraph num="A."> <text>Employees of a union or association;</text> </paragraph> <paragraph num="B."> <text>Members of a union or association who have retired;</text> </paragraph> <paragraph num="C."> <text>Employees of the members of an eligible association; or</text> </paragraph> <paragraph num="D."> <text>Employees of a trustee under a trust referred to in Regulation .04B(12) of this chapter if their principal duties are connected with the trusteeship.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Eligible Groups."> <paragraph num="A."> <text>An insurer may not deliver in this State a contract purporting to provide annuity benefits to more than one individual unless the contract conforms to the definition of a group annuity contract contained in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="B."> <text>If a contract providing annuity benefits to more than one individual is delivered in this State before the effective date of these regulations, an insurer may not include additional annuitants under the contract if the contract does not conform to the definition of a group annuity contract contained in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="C."> <text>Except as provided under §D of this regulation, an insurer may not include any resident of Maryland under any contract delivered in another jurisdiction which purports to provide annuity benefits to more than one individual if the contract does not conform to the definition of a group annuity contract contained in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="D."> <text>An insurer may include a resident of Maryland under a contract delivered in another jurisdiction which purports to provide annuity benefits to more than one individual if both of the following requirements are satisfied:</text> <paragraph num="(1)"> <text>A finding by the Commissioner that the type of group to be covered is the subject of an approval from the Commissioner for the solicitation of policies issued in another jurisdiction under Insurance Article, §15-310, Annotated Code of Maryland, in the case of group health insurance, or Insurance Article, §17-101(c), Annotated Code of Maryland, in the case of group life insurance; and</text> </paragraph> <paragraph num="(2)"> <text>The group annuity contract contains a nonforfeiture provision or provisions which in the opinion of the Commissioner is equitable to the annuitants.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-101(d), 2-109, 12-203, 12-205, 12-209, 16-114, and 16-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 23, 1987 (14:4 Md. R. 417)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended and D adopted effective January 29, 1996 (23:2 Md. R. 95)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.71 to COMAR 31.09.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="09" heading="Life Insurance Illustrations"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide rules for life insurance policy illustrations that will protect consumers and foster consumer education. The chapter provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this chapter are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms used in the illustration in language that can be understood by a typical person within the segment of the public to which the illustration is directed.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability and Scope."> <text>This chapter applies to all group and individual life insurance policies and certificates except:</text> <paragraph num="A."> <text>Variable life insurance;</text> </paragraph> <paragraph num="B."> <text>Individual and group annuity contracts;</text> </paragraph> <paragraph num="C."> <text>Credit life insurance; or</text> </paragraph> <paragraph num="D."> <text>Life insurance policies with no illustrated death benefits on any individual exceeding $10,000.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice.</text> </paragraph> <paragraph num="(2)"> <text>“Basic illustration” means a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements.</text> </paragraph> <paragraph num="(3)"> <text>“Contract premium” means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration.</text> </paragraph> <paragraph num="(4)"> <text>“Currently payable scale” means a scale on nonguaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days.</text> </paragraph> <paragraph num="(5)"> <text>Disciplined Current Scale.</text> <paragraph num="(a)"> <text>“Disciplined current scale” means a scale on nonguaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer.</text> </paragraph> <paragraph num="(b)"> <text>“Disciplined current scale” includes further guidance contained in standards established by the Actuarial Standards Board which may be relied upon if the standards:</text> <paragraph num="(i)"> <text>Are consistent with all provisions of this chapter;</text> </paragraph> <paragraph num="(ii)"> <text>Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;</text> </paragraph> <paragraph num="(iii)"> <text>Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and</text> </paragraph> <paragraph num="(iv)"> <text>Do not permit assumed expenses to be less than minimum assumed expenses.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Generic name” means a short title descriptive of the policy being illustrated such as whole life, term life, or flexible premium adjustable life.</text> </paragraph> <paragraph num="(7)"> <text>“Guaranteed elements” means the premiums, benefits, values, credits, or charges under a policy of life insurance that are guaranteed and determined at issue.</text> </paragraph> <paragraph num="(8)"> <text>“Illustrated scale” means a scale on nonguaranteed elements, as defined in §B(14) of this regulation, currently being illustrated that is not more favorable to the policy owner than the lesser of the:</text> <paragraph num="(a)"> <text>Disciplined current scale; or</text> </paragraph> <paragraph num="(b)"> <text>Currently payable scale.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Illustration” means a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years and that is one of the following three types:</text> <paragraph num="(a)"> <text>Basic illustration;</text> </paragraph> <paragraph num="(b)"> <text>Supplemental illustration; or</text> </paragraph> <paragraph num="(c)"> <text>In force illustration.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Illustration actuary” means an actuary meeting the requirements of Regulation .11 of this chapter who certifies to illustrations based on the standard of practice promulgated by the Actuarial Standards Board.</text> </paragraph> <paragraph num="(11)"> <text>“In force illustration” means an illustration furnished at any time after the policy that it depicts has been in force for 1 year or more.</text> </paragraph> <paragraph num="(12)"> <text>“Lapse-supported illustration” means an illustration of a policy form failing the test of self-supporting as defined in §B(18) of this regulation under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first 5 years and 100 percent policy persistent after that.</text> </paragraph> <paragraph num="(13)"> <text>“Minimum assumed expenses” means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form.</text> </paragraph> <paragraph num="(14)"> <text>“Nonguaranteed elements” means the premiums, benefits, values, credits, or charges under a policy of life insurance that are not guaranteed or not determined at issue.</text> </paragraph> <paragraph num="(15)"> <text>“Non-term group life” means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group when:</text> <paragraph num="(a)"> <text>Every plan of coverage was selected by the employer or other group representative;</text> </paragraph> <paragraph num="(b)"> <text>Some portion of the premium is paid by the group or through payroll deduction; and</text> </paragraph> <paragraph num="(c)"> <text>Group underwriting or simplified underwriting is used.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Policy owner” means the owner named in the policy or the certificate holder in the case of a group policy.</text> </paragraph> <paragraph num="(17)"> <text>“Premium outlay” means the amount of out-of-pocket premium assumed to be paid by the policy owner or other premium payer.</text> </paragraph> <paragraph num="(18)"> <text>“Self-supporting illustration” means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the 15th policy anniversary or the 20th policy anniversary for second-or-later-to-die policies (or upon policy expiration, if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value includes cash surrender values and any other illustrated benefit amounts available at the policy owner's election.</text> </paragraph> <paragraph num="(19)"> <text>“Supplemental illustration” means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this chapter, and that may be presented in a format differing from the basic illustration, but may only depict a scale of nonguaranteed elements that is permitted in a basic illustration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Incorporation by Reference."> <text>The Actuarial Standard of Practice No. 24 Compliance with the NAIC Life Insurance Illustrations Model Regulation (Adopted by the Actuarial Standards Board, December 1995) is incorporated by reference.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Policies To Be Illustrated."> <paragraph num="A."> <text>Each insurer marketing policies to which this chapter is applicable shall notify the Commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this chapter, the insurer shall identify in writing those forms and whether or not an illustration will be used with the forms. For policy forms filed after the effective date of this chapter, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the Commissioner.</text> </paragraph> <paragraph num="B."> <text>Except as required by COMAR 31.09.05.07B(2) and .09A, if the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for a policy using that form before the first policy anniversary is prohibited.</text> </paragraph> <paragraph num="C."> <text>If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this chapter is required, except that a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished to an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.</text> </paragraph> <paragraph num="D."> <text>Potential enrollees of non-term group life subject to this chapter shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and nonguaranteed basis appropriate to the group and the coverage. This quotation is not considered an illustration for purposes of this chapter, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="General Rules and Prohibitions."> <paragraph num="A."> <text>An illustration used in the sale of a life insurance policy shall:</text> <paragraph num="(1)"> <text>Satisfy the applicable requirements of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Be clearly labeled “life insurance illustration”; and</text> </paragraph> <paragraph num="(3)"> <text>Contain the following basic information:</text> <paragraph num="(a)"> <text>Name of insurer,</text> </paragraph> <paragraph num="(b)"> <text>Name and business address of the producer or insurer's authorized representative, if any,</text> </paragraph> <paragraph num="(c)"> <text>Name, age, and sex of the proposed insured, except where a composite illustration is permitted under this chapter,</text> </paragraph> <paragraph num="(d)"> <text>Underwriting or rating classification upon which the illustration is based,</text> </paragraph> <paragraph num="(e)"> <text>Generic name of the policy, the company product name, if different, and the form number,</text> </paragraph> <paragraph num="(f)"> <text>Initial death benefit, and</text> </paragraph> <paragraph num="(g)"> <text>Dividend option election or application of nonguaranteed elements, if applicable.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>When using an illustration in the sale of a life insurance policy, an insurer or its producers, or other authorized representatives may not:</text> <paragraph num="(1)"> <text>Represent the policy as anything other than a life insurance policy;</text> </paragraph> <paragraph num="(2)"> <text>Use or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;</text> </paragraph> <paragraph num="(3)"> <text>State or imply that the payment or amount of nonguaranteed elements is guaranteed;</text> </paragraph> <paragraph num="(4)"> <text>Use an illustration that does not comply with the requirements of this chapter;</text> </paragraph> <paragraph num="(5)"> <text>Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;</text> </paragraph> <paragraph num="(6)"> <text>Provide an applicant with an incomplete illustration;</text> </paragraph> <paragraph num="(7)"> <text>Represent in any way that premium payments are not required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;</text> </paragraph> <paragraph num="(8)"> <text>Use the term “vanish” or “vanishing premium”, or a similar term that implies the policy becomes paid up, to describe a plan for using nonguaranteed elements to pay a portion of future premiums;</text> </paragraph> <paragraph num="(9)"> <text>Use an illustration that is lapse supported, except for policies than can never develop nonforfeiture values; or</text> </paragraph> <paragraph num="(10)"> <text>Use an illustration that is not self-supporting.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If an interest rate used to determine the illustrated nonguaranteed elements is shown, it may not be greater than the earned interest rate underlying the disciplined current scale.</text> </paragraph> <paragraph num="D."> <text>The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:</text> <paragraph num="(1)"> <text>Fully allocated expenses;</text> </paragraph> <paragraph num="(2)"> <text>Marginal expenses; and</text> </paragraph> <paragraph num="(3)"> <text>A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses shall be used.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Standards for Basic Illustrations."> <paragraph num="A."> <text>Format.</text> <paragraph num="(1)"> <text>A basic illustration shall conform with the requirements of this section.</text> </paragraph> <paragraph num="(2)"> <text>The illustration shall be labeled with the date on which it was prepared.</text> </paragraph> <paragraph num="(3)"> <text>Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration; for example, the fourth page of a seven page illustration shall be labeled “page 4 of 7 pages”.</text> </paragraph> <paragraph num="(4)"> <text>The assumed dates of payment receipt and benefit pay-out within a policy year shall be clearly identified.</text> </paragraph> <paragraph num="(5)"> <text>If the age of the proposed insured is shown as a component of the tabular detail, the age shall be issue age plus the number of years the policy is assumed to have been in force.</text> </paragraph> <paragraph num="(6)"> <text>The assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay.</text> </paragraph> <paragraph num="(7)"> <text>Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed.</text> </paragraph> <paragraph num="(8)"> <text>If the illustration shows any nonguaranteed elements, those elements cannot be based on a scale more favorable to the policy owner than the insurer's illustrated scale at any duration. These elements shall be clearly labeled as nonguaranteed.</text> </paragraph> <paragraph num="(9)"> <text>The guaranteed elements, if any, shall be:</text> <paragraph num="(a)"> <text>Shown before corresponding nonguaranteed elements; and</text> </paragraph> <paragraph num="(b)"> <text>Specifically referred to on any page of an illustration that shows or describes only the nonguaranteed elements; for example, “see page one for guaranteed elements”.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>The account or accumulation value of a policy, if shown, shall be:</text> <paragraph num="(a)"> <text>Identified by the name this value is given in the policy being illustrated; and</text> </paragraph> <paragraph num="(b)"> <text>Shown in close proximity to the corresponding value available upon surrender.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>The value available upon surrender shall be:</text> <paragraph num="(a)"> <text>Identified by the name this value is given in the policy being illustrated; and</text> </paragraph> <paragraph num="(b)"> <text>The amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans, and policy loan interests, as applicable.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form.</text> </paragraph> <paragraph num="(13)"> <text>Any illustration of nonguaranteed elements shall be accompanied by a statement indicating that the:</text> <paragraph num="(a)"> <text>Benefits and values are not guaranteed;</text> </paragraph> <paragraph num="(b)"> <text>Assumptions on which they are based are subject to change by the insurer; and</text> </paragraph> <paragraph num="(c)"> <text>Actual results may be more or less favorable.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>If the illustration shows that the premium payer may have the option to allow policy charges to be paid using nonguaranteed values, the illustration shall clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter duration than the contract premium. If a contract premium is due, the premium outlay display may not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up.</text> </paragraph> <paragraph num="(15)"> <text>If the applicant plans to use dividends or policy values, guaranteed or nonguaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Narrative Summary. A brief illustration shall include the following:</text> <paragraph num="(1)"> <text>A brief description of the policy being illustrated, including a statement that it is a life insurance policy;</text> </paragraph> <paragraph num="(2)"> <text>A brief description of the premium outlay or contract premium, as applicable, for the policy;</text> </paragraph> <paragraph num="(3)"> <text>A brief description of any policy features, riders, or options, guaranteed or nonguaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy;</text> </paragraph> <paragraph num="(4)"> <text>Identification and a brief definition of column headings and key terms used in the illustration; and</text> </paragraph> <paragraph num="(5)"> <text>A statement containing in substance that: “This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown.”</text> </paragraph> </paragraph> <paragraph num="C."> <text>Numeric Summary.</text> <paragraph num="(1)"> <text>Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. This summary shall be shown for at least policy years 5, 10, and 20, and at age 70, if applicable, on the following three bases:</text> <paragraph num="(a)"> <text>Policy guarantees;</text> </paragraph> <paragraph num="(b)"> <text>Insurer's illustrated scale; and</text> </paragraph> <paragraph num="(c)"> <text>Insurer's illustrated scale used but with the nonguaranteed elements reduced as follows:</text> <paragraph num="(i)"> <text>Dividends at 50 percent of the dividends contained in the illustrated scale used,</text> </paragraph> <paragraph num="(ii)"> <text>Nonguaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used, and</text> </paragraph> <paragraph num="(iii)"> <text>All nonguaranteed charges, including but not limited to term insurance charges, and mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For multiple life policies, the summary shall show policy years 5, 10, 20, and 30 for each of the three bases identified in §C(1) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>In addition, if coverage would cease before policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three bases identified in §C(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Statements. Statements substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this chapter:</text> <paragraph num="(1)"> <text>A statement to be signed and dated by the applicant or policy owner reading as follows: “I have received a copy of this illustration and understand that any nonguaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed.”; and</text> </paragraph> <paragraph num="(2)"> <text>A statement to be signed and dated by the insurance producer or other authorized representative of the insurer reading as follows: “I certify that this illustration has been presented to the applicant and that I have explained that any nonguaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration.”</text> </paragraph> </paragraph> <paragraph num="E."> <text>Tabular Detail.</text> <paragraph num="(1)"> <text>A basic illustration shall include the following for at least each policy year from 1 to 10 and for every fifth policy year after that ending at age 100, policy maturity, or final expiration and, except for term insurance beyond the twentieth year, for any year in which the premium outlay and contract premium, if applicable, is to change:</text> <paragraph num="(a)"> <text>The premium outlay and mode the applicant plans to pay and the contract premium, as applicable;</text> </paragraph> <paragraph num="(b)"> <text>The corresponding guaranteed death benefit, as provided in the policy; and</text> </paragraph> <paragraph num="(c)"> <text>The corresponding guaranteed value available upon surrender, as provided in the policy.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender shall correspond to the contract premium.</text> </paragraph> <paragraph num="(3)"> <text>Nonguaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer's current practice is to pay terminal dividends. If any nonguaranteed elements are shown, they shall be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a nonguaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column.</text> </paragraph> </paragraph> <paragraph num="F."> <text>For a policy that does not require payment of a specific contract premium, the illustration required in §B(2) of this regulation shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Standards for Supplemental Illustrations."> <paragraph num="A."> <text>A supplemental illustration may be provided if:</text> <paragraph num="(1)"> <text>It is appended to, accompanied by, or preceded by a basic illustration that complies with this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The nonguaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration;</text> </paragraph> <paragraph num="(3)"> <text>It contains the same statement required of a basic illustration that nonguaranteed elements are not guaranteed; and</text> </paragraph> <paragraph num="(4)"> <text>For a policy that:</text> <paragraph num="(a)"> <text>Has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration, or</text> </paragraph> <paragraph num="(b)"> <text>Does not require a contract premium, the premium outlay underlying the supplemental illustration is equal to the premium outlay shown in the basic illustration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The supplemental illustration shall include a notice referring to the basic illustration for guaranteed elements and other important information.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Delivery of Illustration and Record Retention."> <paragraph num="A."> <text>If a basic illustration is used by an insurance producer or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this chapter, shall be:</text> <paragraph num="(1)"> <text>Submitted to the insurer at the time of policy application; and</text> </paragraph> <paragraph num="(2)"> <text>Provided to the applicant.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued shall be sent with the policy. The revised illustration shall conform to the requirements of this chapter, shall be labeled “revised illustration”, and shall be signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer not later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.</text> </paragraph> <paragraph num="C."> <text>If no illustration is used by an insurance producer or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the producer or representative shall certify to that effect in writing on a form provided by the insurer. On the same form, the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued will be provided not later than at the time of the policy delivery. This form shall be submitted to the insurer at the time of policy application.</text> </paragraph> <paragraph num="D."> <text>If the policy is issued, a basic illustration conforming to the policy as issued shall be sent with the policy and signed not later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.</text> </paragraph> <paragraph num="E."> <text>If the basic illustration or revised illustration is sent to the applicant or policy owner by mail from the insurer, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer's obligation under this section is satisfied if the insurer can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort is deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page.</text> </paragraph> <paragraph num="F."> <text>A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either an illustration was not used or that the policy was applied for other than as illustrated, shall be retained by the insurer until 3 years after the policy is no longer in force. A copy need not be retained if a policy is not issued.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Annual Report; Notice to Policy Owners."> <paragraph num="A."> <text>In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy that shall contain at least the following information:</text> <paragraph num="(1)"> <text>For universal life policies, the report shall include the following:</text> <paragraph num="(a)"> <text>The beginning and end date of the current report period;</text> </paragraph> <paragraph num="(b)"> <text>The policy value at the end of the previous report period and at the end of the current report period;</text> </paragraph> <paragraph num="(c)"> <text>The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type, such as interest, mortality, expense, and riders;</text> </paragraph> <paragraph num="(d)"> <text>The current death benefit at the end of the current report period on each life covered by the policy;</text> </paragraph> <paragraph num="(e)"> <text>The net cash surrender value of the policy as of the end of the current report period;</text> </paragraph> <paragraph num="(f)"> <text>The amount of outstanding loans, if any, as of the end of the current report period; and</text> </paragraph> <paragraph num="(g)"> <text>One of the following:</text> <paragraph num="(i)"> <text>For fixed premium policies: if, assuming guaranteed interest, mortality and expense loads, and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report, or</text> </paragraph> <paragraph num="(ii)"> <text>For flexible premium policies: if, assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report; or</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For all other policies, if applicable:</text> <paragraph num="(a)"> <text>Current death benefit;</text> </paragraph> <paragraph num="(b)"> <text>Annual contract premium;</text> </paragraph> <paragraph num="(c)"> <text>Current cash surrender value;</text> </paragraph> <paragraph num="(d)"> <text>Current dividend;</text> </paragraph> <paragraph num="(e)"> <text>Application of current dividend; and</text> </paragraph> <paragraph num="(f)"> <text>Amount of outstanding loan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to nonguaranteed policy elements by the insurer.</text> </paragraph> <paragraph num="C."> <text>If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently: “IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling (insurer's phone number), writing to (insurer's name) at (insurer's address) or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department.” The insurer may vary the sequential order of the methods for obtaining an in force illustration.</text> </paragraph> <paragraph num="D."> <text>Upon the request of the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer's present illustrated scale. This illustration shall comply with the requirements of Regulations .06A and B and .07A and E of this chapter. A signature or other acknowledgment of receipt of this illustration is not required.</text> </paragraph> <paragraph num="E."> <text>If an adverse change in nonguaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Annual Certifications."> <paragraph num="A."> <text>The board of directors of each insurer shall appoint one or more illustration actuaries.</text> </paragraph> <paragraph num="B."> <text>The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice No. 24 Compliance with the NAIC Life Insurance Illustrations Model Regulations, promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this chapter.</text> </paragraph> <paragraph num="C."> <text>The illustration actuary:</text> <paragraph num="(1)"> <text>Shall be a member in good standing of the American Academy of Actuaries;</text> </paragraph> <paragraph num="(2)"> <text>Shall be familiar with the standard of practice regarding life insurance policy illustrations;</text> </paragraph> <paragraph num="(3)"> <text>May not have been found by the Commissioner, following appropriate notice and hearing to have:</text> <paragraph num="(a)"> <text>Violated any provision of, or any obligation imposed by, the insurance law, or other law, in the course of dealings as an illustration actuary,</text> </paragraph> <paragraph num="(b)"> <text>Been found guilty of fraudulent or dishonest practices,</text> </paragraph> <paragraph num="(c)"> <text>Demonstrated incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary, or</text> </paragraph> <paragraph num="(d)"> <text>Resigned or been removed as an illustration actuary within the past 5 years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>May not fail to notify the Commissioner of any action taken by a commissioner of another state similar to that under §C(3) of this regulation;</text> </paragraph> <paragraph num="(5)"> <text>Shall disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous 5 years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale; and</text> </paragraph> <paragraph num="(6)"> <text>Shall disclose in the annual certification one of the following methods used to allocate overhead expenses for all illustrations:</text> <paragraph num="(a)"> <text>Fully allocated expenses,</text> </paragraph> <paragraph num="(b)"> <text>Marginal expenses, or</text> </paragraph> <paragraph num="(c)"> <text>A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Filing of Certification.</text> <paragraph num="(1)"> <text>The illustration actuary shall file a certification with the board of directors of the insured and with the Commissioner as follows:</text> <paragraph num="(a)"> <text>Annually for all policy forms for which illustrations are used; and</text> </paragraph> <paragraph num="(b)"> <text>Before a new policy form is illustrated.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an error in a previous certification is discovered, the illustration actuary shall notify the board of directors of the insurer and the Commissioner promptly.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the Commissioner promptly of this inability to certify.</text> </paragraph> <paragraph num="F."> <text>A responsible officer of the insurer, other than the illustration actuary, shall certify annually that the:</text> <paragraph num="(1)"> <text>Illustration formats meet the requirements of this chapter and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and</text> </paragraph> <paragraph num="(2)"> <text>Company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in §C(6) of this regulation.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The annual certifications shall be provided to the Commissioner before each year by a date determined by the insurer.</text> </paragraph> <paragraph num="H."> <text>If an insurer changes the illustration actuary responsible for all or a portion of the company's policy forms, the insurer shall notify the Commissioner of that fact promptly and disclose the reason for the change.</text> </paragraph> <paragraph num="I."> <text>The following shall be disclosed in the annual certification:</text> <paragraph num="(1)"> <text>If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar in force policies; and</text> </paragraph> <paragraph num="(2)"> <text>If nonguaranteed elements illustrated for both new and in force policies are not consistent with the nonguaranteed elements actually being paid, charged, or credited to the same or similar forms.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Penalties."> <text>In addition to any other penalties provided by the laws of this State, an insurer or producer that violates a requirement of this chapter is guilty of a violation of Insurance Article, §§27-202 and 27-203, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Separability."> <text>If any provision of this chapter or its application to any person or circumstance is for any reason held to be invalid by any court of law, the remainder of the chapter and its application to other persons or circumstances are not affected.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 27-202, and 27-203, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1998 (24:23 Md. R. 1610)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.27 to COMAR 31.09.09 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="10" heading="Separate Account Investments under Funding Agreements"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Funding agreement” means a contract described in Insurance Article, §16-113, Annotated Code of Maryland, whereby an insurer may accept and accumulate funds and make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies.</text> </paragraph> <paragraph num="(2)"> <text>“Separate account” means an account:</text> <paragraph num="(a)"> <text>That is segregated from, and maintained separately from, an insurer's general account; and</text> </paragraph> <paragraph num="(b)"> <text>To which amounts paid to a Maryland-domiciled insurer under a funding agreement are allocated, as authorized by Insurance Article, §16-113, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Plan of Operation Requirements."> <paragraph num="A."> <text>A Maryland-domiciled insurer may not issue a funding agreement for which a separate account will be used unless prior to delivery or issuance for delivery in the State, the form of the contract and the plan of operation have been filed with and approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>A Maryland-domiciled insurer shall include in its plan of operation for a funding agreement for which a separate account will be used a statement of investment policy for the separate account and any supplemental account, including:</text> <paragraph num="(1)"> <text>Requirements for diversification, maturity, type, and quality of assets; and</text> </paragraph> <paragraph num="(2)"> <text>As applicable, target duration for matching funding agreement liabilities or the degree to which the investment policy is likely to match the performance of an interest rate series or index on which the funding agreement is based.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Investment Requirements."> <paragraph num="A."> <text>Application of Insurance Article, §5-511, Annotated Code of Maryland.</text> <paragraph num="(1)"> <text>Subject to §A(2) of this regulation, and Insurance Article, §16-113(d)(3), Annotated Code of Maryland, amounts allocated to a separate account and any resulting accumulations shall be invested and reinvested in accordance with the classes of investments, and the limitations on classes of investments, set forth in Insurance Article, §5-511, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>For the purpose of applying Insurance Article, §5-511, Annotated Code of Maryland, pursuant to §A(1) of this regulation, separate account assets shall be treated as admitted assets and be subject to the requirements and limitations of Insurance Article, §5-511, Annotated Code of Maryland, that apply to admitted assets.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Notwithstanding §A of this regulation, amounts allocated to a separate account and any resulting accumulations are not subject to the requirements and limitations set forth in Insurance Article, §5-511, Annotated Code of Maryland if the insurer obtains:</text> <paragraph num="(1)"> <text>Prior approval from the Commissioner for the amounts not to be subject to the requirements and limitations set forth in Insurance Article, §5-511, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Written consent of the holder of the funding agreement to the terms of the investment policy for the separate account.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §16-113, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 19, 2006 (33:12 Md. R. 999)</annotation> </annotations> </chapter> <chapter num="11" heading="Viaticals"> <regulation prefix="Regulation" num=".01" heading="Verification of Coverage for Life Insurance Policies."> <paragraph num="A."> <text>An insurer shall respond to a request for verification of coverage submitted by a viatical settlement provider or a viatical settlement broker within 30 days after the request is received.</text> </paragraph> <paragraph num="B."> <text>The request by the viatical settlement provider or viatical settlement broker shall include all items required by Insurance Article, §8-610.1(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>An insurer may charge a fee as set forth in Insurance Article, §8-610.1(b), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Form."> <paragraph num="A."> <text>The “Verification of Coverage for Life Insurance Policies” form adopted by the Commissioner under §B of this regulation shall be used.</text> </paragraph> <paragraph num="B."> <text>The form required in §A of this regulation shall read as follows:</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-209 and 8-610.1, Annotated Code of Maryland;Ch. 146, Acts of 2006</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 12, 2007 (34:5 Md. R. 562)</annotation> </annotations> </chapter> <chapter num="12" heading="Suitability in Annuity Transactions"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>The purpose of this chapter is to require producers to act in the best interest of the consumer when making a recommendation of an annuity and to require insurers to establish and maintain a system to supervise recommendations so that the insurance needs and financial objectives of consumers, at the time of the transaction, are effectively addressed.</text> </paragraph> <paragraph num="B."> <text>Nothing provided in this chapter shall be construed to create or imply a private cause of action for a violation of this chapter or to subject a producer to civil liability under the best interest standard of care outlined in Regulation .04 of this chapter or under standards governing the conduct of a fiduciary or a fiduciary relationship.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>In General. This chapter applies to any sale or recommendation of an annuity.</text> </paragraph> <paragraph num="B."> <text>Exceptions. Unless otherwise specifically included, this chapter does not apply to transactions involving:</text> <paragraph num="(1)"> <text>Direct response solicitations if there is no recommendation based on information collected from the consumer pursuant to this regulation;</text> </paragraph> <paragraph num="(2)"> <text>Contracts used to fund:</text> <paragraph num="(a)"> <text>An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act;</text> </paragraph> <paragraph num="(b)"> <text>A plan described by 26 U.S.C. §§401(a), 401(k), 403(b), 408(k), or 408(p) if established or maintained by an employer;</text> </paragraph> <paragraph num="(c)"> <text>A government or church plan defined in 26 U.S.C. §414, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax-exempt organization under 26 U.S.C. §457; or</text> </paragraph> <paragraph num="(d)"> <text>A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or</text> </paragraph> <paragraph num="(4)"> <text>Formal prepaid funeral contracts.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined:</text> <paragraph num="(1)"> <text>“Annuity” means an annuity that is an insurance product under State law that is individually solicited, whether the product is classified as an individual or group annuity.</text> </paragraph> <paragraph num="(2)"> <text>“Cash compensation” means any discount, concession, fee, service fee, commission, sales charge, loan, override, or cash benefit received by a producer in connection with the recommendation or sale of an annuity from an insurer, intermediary, or directly from the consumer.</text> </paragraph> <paragraph num="(3)"> <text>“Comparable standards” means:</text> <paragraph num="(a)"> <text>With respect to broker-dealers and registered representatives of broker-dealers, applicable SEC and FINRA rules pertaining to best interest obligations and supervision of annuity recommendations and sales, including, but not limited to, Regulation Best Interest and any amendments or successor regulations thereto;</text> </paragraph> <paragraph num="(b)"> <text>With respect to investment advisers registered under federal securities laws or investment adviser representatives, the fiduciary duties and all other requirements imposed on such investment advisers or investment adviser representatives by contract or under the Investment Advisers Act of 1940, including, but not limited to, the Form ADV and interpretations; and</text> </paragraph> <paragraph num="(c)"> <text>With respect to plan fiduciaries or fiduciaries, the duties, obligations, prohibitions, and all other requirements attendant to such status under ERISA or the IRC and any amendments or successor statutes thereto.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Consumer profile information” means information that is reasonably appropriate to determine whether a recommendation addresses the consumer’s financial situation, insurance needs, and financial objectives, including, at a minimum, the following:</text> <paragraph num="(a)"> <text>Age;</text> </paragraph> <paragraph num="(b)"> <text>Annual income;</text> </paragraph> <paragraph num="(c)"> <text>Financial situation and needs, including debts and other obligations;</text> </paragraph> <paragraph num="(d)"> <text>Financial experience;</text> </paragraph> <paragraph num="(e)"> <text>Insurance needs;</text> </paragraph> <paragraph num="(f)"> <text>Financial objectives;</text> </paragraph> <paragraph num="(g)"> <text>Intended use of the annuity;</text> </paragraph> <paragraph num="(h)"> <text>Financial time horizon;</text> </paragraph> <paragraph num="(i)"> <text>Existing assets or financial products, including investment, annuity and insurance holdings;</text> </paragraph> <paragraph num="(j)"> <text>Liquidity needs;</text> </paragraph> <paragraph num="(k)"> <text>Liquid net worth;</text> </paragraph> <paragraph num="(l)"> <text>Risk tolerance, including, but not limited to, willingness to accept non-guaranteed elements in the annuity;</text> </paragraph> <paragraph num="(m)"> <text>Financial resources used to fund the annuity; and</text> </paragraph> <paragraph num="(n)"> <text>Tax status.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Continuing education credit” or “CE credit” means 1 hour of continuing education as defined in COMAR 31.03.02.02B(9).</text> </paragraph> <paragraph num="(6)"> <text>“ERISA” means the Employee Retirement and Income Security Act.</text> </paragraph> <paragraph num="(7)"> <text>“Financial professional” means a producer that is regulated and acting as:</text> <paragraph num="(a)"> <text>A broker-dealer registered under federal securities laws or a registered representative of a broker-dealer;</text> </paragraph> <paragraph num="(b)"> <text>An investment adviser registered under federal securities laws or an investment adviser representative associated with the federal registered investment adviser; or</text> </paragraph> <paragraph num="(c)"> <text>A plan fiduciary under 29 CFR §2510.3-21 or fiduciary under 26 U.S.C. §4975(e)(3), or any amendments or successor statutes thereto.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“FINRA” means the Financial Industry Regulatory Authority or a succeeding agency.</text> </paragraph> <paragraph num="(9)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101(v), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Intermediary” means an entity contracted directly with an insurer or with another entity contracted with an insurer to facilitate the sale of the insurer’s annuities by producers.</text> </paragraph> <paragraph num="(11)"> <text>Material Conflict of Interest.</text> <paragraph num="(a)"> <text>“Material conflict of interest” means a financial interest of the producer in the sale of an annuity that a reasonable person would expect to influence the impartiality of a recommendation.</text> </paragraph> <paragraph num="(b)"> <text>“Material conflict of interest” does not include cash compensation or non-cash compensation.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Non-cash compensation” means any form of compensation that is not cash compensation, including, but not limited to, health insurance, office rent, office support and retirement benefits.</text> </paragraph> <paragraph num="(13)"> <text>“Non-guaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, dividends, non-interest based credits, charges, or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.</text> </paragraph> <paragraph num="(14)"> <text>“Producer” means:</text> <paragraph num="(a)"> <text>A licensed insurance producer as defined in Insurance Article, §1-101(w), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>An insurer if no producer is involved.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Provider” has the meaning stated in COMAR 31.03.02.02B(15).</text> </paragraph> <paragraph num="(16)"> <text>Recommendation.</text> <paragraph num="(a)"> <text>“Recommendation” means advice provided by a producer to an individual consumer that was intended to result or does result in a purchase, an exchange, or a replacement of an annuity in accordance with that advice.</text> </paragraph> <paragraph num="(b)"> <text>“Recommendation” does not include general communication to the public, generalized customer services assistance or administrative support, general educational information and tools, prospectuses, or other product and sales material.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Replacement” has the meaning stated in COMAR 31.09.05.03B(11).</text> </paragraph> <paragraph num="(18)"> <text>“SEC” means the United States Securities and Exchange Commission.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Best Interest Obligations."> <paragraph num="A."> <text>The requirements under this regulation do not create a fiduciary obligation or relationship and only create a regulatory obligation as established in this chapter.</text> </paragraph> <paragraph num="B."> <text>A producer, when making a recommendation of an annuity, shall act in the best interest of the consumer under the circumstances known by the producer at the time the recommendation is made, without placing the producer’s or the insurer’s financial interest ahead of the consumer’s interest.</text> </paragraph> <paragraph num="C."> <text>A producer is considered to be acting in the best interest of the consumer if the producer satisfies the obligations described in §§D—G of this regulation.</text> </paragraph> <paragraph num="D."> <text>Care Obligation.</text> <paragraph num="(1)"> <text>The producer, in making a recommendation, shall exercise reasonable diligence, care, and skill to:</text> <paragraph num="(a)"> <text>Know the consumer’s financial situation, insurance needs, and financial objectives;</text> </paragraph> <paragraph num="(b)"> <text>Understand the available recommendation options after making a reasonable inquiry into options available to the producer;</text> </paragraph> <paragraph num="(c)"> <text>Have a reasonable basis to believe the recommended option effectively addresses the consumer’s financial situation, insurance needs, and financial objectives over the life of the product, as evaluated in light of the consumer profile information; and</text> </paragraph> <paragraph num="(d)"> <text>Communicate the basis or bases of the recommendation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The requirements under §D(1) of this regulation include making reasonable efforts to obtain consumer profile information from the consumer prior to the recommendation of an annuity.</text> </paragraph> <paragraph num="(3)"> <text>The requirements under §D(1) of this regulation require a producer to consider the types of products the producer is authorized and licensed to recommend or sell that address the consumer’s financial situation, insurance needs, and financial objectives.</text> </paragraph> <paragraph num="(4)"> <text>The requirements under §D(1) of this regulation do not require analysis or consideration of any products outside the authority and license of the producer or other possible alternative products or strategies available in the market at the time of the recommendation.</text> </paragraph> <paragraph num="(5)"> <text>Producers shall be held to standards applicable to producers with similar authority and licensure.</text> </paragraph> <paragraph num="(6)"> <text>The factors generally relevant in making a determination whether an annuity effectively addresses the consumer’s financial situation, insurance needs, and financial objectives are the consumer profile information, characteristics of the insurer, and product costs, rates, benefits, and features.</text> </paragraph> <paragraph num="(7)"> <text>The level of importance of each factor described in §D(6) of this regulation may vary depending on the facts and circumstances of a particular case, but each factor may not be considered in isolation.</text> </paragraph> <paragraph num="(8)"> <text>The requirements under §D(1) of this regulation include having a reasonable basis to believe the consumer would benefit from certain features of the annuity, such as annuitization, death or living benefit, or other insurance-related features.</text> </paragraph> <paragraph num="(9)"> <text>The requirements under §D(1) of this regulation apply to the particular annuity as a whole and the underlying subaccounts to which funds are allocated at the time of purchase or exchange of an annuity, and riders and similar product enhancements, if any.</text> </paragraph> <paragraph num="(10)"> <text>The requirements under §D(1) of this regulation do not mean the annuity with the lowest one-time or multiple occurrence compensation structure shall necessarily be recommended.</text> </paragraph> <paragraph num="(11)"> <text>The requirements under §D(1) of this regulation do not mean the producer has ongoing monitoring obligations under the care obligation under this section, although such an obligation may be separately owed under the terms of a fiduciary, consulting, investment advising or financial planning agreement between the consumer and the producer.</text> </paragraph> <paragraph num="(12)"> <text>In the case of an exchange or replacement of an annuity, the producer shall consider the whole transaction, which includes taking into consideration whether:</text> <paragraph num="(a)"> <text>The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits, such as death, living, or other contractual benefits, or be subject to increased fees, investment advisory fees, or charges for riders and similar product enhancements;</text> </paragraph> <paragraph num="(b)"> <text>The replacing product would substantially benefit the consumer in comparison to the replaced product over the life of the product; and</text> </paragraph> <paragraph num="(c)"> <text>The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 60 months.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>Nothing in this chapter shall be construed to require a producer to obtain any license other than a producer license with the appropriate line of authority to sell, solicit, or negotiate insurance in this State, including but not limited to any securities license, in order to fulfill the duties and obligations contained in this chapter, provided the producer does not give advice or provide services that are otherwise subject to securities laws or engage in any other activity requiring other professional licenses.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Disclosure Obligation.</text> <paragraph num="(1)"> <text>Prior to the recommendation or sale of an annuity, the producer shall prominently disclose the following information to the consumer:</text> <paragraph num="(a)"> <text>A description of the scope and terms of the relationship with the consumer and the role of the producer in the transaction;</text> </paragraph> <paragraph num="(b)"> <text>An affirmative statement on whether the producer is licensed and authorized to sell the following products:</text> <paragraph num="(i)"> <text>Fixed annuities;</text> </paragraph> <paragraph num="(ii)"> <text>Fixed indexed annuities;</text> </paragraph> <paragraph num="(iii)"> <text>Variable annuities;</text> </paragraph> <paragraph num="(iv)"> <text>Life insurance;</text> </paragraph> <paragraph num="(v)"> <text>Mutual funds;</text> </paragraph> <paragraph num="(vi)"> <text>Stocks and bonds; and</text> </paragraph> <paragraph num="(vii)"> <text>Certificates of deposit;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>An affirmative statement describing the insurer the producer is authorized, contracted, appointed, or otherwise able to sell insurance products for, using the following descriptions:</text> <paragraph num="(i)"> <text>One insurer;</text> </paragraph> <paragraph num="(ii)"> <text>From two or more insurers; or</text> </paragraph> <paragraph num="(iii)"> <text>From two or more insurers although primarily contracted with one insurer;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>A description of the sources and types of cash compensation and non-cash compensation to be received by the producer, including whether the producer is to be compensated for the sale of a recommended annuity by commission as part of premium or other remuneration received from the insurer, intermediary, or other producer or by fee as a result of a contract for advice or consulting services; and</text> </paragraph> <paragraph num="(e)"> <text>A notice of the consumer’s right to request additional information regarding cash compensation described in §E(3) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The disclosure described in §E(1) of this regulation shall be in a format substantially similar to that specified in Regulation .11 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>Upon request of the consumer or the consumer’s designated representative, the producer shall disclose:</text> <paragraph num="(a)"> <text>A reasonable estimate of the amount of cash compensation to be received by the producer, which may be stated as a range of amounts or percentages; and</text> </paragraph> <paragraph num="(b)"> <text>Whether the cash compensation is a one-time or multiple occurrence amount and, if a multiple occurrence amount, the frequency and amount of the occurrence, which may be stated as a range of amounts or percentages.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Prior to or at the time of the recommendation or sale of an annuity, the producer shall have a reasonable basis to believe the consumer has been informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders, or annuitizes the annuity, mortality and expense fees, investment advisory fees, any annual fees, potential charges for and features of riders or other options of the annuity, limitations on interest returns, potential changes in non-guaranteed elements of the annuity, insurance and investment components, and market risk.</text> </paragraph> <paragraph num="(5)"> <text>The disclosure obligation under §E of this regulation is intended to supplement and not replace the disclosure requirements under COMAR 31.15.04.05.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Conflict of Interest Obligation. A producer shall identify and avoid or reasonably manage and disclose material conflicts of interest, including material conflicts of interest related to an ownership interest.</text> </paragraph> <paragraph num="G."> <text>Documentation Obligation.</text> <paragraph num="(1)"> <text>At the time of recommendation or sale, a producer shall:</text> <paragraph num="(a)"> <text>Make a written record of any recommendation and the basis for the recommendation subject to this regulation;</text> </paragraph> <paragraph num="(b)"> <text>Obtain a consumer signed statement documenting:</text> <paragraph num="(i)"> <text>A consumer’s refusal to provide the consumer profile information, if any; and</text> </paragraph> <paragraph num="(ii)"> <text>A consumer’s understanding of the ramifications of not providing the consumer’s consumer profile information or of providing insufficient consumer profile information; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Obtain a consumer signed statement acknowledging the annuity transaction is not recommended if a consumer decides to enter into an annuity transaction that is not based on the producer’s recommendation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The statement described in §G(1)(b) of this regulation shall be in a format substantially similar to that specified in Regulation .12 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>The statement described in §G(1)(c) of this regulation shall be in a format substantially similar to that specified in Regulation .13 of this chapter.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Application of the Best Interest Obligation.</text> <paragraph num="(1)"> <text>Any requirement applicable to a producer under this subsection shall apply to every producer who has exercised material control or influence in the making of a recommendation and has received direct compensation as a result of the recommendation or sale, regardless of whether the producer has had any direct contact with the consumer.</text> </paragraph> <paragraph num="(2)"> <text>Activities such as providing or delivering marketing or educational materials, product wholesaling or other back office product support, and general supervision of a producer do not, in and of themselves, constitute material control or influence.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Transactions Not Based on a Recommendation.</text> <paragraph num="(1)"> <text>Except as provided under §I(2) of this regulation, a producer shall have no obligation to a consumer under §§B—G of this regulation related to any annuity transaction if:</text> <paragraph num="(a)"> <text>No recommendation is made;</text> </paragraph> <paragraph num="(b)"> <text>A recommendation is made and is later found to have been prepared based on materially inaccurate information provided by the consumer;</text> </paragraph> <paragraph num="(c)"> <text>A consumer refuses to provide relevant consumer profile information and the annuity transaction is not recommended; or</text> </paragraph> <paragraph num="(d)"> <text>A consumer decides to enter into an annuity transaction that is not based on a recommendation of the producer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer’s issuance of an annuity subject to §I(1) of this regulation shall be reasonable under all the circumstances actually known to the insurer at the time the annuity is issued.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Supervision System."> <paragraph num="A."> <text>Except as permitted under Regulation .04I of this chapter, an insurer may not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity would effectively address the particular consumer’s financial situation, insurance needs, and financial objectives based on the consumer’s consumer profile information.</text> </paragraph> <paragraph num="B."> <text>An insurer shall establish and maintain a supervision system that is reasonably designed to achieve the insurer’s and its producers’ compliance with this regulation, including, but not limited to, the following:</text> <paragraph num="(1)"> <text>The insurer shall establish and maintain reasonable procedures to inform its producers of the requirements of this regulation and shall incorporate the requirements of this regulation into relevant producer training manuals;</text> </paragraph> <paragraph num="(2)"> <text>The insurer shall establish and maintain standards for producer product training and shall establish and maintain reasonable procedures to require its producers to comply with the requirements of Regulation .08 of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>The insurer shall provide product-specific training and training materials which explain all material features of its annuity products to its producers;</text> </paragraph> <paragraph num="(4)"> <text>The insurer shall establish and maintain procedures for the review of each recommendation prior to issuance of an annuity that are designed to ensure there is a reasonable basis to determine that the recommended annuity would effectively address the particular consumer’s financial situation, insurance needs, and financial objectives. Such review procedures may:</text> <paragraph num="(a)"> <text>Apply a screening system for the purpose of identifying selected transactions for additional review; and</text> </paragraph> <paragraph num="(b)"> <text>Be accomplished electronically or through other means including, but not limited to, physical review. An electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criteria;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The insurer shall establish and maintain reasonable procedures to detect recommendations that are not in compliance with Regulations .04, .06, and .07 of this chapter. An insurer may comply with this section by applying sampling procedures or by confirming the consumer profile information or other required information under this section after issuance or delivery of the annuity. The procedures described in this section may include, but are not limited to:</text> <paragraph num="(a)"> <text>Confirmation of the consumer’s profile information;</text> </paragraph> <paragraph num="(b)"> <text>Systematic consumer surveys;</text> </paragraph> <paragraph num="(c)"> <text>Producer and consumer interviews;</text> </paragraph> <paragraph num="(d)"> <text>Confirmation letters;</text> </paragraph> <paragraph num="(e)"> <text>Producer statements or attestations; or</text> </paragraph> <paragraph num="(f)"> <text>Programs of internal monitoring;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The insurer shall establish and maintain reasonable procedures to assess, prior to or upon issuance or delivery of an annuity, whether a producer has provided to the consumer the information required to be provided under this Regulation .04 of this chapter;</text> </paragraph> <paragraph num="(7)"> <text>The insurer shall establish and maintain reasonable procedures to identify and address suspicious consumer refusals to provide consumer profile information;</text> </paragraph> <paragraph num="(8)"> <text>The insurer shall establish and maintain reasonable procedures to identify and eliminate any sales contests, sales quotas, bonuses, and non-cash compensation that are based on the sales of specific annuities within a limited period of time;</text> </paragraph> <paragraph num="(9)"> <text>The requirements of §B(8) of this regulation are not intended to prohibit the receipt of health insurance, office rent, office support, retirement benefits, or other employee benefits by employees if those benefits are not based upon the volume of sales of a specific annuity within a limited period of time; and</text> </paragraph> <paragraph num="(10)"> <text>On an annual basis, the insurer shall provide a written report to senior management, including to the senior manager responsible for audit functions, that details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Nothing in this regulation restricts an insurer from contracting for performance of a function, including maintenance of procedures, required under this regulation.</text> </paragraph> <paragraph num="D."> <text>An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties pursuant to Regulation .09 of this chapter, regardless of whether the insurer contracts for performance of a function and regardless of the insurer’s compliance with this section. An insurer’s supervision system under this regulation shall include supervision of contractual performance under this regulation, including, but not limited to:</text> <paragraph num="(1)"> <text>Monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed; and</text> </paragraph> <paragraph num="(2)"> <text>Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.</text> </paragraph> </paragraph> <paragraph num="E."> <text>An insurer is not required to include in its system of supervision:</text> <paragraph num="(1)"> <text>A producer’s recommendations to consumers of products other than the annuities offered by the insurer; or</text> </paragraph> <paragraph num="(2)"> <text>Consideration of or comparison to options available to the producer or compensation relating to those options other than annuities or other products offered by the insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Prohibited Practices."> <text>A producer or insurer may not dissuade or attempt to dissuade a consumer from:</text> <paragraph num="A."> <text>Truthfully responding to an insurer’s request for confirmation of the consumer profile information;</text> </paragraph> <paragraph num="B."> <text>Filing a complaint; or</text> </paragraph> <paragraph num="C."> <text>Cooperating with the investigation of a complaint.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Safe Harbor."> <paragraph num="A."> <text>Recommendations and sales of annuities made in compliance with comparable standards shall satisfy the requirements under this chapter.</text> </paragraph> <paragraph num="B."> <text>This regulation applies to all recommendations and sales of annuities made by financial professionals in compliance with business rules, controls, and procedures that satisfy a comparable standard even if such standard would not otherwise apply to the product or recommendation at issue.</text> </paragraph> <paragraph num="C."> <text>Nothing in this regulation shall limit the Commissioner’s ability to investigate and enforce the provisions of this chapter.</text> </paragraph> <paragraph num="D."> <text>Nothing in §A of this regulation shall limit the insurer’s obligation to comply with Regulation .05A of this chapter, although the insurer may base its analysis on information received from either the financial professional or the entity supervising the financial professional.</text> </paragraph> <paragraph num="E."> <text>For §A of this regulation to apply, an insurer shall:</text> <paragraph num="(1)"> <text>Monitor the relevant conduct of the financial professional seeking to rely on §A of this regulation or the entity responsible for supervising the financial professional, such as the financial professional’s broker-dealer or an investment adviser registered under federal securities laws using information collected in the normal course of an insurer’s business; and</text> </paragraph> <paragraph num="(2)"> <text>Provide to the entity responsible for supervising the financial professional seeking to rely on §A of this regulation, such as the financial professional’s broker-dealer or investment adviser registered under federal securities laws, information and reports that are reasonably appropriate to assist such entity to maintain its supervision system.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A financial professional who is not explicitly acting in compliance with the relevant comparable standards is not eligible for the safe harbor under §A of this regulation and is subject to compliance with the requirements of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Producer Training."> <paragraph num="A."> <text>A producer may not solicit the sale of an annuity product unless the producer has adequate knowledge of the product to recommend the annuity and the producer is in compliance with the insurer’s standards for product training.</text> </paragraph> <paragraph num="B."> <text>A producer may rely on insurer-provided product-specific training standards and materials to comply with §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>Training Requirements.</text> <paragraph num="(1)"> <text>A producer who engages in the sale of annuity products shall complete a one-time four-credit training course approved by the Maryland Insurance Administration and provided by a Maryland Insurance Administration approved education provider.</text> </paragraph> <paragraph num="(2)"> <text>A producer who holds a life insurance line of authority on the effective date of this regulation and who desires to sell annuities shall complete the requirements of §C(1) of this regulation within 6 months after the effective date of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>An individual who obtains a life insurance line of authority on or after the effective date of this regulation may not engage in the sale of annuities until the annuity training course required under §C(1) of this regulation has been completed.</text> </paragraph> <paragraph num="(4)"> <text>The minimum length of the training required under §C(1) of this regulation shall be sufficient to qualify for at least four continuing education credits but may be longer.</text> </paragraph> <paragraph num="(5)"> <text>The training required under §C(1) of this regulation shall include information on the following topics:</text> <paragraph num="(a)"> <text>The types of annuities and various classifications of annuities;</text> </paragraph> <paragraph num="(b)"> <text>Identification of the parties to an annuity;</text> </paragraph> <paragraph num="(c)"> <text>How product-specific annuity contract features affect consumers;</text> </paragraph> <paragraph num="(d)"> <text>The application of income taxation of qualified and non-qualified annuities;</text> </paragraph> <paragraph num="(e)"> <text>The primary uses of annuities; and</text> </paragraph> <paragraph num="(f)"> <text>Appropriate standard of conduct, sales practices, replacement, and disclosure requirements.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Providers of courses intended to comply with §C(1) of this regulation:</text> <paragraph num="(a)"> <text>Shall cover all topics listed in the prescribed outline;</text> </paragraph> <paragraph num="(b)"> <text>May not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products; and</text> </paragraph> <paragraph num="(c)"> <text>May offer additional topics in conjunction with and in addition to the required outline.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>A provider of an annuity training course intended to comply with §C(1) of this regulation shall comply with the rules and guidelines applicable to producer continuing education courses as set forth in COMAR 31.03.02.</text> </paragraph> <paragraph num="(8)"> <text>Within 6 months after the effective date of this regulation, a producer who has completed an annuity training course approved by the Maryland Insurance Administration prior to the effective date of this regulation shall complete either:</text> <paragraph num="(a)"> <text>A new four-credit training course approved by the Maryland Insurance Administration after the effective date of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>An additional one-time one-credit training course approved by the Maryland Insurance Administration and provided by the Maryland Insurance Administration approved education provider on appropriate sales practices, replacement, and disclosure requirements under this chapter.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with COMAR 31.03.02.</text> </paragraph> <paragraph num="(10)"> <text>A provider of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with COMAR 31.03.02.</text> </paragraph> <paragraph num="(11)"> <text>The satisfaction of the training requirements of another state that are substantially similar to the requirements of this section shall be deemed to satisfy the training requirements of this regulation.</text> </paragraph> <paragraph num="(12)"> <text>The satisfaction of the components of the training requirements of any course or courses with components substantially similar to the provisions of §C of this regulation shall be deemed to satisfy the training requirements of this regulation.</text> </paragraph> <paragraph num="(13)"> <text>An insurer shall verify that a producer has completed the annuity training course required under this subsection before allowing the producer to sell an annuity product for that insurer.</text> </paragraph> <paragraph num="(14)"> <text>An insurer may satisfy its responsibility under this regulation by obtaining certificates of completion of the training course or obtaining reports provided by commissioner-sponsored database systems or vendors or from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance education providers.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Compliance and Penalties."> <paragraph num="A."> <text>An insurer is responsible for compliance with this chapter.</text> </paragraph> <paragraph num="B."> <text>If a violation of this chapter occurs, because of either the action or the inaction of the insurer or its producer, the Commissioner may order:</text> <paragraph num="(1)"> <text>An insurer to take reasonably appropriate corrective action for any consumer harmed by the insurer’s, or by its producer’s, violation of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>A general agency, independent agency, or a producer to take reasonably appropriate corrective action for any consumer harmed by the producer’s violation of this chapter; and</text> </paragraph> <paragraph num="(3)"> <text>Appropriate penalties and sanctions.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Penalties.</text> <paragraph num="(1)"> <text>A producer who violates this chapter is subject to a penalty or other appropriate sanction under Insurance Article, §10-126, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>An insurer that violates this chapter is subject to a penalty or other appropriate sanction under Insurance Article, §4-113, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Record Keeping."> <paragraph num="A."> <text>Insurers, general agents, independent agencies, and producers shall maintain or be able to make available to the Commissioner records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for 7 years after the insurance transaction is completed by the insurer.</text> </paragraph> <paragraph num="B."> <text>An insurer is permitted, but is not required, to maintain documentation on behalf of a producer.</text> </paragraph> <paragraph num="C."> <text>Records required to be maintained by this regulation may be maintained in paper, photographic, micro processed, magnetic, mechanical, or electronic media, or by any process that accurately reproduces the actual document, if the copy of the record is maintained in a manner that:</text> <paragraph num="(1)"> <text>Is clear and legible;</text> </paragraph> <paragraph num="(2)"> <text>Accurately reproduces the original document in its entirety, including any attachments to the document;</text> </paragraph> <paragraph num="(3)"> <text>Is capable of producing a clear and legible hard copy of the original document; and</text> </paragraph> <paragraph num="(4)"> <text>Preserves evidence of any signature contained on the document.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Producer Disclosure for Annuities Form."> <text>The form to be used for providing the disclosure required by Regulation .04E(1) of this chapter can be found here:</text> <text>FORM AT END OF CHAPTER</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Consumer Refusal to Provide Information Form."> <text>The form to be used for obtaining the consumer signed statement required by Regulation .04G(1)(b) of this chapter can be found here:</text> <text>FORM AT END OF CHAPTER</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Consumer Decision to Purchase Annuity Not Based on Recommendation Form."> <text>The form to be used for obtaining the consumer signed statement required by Regulation .04G(1)(c) of this chapter can be found here:</text> <text>FORM AT END OF CHAPTER</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a), 4-113, 10-126(a)(13) and (d), 27-102, 27-202, and 27-203, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 1, 2007 (34:8 Md. R. 768)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective November 1, 2011 (38:10 Md. R. 618)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.11 repealed and new Regulation .01—.13 adopted effective October 8, 2022 (49:8 Md. R. 501)</annotation> </annotations> </chapter> <chapter num="13" heading="Military Sales Practices"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>The purpose of this chapter is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive, or unfair.</text> </paragraph> <paragraph num="B."> <text>Nothing in this chapter may be construed to create or imply a private cause of action for a violation of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter applies only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States Armed Forces.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Incorporation by Reference."> <text>In this chapter, the following documents are incorporated by reference:</text> <paragraph num="A."> <text>38 U.S.C. §1965 et seq. (2007);</text> </paragraph> <paragraph num="B."> <text>Internal Revenue Code, 26 U.S.C. §501(c)(23) (2007);</text> </paragraph> <paragraph num="C."> <text>Department of Defense DoD Instruction 1344.07—Personal Commercial Solicitation on DoD Installations (March 30, 2006);</text> </paragraph> <paragraph num="D."> <text>Truth in Savings Act, 12 U.S.C. §4301 et seq. (2007), and the regulations promulgated under it; and</text> </paragraph> <paragraph num="E."> <text>§10 of the “Military Personnel Financial Services Protection Act,” Pub. L. No. 109-290, p.16.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Active Duty.</text> <paragraph num="(a)"> <text>“Active duty” means full-time duty in the active military service of the United States and includes members of the reserve component, National Guard and Reserve, while serving under published orders for active duty or full-time training.</text> </paragraph> <paragraph num="(b)"> <text>“Active duty” does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than 31 calendar days.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Annuity” means annuity as defined in Insurance Article, §1-101(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Department of Defense (DoD) Personnel” means all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the Department of Defense.</text> </paragraph> <paragraph num="(4)"> <text>“Door-to-door” means a solicitation or sales method whereby an insurance producer proceeds randomly or selectively from household to household without prior specific appointment.</text> </paragraph> <paragraph num="(5)"> <text>“General advertisement” means an advertisement having as its sole purpose the promotion of the reader's or viewer's interest in the concept of insurance, or the promotion of the insurer or the insurance producer.</text> </paragraph> <paragraph num="(6)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101(u), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101(v), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Known” or “knowingly” means, depending on its use in this chapter, the insurance producer or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:</text> <paragraph num="(a)"> <text>Is a service member; or</text> </paragraph> <paragraph num="(b)"> <text>Is a service member with a pay grade of E-4 or below.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Life insurance” has the meaning stated in Insurance Article, §1-101(x), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Military installation” means any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.</text> </paragraph> <paragraph num="(11)"> <text>“MyPay” is a Defense Finance and Accounting Service (DFAS) web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.</text> </paragraph> <paragraph num="(12)"> <text>“Service member” means any active duty officer, commissioned and warrant, or enlisted member of the United States Armed Forces.</text> </paragraph> <paragraph num="(13)"> <text>Side Fund.</text> <paragraph num="(a)"> <text>“Side fund” means a fund or reserve that is part of or otherwise attached to a life insurance policy by rider, endorsement, or other mechanism which accumulates premium or deposits with interest or by other means.</text> </paragraph> <paragraph num="(b)"> <text>“Side fund” does not include:</text> <paragraph num="(i)"> <text>Accumulated value or cash value or secondary guarantees provided by a universal life policy;</text> </paragraph> <paragraph num="(ii)"> <text>Cash values provided by a whole life policy which are subject to standard nonforfeiture law for life insurance; or</text> </paragraph> <paragraph num="(iii)"> <text>A premium deposit fund which contains only premiums paid in advance which accumulate at interest, imposes no penalty for withdrawal, does not permit funding beyond future required premiums, is not marketed or intended as an investment, and does not carry a commission, either paid or calculated.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Specific appointment” means a prearranged appointment agreed upon by both parties and definite as to place and time.</text> </paragraph> <paragraph num="(15)"> <text>“United States Armed Forces” means all components of the Army, Navy, Air Force, Marine Corps, and Coast Guard.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Exemptions."> <paragraph num="A."> <text>This chapter does not apply to solicitations or sales involving:</text> <paragraph num="(1)"> <text>Credit insurance;</text> </paragraph> <paragraph num="(2)"> <text>Group life insurance or group annuities where there is no in-person, face-to-face solicitation of individuals by an insurance producer or where the contract or certificate does not include a side fund;</text> </paragraph> <paragraph num="(3)"> <text>An application to the existing insurer that issued the existing policy or contract when:</text> <paragraph num="(a)"> <text>A contractual change or a conversion privilege is being exercised;</text> </paragraph> <paragraph num="(b)"> <text>The existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or</text> </paragraph> <paragraph num="(c)"> <text>A term conversion privilege is exercised among corporate affiliates;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Individual health policies, including disability income policies;</text> </paragraph> <paragraph num="(5)"> <text>Contracts offered by Service members' Group Life Insurance (SGLI) or Veterans' Group Life Insurance (VGLI), as authorized by 38 U.S.C. §1965 et seq. (2007);</text> </paragraph> <paragraph num="(6)"> <text>Life insurance contracts offered through or by a nonprofit military association, qualifying under 26 U.S.C. §501(c)(23) (2007), and which are not underwritten by an insurer; or</text> </paragraph> <paragraph num="(7)"> <text>Contracts used to fund:</text> <paragraph num="(a)"> <text>An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);</text> </paragraph> <paragraph num="(b)"> <text>A plan described by §401(a), 401(k), 403(b), 408(k), or 408(p) of the Internal Revenue Code, as amended, if established or maintained by an employer;</text> </paragraph> <paragraph num="(c)"> <text>A government or church plan defined in §414 of the Internal Revenue Code, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under §457 of the Internal Revenue Code;</text> </paragraph> <paragraph num="(d)"> <text>A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;</text> </paragraph> <paragraph num="(e)"> <text>Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or</text> </paragraph> <paragraph num="(f)"> <text>Prearranged funeral contracts.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Nothing in this chapter may be construed to abrogate the ability of nonprofit organizations to educate members of the United States Armed Forces in accordance with Department of Defense DoD Instruction 1344.07—Personal Commercial Solicitation on DoD Installations.</text> </paragraph> <paragraph num="C."> <text>For purposes of this chapter, general advertisements, direct mail, and internet marketing do not constitute solicitation.</text> </paragraph> <paragraph num="D."> <text>Telephone Marketing.</text> <paragraph num="(1)"> <text>Telephone marketing does not constitute solicitation, if the caller:</text> <paragraph num="(a)"> <text>Explicitly and conspicuously discloses that the product concerned is life insurance or annuity; and</text> </paragraph> <paragraph num="(b)"> <text>Makes no statements that avoid a clear and unequivocal statement that life insurance or annuity is the subject matter of the solicitation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Nothing in this section may be construed to exempt an insurer or insurance producer from this chapter in any in-person, face-to-face meeting established as a result of the solicitation exemptions identified in this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Practices Declared False, Misleading, Deceptive, or Unfair on a Military Installation."> <paragraph num="A."> <text>The following acts or practices when committed on a military installation by an insurer or insurance producer with respect to the in-person, face-to-face solicitation of life insurance or annuity are prohibited as false, misleading, deceptive, or unfair:</text> <paragraph num="(1)"> <text>Knowingly soliciting the purchase of any life insurance product or annuity door-to-door or without first establishing a specific appointment for each meeting with the prospective purchaser;</text> </paragraph> <paragraph num="(2)"> <text>Soliciting service members in a group or mass audience or in a captive audience where attendance is not voluntary;</text> </paragraph> <paragraph num="(3)"> <text>Knowingly making appointments with or soliciting service members during their normally scheduled duty hours;</text> </paragraph> <paragraph num="(4)"> <text>Making appointments with or soliciting service members in barracks, day rooms, unit areas, transient personnel housing, or other areas where the installation commander has prohibited solicitation;</text> </paragraph> <paragraph num="(5)"> <text>Soliciting the sale of life insurance or annuity without first obtaining permission from the installation commander or the commander's designee;</text> </paragraph> <paragraph num="(6)"> <text>Posting unauthorized bulletins, notices, or advertisements;</text> </paragraph> <paragraph num="(7)"> <text>Failing to present DD Form 2885, Personal Commercial Solicitation Evaluation, to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885, as set forth in §C of this regulation; and</text> </paragraph> <paragraph num="(8)"> <text>Knowingly accepting an application or issuing a policy for life insurance or annuity, on the life of an enlisted member of the United States Armed Forces without first obtaining for the insurer's files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives, or rules of the DoD or any branch of the Armed Forces.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The following acts or practices when committed on a military installation by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements and therefore prohibited as false, misleading, deceptive or unfair:</text> <paragraph num="(1)"> <text>Using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity, with or without compensation with respect to the solicitation or sale of life insurance or annuity to service members; and</text> </paragraph> <paragraph num="(2)"> <text>Using an insurance producer to participate in any United States Armed Forces sponsored education or orientation program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Personal Commercial Solicitation Evaluation Form.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Practices Declared False, Misleading, Deceptive, or Unfair Regardless of Location."> <paragraph num="A."> <text>The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements, regardless of location, and therefore, are prohibited as false, misleading, deceptive, or unfair:</text> <paragraph num="(1)"> <text>Submitting, processing, or assisting in the submission or processing of any allotment form or similar device used by the United States Armed Forces to direct a service member's pay to a third party for the purchase of life insurance or annuity, which acts include but are not limited to:</text> <paragraph num="(a)"> <text>Using or assisting in using a service member's “MyPay” account; or</text> </paragraph> <paragraph num="(b)"> <text>Using another similar internet or electronic medium for such purposes.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship.</text> </paragraph> <paragraph num="(3)"> <text>Employing any device or method, or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member's Leave and Earnings Statement or equivalent or successor form as Savings or Checking and where the service member has no formal banking relationship as defined in §A(2) of this regulation;</text> </paragraph> <paragraph num="(4)"> <text>Entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship;</text> </paragraph> <paragraph num="(5)"> <text>Using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity with or without compensation with respect to the solicitation or sale of life insurance or annuity to service members who are junior in rank or grade, or to the family members of such personnel;</text> </paragraph> <paragraph num="(6)"> <text>Offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting, or facilitating the solicitation or sale of life insurance or annuity to another service member;</text> </paragraph> <paragraph num="(7)"> <text>Knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for life insurance or annuity is solicited; and</text> </paragraph> <paragraph num="(8)"> <text>Advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or State of legal residence for the sole purpose of increasing disposable income to purchase life insurance or annuity.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Section A(1) of this regulation does not prohibit:</text> <paragraph num="(1)"> <text>Assisting a service member by providing insurer information; or</text> </paragraph> <paragraph num="(2)"> <text>Premium information necessary to complete any allotment form.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For purposes of §B(2) of this regulation, a formal banking relationship is established when the depository institution:</text> <paragraph num="(1)"> <text>Provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. §4301 et seq. (2007), and the regulations promulgated under it; and</text> </paragraph> <paragraph num="(2)"> <text>Permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Prohibited Practices—Source.</text> <paragraph num="(1)"> <text>The following acts or practices by an insurer or insurance producer regarding source, sponsorship, approval, or affiliation are prohibited as false, misleading, deceptive, or unfair:</text> <paragraph num="(a)"> <text>Making any representation, or using any device, title, descriptive name, or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer, or product offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned, or recommended by the U.S. Government, the United States Armed Forces, any state or federal agency, or government entity; and</text> </paragraph> <paragraph num="(b)"> <text>Soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer, or insurance product is affiliated, connected or associated with, endorsed, sponsored, sanctioned, or recommended by the U.S. Government or the United States Armed Forces.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Examples of prohibited insurance producer titles under §D(1)(a) of this regulation include, but are not limited to:</text> <paragraph num="(a)"> <text>Battalion Insurance Counselor;</text> </paragraph> <paragraph num="(b)"> <text>Unit Insurance Advisor;</text> </paragraph> <paragraph num="(c)"> <text>Servicemen's Group Life Insurance Conversion Consultant; or</text> </paragraph> <paragraph num="(d)"> <text>Veteran's Benefits Counselor.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Nothing in this chapter may be construed to prohibit a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning, including:</text> <paragraph num="(a)"> <text>Chartered Life Underwriter (CLU);</text> </paragraph> <paragraph num="(b)"> <text>Chartered Financial Consultant (ChFC);</text> </paragraph> <paragraph num="(c)"> <text>Certified Financial Planner (CFP);</text> </paragraph> <paragraph num="(d)"> <text>Master of Science In Financial Services (MSFS); or</text> </paragraph> <paragraph num="(e)"> <text>Masters of Science Financial Planning (MS).</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Prohibited Practices—Costs and Returns. The following acts or practices by an insurer or insurance producer regarding premiums, costs, or investment returns are prohibited as false, misleading, deceptive, or unfair:</text> <paragraph num="(1)"> <text>Using or describing the credited interest rate on a life insurance policy or annuity contract in a manner that implies that the credited interest rate is a net return on premium paid; and</text> </paragraph> <paragraph num="(2)"> <text>Misrepresenting the mortality costs of a life insurance product, including stating or implying that the product costs nothing or is free.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are false, misleading, deceptive, or unfair:</text> <paragraph num="(1)"> <text>Making any false, misleading, or deceptive representations regarding the availability, suitability, amount, cost, exclusions, or limitations to coverage provided to a service member or dependents by SGLI or VGLI;</text> </paragraph> <paragraph num="(2)"> <text>Making any false, misleading, or deceptive representations regarding conversion requirements, including the costs of coverage, exclusions, or limitations to coverage of SGLI or VGLI to private insurers; or</text> </paragraph> <paragraph num="(3)"> <text>Suggesting, recommending, or encouraging a service member to cancel or terminate his or her SGLI policy, or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement will take effect upon or after the service member's separation from the United States Armed Forces.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The following acts or practices by an insurer or insurance producer regarding disclosure are prohibited as false, misleading, deceptive, or unfair:</text> <paragraph num="(1)"> <text>Deploying, using, or contracting for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if done for the purpose of soliciting the purchase of life insurance or annuity;</text> </paragraph> <paragraph num="(2)"> <text>Failing to disclose that a solicitation for the sale of life insurance or annuity will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser;</text> </paragraph> <paragraph num="(3)"> <text>Failing to clearly and conspicuously disclose the fact that the product being sold is life insurance;</text> </paragraph> <paragraph num="(4)"> <text>Failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by §10 of the “Military Personnel Financial Services Protection Act,” Pub. L. No. 109-290, p.16; and</text> </paragraph> <paragraph num="(5)"> <text>When the sale is conducted in-person face-to-face with an individual known to be a service member, failing to provide the applicant at the time the application is taken:</text> <paragraph num="(a)"> <text>An explanation of any free look period with instructions on how to cancel if a policy is issued; and</text> </paragraph> <paragraph num="(b)"> <text>Either a copy of the application or a written disclosure, that:</text> <paragraph num="(i)"> <text>Shall clearly and concisely set out the type of life insurance, the death benefit applied for, and its expected first year cost; or</text> </paragraph> <paragraph num="(ii)"> <text>May be satisfied by a basic illustration that meets the requirements of COMAR 31.09.09 which shall be considered sufficient to meet this requirement for a written disclosure.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this section, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Insurable needs” are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant's estate and/or survivors or dependents.</text> </paragraph> <paragraph num="(b)"> <text>“Other military survivor benefits” include:</text> <paragraph num="(i)"> <text>The death gratuity;</text> </paragraph> <paragraph num="(ii)"> <text>Funeral reimbursement;</text> </paragraph> <paragraph num="(iii)"> <text>Transition assistance;</text> </paragraph> <paragraph num="(iv)"> <text>Survivor and dependents' educational assistance;</text> </paragraph> <paragraph num="(v)"> <text>Dependency and indemnity compensation;</text> </paragraph> <paragraph num="(vi)"> <text>TRICARE healthcare benefits;</text> </paragraph> <paragraph num="(vii)"> <text>Survivor housing benefits and allowances;</text> </paragraph> <paragraph num="(viii)"> <text>Federal income tax forgiveness; and</text> </paragraph> <paragraph num="(ix)"> <text>Social Security survivor benefits.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products or annuities are false, misleading, deceptive, or unfair:</text> <paragraph num="(a)"> <text>Recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable;</text> </paragraph> <paragraph num="(b)"> <text>Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, unless, after the completion of a needs assessment, the insurer demonstrates that the applicant's SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant's insurable needs for life insurance;</text> </paragraph> <paragraph num="(c)"> <text>Offering for sale or selling any life insurance contract which includes a side fund unless:</text> <paragraph num="(i)"> <text>Interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;</text> </paragraph> <paragraph num="(ii)"> <text>The applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product that satisfies the following requirements;</text> </paragraph> <paragraph num="(iii)"> <text>The effective rate of return will consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage;</text> </paragraph> <paragraph num="(iv)"> <text>The schedule is provided for at least each policy year from 1 to 10 and for every fifth policy year thereafter ending at age 100, policy maturity, or final expiration; and</text> </paragraph> <paragraph num="(v)"> <text>By default funds accumulated in the side fund are diverted and transferred to pay, reduce, or offset any premiums due;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Offering for sale or selling any life insurance contract which after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with standard nonforfeiture law for life insurance; and</text> </paragraph> <paragraph num="(e)"> <text>Selling any life insurance product to an individual known to be a service member that excludes coverage if the insured's death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage which may be excluded.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Severability."> <text>If any provision of this chapter or the application thereof to any person or circumstance is held invalid for any reason, the invalidity does not affect the other provisions or any other application of these sections which can be given effect without the invalid provisions or application. To this end all provisions of this chapter are declared to be severable.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Effective Date."> <text>This chapter is effective May 1, 2008, and shall apply to acts or practices committed on or after the effective date.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§27-101, et seq., Title 27; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 1, 2008 (35:3 Md. R. 290)</annotation> </annotations> </chapter> <chapter num="14" heading="Retained Asset Accounts" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: February 8, 2010 (37:3 Md. R. 178)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective February 21, 2011 (38:4 Md. R. 264)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective November 14, 2011 (38:23 Md. R. 1423)</annotation> </annotations> </chapter> <chapter num="15" heading="Universal Life Insurance"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish standards for universal life insurance policies in order to accommodate the development and issuance of universal life insurance.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter applies to all individual universal life insurance policies, except variable universal life insurance policies.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>As used in this chapter, the following terms have the meanings indicted.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Cash surrender value” means the net cash surrender value plus any amounts outstanding as policy loans.</text> </paragraph> <paragraph num="(2)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>“Fixed premium universal life insurance policy” means a universal life insurance policy other than a flexible premium universal life insurance policy.</text> </paragraph> <paragraph num="(4)"> <text>“Flexible premium universal life insurance policy” means a universal life insurance policy which permits the policyowner to vary, independently of each other, the amount or timing of one or more premium payments or the amount of insurance.</text> </paragraph> <paragraph num="(5)"> <text>“Interest-indexed universal life insurance policy” or “interest-indexed policy” means any universal life insurance policy where the interest credits are linked to an external referent.</text> </paragraph> <paragraph num="(6)"> <text>“Net cash surrender value” means the maximum amount payable to the policyowner upon surrender.</text> </paragraph> <paragraph num="(7)"> <text>“Policy value” means the amount to which separately identified interest credits and mortality, expense, or other charges are made under a universal life insurance policy.</text> </paragraph> <paragraph num="(8)"> <text>“Universal life insurance policy” means a life insurance policy where separately identified:</text> <paragraph num="(a)"> <text>Interest credits, other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts are made to the policy;</text> </paragraph> <paragraph num="(b)"> <text>Mortality charges are made to the policy; and</text> </paragraph> <paragraph num="(c)"> <text>Expense charges are made to the policy.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="General Calculation Method for Reserves."> <paragraph num="A."> <text>The minimum valuation standard for universal life insurance policies shall be</text> <paragraph num="(1)"> <text>The Commissioner's Reserve Valuation Method, as described in §B of this regulation for such policies; and</text> </paragraph> <paragraph num="(2)"> <text>The mortality tables and interest rates specified in §B(2) of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Commissioner's Reserve Valuation Method.</text> <paragraph num="(1)"> <text>The terminal reserve for the basic policy and any benefits or riders for which premiums are not paid separately as of any policy anniversary shall be equal to the net level premium reserves less (C) and less (D), where:</text> <paragraph num="(a)"> <text>Reserves by the net level premium method shall be equal to ((A) - (B)) r where:</text> <paragraph num="(i)"> <text>The quantity(a) is the present value of all future guaranteed benefits at the date of valuation;</text> </paragraph> <paragraph num="(ii)"> <text>The quantity (B) is the quantity (PVFB) (äx+t/äx);</text> </paragraph> <paragraph num="(iii)"> <text>PVFB is the present value of all benefits guaranteed at issue assuming future guaranteed maturity premiums are paid by the policyowner and taking into account all guarantees contained in the policy or declared by the insurer;</text> </paragraph> <paragraph num="(iv)"> <text>The quantities äx and äx+t are present values of an annuity of one per year payable on policy anniversaries beginning at ages x and x+t, respectively, and continuing until the highest attained age at which a premium may be paid under the policy;</text> </paragraph> <paragraph num="(v)"> <text>The letter x is the issue age;</text> </paragraph> <paragraph num="(vi)"> <text>The letter t is the duration of the policy; and</text> </paragraph> <paragraph num="(vii)"> <text>The letter r is equal to one unless the policy is a flexible premium policy and the policy value is less than the guaranteed maturity fund, in which case “r” is the ratio of the policy value to the guaranteed maturity fund;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The guaranteed maturity premium for flexible premium universal life insurance policies shall be that level gross premium, paid at issue and periodically thereafter over the period during which premiums are allowed to be paid, which will mature the policy on the latest maturity date, if any, permitted under the policy, otherwise at the highest age in the valuation mortality table, for an amount which is in accordance with the policy structure;</text> </paragraph> <paragraph num="(c)"> <text>The guaranteed maturity premium is calculated at issue based on all policy guarantees at issue (excluding guarantees linked to an external referent);</text> </paragraph> <paragraph num="(d)"> <text>The guaranteed maturity premium for fixed premium universal life insurance policies shall be the premium defined in the policy which at issue provides the minimum policy guarantees;</text> </paragraph> <paragraph num="(e)"> <text>The guaranteed maturity fund at any duration is that amount which, together with future guaranteed maturity premiums, will mature the policy based on all policy guarantees at issue;</text> </paragraph> <paragraph num="(f)"> <text>The quantity (C) is ((a) - (b)) (äx+t /äx) r where (a) - (b) is the amount, if any, that the present value, at the date of valuation, of the guaranteed benefits under the policy exceeds the present value, at the date of valuation, of any future modified net premiums for the policy, as described in Insurance Article, §5-307(a)(2), Annotated Code of Maryland, for the plan of insurance defined at issue by the guaranteed maturity premiums and all guarantees contained in the policy or declared by the insurer;</text> </paragraph> <paragraph num="(g)"> <text>The quantity (D) is the sum of any additional quantities analogous to the quantity (C) which arise because of structural changes in the policy, with each such quantity being determined on a basis consistent with that of the quantity (C) using the maturity date in effect at the time of the change;</text> </paragraph> <paragraph num="(h)"> <text>The guaranteed maturity premium, the guaranteed maturity fund, and the quantity (B) described in §B(1)(a)(ii) of this regulation shall be recalculated to reflect any structural changes in the policy; and</text> </paragraph> <paragraph num="(i)"> <text>The recalculation described in §B(1)(h) of this regulation shall be done in a manner consistent with the descriptions found in §B(1)(a)-(g) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Future guaranteed benefits are determined by:</text> <paragraph num="(a)"> <text>Projecting the greater of the guaranteed maturity fund and the policy value, taking into account future guaranteed maturity premiums, if any, and using all guarantees of interest, mortality, expense deductions, and other deductions, contained in the policy or declared by the insurer; and</text> </paragraph> <paragraph num="(b)"> <text>Taking into account any benefits guaranteed in the policy or by declaration which do not depend on the policy value.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>All present values shall be determined using:</text> <paragraph num="(a)"> <text>An interest rate, or rates, specified by Insurance Article, §5-306(c), Annotated Code of Maryland, for policies issued in the same year;</text> </paragraph> <paragraph num="(b)"> <text>The mortality rates specified by Insurance Article, §5-304(b)(3), Annotated Code of Maryland, for policies issued in the same year or the mortality rates contained in another table as may be approved by the Commissioner for this purpose; and</text> </paragraph> <paragraph num="(c)"> <text>Any other tables needed to value supplementary benefits provided by a rider which is being valued together with the policy.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Alternative Minimum Reserves."> <paragraph num="A."> <text>If, in any policy year, the guaranteed maturity premium on a universal life insurance policy is less than the valuation net premium for the same universal life insurance policy, calculated by the valuation method actually used in calculating the reserve on the universal life insurance policy, but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for the universal life insurance policy shall be the greater of:</text> <paragraph num="(1)"> <text>The reserve calculated according to the method, the mortality table, and the rate of interest actually used; and</text> </paragraph> <paragraph num="(2)"> <text>The reserve calculated according to the method actually used but using the minimum valuation standards of mortality and rate of interest and replacing the valuation net premium by the Guaranteed Maturity Premium in each policy year for which the valuation net premium exceeds the Guaranteed Maturity Premium.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Reserves.</text> <paragraph num="(1)"> <text>For universal life insurance reserves on a net level premium basis, the valuation net premium is PVFB/äx where PVFB is as described in Regulation .04B(1)(a)(iii) of this chapter and äx and äx+t are as described in Regulation .04B(1)(a)(iv) of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>For reserves on the Commissioners Reserve Valuation Method, the valuation net premium is PVFB/äx + ((a) - (b))/äx where(a) - (b) is the amount, if any, that the present value, at the date of valuation, of the guaranteed benefits under the policy exceeds the present value, at the date of valuation, of any future modified net premiums for the policy, as described in Insurance Article, §5-307(a)(2), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Nonforfeiture Values for Flexible Premium Universal Life Insurance Policies."> <paragraph num="A."> <text>Minimum cash surrender values for flexible premium universal life insurance policies shall be determined separately for the basic policy and for any benefits and riders for which premiums are paid separately.</text> </paragraph> <paragraph num="B."> <text>The requirements in this regulation pertain to a basic policy and any benefits and riders for which premiums are not paid separately.</text> </paragraph> <paragraph num="C."> <text>The minimum cash surrender value, before adjustment for indebtedness and dividend credits, available on a date as of which interest is credited to the policy shall be equal to:</text> <paragraph num="(1)"> <text>The accumulation to that date of the premiums paid; minus</text> </paragraph> <paragraph num="(2)"> <text>The accumulations to that date of:</text> <paragraph num="(a)"> <text>The benefit charges;</text> </paragraph> <paragraph num="(b)"> <text>The averaged administrative expense charges for the first policy year and any insurance-increase years;</text> </paragraph> <paragraph num="(c)"> <text>Actual administrative expense charges for other years;</text> </paragraph> <paragraph num="(d)"> <text>Initial and additional acquisition expense charges not exceeding the initial or additional expense allowances, respectively;</text> </paragraph> <paragraph num="(e)"> <text>Any service charges actually made, excluding charges for cash surrender or election of a paid-up nonforfeiture benefit; and</text> </paragraph> <paragraph num="(f)"> <text>Any deductions made for partial withdrawals; minus</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Any unamortized unused initial and additional expense allowances.</text> </paragraph> </paragraph> <paragraph num="D."> <text>All accumulations in §C(1) and (2) of this regulation shall be at the actual rate or rates of interest at which interest credits have been made unconditionally to the policy, or have been made conditionally, but for which the conditions have since been met.</text> </paragraph> <paragraph num="E."> <text>Interest on the premiums and on all charges referred to in §C(1)-(2) of this regulation shall be accumulated from and to such dates as are consistent with the manner in which interest is credited in determining the policy value.</text> </paragraph> <paragraph num="F."> <text>Benefit Changes.</text> <paragraph num="(1)"> <text>The benefit charges listed in §C(2)(a) of this regulation shall include the charges made for mortality and any charges made for riders or supplementary benefits for which premiums are not paid separately.</text> </paragraph> <paragraph num="(2)"> <text>If benefit charges are substantially level by duration and develop low or no cash values, then the Commissioner shall have the right to require higher cash values unless the insurer provides adequate justification that the cash values are appropriate in relation to the policy's other characteristics.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Calculation of Administrative Expense Charges.</text> <paragraph num="(1)"> <text>The administrative expense charges referenced in §C(2)(b) and (c) of this regulation shall include the following if provided for by the policy:</text> <paragraph num="(a)"> <text>Charges per premium payment;</text> </paragraph> <paragraph num="(b)"> <text>Charges per dollar of premium paid;</text> </paragraph> <paragraph num="(c)"> <text>Periodic charges per thousand dollars of insurance;</text> </paragraph> <paragraph num="(d)"> <text>Periodic per policy charges; and</text> </paragraph> <paragraph num="(e)"> <text>Any other charges permitted by the policy to be imposed without regard to the policyowner's request for services.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The averaged administrative expense charges referenced in §C(2)(b) of this regulation for any year shall be those which would have been imposed in that year if the charge rate or rates for each transaction or period within the year had been equal to the arithmetic average of the corresponding charge rates that the policy states will be imposed in policy years 2 through 20 in determining the policy value.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Calculation of Initial Acquisition Expense Charges.</text> <paragraph num="(1)"> <text>The initial acquisition expense charges referenced in §C(2)(d) of this regulation shall be the excess of the expense charges, other than service charges, actually made in the first policy year over the averaged administrative expense charges for that year.</text> </paragraph> <paragraph num="(2)"> <text>Additional acquisition expense charges referenced in §C(2)(d) of this regulation shall be the excess of the expense charges, other than service charges, actually made in an insurance-increase year over the averaged administrative expense charges for that year.</text> </paragraph> <paragraph num="(3)"> <text>An insurance-increase year shall be the year beginning on the date of increase in the amount of insurance by policyowner request or by the terms of the policy.</text> </paragraph> <paragraph num="(4)"> <text>The service charges referenced in §H(1) and (2) of this regulation shall include charges permitted by the policy to be imposed as the result of a policyowner's request for a service by the insurer, such as the furnishing of future benefit illustrations, or of special transactions.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Calculation of Initial Expense Allowance.</text> <paragraph num="(1)"> <text>The initial expense allowance referenced in §C(3) of this regulation shall be the allowance provided by Insurance Article, §16-309(b), Annotated Code of Maryland, for a fixed premium, fixed benefit endowment policy with a face amount equal to the initial face amount of the flexible premium universal life insurance policy, with level premiums paid annually until the highest attained age at which a premium may be paid under the flexible premium universal life insurance policy, and maturing on the latest maturity date permitted under the policy, if any, otherwise at the highest age in the valuation mortality table.</text> </paragraph> <paragraph num="(2)"> <text>The unused initial expense allowance shall be the excess, if any, of the initial expense allowance over the initial acquisition expense charges as described in §H of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If the amount of insurance is subsequently increased upon request of the policyowner, or by the terms of the policy, an additional expense allowance and an unused additional expense allowance shall be determined on a basis consistent with §I(1) and (2) of this regulation and with Insurance Article, §16-309(e), Annotated Code of Maryland, using the face amount and the latest maturity date permitted at that time under the policy.</text> </paragraph> <paragraph num="(4)"> <text>Unamortized Unused Expense Allowance.</text> <paragraph num="(a)"> <text>The unamortized unused initial expense allowance during the policy year beginning on the policy anniversary at age x+t, where x is the same issue age, shall be the unused initial expense allowance multiplied by äx+t/äx where äx+t and äx are present values of an annuity of one per year payable on policy anniversaries beginning at ages x+t and x, respectively, and continuing until the highest attained age at which a premium may be paid under the policy, both on the mortality and interest bases guaranteed in the policy.</text> </paragraph> <paragraph num="(b)"> <text>An unamortized unused additional expense allowance shall be the unused additional expense allowance multiplied by a similar ratio of annuities, with äx replaced by an annuity beginning on the date as of which the additional expense allowance was determined.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Nonforfeiture Values for Fixed Premium Universal Life Insurance Policies."> <paragraph num="A."> <text>For fixed premium universal life insurance policies, the minimum cash surrender values shall be determined separately for the basic policy and any benefits and riders for which premiums are paid separately.</text> </paragraph> <paragraph num="B."> <text>The requirements in this regulation pertain to a basic policy and to any benefits and riders for which premiums are not paid separately.</text> </paragraph> <paragraph num="C."> <text>The minimum cash surrender value, before adjustment for indebtedness and dividend credits, available on a date as of which interest is credited to the policy shall be equal to [(A)-(B)-(C)-(D)], where:</text> <paragraph num="(1)"> <text>The quantity(a) is the present value of all future guaranteed benefits;</text> </paragraph> <paragraph num="(2)"> <text>The quantity (B) is the present value of future adjusted premiums;</text> </paragraph> <paragraph num="(3)"> <text>The quantity (C) is the present value of any quantities analogous to the nonforfeiture net level premium which arise because of guarantees declared by the insurer after the issue date of the policy; and</text> </paragraph> <paragraph num="(4)"> <text>The quantity (D) is the sum of any quantities analogous to (B), as described in §C(2) of this regulation, which arise because of structural changes in the policy.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The adjusted premiums described in §C(2) of this regulation are calculated as described in Insurance Article, §16-309(b)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>The nonforfeiture net level premium is equal to the quantity PVFB/äx where:</text> <paragraph num="(1)"> <text>PVFB is the present value of all benefits guaranteed at issue assuming future premiums are paid by the policyowner and all guarantees are contained in the policy or declared by the insurer; and</text> </paragraph> <paragraph num="(2)"> <text>The quantity äx is the present value of an annuity of one per year payable on policy anniversaries beginning at age x and continuing until the highest attained age at which a premium may be paid under the policy.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The quantity äx shall be replaced by an annuity beginning on the date as of which the declaration described in §C(3) of this regulation became effective and payable until the end of the period covered by the declaration.</text> </paragraph> <paragraph num="G."> <text>Future guaranteed benefits are determined by:</text> <paragraph num="(1)"> <text>Projecting the policy value, taking into account future premiums, if any, using all guarantees of interest, mortality, or expense deductions, contained in the policy or declared by the insurer; and</text> </paragraph> <paragraph num="(2)"> <text>Taking into account any benefits guaranteed in the policy or by declaration which do not depend on the policy value.</text> </paragraph> </paragraph> <paragraph num="H."> <text>All present values shall be determined using:</text> <paragraph num="(1)"> <text>An interest rate, or rates, specified by Insurance Article, §16-309(j), Annotated Code of Maryland, for policies issued in the same year; and</text> </paragraph> <paragraph num="(2)"> <text>The mortality rates specified by Insurance Article, §16-309(i)(3) and (5), Annotated Code of Maryland, for policies issued in the same year or contained in such other table as may be approved by the Commissioner for this purpose.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Minimum Paid-Up Nonforfeiture Benefits."> <paragraph num="A."> <text>If a universal life insurance policy provides for the optional election of a paid-up nonforfeiture benefit, it shall be such that its present value shall be at least equal to the cash surrender value provided for by the policy on the effective date of the election.</text> </paragraph> <paragraph num="B."> <text>The present value in §A of this regulation shall be based on mortality and interest standards at least as favorable to the policyowner as:</text> <paragraph num="(1)"> <text>In the case of a flexible premium universal life insurance policy, the mortality and interest basis guaranteed in the policy for determining the policy value; or</text> </paragraph> <paragraph num="(2)"> <text>In the case of a fixed premium policy the mortality and interest standards permitted for paid-up nonforfeiture benefits by Insurance Article, §§16-306 and 16-309(i), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In lieu of the paid-up nonforfeiture benefit described in §§A and B of this regulation, the insurer may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits, or, if applicable, a greater amount or earlier payment of endowment benefits.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Mandatory Policy Provisions."> <paragraph num="A."> <text>In addition to the applicable provisions of Insurance Article, Title 16, Annotated Code of Maryland, each universal life insurance policy shall include the provisions described in §§B-H of this regulation.</text> </paragraph> <paragraph num="B."> <text>Periodic Disclosure to Policyowner.</text> <paragraph num="(1)"> <text>The policy shall provide that the policyowner will be sent, without charge, at least annually, a report that satisfies the requirements of Regulation .11 of this chapter, which will serve to keep the policyowner advised as to the status of the policy.</text> </paragraph> <paragraph num="(2)"> <text>The end of the current report period shall be not more than 3 months before the date of the mailing of the report.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Policy Guarantees.</text> <paragraph num="(1)"> <text>The policy shall provide guarantees of minimum interest credits and maximum mortality and expense charges.</text> </paragraph> <paragraph num="(2)"> <text>All values and data shown in the policy shall be based on guarantees.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Calculation of Cash Surrender Values.</text> <paragraph num="(1)"> <text>The policy shall contain at least a general description of the calculation of cash surrender values including the following information:</text> <paragraph num="(a)"> <text>The guaranteed maximum expense charges and loads;</text> </paragraph> <paragraph num="(b)"> <text>Any limitation on the crediting of additional interest;</text> </paragraph> <paragraph num="(c)"> <text>The guaranteed minimum rate or rates of interest;</text> </paragraph> <paragraph num="(d)"> <text>The guaranteed maximum mortality charges;</text> </paragraph> <paragraph num="(e)"> <text>Any other guaranteed charges; and</text> </paragraph> <paragraph num="(f)"> <text>Any surrender or partial withdrawal charges.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The interest credits in §D(1)(b) of this regulation may not remain conditional for a period longer than 24 months.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Changes in Basic Coverage.</text> <paragraph num="(1)"> <text>If the policyowner has the right to change the basic coverage, any limitation on the amount or timing of the change of basic coverage shall be stated in the policy.</text> </paragraph> <paragraph num="(2)"> <text>If the policyowner has the right to increase the basic coverage, the policy shall state whether a new period of contestability or suicide, or both, is applicable to the additional coverage.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Grace Period and Lapse.</text> <paragraph num="(1)"> <text>The policy shall provide for written notice to be sent to the policyowner's last known address at least 30 days before termination of coverage.</text> </paragraph> <paragraph num="(2)"> <text>Flexible Premium Policies.</text> <paragraph num="(a)"> <text>A flexible premium policy shall provide for a grace period of at least 30 days after lapse.</text> </paragraph> <paragraph num="(b)"> <text>Unless otherwise defined in the policy, lapse shall occur on the date on which the net cash surrender value first equals zero.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Misstatement of Age or Sex.</text> <paragraph num="(1)"> <text>Except as stated in §G(2) of this regulation, if there is a misstatement of age or sex in the policy, the amount of the death benefit shall be that which would be purchased by the most recent mortality charge at the correct age or sex.</text> </paragraph> <paragraph num="(2)"> <text>The commissioner may approve other methods of adjustment than those described in §G(1) of this regulation for misstatement of age which are deemed satisfactory.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Maturity Date. If a policy provides for a maturity date, end date, or date after which the policy will no longer be in force, then the policy shall also contain a statement, in close proximity to that date, that it is possible that coverage may not continue to the maturity date even if scheduled premiums are paid in a timely manner, if such is the case.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Disclosure Requirements."> <text>Disclosure of information about the policy being applied for shall follow the standards in COMAR 31.09.09.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Periodic Disclosure to Policyowner."> <paragraph num="A."> <text>Annual Report.</text> <paragraph num="(1)"> <text>The policy shall provide that the policyowner will be sent, without charge, at least annually, a report which will serve to keep the policyowner advised of the status of the policy.</text> </paragraph> <paragraph num="(2)"> <text>The end of the current report period shall be not more than 3 months before the date of the mailing of the report.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The annual report required by §A of this regulation shall include the following:</text> <paragraph num="(1)"> <text>The beginning and end of the current report period;</text> </paragraph> <paragraph num="(2)"> <text>The policy value at the end of the previous report period and at the end of the current report period;</text> </paragraph> <paragraph num="(3)"> <text>The total amounts which have been credited or debited to the policy value during the current report period, identifying each by type, such as interest, mortality, expense, and riders;</text> </paragraph> <paragraph num="(4)"> <text>The current death benefit at the end of the current report period on each life covered by the policy;</text> </paragraph> <paragraph num="(5)"> <text>The net cash surrender value of the policy as of the end of the current report period;</text> </paragraph> <paragraph num="(6)"> <text>The amount of outstanding loans, if any, as of the end of the current report period;</text> </paragraph> <paragraph num="(7)"> <text>Notice that the policyholder may request an illustration of current and future benefits and values;</text> </paragraph> <paragraph num="(8)"> <text>For fixed premium policies:</text> <paragraph num="(a)"> <text>How long the policy will continue in effect, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments; and</text> </paragraph> <paragraph num="(b)"> <text>If, assuming guaranteed interest, mortality, and expense loads and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect; and</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>For flexible premium policies:</text> <paragraph num="(a)"> <text>How long the policy will continue in effect, assuming guaranteed interest, mortality and expense loads, and no further premium payments; and</text> </paragraph> <paragraph num="(b)"> <text>If, assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Interest-Indexed Universal Life Insurance Policies."> <paragraph num="A."> <text>Initial Filing Requirements.</text> <paragraph num="(1)"> <text>The following information shall be submitted in connection with any filing of interest-indexed universal life insurance policies:</text> <paragraph num="(a)"> <text>A description of how the interest credits are determined, including:</text> <paragraph num="(i)"> <text>A description of the index;</text> </paragraph> <paragraph num="(ii)"> <text>The relationship between the value of the index and the actual interest rate to be credited;</text> </paragraph> <paragraph num="(iii)"> <text>The frequency and timing of determining the interest rate; and</text> </paragraph> <paragraph num="(iv)"> <text>The allocation of interest credits, if more than one rate of interest applies to different portions of the policy value;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The insurer's investment policy, which includes a description of the following:</text> <paragraph num="(i)"> <text>How the insurer addressed the reinvestment risks;</text> </paragraph> <paragraph num="(ii)"> <text>How the insurer plans to address the risk of capital loss on cash outflows;</text> </paragraph> <paragraph num="(iii)"> <text>How the insurer plans to address the risk that appropriate investments may not be available or not available in sufficient quantities;</text> </paragraph> <paragraph num="(iv)"> <text>How the insurer plans to address the risk that the indexed interest rate may fall below the minimum contractual interest rate guaranteed in the policy;</text> </paragraph> <paragraph num="(v)"> <text>The amount and type of assets currently held for interest indexed policies; and</text> </paragraph> <paragraph num="(vi)"> <text>The amount and type of assets expected to be acquired in the future;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>If policies are linked to an index for a specified period less than to the maturity date of the policy, a description of the method used, or currently contemplated, to determine interest credits upon the expiration of the period;</text> </paragraph> <paragraph num="(d)"> <text>A description of any interest guarantee in addition to or in place of the index; and</text> </paragraph> <paragraph num="(e)"> <text>A description of any maximum premium limitations and the conditions under which they apply.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All information received under this regulation shall be treated confidentially to the extent permitted by law.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Additional Filing Requirements.</text> <paragraph num="(1)"> <text>Annually, each insurer shall submit a Statement of Actuarial Opinion by the insurer's actuary similar to the example contained in Regulation .13 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Annually, each insurer shall submit a description of the amount and type of assets currently held by the insurer with respect to its interest-indexed policies.</text> </paragraph> <paragraph num="(3)"> <text>Change in Investment Strategy.</text> <paragraph num="(a)"> <text>Before implementation, each domestic insurer shall submit a description of any material change in the insurer's investment strategy or method of determining the interest credits.</text> </paragraph> <paragraph num="(b)"> <text>A change in investment strategy is considered to be material if it would affect the form or definition of the index, such as any change in the information supplied in §A(1) of this regulation, or if it would significantly change the amount or type of assets held for interest-indexed policies.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Sample Statement of Actuarial Opinion."> <text>The following form is a sample form that may be used for providing the statement of actuarial opinion as described in Regulation .12 of this chapter:</text> <text>"Statement of Actuarial Opinion for Interest-Indexed Universal Life Insurance Policies</text> <text>I, {insert name of actuary}, am {insert position or relationship to Insurer} for the XYZ Life Insurance Company (The Insurer) in the state of {Insert State of Domicile of Insurer}.</text> <text>I am a member of the American Academy of Actuaries (or if not, state other qualifications to sign annual statement actuarial opinions).</text> <text>I have examined the interest-indexed universal life insurance policies of the Insurer in force as of December 31, 20XX, encompassing _______ number of policies and $__________ of insurance in force.</text> <text>I have considered the provisions of the policies. I have considered any reinsurance agreements pertaining to such policies, the characteristics of the identified assets, and the investment policy adopted by the Insurer as they affect future insurance and investment cash flows under such policies and related assets. My examination included such tests and calculations as I considered necessary to form an opinion concerning the insurance and investment cash flows arising from the policies and related assets.</text> <text>I relied on the investment policy of the Insurer and on projected investment cash flows as provided by __________________________, Chief Investment Officer of the Insurer.</text> <text>The tests were conducted under various assumptions as to future interest rates, and particular attention was given to those provisions and characteristics that might cause future insurance and investment cash flows to vary with changes in the level of prevailing interest rates.</text> <text>In my opinion, the anticipated insurance and investment cash flows referred to above make good and sufficient provision for the contractual obligations of the Insurer under these insurance policies.</text> <text>__________________________</text> <text>Signature of Actuary"</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 5-312, 12-205(b)(4) and (8), 16-310(c), and 27-208(a), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 6, 2010 (37:18 Md. R. 1215)</annotation> </annotations> </chapter> <chapter num="16" heading="Accelerated Benefits"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to regulate accelerated benefit provisions in individual and group life insurance policies and to provide required standards of disclosure.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter shall apply to all accelerated benefit provisions of individual and group life insurance policies issued or delivered in Maryland except those subject to Insurance Article, Title 18, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicted.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accelerated benefits” means benefits payable under a life insurance contract that:</text> <paragraph num="(a)"> <text>Are payable during the lifetime of the insured in anticipation of death or upon the occurrence of specified life-threatening or catastrophic conditions as defined by the policy or rider, to a policy owner or certificate holder;</text> </paragraph> <paragraph num="(b)"> <text>Reduce the death benefit otherwise payable under the life insurance contract; and</text> </paragraph> <paragraph num="(c)"> <text>Are payable upon the occurrence of a single qualifying event that results in the payment of a benefit amount fixed at the time of acceleration.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Activities of daily living” has the meaning stated in COMAR 31.14.01.02B.</text> </paragraph> <paragraph num="(3)"> <text>“Chronic illness” means:</text> <paragraph num="(a)"> <text>The permanent inability to perform, without substantial assistance from another individual, a specified number of activities of daily living; or</text> </paragraph> <paragraph num="(b)"> <text>Permanent severe cognitive impairment and similar forms of dementia requiring substantial supervision of the insured.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Qualifying event” means one or more of the following:</text> <paragraph num="(a)"> <text>A medical condition that would result in a drastically limited life span as specified in the contract;</text> </paragraph> <paragraph num="(b)"> <text>A medical condition that requires extraordinary medical intervention without which the insured would die;</text> </paragraph> <paragraph num="(c)"> <text>A medical condition that usually requires continuous confinement in an eligible institution as defined in the contract if the insured is expected to remain there for the rest of the insured’s life;</text> </paragraph> <paragraph num="(d)"> <text>A medical condition that would, in the absence of extensive or extraordinary medical treatment, result in a drastically limited life span;</text> </paragraph> <paragraph num="(e)"> <text>A chronic illness; or</text> </paragraph> <paragraph num="(f)"> <text>Any other qualifying event that the Commissioner may approve.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Terminal illness” means a medical condition that is reasonably expected to result in a drastically limited life span for the insured as specified in the contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Type of Product."> <paragraph num="A."> <text>Accelerated benefit riders and life insurance policies with accelerated benefit provisions are primarily mortality risks rather than morbidity risks.</text> </paragraph> <paragraph num="B."> <text>The inclusion of terminal illness as a qualifying event shall be included in all accelerated benefit policies and riders.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Assignee or Irrevocable Beneficiary."> <text>Prior to the payment of the accelerated benefit, the insurer shall obtain from an assignee or irrevocable beneficiary a signed acknowledgement of concurrence for payout. If the insurer is the assignee under the policy, no acknowledgement is required.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Criteria for Payment."> <paragraph num="A."> <text>Lump Sum Settlement Option.</text> <paragraph num="(1)"> <text>The insurer shall include the option to take the benefit as a lump sum in the contract payment options.</text> </paragraph> <paragraph num="(2)"> <text>The benefit may not be made available as an annuity contingent upon the life of the insured.</text> </paragraph> </paragraph> <paragraph num="B."> <text>No restrictions are permitted on the use of the proceeds.</text> </paragraph> <paragraph num="C."> <text>If any death benefit remains after payment of an accelerated benefit, the accidental death benefit provision, if any, in the policy or rider may not be affected by the payment of the accelerated benefit.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Disclosures."> <paragraph num="A."> <text>Descriptive Title.</text> <paragraph num="(1)"> <text>The insurer shall include the term “accelerated benefit” in the policy or rider’s title.</text> </paragraph> <paragraph num="(2)"> <text>An accelerated benefit product being offered under this chapter may not be described or marketed as long-term care insurance or as providing long-term care benefits.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Disclosure of Tax Consequences.</text> <paragraph num="(1)"> <text>A written disclosure stating that receipt of the accelerated benefits may be taxable and assistance should be sought from a personal tax advisor shall be provided by the insurer at the time of application for the policy or rider, and at the time the accelerated benefit payment request is submitted.</text> </paragraph> <paragraph num="(2)"> <text>The disclosure statement issued by the insurer required by §B(1) of this regulation shall be prominently displayed on the first page of the policy or rider and on the first page of any other related documents.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Solicitations.</text> <paragraph num="(1)"> <text>A written disclosure including, but not limited to, a brief description of the accelerated benefit and definitions of the conditions or occurrences triggering payment of the benefits shall be given to the applicant as follows:</text> <paragraph num="(a)"> <text>The description shall include an explanation of any effect the payment of a benefit would have on the policy’s cash value, accumulation account, death benefit, premium, policy loans, and policy liens;</text> </paragraph> <paragraph num="(b)"> <text>For agent solicited insurance, the agent shall provide the disclosure form to the applicant as follows:</text> <paragraph num="(i)"> <text>This form shall be provided by the agent prior to or concurrently with the application; and</text> </paragraph> <paragraph num="(ii)"> <text>The acknowledgment of the disclosure form shall be signed by the applicant and writing agent;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>For solicitations by direct response, the insurer shall provide the disclosure form to the applicant at the time the policy is delivered, with a notice that a full premium refund shall be received if the policy is returned to the insurer within the free look period; and</text> </paragraph> <paragraph num="(d)"> <text>For group insurance, the disclosure form shall be contained as part of the certificate of coverage or any other related document furnished by the insurer for the certificate holder.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If there is a premium or cost of insurance charge, the insurer shall give the applicant a generic illustration numerically demonstrating any effect of the payment of a benefit on the policy’s cash value, accumulation account, death benefit, premium, policy loans and policy liens as follows:</text> <paragraph num="(a)"> <text>For agent solicited insurance, the agent shall provide the illustration to the applicant prior to or concurrently with the application; or</text> </paragraph> <paragraph num="(b)"> <text>For solicitations by direct response, the insurer shall provide the illustration to the applicant at the time the policy is delivered.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Disclosure of Premium Charge.</text> <paragraph num="(a)"> <text>The insurer with financing options other than as described in Regulation .11A(2) and (3) of this chapter shall disclose to the policy owner any premium or cost of insurance charge for the accelerated benefit. The insurer shall make a reasonable effort to assure that the certificate holder is aware of any additional premium or cost of insurance charge if the certificate holder is required to pay a charge.</text> </paragraph> <paragraph num="(b)"> <text>The insurer shall furnish an actuarial demonstration to the Commissioner when filing the product which discloses the method the insurer used to arrive at the cost for the accelerated benefit.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Disclosure of Administrative Expense Charge.</text> <paragraph num="(a)"> <text>The insurer shall disclose to the policy owner any administrative expense charge provided in the policy. The administrative expense charge shall be disclosed in the written disclosure required by §C(1) of this regulation and in the statement required by §D(1) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The insurer shall make a reasonable effort to assure that the certificate holder is aware of any administrative expense charge if the certificate holder is required to pay this charge.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Effect of the Benefit Payment.</text> <paragraph num="(1)"> <text>When a policy owner or certificate holder requests an acceleration, the insurer shall send a statement to the policy owner or certificate holder and irrevocable beneficiary that:</text> <paragraph num="(a)"> <text>Illustrates any effect that the payment of the accelerated benefit will have on the policy’s cash value, accumulation account, death benefit, premium, policy loans, and policy liens;</text> </paragraph> <paragraph num="(b)"> <text>Discloses that receipt of accelerated benefit payments may adversely affect the recipient’s eligibility for Medicaid or other government benefits or entitlements; and</text> </paragraph> <paragraph num="(c)"> <text>Discloses that receipt of an accelerated benefit payment may be taxable and assistance should be sought from a personal tax advisor.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>When a previous disclosure statement becomes invalid as a result of an acceleration of the death benefit, the insurer shall send a revised disclosure statement to the policy owner or certificate holder and irrevocable beneficiary.</text> </paragraph> <paragraph num="(3)"> <text>When the insurer agrees to accelerate death benefits, the insurer shall issue an amended schedule page to the policy holder or notify the certificate holder under a group policy to reflect any new, reduced in-force face amount of the contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Effective Date of the Accelerated Benefits."> <paragraph num="A."> <text>The accelerated benefit provision shall be effective for accidents on the effective date of the policy or rider.</text> </paragraph> <paragraph num="B."> <text>The accelerated benefit provision shall be effective for illness no more than 30 days following the effective date of the policy or rider.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Waiver of Premiums."> <paragraph num="A."> <text>The insurer may offer a waiver of premium for the accelerated benefit provision in the absence of a waiver of premium provision for the policy being in effect.</text> </paragraph> <paragraph num="B."> <text>At the time the benefit is claimed, the insurer shall explain to the policy holder or certificate holder any continuing premium requirements to keep the policy in force.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Discrimination."> <text>An insurer may not:</text> <paragraph num="A."> <text>Unfairly discriminate among insureds with differing qualifying events covered under the policy or among insureds with similar qualifying events covered under the policy;</text> </paragraph> <paragraph num="B."> <text>Apply further conditions on the payment of the accelerated benefits other than those conditions specified in the policy or rider.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Actuarial Standards."> <paragraph num="A."> <text>Financing Options.</text> <paragraph num="(1)"> <text>The insurer may require a premium charge or cost of insurance charge for the accelerated benefit as follows:</text> <paragraph num="(a)"> <text>The insurer shall base the charge on sound actuarial principles; and</text> </paragraph> <paragraph num="(b)"> <text>For group insurance, the insurer may reflect the additional cost in experience rating.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The insurer may pay a present value of the face amount as follows:</text> <paragraph num="(a)"> <text>The present value calculation shall be based on any applicable actuarial discount appropriate to the policy design;</text> </paragraph> <paragraph num="(b)"> <text>The interest rate or interest rate methodology used in the calculation shall be based on sound actuarial principles;</text> </paragraph> <paragraph num="(c)"> <text>The insurer shall disclose the interest rate or interest rate methodology in the contract or actuarial memorandum; and</text> </paragraph> <paragraph num="(d)"> <text>The maximum interest rate used shall be no more than the greater of:</text> <paragraph num="(i)"> <text>The current yield on 90-day Treasury bills; or</text> </paragraph> <paragraph num="(ii)"> <text>The current maximum adjustable policy loan interest rate as set forth in accordance with Insurance Article, §16-208, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The insurer may accrue an interest charge on the amount of the accelerated benefits as follows:</text> <paragraph num="(a)"> <text>The interest rate or interest rate methodology used in the calculation shall be based on sound actuarial principles;</text> </paragraph> <paragraph num="(b)"> <text>The insurer shall disclose the interest rate or interest rate methodology in the contract or actuarial memorandum;</text> </paragraph> <paragraph num="(c)"> <text>The maximum interest rate used shall be no more than the greater of:</text> <paragraph num="(i)"> <text>The current yield on 90-day Treasury bills; or</text> </paragraph> <paragraph num="(ii)"> <text>The current maximum adjustable policy loan interest rate as set forth in accordance with Insurance Article, §16-208, Annotated Code of Maryland; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The interest rate accrued on the portion of the lien that is equal in amount to the cash value of the contract at the time of the benefit acceleration shall be no more than the policy loan interest rate stated in the contract.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Effect on Cash Value.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, when an accelerated benefit is payable, there may be no more than a pro rata reduction in the cash value based on the percentage of death benefits accelerated to produce the accelerated benefit payment; or</text> </paragraph> <paragraph num="(2)"> <text>The payment of accelerated benefits, any administrative expense charges, any future premiums and any accrued interest may be considered a lien against the death benefit of the policy or rider and the access to the cash value may be:</text> <paragraph num="(a)"> <text>Restricted to any excess of the cash value over the sum of any other outstanding loans and the lien; and</text> </paragraph> <paragraph num="(b)"> <text>Future access to additional policy loans may be limited to any excess of the cash value over the sum of the lien and any other outstanding policy loans.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Effect of Any Outstanding Policy Loans on Accelerated Death Benefit Payment. When payment of an accelerated benefit results in a pro rata reduction in the cash value, the payment may not be applied toward repaying an amount greater than a pro rata portion of any outstanding policy loans.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Actuarial Disclosure and Reserves."> <paragraph num="A."> <text>Actuarial Memorandum.</text> <paragraph num="(1)"> <text>A qualified actuary shall describe the accelerated benefits, the risks, the expected costs, and the calculation of statutory reserves in an actuarial memorandum accompanying each filing.</text> </paragraph> <paragraph num="(2)"> <text>The insurer shall maintain in its files descriptions of the bases and procedures used to calculate benefits payable under this chapter. The descriptions shall be made available for examination by the Commissioner upon request.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Reserves.</text> <paragraph num="(1)"> <text>When benefits are provided through the acceleration of benefits under a group or individual life policy or a rider to such policies, an actuary shall determine policy reserves in accordance with the Standard Valuation Law referenced in Insurance Article, §§5-301—5-317, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>A member in good standing of the American Academy of Actuaries shall determine all valuation assumptions used in constructing the reserves as appropriate for statutory valuation purposes.</text> </paragraph> <paragraph num="(3)"> <text>Mortality tables and interest currently recognized for life insurance reserves by the National Association of Insurance Commissioners may be used by the actuary as appropriate assumptions for other provisions incorporated in the policy form.</text> </paragraph> <paragraph num="(4)"> <text>The actuary shall follow both actuarial standards and certification for good and sufficient reserves.</text> </paragraph> <paragraph num="(5)"> <text>Reserves in the aggregate shall be sufficient to cover:</text> <paragraph num="(a)"> <text>Policies upon which no claim has yet arisen; and</text> </paragraph> <paragraph num="(b)"> <text>Policies upon which an accelerated claim has arisen.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The actuary is not required to establish additional reserves for policies and certificates that provide actuarially equivalent benefits.</text> </paragraph> <paragraph num="(7)"> <text>The insurer shall include policy liens and policy loans, including accrued interest, as assets of the company for reporting purposes as stated in Insurance Article, §5-101(3)—(7), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>For a policy on which the policy lien exceeds the policy’s statutory reserve liability, the insurer shall hold the excess as a non-admitted asset.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 5-301, 12-205(b)(4) and (8), and 27-202, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 6, 2018 (45:24 Md. R. 1164)</annotation> </annotations> </chapter> </subtitle> <subtitle num="10" heading="Health Insurance — General"> <chapter num="01" heading="Health Insurance"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>Every health insurance policy issued under Insurance Article, Title 15, Annotated Code of Maryland, as amended to date, shall comply with this chapter (except that Regulation .03D and J of this chapter are not applicable to policies issued under Insurance Article, Title 13, Subtitle 3), as well as with any other regulations promulgated under Insurance Article, §12-203, concerning the submission of forms. As used in these regulations, the word “forms” includes applications, policies, certificates, contracts, riders, and endorsements except when the context indicates otherwise.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definition."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means a person that is:</text> <paragraph num="(a)"> <text>An insurer; or</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Individual health benefit plan” means a health benefit plan issued by a carrier to a policyholder to cover:</text> <paragraph num="(a)"> <text>The policyholder;</text> </paragraph> <paragraph num="(b)"> <text>The policyholder's dependents; or</text> </paragraph> <paragraph num="(c)"> <text>The policyholder and the policyholder's dependents.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Mail” means first class mail or compliance with the Uniform Electronics Transactions Act, Commercial Law Article, Title 21, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Policyholder” means the person to whom the carrier’s contract is issued.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Filing of Health Insurance Forms for Approval."> <paragraph num="A."> <text>The filing of a form shall be accompanied by the filing of premium rates for it. Subsequent changes in premium rates shall be filed with supporting data at least 90 days before the date any change in the rate is proposed to become effective.</text> </paragraph> <paragraph num="A-1."> <text>A carrier submitting forms for approval, or premiums for forms pending approval or previously approved, shall print or type in a conspicuous manner immediately below the name of the carrier on the letter of transmittal the carrier’s National Association of Insurance Commissioners (NAIC) company code number.</text> </paragraph> <paragraph num="B."> <text>Any name or title of a policy should be printed in a size of type smaller than that used for the name of the carrier.</text> </paragraph> <paragraph num="C."> <text>Reference to a standard of time shall specify time at the place the insured resides, or at the place the accident or illness occurs, or at the place the policy is delivered.</text> </paragraph> <paragraph num="D."> <text>A form will not be approved for issuance at any age which does not provide a reasonable period of full coverage before the age at which benefits terminate or are substantially reduced.</text> </paragraph> <paragraph num="E."> <text>If a rider or endorsement reduces or eliminates coverage of a policy, signed acceptance by the policyowner at the time of or before delivery of the policy is required.</text> </paragraph> <paragraph num="F."> <text>Any form which by its terms provides that only one of several benefits will be payable as a result of any one accident or sickness shall state that the largest of the benefits will be payable.</text> </paragraph> <paragraph num="G."> <text>If the claimant has the right to elect alternative benefits, the time allowed for the election shall be not less than 90 days from the date of the accident or commencement of the loss.</text> </paragraph> <paragraph num="H."> <text>If payment of benefits is related to the first visit of a physician or the date of the first medical attendance, this stipulation shall appear in the benefit provision to which it applies.</text> </paragraph> <paragraph num="I."> <text>Payment of benefits may be limited in duration to the time the insured is under the care of a physician, but may not be conditioned upon any specified frequency of visits or attendance by the physician.</text> </paragraph> <paragraph num="J."> <text>Except in the case of group health insurance, if any policy provision terminates upon entry of the insured into military service, or if the policy excludes any coverage while the insured is in military service, the policy shall provide for a refund upon request of the policyowner of pro rata unearned premium for any period during which the insured is not covered. However, if coverage is excluded only for loss resulting from military service while in military service, a refund is not required. In policies of noncancellable or guaranteed renewable health insurance, when the coverage is automatically reinstated upon discharge from military service or within a stated period not exceeding 6 months after discharge, a refund is not required.</text> </paragraph> <paragraph num="K."> <text>In lieu of the definitions contained in §§L, M, and N of this regulation, the policy may contain a definition which, in the opinion of the Commissioner, is not less favorable to the policyholder.</text> </paragraph> <paragraph num="L."> <text>During at least the first 12 months, or the first 52 weeks, of disability, total disability for which benefits may become due and payable shall be defined as “inability by reason of injury or sickness to perform each and every duty pertaining to the insured's occupation”. After the first 12 months, or the first 52 weeks, of disability, total disability may be defined as “inability to perform each and every duty of any business or occupation for which the insured is reasonably fitted by education, training and experience”.</text> </paragraph> <paragraph num="M."> <text>Partial disability shall be defined as “inability to perform one or more, but not all, of the important daily duties of the insured's occupation”.</text> </paragraph> <paragraph num="N."> <text>If a form provides coverage due to the wrecking or disablement of, or material damage to, an automobile, elevator, or other conveyance in which the insured is a passenger at the time of the accident, the wrecking, disablement, or material damage shall be defined substantially as damage which necessitates repair in order to place the conveyance in as good a condition as it was before the accident.</text> </paragraph> <paragraph num="O."> <text>An exception excluding liability for chronic or organic disease will not be permitted. Any disease to be excluded from coverage shall be stated with sufficient clarity so as to be readily identifiable.</text> </paragraph> <paragraph num="P."> <text>A provision may not contain the words “reimburse” or “reimbursement” or the phrase “amount actually expended”. A benefit may not be conditioned on the payment by the claimant of expenses for which the policy provides a benefit.</text> </paragraph> <paragraph num="Q."> <text>A form may not contain the phrase “strict compliance” or words of similar import.</text> </paragraph> <paragraph num="R."> <text>Except in the case of a health benefit plan, in any policy form in which the carrier has the right to change premium rates, the policy shall provide that notice of any increase in rates shall be given to the policyholder by mail at least 40 days before the expiration of the grace period applicable to the first increased premium.</text> </paragraph> <paragraph num="S."> <text>In any individual health benefit plan in which the carrier has the right to change premium rates, the health benefit plan shall provide that notice of any increase in premium rates shall be given to the policyholder by mail at least 45 days before the change in premium rates is proposed to become effective.</text> </paragraph> <paragraph num="T."> <text>A noncancellable or guaranteed renewable family health insurance policy which covers the spouse of the insured shall provide that, in the event of the death of the insured applicant, the spouse will become the successor insured.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 12-203, 12-205, 13-110(a), 13-111(b), 14-109(3)(iv), 14-126(a)(1), 14-405(b)(9),14-410(c), 15-903, 15-904, 15-906 — 15-908, and 15-911,; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 1, 1965</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A-1 adopted effective July 19, 1993 (20:13 Md. R. 1169)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.44 to COMAR 31.10.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 17, 2012 (39:18 Md. R. 1198)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective May 9, 2016 (43:9 Md. R. 532)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03S amended effective May 9, 2016 (43:9 Md. R. 532)</annotation> </annotations> </chapter> <chapter num="02" heading="Health Insurance — Simplified Language"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <paragraph num="A."> <text>This chapter does not apply to:</text> <paragraph num="(1)"> <text>Group health insurance policies initially issued to employer/employee groups of more than 1,000 employees;</text> </paragraph> <paragraph num="(2)"> <text>Group health insurance policies issued pursuant to a collective bargaining labor-management agreement; or</text> </paragraph> <paragraph num="(3)"> <text>Reinsurance contracts.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Except as provided in §A of this regulation, this chapter applies to all health insurance policies, including riders, endorsements, and certificates, issued or delivered in this State by any insurer or nonprofit health service plan.</text> </paragraph> <paragraph num="C."> <text>The Insurance Commissioner may except other policies from the requirements of this chapter if the Commissioner determines that an exception is warranted by the nature of the particular policy form or if the policy language is drafted to conform to requirements of any other applicable law or regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Minimum Standards."> <paragraph num="A."> <text>In addition to any other requirements or law, a policy form to which this chapter is applicable may not be issued or delivered in this State unless:</text> <paragraph num="(1)"> <text>The text achieves a minimum score of 40 on the Flesch Reading Ease Test;</text> </paragraph> <paragraph num="(2)"> <text>The policy contains a table of contents or an index of the principal sections of the policy if it has more than 3,000 words or more than three pages regardless of the number of words;</text> </paragraph> <paragraph num="(3)"> <text>The style, arrangement, and overall appearance of the policy do not give undue prominence to any portion of the text or to any endorsements or riders; and</text> </paragraph> <paragraph num="(4)"> <text>Except for specification pages, schedules, tables, and tables of contents, if any, the policy is plainly printed in a style in general use and the size is uniform and not less than 10-point type, 1-point leaded, with a lower case alphabet length not less than 120 point.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If any provision of Insurance Article, Annotated Code of Maryland, requires that any particular section of a policy or any particular type of policy be printed in larger type style or with greater prominence, then the provisions of the Insurance Article prevail over the requirements of these regulations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Flesch Reading Ease Test Scores."> <paragraph num="A."> <text>The Flesch Reading Ease Test scores shall be calculated according to the requirements of §§B—F of this regulation.</text> </paragraph> <paragraph num="B."> <text>For policy forms containing 10,000 words or less of text, the entire form shall be analyzed. For policy forms containing more than 10,000 words, the readability of two 200-word samples per page may be analyzed instead of the entire form. The samples shall be separated by at least 20 printed lines.</text> </paragraph> <paragraph num="C."> <text>The number of words and sentences in the text shall be counted and the total number of words divided by the total number of sentences. The figure obtained shall be multiplied by a factor of 1.015.</text> </paragraph> <paragraph num="D."> <text>The total number of syllables shall be counted and divided by the total number of words. The figure obtained shall be multiplied by a factor of 84.6.</text> </paragraph> <paragraph num="E."> <text>The sum of the figures computed in §§C and D of this regulation, subtracted from 206.835, equals the Flesch Reading Ease Test Score for the policy form.</text> </paragraph> <paragraph num="F."> <text>For purposes of §§C—E of this regulation, the following procedures shall be used:</text> <paragraph num="(1)"> <text>A contraction, hyphenated word, or number or letter separated by spaces is counted as one word;</text> </paragraph> <paragraph num="(2)"> <text>A unit of words ending with a period, semicolon, or colon, but excluding headings and captions, is counted as one sentence; and</text> </paragraph> <paragraph num="(3)"> <text>A syllable means a unit of spoken language consisting of one or more letters of a word as divided by a commonly accepted dictionary, although when the dictionary shows two or more equally acceptable pronunciations of a word, the pronunciation containing fewer syllables may be used.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The Flesch Reading Ease Test shall be applied to all printed matter in the policy, except for:</text> <paragraph num="(1)"> <text>The name and address of the insurer, policy number, name or title of policy, table of contents or index, specification pages, schedules, tables, captions, and subcaptions; and</text> </paragraph> <paragraph num="(2)"> <text>Medical terminology, language which is drafted to conform to the requirements of any applicable law or regulation, language required by a collective bargaining labor-management agreement, or terms defined in the policy.</text> </paragraph> </paragraph> <paragraph num="H."> <text>At the option of the insurer, riders, endorsements, and other forms which are attached to and made a part of the policy may be scored separately or as part of the policy with which they are to be used.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Certification."> <text>A policy form to which these regulations apply, and which is required to be submitted for approval in accordance with Insurance Article, §§12-203 and 12-205, Annotated Code of Maryland, shall be accompanied by a certificate signed by an officer of the insurer stating that the language of the form has been measured by the Flesch Reading Ease Test, and giving the resulting score achieved on that test. If any language has been omitted from the test in accordance with Regulation .03G(2) of this chapter, the certificate shall so specify.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Effective Date."> <paragraph num="A."> <text>These regulations apply to all health insurance policies, certificates, riders, and endorsements submitted for approval on or after January 1, 1992.</text> </paragraph> <paragraph num="B."> <text>If any policy form, certificate, rider, or endorsement which does not comply with the minimum standards of Regulation .02 of this chapter has been submitted for approval before January 1, 1992, and approved by the Commissioner, it may be issued or delivered in this State until January 1, 1997, but not after that unless it has been submitted or resubmitted in accordance with the requirements of these regulations. A policy form, certificate, rider, or endorsement submitted before January 1, 1992, which complies with the minimum standards of Regulation .02 of this chapter need not be resubmitted.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 12-102—12-104, 12-107, 12-203—12-205, 12-209, 15-103, 15-201, 15-202, 15-402, 15-502, 15-916, 15-919, and 15-924, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 30, 1992 (19:6 Md. R. 672)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.36 to COMAR 31.10.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="03" heading="Health Insurance — Stop-Loss Coverage" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: September 25, 1995 (22:19 Md. R. 1473)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B, .03B, and .05 amended as an emergency provision effective December 23, 1995 (23:2 Md. R. 92); emergency status expired April 1, 1996</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.02 to COMAR 31.10.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective January 16, 2006 (33:1 Md. R. 40)</annotation> </annotations> </chapter> <chapter num="04" heading="Health Insurance — Plan of Withdrawal"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to all insurers writing health insurance in this State.</text> </paragraph> <paragraph num="B."> <text>This chapter does not apply to health benefit plans issued under Insurance Article, Title 15, Subtitles 12, 13, or 14, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §31-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Health insurance product” means any:</text> <paragraph num="(a)"> <text>Group or individual health insurance policy or contract which covers a Maryland resident;</text> </paragraph> <paragraph num="(b)"> <text>Individual health insurance contract issued to a Maryland resident; or</text> </paragraph> <paragraph num="(c)"> <text>Rider to any group or individual health insurance contract issued to a Maryland resident.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Single case basis” means a contract which was approved by the Maryland Insurance Administration for issuance to only one contract holder in Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Filings."> <paragraph num="A."> <text>When an insurer intends to cancel or not renew a health insurance product for all of the insurer's covered insureds in the State, the insurer shall file a plan of withdrawal with the Commissioner at least 90 days from the date of the proposed cancellation or nonrenewal.</text> </paragraph> <paragraph num="B."> <text>When an insurer intends to cancel or not renew all of the insurer's health insurance products for all of its covered insureds in the State, the insurer shall file a plan of withdrawal with the Commissioner at least 180 days before the date of the proposed withdrawal.</text> </paragraph> <paragraph num="C."> <text>A plan of withdrawal may not be required for nonrenewal of a contract which was approved for issuance on a single case basis.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-606, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 9, 1995 (22:20 Md. R. 1543)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.10 to COMAR 31.10.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective May 9, 2016 (43:9 Md. R. 532)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective May 9, 2016 (43:9 Md. R. 532)</annotation> </annotations> </chapter> <chapter num="05" heading="Minimum Standards for Medicare Supplement Policies"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide for the reasonable standardization of coverage and simplification of terms and benefits of Medicare supplement policies, to facilitate public understanding and comparison of these policies, to eliminate policy provisions which may be misleading or confusing in connection with the purchase of the policies or with the settlement of claims, and to provide for full disclosures in the sale of health insurance coverages to persons eligible for Medicare by reason of age.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Authority."> <text>This chapter is issued pursuant to the authority given the Insurance Commissioner under Insurance Article, §2-109 and TItle 15, Subtitle 9, and Health-General Article, §§19-705 and 19-706, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability and Scope."> <text>Except as otherwise specifically provided, this chapter applies to all:</text> <paragraph num="A."> <text>Medicare supplement policies and subscriber contracts delivered or issued for delivery in this State before July 1, 1992; and</text> </paragraph> <paragraph num="B."> <text>Certificates issued under group Medicare supplement policies or subscriber contracts if the certificates were delivered or issued for delivery in this State before July 1, 1992.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Definitions."> <paragraph num="A."> <text>Whenever used in this chapter or in a Medicare supplement policy subject to these regulations, or in any advertisement soliciting a Medicare supplement policy, the following terms shall have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Applicant” means, in the case of:</text> <paragraph num="(a)"> <text>An individual Medicare supplement policy or subscriber contract, the person who seeks to contract for insurance benefits; and</text> </paragraph> <paragraph num="(b)"> <text>A group Medicare supplement policy or subscriber contract, the proposed certificate holder.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Certificate” means any certificate issued under a group Medicare supplement policy or contract which has been delivered or issued for delivery in this State, including any individual certificate issued by a nonprofit health service plan or by a health maintenance organization.</text> </paragraph> <paragraph num="(3)"> <text>“Direct response solicitation” means solicitation of individuals or groups through the mail or by mass media advertising, including both print and broadcast advertising.</text> </paragraph> <paragraph num="(4)"> <text>“Health care expenses” means expenses of health maintenance organizations associated with the delivery of health care services which are analogous to incurred losses of insurers. These expenses do not include:</text> <paragraph num="(a)"> <text>Home office and overhead costs;</text> </paragraph> <paragraph num="(b)"> <text>Advertising costs;</text> </paragraph> <paragraph num="(c)"> <text>Commissions and other acquisition costs;</text> </paragraph> <paragraph num="(d)"> <text>Taxes;</text> </paragraph> <paragraph num="(e)"> <text>Capital costs;</text> </paragraph> <paragraph num="(f)"> <text>Administrative costs; or</text> </paragraph> <paragraph num="(g)"> <text>Claims processing costs.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Health insurance” means insurance coverage as defined in Insurance Article, §1-101(q), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Individual policy” means:</text> <paragraph num="(a)"> <text>Individually issued policies and certificates; and</text> </paragraph> <paragraph num="(b)"> <text>Certificates issued under group policies as a result of the direct response solicitation.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Low-dose mammography” means X-ray examination of the breast using dedicated equipment including an X-ray tube, filter, compression device, screens, films, and cassettes specifically for mammography with average radiation exposure to deliver less than 1 rad mid-breast, two views per breast.</text> </paragraph> <paragraph num="(8)"> <text>“Medicaid” means the Maryland Medical Assistance Program or any similar program provided by the State in which the insured person resides.</text> </paragraph> <paragraph num="(9)"> <text>“Medicare” means the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended.</text> </paragraph> <paragraph num="(10)"> <text>“Medicare eligible expenses” means health care expenses of the kinds covered by Medicare to the extent these services are considered reasonable under Medicare rules and regulations.</text> </paragraph> <paragraph num="(11)"> <text>Medicare Supplement Policy.</text> <paragraph num="(a)"> <text>“Medicare supplement policy” means an individual or group policy, subscriber contract, or certificate of health insurance primarily designed, advertised, marketed, or otherwise purported to be a supplement to reimbursements under Medicare for the hospital, medical, surgical, nursing, or related expenses of persons eligible for Medicare by reason of age.</text> </paragraph> <paragraph num="(b)"> <text>“Medicare supplement policy” does not include benefits offered by a health maintenance organization or other direct service organization in connection with a contract with the United States Health Care Financing Administration.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Medigap policy” means a Medicare supplement policy.</text> </paragraph> <paragraph num="(13)"> <text>“Policy and subscriber contracts”, whenever they appear in these regulations, include “certificate” unless the context indicates otherwise.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Policy Definitions and Terms."> <paragraph num="A."> <text>An insurance policy, subscriber contract, or certificate may not be advertised, marketed, solicited, or issued for delivery in this State as a Medicare supplement policy unless it contains definitions or terms which conform to the requirements of this regulation, or definitions which are more favorable to the insured person or certificate holder.</text> </paragraph> <paragraph num="B."> <text>Terms To Be Defined in the Policy.</text> <paragraph num="(1)"> <text>Accident.</text> <paragraph num="(a)"> <text>“Accident”, “accidental injury”, or “accidental means” shall be defined to employ “result” language and may not include words which establish an accidental means test or use words such as “external, violent, and accidental means”, “visible contusion or wound”, or words of similar import, description, or characterization.</text> </paragraph> <paragraph num="(b)"> <text>The definition may not be more restrictive than the following: “Injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance coverage is in force.”</text> </paragraph> <paragraph num="(c)"> <text>The definition may additionally provide that injuries do not include injuries for which benefits are provided or available to the insured under any workers' compensation, occupational disease, employer's liability, or similar law, or to the extent permitted by law, to benefits provided or available under any motor vehicle no-fault plan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Benefit period” or “Medicare benefit period” may not be defined in a manner more restrictive than as defined in the Medicare program.</text> </paragraph> <paragraph num="(3)"> <text>“Convalescent nursing home”, “extended care facility”, or “skilled nursing facility” shall be defined in relation to its status, facilities, and available services. The following apply:</text> <paragraph num="(a)"> <text>The definition may not be more restrictive than one requiring that the home or facility:</text> <paragraph num="(i)"> <text>Be operated pursuant to law;</text> </paragraph> <paragraph num="(ii)"> <text>Be approved for payment of Medicare benefits or be qualified to receive that approval;</text> </paragraph> <paragraph num="(iii)"> <text>Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician;</text> </paragraph> <paragraph num="(iv)"> <text>Provide continuous 24-hour-a-day nursing service by or under the supervision of a registered graduate professional nurse (R.N.); and</text> </paragraph> <paragraph num="(v)"> <text>Maintain a daily medical record of each patient.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The definition of the home or facility may provide that the term does not include:</text> <paragraph num="(i)"> <text>A home, facility, or part of a home or facility used primarily for rest;</text> </paragraph> <paragraph num="(ii)"> <text>A home or facility for the aged or for the care of drug addicts or alcoholics; or</text> </paragraph> <paragraph num="(iii)"> <text>A home or facility primarily used for the care and treatment of mental diseases or disorders, or for custodial or educational care.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Hospital” shall be defined in relation to its status, facilities, and available services, or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals. The definition of the term “hospital”:</text> <paragraph num="(a)"> <text>May not be more restrictive than one requiring that the hospital:</text> <paragraph num="(i)"> <text>Be an institution operated pursuant to law,</text> </paragraph> <paragraph num="(ii)"> <text>Be primarily and continuously engaged in providing or operating, either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic, and major surgical facilities for the medical care and treatment of sick or injured persons on an inpatient basis, for which a charge is made, and</text> </paragraph> <paragraph num="(iii)"> <text>Provide 24-hour nursing service by or under the supervision of registered graduate professional nurses (R.N.'s);</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>May provide that the term does not include:</text> <paragraph num="(i)"> <text>Convalescent homes, convalescent rest or nursing facilities,</text> </paragraph> <paragraph num="(ii)"> <text>Facilities primarily affording custodial, educational, or rehabilitative care,</text> </paragraph> <paragraph num="(iii)"> <text>Facilities for the aged, drug addicts or alcoholics, military, veterans' or soldiers' home, or any hospital contracted for or operated by any national government or national governmental agency for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis when legal liability exists for charges made to the individual for these services.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Medicare” shall be defined in the policy substantially either as:</text> <paragraph num="(a)"> <text>“The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended”; or</text> </paragraph> <paragraph num="(b)"> <text>“Title I, Part 1 of Public Law 89-97, as enacted by the 89th Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes of that Act.”</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Medicare eligible expenses” shall be defined in the policy as health care expenses of the kind covered by Medicare, to the extent recognized as reasonable by Medicare. The insurer may modify the definition to provide that payments under the policy will be conditioned on less restrictive payment conditions, including determinations of medical necessity, than the conditions applicable to medical claims.</text> </paragraph> <paragraph num="(7)"> <text>“Mental or nervous disorders” may be defined in a manner which includes neurosis, psychoneurosis, psychopathy, psychosis, and mental and emotional disease or disorder of any kind.</text> </paragraph> <paragraph num="(8)"> <text>“Nurse” may be defined to include a registered graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), a licensed nurse anesthetist, or a licensed vocational nurse (L.V.N.). The use of the words “nurse” or “trained nurse” without further qualification will require the insurer to recognize the services of any individual qualified under applicable statutes or regulations provided the nurse is acting within the lawful scope of practice of the nurse's license.</text> </paragraph> <paragraph num="(9)"> <text>“Physician” shall be defined to include a licensed physician or any duly licensed provider of medical care and treatment when the services to be performed are within the lawful scope of practice of the provider.</text> </paragraph> <paragraph num="(10)"> <text>“Sickness” shall be defined so as to be not more restrictive than a sickness or disease of an insured person which first manifests itself after the effective date of the insurance and while the insurance is in force. The insurer may modify the definition to exclude sickness or disease for which benefits are provided under any workers' compensation, occupational disease, employer's liability, or similar law.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Prohibited Policy Provisions."> <paragraph num="A."> <text>Waivers may not be included in or attached to a Medicare supplement policy if the effect of the waivers is to exclude, limit, or reduce coverage or benefits for specifically named or described diseases or physical conditions.</text> </paragraph> <paragraph num="B."> <text>A Medicare supplement policy or subscriber contract may not be advertised, solicited, or issued for delivery in this State as a Medicare supplement policy or subscriber contract if the policy or contract limits or excludes coverage by type of illness, accident, treatment, or medical condition, except for the following, provided however, that if any of the following limitations or exclusions are contained in a Medicare supplement policy, the limitation or exclusion may not be more restrictive than that applicable to the Medicare program:</text> <paragraph num="(1)"> <text>Foot care in connection with corns, calluses, flat feet, fallen arches, weak feet, chronic foot strain, or symptomatic complaints of the feet;</text> </paragraph> <paragraph num="(2)"> <text>Mental or emotional disorders, alcoholism, and drug addiction;</text> </paragraph> <paragraph num="(3)"> <text>Illness, treatment, or medical condition arising out of:</text> <paragraph num="(a)"> <text>War or act of war (whether declared or undeclared), participation in a felony, riot or insurrection, service in the armed forces or auxiliary units,</text> </paragraph> <paragraph num="(b)"> <text>Suicide while sane or insane, attempted suicide, or intentionally self-inflicted injury, or</text> </paragraph> <paragraph num="(c)"> <text>Aviation or air travel other than as a fare-paying passenger on a regularly scheduled airline or on a group-chartered plane;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Cosmetic surgery, but this exclusion may not apply to reconstructive surgery when the surgery is incidental to or follows surgery resulting from trauma, infection, or diseases of the involved part;</text> </paragraph> <paragraph num="(5)"> <text>Care in connection with the detection and correction by manual or mechanical means of structural imbalance, distortion, or subluxation in the human body for purposes of removing nerve interference and their effects, if the interference is the result of or related to distortion, misalignment or subluxation of, or in, the vertebral column;</text> </paragraph> <paragraph num="(6)"> <text>Treatment provided in a federal government hospital, benefits provided under Medicare or other governmental program (except Medicaid), any workers' compensation, employer's liability or occupational disease or similar law, or any motor vehicle no-fault or similar law;</text> </paragraph> <paragraph num="(7)"> <text>Services rendered by, and separately billed by, the employees of hospitals, laboratories, or other institutions;</text> </paragraph> <paragraph num="(8)"> <text>Services performed by a member of the covered person's immediate family, and services for which no charge is normally made in the absence of insurance;</text> </paragraph> <paragraph num="(9)"> <text>Dental care or treatment;</text> </paragraph> <paragraph num="(10)"> <text>Eyeglasses, hearing aids, and examination for their prescription or fitting;</text> </paragraph> <paragraph num="(11)"> <text>Rest cures, custodial care, transportation, and routine physical examinations;</text> </paragraph> <paragraph num="(12)"> <text>Territorial limitations outside the United States; and</text> </paragraph> <paragraph num="(13)"> <text>Coverage of any expense to the extent of any benefit available to the insured under Medicare.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The terms “Medicare supplement”, “Medigap”, and words of similar import may not be used in connection with the advertisement, solicitation, or policy description or title unless the policy is issued in compliance with these regulations.</text> </paragraph> <paragraph num="D."> <text>A Medicare supplement policy, contract, or certificate in force in this State may not include benefits which duplicate benefits provided by Medicare.</text> </paragraph> <paragraph num="E."> <text>An insurer may not deny, reduce, or condition coverage or apply an increased premium rating to an applicant for a Medicare supplement policy by reason of the applicant's health status, claims experience, medical condition, or use of medical care if the applicant applies for the Medicare supplement policy within the first 6 months after becoming eligible for Medicare by reason of age. However, the insurer may include a provision with regard to preexisting conditions which complies with Regulation .07B(1) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Minimum Benefit Standards."> <paragraph num="A."> <text>A health insurance policy, contract, or certificate may not be advertised, marketed, solicited, or issued for delivery in this State as a Medicare supplement policy or as a Medigap policy unless it meets the following general and minimum standards and unless the insurer and its agents adhere to the requirements of the Maryland statutes and regulations regarding the sale of Medicare supplement policies. The minimum standards do not preclude the provision of additional benefits which are not inconsistent with these requirements and the use of other provisions which are more favorable to the insured or the policyholder. Whenever a policy is referred to in these regulations, it shall include a certificate.</text> </paragraph> <paragraph num="B."> <text>General Standards.</text> <paragraph num="(1)"> <text>A Medicare supplement policy may not deny a claim for losses incurred more than 6 months after the effective date of coverage for a preexisting condition. The policy may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within 6 months before the effective date of coverage.</text> </paragraph> <paragraph num="(2)"> <text>A Medicare supplement policy may not provide benefits for losses resulting from sickness on a different basis than benefits provided for losses resulting from accidents.</text> </paragraph> <paragraph num="(3)"> <text>Automatic Changes to Correspond to Changes in Medicare.</text> <paragraph num="(a)"> <text>A Medicare supplement policy shall provide that benefits designed to cover deductibles or coinsurance amounts under Medicare will be changed automatically to coincide with any corresponding changes in the applicable Medicare deductible and copayment amounts.</text> </paragraph> <paragraph num="(b)"> <text>The insurer shall reserve the right to adjust premiums under the policy for the changes described in §B(3)(a) of this regulation.</text> </paragraph> <paragraph num="(c)"> <text>Proposed premium adjustments shall be submitted for approval by the Commissioner in accordance with the requirements of COMAR 31.10.01 and with other applicable regulations and statutes.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Guaranteed Renewability.</text> <paragraph num="(a)"> <text>A Medicare supplement policy which provides coverage for an insured and spouse shall provide, except in the event of nonpayment of premium, continuation of coverage on the:</text> <paragraph num="(i)"> <text>Insured if coverage for the spouse is terminated; and</text> </paragraph> <paragraph num="(ii)"> <text>Spouse if coverage for the insured is terminated.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Except in the event of nonpayment of premium, or as authorized by the Commissioner, an insurer may not cancel or nonrenew a Medicare supplement policy or certificate.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Extension of Benefits.</text> <paragraph num="(a)"> <text>Termination of a Medicare supplement policy shall be without prejudice to any continuous loss which began while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured limited to the duration of the policy benefit period, if any, or payment of the maximum benefits.</text> </paragraph> <paragraph num="(b)"> <text>Receipt of Medicare Part D benefits may not be considered in determining a continuous loss.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this regulation.</text> </paragraph> <paragraph num="(7)"> <text>Termination by a Group Policyholder.</text> <paragraph num="(a)"> <text>If a group Medicare supplement policy is terminated by the group policyholder and not replaced as provided in §B(9) of this regulation, the insurer shall offer certificate holders an individual Medicare supplement policy.</text> </paragraph> <paragraph num="(b)"> <text>The insurer shall offer the certificate holders described in §B(7)(a) of this regulation at least the following choices:</text> <paragraph num="(i)"> <text>An individual Medicare supplement policy which provides for continuation of the benefits contained in the group policy; and</text> </paragraph> <paragraph num="(ii)"> <text>An individual Medicare supplement policy which provides only those benefits which are required to meet the minimum standards of these regulations.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>If membership in a group is terminated, the insurer shall:</text> <paragraph num="(a)"> <text>Offer the certificate holder the conversion rights described in §B(7) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Minimum Required Benefits.</text> <paragraph num="(1)"> <text>A Medicare supplement policy shall provide at least the following minimum benefits:</text> <paragraph num="(a)"> <text>Coverage of Medicare Part A eligible expenses for the initial Medicare deductible for hospitalization in any Medicare benefit period;</text> </paragraph> <paragraph num="(b)"> <text>Coverage of Medicare Part A eligible expenses for hospitalization to the extent not covered by Medicare for the 61st day through the 90th day in any Medicare benefit period;</text> </paragraph> <paragraph num="(c)"> <text>Coverage of Medicare Part A eligible expenses incurred as daily hospital charges to the extent not covered by Medicare during use of Medicare's lifetime hospital inpatient reserve days;</text> </paragraph> <paragraph num="(d)"> <text>Upon exhaustion of all Medicare inpatient hospital coverage, including the lifetime reserve days, coverage of 90 percent of all Medicare Part A eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional 365 days;</text> </paragraph> <paragraph num="(e)"> <text>Coverage for the coinsurance amount of Medicare eligible expenses under Medicare Part B regardless of hospital confinement;</text> </paragraph> <paragraph num="(f)"> <text>Coverage under Medicare Part A for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells as defined under federal regulations, in any calendar year unless replaced in accordance with federal regulations or already paid for under Medicare Part B;</text> </paragraph> <paragraph num="(g)"> <text>Coverage under Medicare Part B for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, in any calendar year unless replaced in accordance with federal regulations or already paid for under Part A, subject to the Medicare Part B deductible amount; and</text> </paragraph> <paragraph num="(h)"> <text>Coverage for up to $100 in each calendar year for an annual screening by low-dose mammography for the presence of occult breast cancer.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Each insurer issuing a Medicare supplement policy shall include in the policy, or offer as an option, coverage of the initial annual deductible for Medicare eligible expenses under Medicare Part B.</text> </paragraph> <paragraph num="(3)"> <text>Payment of benefits by insurers for Medicare eligible expenses may be conditioned upon the same or less restrictive payment conditions, including determinations of medical necessity, as are applicable to medical claims.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An insurer shall restore any benefits which were eliminated from a Medicare supplement policy by operation of the Medicare Catastrophic Coverage Act of 1988.</text> </paragraph> <paragraph num="E."> <text>A Medicare supplement policy shall provide for suspension of policy benefits and premiums for up to 24 months if the covered person is receiving benefits under Medicaid.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Standards for Claims Payment."> <paragraph num="A."> <text>Each insurer providing Medicare supplement policies or contracts shall comply with all provisions of §4081 of the Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203), and with applicable rules and regulations issued under the Act by the Secretary of the federal Department of Health and Human Services. Some of the provisions of the Act require each insurer issuing Medicare supplement policies to:</text> <paragraph num="(1)"> <text>Agree to accept claims notices as claims for benefits under the policies;</text> </paragraph> <paragraph num="(2)"> <text>Agree to make payment determination based on the information provided in the notices;</text> </paragraph> <paragraph num="(3)"> <text>Provide notices to participating providers and suppliers and to the beneficiaries concerning the payment determinations;</text> </paragraph> <paragraph num="(4)"> <text>Provide payment directly to participating providers and suppliers;</text> </paragraph> <paragraph num="(5)"> <text>Provide Medicare beneficiaries with the name and address of Medicare contracting carriers to which notices should be sent; and</text> </paragraph> <paragraph num="(6)"> <text>Agree to pay usual fees.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Each insurer shall certify on its Medicare supplement insurance experience reporting forms compliance with the requirements set forth in §A of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Loss Ratio Standards."> <text>As soon as practicable, but before the effective date of Medicare benefit changes, each insurer issuing or delivering Medicare supplement policies or subscriber contracts in this State shall file with the Commissioner, in accordance with applicable filing procedures:</text> <paragraph num="A."> <text>Appropriate premium adjustments necessary to produce loss ratios as originally anticipated for the applicable policies or certificates. Supporting documents necessary to justify the proposed adjustments shall be included with the filing. The following apply:</text> <paragraph num="(1)"> <text>Each insurer subject to the Medicare Supplement Act of Insurance Article, Annotated Code of Maryland, issuing or delivering Medicare supplement policies or contracts to residents of this State, shall make those premium adjustments which are necessary to produce an expected loss ratio under the policies or contracts which will conform with the minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums for the Medicare supplement policies or contracts. Premium adjustments shall be calculated for the period beginning with Medicare benefit changes.</text> </paragraph> <paragraph num="(2)"> <text>Premium adjustments which would modify the loss ratio under the policies and contracts other than the adjustments described in this section may be made only on the renewal date or anniversary date of the policy or contract.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Appropriate riders, endorsements, or policy forms, which shall be drafted to:</text> <paragraph num="(1)"> <text>Accomplish Medicare supplement insurance modifications necessary to:</text> <paragraph num="(a)"> <text>Eliminate benefit duplications with Medicare, and</text> </paragraph> <paragraph num="(b)"> <text>Provide any additional benefits necessary to comply with State or federal statutes, rules, and regulations modifying minimum benefit requirements under Medicare supplement policies and contracts;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Provide a clear description of the Medicare supplement benefits to be provided by the policies or contracts.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Filing Requirements for Out-of-State Group Policies."> <paragraph num="A."> <text>Each insurer providing group Medicare supplement insurance benefits to a resident of this State under a group policy issued elsewhere shall file a copy of the master policy and any certificate used in this State in accordance with the filing requirements and procedures applicable to group Medicare supplement policies issued in this State.</text> </paragraph> <paragraph num="B."> <text>If the out-of-State group policy is issued to an employer having a home office in the state in which the policy is issued, the filing required by §A of this regulation shall be made not later than 30 days after the effective date of the certificate issued to any employee resident in this State.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Required Disclosure Provisions."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>Medicare supplement policies shall contain a clearly worded provision regarding the right of the policyholder to renew or continue the policy. This provision shall be appropriately captioned and shall be printed on the first page of the policy.</text> </paragraph> <paragraph num="(2)"> <text>Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured or exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured unless otherwise authorized by the Commissioner. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing, signed by the insured unless the benefits or coverage are required by the minimum standards for Medicare supplement insurance policies or are required by law. When a separate additional premium is charged for benefits provided in connection with riders or endorsements, the additional premium charge shall be stated in the policy.</text> </paragraph> <paragraph num="(3)"> <text>A Medicare supplement policy which provides for the payment of benefits based on standards described as “usual and customary”, “reasonable and customary”, or words of similar import shall include a definition of these terms and an explanation of the terms in its accompanying outline of coverage.</text> </paragraph> <paragraph num="(4)"> <text>If a Medicare supplement policy contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy and may be labeled as “preexisting condition limitations” or a title of similar import.</text> </paragraph> <paragraph num="(5)"> <text>Medicare supplement policies or certificates shall have a notice prominently printed on the first page of the policy or certificate stating that the policyholder or certificate holder shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Notice Requirements.</text> <paragraph num="(1)"> <text>As soon as practicable, but not later than 30 days before the annual effective date of any Medicare benefit changes, each insurer, including any health service plan, which provides Medicare supplement insurance or benefits to a resident of this State, shall notify its policyholders, contract holders, and certificate holders of modifications to be made to Medicare insurance policies or contracts in a manner approved by the Commissioner. In addition, the notice shall:</text> <paragraph num="(a)"> <text>Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement insurance policy or contract; and</text> </paragraph> <paragraph num="(b)"> <text>Inform each covered person as to when any premium adjustment is to be made by reason of changes in Medicare benefits.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The notices of benefit modifications and of any premium adjustments shall be in outline form and in clear and simple terms in order to facilitate comprehension.</text> </paragraph> <paragraph num="(3)"> <text>The notices may not contain or be accompanied by any solicitation materials.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 15, Subtitle 9; Health-General Article, §§19-705 and 19-706; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.09, Appendixes A—C adopted as an emergency provision effective July 1, 1982 (9:13 Md. R. 1340); adopted permanently effective October 1, 1982 (9:17 Md. R. 1707)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended, Regulations .02—.09 and Appendices A—C repealed, and new Regulations .02—.14 and Appendices A—C adopted as an emergency provision effective July 25, 1989 (16:16 Md. R. 1738); emergency status extended at 16:26 Md. R. 2782 and 17:5 Md. R. 633; emergency status expired July 20, 1990</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended, Regulations .02—.09 and Appendices A—C repealed, and new Regulations .02—.21 adopted effective July 23, 1990 (17:14 Md. R. 1757)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06E adopted effective November 11, 1991 (18:22 Md. R. 2396)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07E adopted effective November 11, 1991 (18:22 Md. R. 2396)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16 amended effective November 11, 1991 (18:22 Md. R. 2396)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.59 to COMAR 31.10.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective January 1, 2006 (32:18 Md. R. 1522)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective January 1, 2006 (32:18 Md. R. 1522)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective January 1, 2006 (32:18 Md. R. 1522)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective January 1, 2006 (32:18 Md. R. 1522)</annotation> <annotation type="History" subtype="Administrative History">Regulations .12—.21 repealed effective January 1, 2006 (32:18 Md. R. 1522)</annotation> </annotations> </chapter> <chapter num="06" heading="Standards for Medicare Supplement Policies"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <paragraph num="A."> <text>Except as otherwise provided in Regulations .10, .11, and .17 of this chapter, this chapter applies to all:</text> <paragraph num="(1)"> <text>Medicare supplement policies delivered or issued for delivery in this State; and</text> </paragraph> <paragraph num="(2)"> <text>Certificates issued under group Medicare supplement policies if the certificates are delivered or issued for delivery in this State.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter is applicable to all Medicare supplement policies and certificates under group Medicare supplement policies held by residents of this State and in force on the day preceding the effective date of House Bill 305 (Chapter 526, Acts of 1992), except as to the benefits and other policy provisions of those policies and certificates. While those policies and certificates remain in effect, their benefits and policy provisions shall continue to be governed by the applicable provisions of the Annotated Code of Maryland in effect immediately preceding the effective date of House Bill 305 (Chapter 526, Acts of 1992) and of the applicable regulations of COMAR 31.10.05 where the latter regulations are inconsistent with this chapter.</text> </paragraph> <paragraph num="C."> <text>This chapter does not apply to a policy or a certificate under a group policy issued to one or more employers or labor organizations, or to the trustees of a fund established by one or more employers or labor organizations for employees or former employees of the employers, or for members or former members of the labor organizations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Adverse decision” has the meaning stated in Insurance Article, §15-10A-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means:</text> <paragraph num="(a)"> <text>In the case of an individual Medicare supplement policy, the person who seeks to contract for insurance benefits; and</text> </paragraph> <paragraph num="(b)"> <text>In the case of a group Medicare supplement policy, the proposed certificate holder.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Bankruptcy” means when a Medicare Advantage organization that is not an issuer has filed, or has had filed against it, a petition for declaration of bankruptcy and has ceased doing business in the State.</text> </paragraph> <paragraph num="(4)"> <text>“Certificate” means any certificate delivered or issued for delivery in this State under a group Medicare supplement policy.</text> </paragraph> <paragraph num="(5)"> <text>“Certificate form” means the form on which the certificate is delivered or issued for delivery by the issuer.</text> </paragraph> <paragraph num="(6)"> <text>“Complaint” means any dissatisfaction expressed by an individual concerning a Medicare Select issuer or its network providers.</text> </paragraph> <paragraph num="(7)"> <text>“Continuous period of creditable coverage” means the period during which an individual was covered by creditable coverage, if during the period of the coverage the individual had no breaks in coverage greater than 63 days.</text> </paragraph> <paragraph num="(8)"> <text>“Coverage decision” has the meaning stated in Insurance Article, §15-10D-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>Creditable coverage.</text> <paragraph num="(a)"> <text>“Creditable coverage” means, with respect to an individual, coverage of the individual provided under any of the following:</text> <paragraph num="(i)"> <text>A group health plan;</text> </paragraph> <paragraph num="(ii)"> <text>Health insurance coverage;</text> </paragraph> <paragraph num="(iii)"> <text>Part A or Part B of Title XVIII of the Social Security Act (Medicare);</text> </paragraph> <paragraph num="(iv)"> <text>Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under §1928;</text> </paragraph> <paragraph num="(v)"> <text>Chapter 55 of Title 10 United States Code (CHAMPUS);</text> </paragraph> <paragraph num="(vi)"> <text>A medical care program of the Indian Health Service or of a tribal organization;</text> </paragraph> <paragraph num="(vii)"> <text>A State health benefits risk pool;</text> </paragraph> <paragraph num="(viii)"> <text>A health plan offered under Chapter 89 of Title 5 United States Code (Federal Employees Health Benefits Program);</text> </paragraph> <paragraph num="(ix)"> <text>A public health plan as defined in federal regulation; and</text> </paragraph> <paragraph num="(x)"> <text>A health benefit plan under §5(e) of the Peace Corps Act (22 U.S.C. §2504(e)).</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Creditable coverage” does not include one or more, or any combination of, the following:</text> <paragraph num="(i)"> <text>Coverage only for accident or disability income insurance, or any combination of them;</text> </paragraph> <paragraph num="(ii)"> <text>Coverage issued as a supplement to liability insurance;</text> </paragraph> <paragraph num="(iii)"> <text>Liability insurance, including general liability insurance and automobile liability insurance;</text> </paragraph> <paragraph num="(iv)"> <text>Workers' compensation or similar insurance;</text> </paragraph> <paragraph num="(v)"> <text>Automobile medical payment insurance;</text> </paragraph> <paragraph num="(vi)"> <text>Credit-only insurance;</text> </paragraph> <paragraph num="(vii)"> <text>Coverage for on-site medical clinics; and</text> </paragraph> <paragraph num="(viii)"> <text>Other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Creditable coverage” does not include coverage for the following benefits if they are provided under a separate policy, certificate, or contract of insurance, or are otherwise not an integral part of a plan of coverage described in §B(9)(a) of this regulation:</text> <paragraph num="(i)"> <text>Limited scope dental or vision benefits;</text> </paragraph> <paragraph num="(ii)"> <text>Benefits for long-term care, nursing home care, home health care, community-based care, or any combination of these coverages; and</text> </paragraph> <paragraph num="(iii)"> <text>Other similar, limited benefits as are specified in federal regulations.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Creditable coverage” does not include coverage for the following benefits if offered as independent, noncoordinated benefits:</text> <paragraph num="(i)"> <text>Coverage only for a specified disease or illness; and</text> </paragraph> <paragraph num="(ii)"> <text>Hospital indemnity or other fixed indemnity insurance.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>“Creditable coverage” does not include the following coverage if it is offered as a separate policy, certificate, or contract of insurance:</text> <paragraph num="(i)"> <text>Medicare supplemental health insurance as defined under §1882(g)(1) of the Social Security Act;</text> </paragraph> <paragraph num="(ii)"> <text>Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code; and</text> </paragraph> <paragraph num="(iii)"> <text>Similar supplemental coverage provided to coverage under a group health plan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Employee welfare benefit plan” means a plan, fund, or program of employee benefits as defined in 29 U.S.C. §1002 (Employee Retirement Income Security Act).</text> </paragraph> <paragraph num="(11)"> <text>“Grievance” means dissatisfaction expressed in writing by an individual insured under a Medicare Select policy or certificate with the administration, claims practices, or provision of services concerning a Medicare Select issuer or its network providers.</text> </paragraph> <paragraph num="(12)"> <text>“Insolvency” means when an issuer, licensed to transact the business of insurance in this State, has had a final order of liquidation entered against it with a finding of insolvency by a court of competent jurisdiction in the issuer's state of domicile.</text> </paragraph> <paragraph num="(13)"> <text>“Issuer” means insurance companies, fraternal benefit societies, nonprofit health service plans, health maintenance organizations, and any other entity delivering or issuing for delivery in this State Medicare supplement policies or certificates.</text> </paragraph> <paragraph num="(14)"> <text>“Medicare” means the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965, as then constituted or later amended.</text> </paragraph> <paragraph num="(15)"> <text>Medicare Advantage Plan.</text> <paragraph num="(a)"> <text>“Medicare Advantage plan” means a plan of coverage for health benefits under Medicare Part C as defined in 42 U.S.C. §1395w-28(b)(1).</text> </paragraph> <paragraph num="(b)"> <text>“Medicare Advantage plan” includes:</text> <paragraph num="(i)"> <text>Coordinated care plans that provide health care services, including health maintenance organization plans (with or without a point-of-service option), plans offered by provider-sponsored organizations, and preferred provider organization plans;</text> </paragraph> <paragraph num="(ii)"> <text>Medical savings account plans coupled with a contribution into a Medicare Advantage Plan medical savings account; and</text> </paragraph> <paragraph num="(iii)"> <text>Medicare Advantage private fee-for-service plans.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Medicare Select certificate” means a Medicare supplement certificate that contains restricted network provisions.</text> </paragraph> <paragraph num="(17)"> <text>“Medicare Select issuer” means an issuer offering, or seeking to offer, a Medicare Select policy or certificate.</text> </paragraph> <paragraph num="(18)"> <text>“Medicare Select policy” means a Medicare supplement policy that contains restricted network provisions.</text> </paragraph> <paragraph num="(19)"> <text>Medicare Supplement Policy.</text> <paragraph num="(a)"> <text>“Medicare supplement policy” means a group or individual policy of health insurance, or a certificate of a fraternal benefit society, or a subscriber contract of a nonprofit health service plan or of a health maintenance organization, other than a policy issued pursuant to a contract under the federal Social Security Act, §1876, or an issued policy under a demonstration project specified in 42 U.S.C. §1395ss(g)(1), which is advertised, marketed, or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare.</text> </paragraph> <paragraph num="(b)"> <text>“Medicare supplement policy” does not include Medicare Advantage plans established under Medicare Part C, Outpatient Prescription Drug plans established under Medicare Part D, or any Health Care Prepayment Plan (HCPP) that provides benefits pursuant to an agreement under §1833(a)(1)(A) of the Social Security Act.</text> </paragraph> </paragraph> <paragraph num="(20)"> <text>“Network provider” means a provider, or group of providers, of health care which has entered into a written agreement with the issuer to provide benefits insured under a Medicare Select policy.</text> </paragraph> <paragraph num="(21)"> <text>“Newly eligible for Medicare” means the individual:</text> <paragraph num="(a)"> <text>Attained age 65; or</text> </paragraph> <paragraph num="(b)"> <text>Became entitled to benefits under part A pursuant to §226(b) or 226A of the Social Security Act, or is deemed to be eligible for benefits under §226(a) of the Social Security Act.</text> </paragraph> </paragraph> <paragraph num="(22)"> <text>1990 standardized Medicare Supplement Benefit Plan.</text> <paragraph num="(a)"> <text>“1990 standardized Medicare supplement benefit plan”, “1990 standardized benefit plan”, or “1990 plan” means a group or individual policy of Medicare supplement insurance issued on or after July 14, 1992, and with an effective date for coverage before June 1, 2010.</text> </paragraph> <paragraph num="(b)"> <text>“1990 standardized Medicare supplement benefit plan”, “1990 standardized benefit plan”, or “1990 plan” includes Medicare supplement insurance policies and certificates described in §B(21)(a) of this regulation that are renewed on or after June 1, 2010, which are not replaced by the issuer at the request of the insured.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Policy form” means the form on which the policy or certificate is delivered or issued for delivery by the issuer.</text> </paragraph> <paragraph num="(24)"> <text>“Restricted network provision” means any provision which conditions the payment of benefits, in whole or in part, on the use of network providers.</text> </paragraph> <paragraph num="(25)"> <text>“Secretary” means the Secretary of the United States Department of Health and Human Services.</text> </paragraph> <paragraph num="(26)"> <text>“Service area” means the geographic area approved by the Secretary of the Maryland Department of Health within which an issuer is authorized to offer a Medicare Select policy.</text> </paragraph> <paragraph num="(27)"> <text>“2010 standardized Medicare supplement benefit plan”, “2010 standardized benefit plan”, or “2010 plan” means a group or individual policy of Medicare supplement insurance issued with an effective date for coverage on or after June 1, 2010.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Policy Definitions and Terms."> <paragraph num="A."> <text>A policy or certificate may not be advertised, solicited, or issued for delivery in this State as a Medicare supplement policy or certificate unless the policy or certificate contains definitions or terms which conform to the requirements of these regulations.</text> </paragraph> <paragraph num="B."> <text>Policy Terms Defined.</text> <paragraph num="(1)"> <text>Accident.</text> <paragraph num="(a)"> <text>“Accident”, “accidental injury”, or “accidental means” shall be defined to employ “result” language.</text> </paragraph> <paragraph num="(b)"> <text>“Accident”, “accidental injury”, or “accidental means” does not include words which establish an accidental means test or use words such as “external, violent, visible wounds” or similar words of description or characterization.</text> </paragraph> <paragraph num="(c)"> <text>The definition may not be more restrictive than the following: “Injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person which is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance coverage is in force.”</text> </paragraph> <paragraph num="(d)"> <text>The definition may provide that injuries not include injuries for which benefits are provided or available under any workers' compensation, employer's liability or similar law, or motor vehicle no-fault plan, unless prohibited by law.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Benefit period” or “Medicare benefit period” may not be defined more restrictively than as defined in the Medicare program.</text> </paragraph> <paragraph num="(3)"> <text>“Convalescent nursing home”, “extended care facility”, or “skilled nursing facility” may not be defined more restrictively than as defined in the Medicare program.</text> </paragraph> <paragraph num="(4)"> <text>“Health care expenses” means, for the purposes of Regulation .11 of this chapter, expenses of health maintenance organizations associated with the delivery of health care services, which expenses are analogous to incurred losses of insurers.</text> </paragraph> <paragraph num="(5)"> <text>“Hospital” may be defined in relation to its status, facilities, and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals, but not more restrictively than as defined in the Medicare program.</text> </paragraph> <paragraph num="(6)"> <text>“Medicare” shall be defined in the policy and certificate. Medicare may be substantially defined as “The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended”, or “Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes of it” or words of similar import.</text> </paragraph> <paragraph num="(7)"> <text>“Medicare eligible expenses” means expenses of the kinds covered by Medicare Parts A and B, to the extent recognized as reasonable and medically necessary by Medicare.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Restrictions on Policy Definitions.</text> <paragraph num="(1)"> <text>“Physician” may not be defined more restrictively than as defined in the Medicare program.</text> </paragraph> <paragraph num="(2)"> <text>Sickness.</text> <paragraph num="(a)"> <text>“Sickness” may not be defined to be more restrictive than the following: Sickness means illness or disease of an insured person which first manifests itself after the effective date of insurance and while the insurance is in force.</text> </paragraph> <paragraph num="(b)"> <text>This definition may be further modified to exclude sicknesses or diseases for which benefits are provided under any workers' compensation, occupational disease, employer's liability, or similar law.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Filing and Approval of Policies and Certificates and Premium Rates."> <paragraph num="A."> <text>An issuer may not deliver or issue for delivery a Medicare supplement policy or certificate to a resident of this State unless the policy form or certificate form has been filed with and approved by the Commissioner in accordance with filing requirements and procedures prescribed by applicable provisions of Insurance Article, §§12-203, 12-205, and 14-126, Annotated Code of Maryland, and other applicable provisions of Insurance Article and Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland, and applicable regulations and procedures for filing for approval of forms.</text> </paragraph> <paragraph num="B."> <text>An issuer shall file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 only with the commissioner in the state in which the policy or certificate was issued.</text> </paragraph> <paragraph num="C."> <text>Premium Rates.</text> <paragraph num="(1)"> <text>An insurer may not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule, methodology, and supporting documentations have been filed with and approved by the Commissioner in accordance with the filing requirements and procedures prescribed by the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>An issuer may not increase the premium rates for a Medicare Supplement policy for an insured person until:</text> <paragraph num="(a)"> <text>For an individual policy, at least 1 year after the date on which the individual policy became effective; and</text> </paragraph> <paragraph num="(b)"> <text>For a group policy, at least 1 year after the date on which the certificate became effective.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Starting 1 year after the date on which an individual policy or certificate became effective, an issuer may not increase the premium rates for a Medicare Supplement policy for an insured person more than once each year.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Filing for Approval.</text> <paragraph num="(1)"> <text>Except as provided in §D(2) of this regulation, an issuer may not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan.</text> </paragraph> <paragraph num="(2)"> <text>An issuer may offer, with the approval of the Commissioner, up to four additional policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases:</text> <paragraph num="(a)"> <text>The inclusion of new or innovative benefits;</text> </paragraph> <paragraph num="(b)"> <text>The addition of either direct response or agent marketing methods;</text> </paragraph> <paragraph num="(c)"> <text>The addition of either guaranteed issue or underwritten coverage;</text> </paragraph> <paragraph num="(d)"> <text>The offering of coverage to individuals eligible for Medicare by reason of disability.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>For the purposes of this section, a “type” means an individual policy, a group policy, an individual Medicare Select policy, or a group Medicare Select policy.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Availability.</text> <paragraph num="(1)"> <text>Except as provided in §E(2) of this regulation, an issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this regulation that has been approved by the Commissioner. A policy form or certificate form may not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous 12 months.</text> </paragraph> <paragraph num="(2)"> <text>An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the Commissioner in writing its decision at least 30 days before discontinuing the availability of the form of the policy or certificate. After the effective date of the notice, the issuer may no longer offer for sale the policy form or certificate form in this State.</text> </paragraph> <paragraph num="(3)"> <text>An issuer that discontinues the availability of a policy form or certificate form in accordance with §E(2) of this regulation may not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for a period of 5 years after the issuer provides notice to the Commissioner of the discontinuance. The period of discontinuance may be reduced if the Commissioner determines that a shorter period is appropriate.</text> </paragraph> <paragraph num="(4)"> <text>The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of this section.</text> </paragraph> <paragraph num="(5)"> <text>A change in the rating structure or methodology shall be considered a discontinuance under this section unless the issuer complies with the following requirements:</text> <paragraph num="(a)"> <text>The issuer provides an actuarial memorandum, in a form and manner prescribed by the Commissioner, describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates.</text> </paragraph> <paragraph num="(b)"> <text>The issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The Commissioner may approve a change to the differential which is in the public interest.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Basis of Experience Calculation.</text> <paragraph num="(1)"> <text>Except as provided in §F(2) of this regulation, the experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in Regulation .11 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Forms assumed under an assumption reinsurance agreement may not be combined with the experience of other forms for purposes of the refund or credit calculation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Filing Requirements for Advertising."> <text>An issuer shall provide a copy of any Medicare supplement advertisement intended for use in this State whether through written, radio, or television medium or otherwise, to the Commissioner for review by the Commissioner at least 5 business days before using the advertisement.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Open Enrollment."> <paragraph num="A."> <text>Period of Open Enrollment.</text> <paragraph num="(1)"> <text>An issuer may not deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this State, nor discriminate in the pricing of the policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant when:</text> <paragraph num="(a)"> <text>An application for the policy or certificate is submitted during the 6-month period beginning with the first day of the first month in which an individual is both 65 years old or older and is enrolled for benefits under Medicare Part B; or</text> </paragraph> <paragraph num="(b)"> <text>An application for the policy or certificate is submitted on or up to 30 days after the birthday of an individual enrolled in a Medicare supplement policy or certificate.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Each Medicare supplement policy and certificate currently available from an issuer shall be made available to all applicants who qualify under §A(1)(a) of this regulation without regard to age.</text> </paragraph> <paragraph num="(3)"> <text>Subject to Regulation .31A of this chapter, an insurer shall make available to applicants who qualify under §A(1)(b) of this regulation Medicare supplement policies or certificates with benefits that are equal to or less than the benefits of the applicant’s existing Medicare supplement policy or certificate. For the purpose of this regulation, “benefits that are equal to or less than the benefits of the applicant’s existing Medicare supplement policy or certificate” means a policy or certificate of the same or lower benefit level as indicated in the below chart.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Application of Creditable Coverage.</text> <paragraph num="(1)"> <text>If an applicant qualifies under §A of this regulation and submits an application during the time period referenced in §A of this regulation and, as of the date of application, has had a continuous period of creditable coverage of at least 6 months, the issuer may not exclude benefits based on a preexisting condition.</text> </paragraph> <paragraph num="(2)"> <text>If the applicant qualifies under §A of this regulation and submits an application during the time period referenced in §A of this regulation and, as of the date of application, has had a continuous period of creditable coverage that is less than 6 months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary shall specify the manner of the reduction under §B(2) of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Except as provided in §B of this regulation and in Regulations .09-1 and .18 of this chapter, §A of this regulation is not to be construed as preventing the exclusion of benefits under a policy during the first 6 months based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the 6 months before the policy became effective.</text> </paragraph> <paragraph num="D."> <text>Individuals Younger than 65 Years Old and Enrolled in Medicare Part B. An issuer shall comply with the open enrollment requirements that are described in Insurance Article, §15-909, Annotated Code of Maryland, as applying to individuals who are both younger than 65 years old and enrolled in Part B of Medicare.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Policy Provisions."> <paragraph num="A."> <text>Except for permitted preexisting condition clauses as described in Regulations .08B and .27B(2) of this chapter, a policy or certificate may not be advertised, solicited, or issued for delivery in this State as a Medicare supplement policy if the policy or certificate contains limitations or exclusions on coverage that are more restrictive than those of Medicare.</text> </paragraph> <paragraph num="B."> <text>A Medicare supplement policy or certificate may not use waivers to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions.</text> </paragraph> <paragraph num="C."> <text>A Medicare supplement policy or certificate in force in this State may not contain benefits which duplicate benefits provided by Medicare.</text> </paragraph> <paragraph num="D."> <text>Polices With Benefits for Outpatient Prescription Drugs.</text> <paragraph num="(1)"> <text>Subject to COMAR 31.10.05.07B(4) and (6)—(9), and Regulation .08B(5)—(10) of this chapter, a Medicare supplement policy with benefits for outpatient prescription drugs in existence before January 1, 2006, shall be renewed for current policyholders who do not enroll in Part D at the option of the policyholder.</text> </paragraph> <paragraph num="(2)"> <text>A Medicare supplement policy with benefits for outpatient prescription drugs may not be issued after December 31, 2005.</text> </paragraph> <paragraph num="(3)"> <text>After December 31, 2005, a Medicare supplement policy with benefits for outpatient prescription drugs may not be renewed after the policyholder enrolls in Medicare Part D unless:</text> <paragraph num="(a)"> <text>The policy is modified to eliminate outpatient prescription coverage for expenses of outpatient prescription drugs incurred after the effective date of the individual's coverage under a Part D plan; and</text> </paragraph> <paragraph num="(b)"> <text>Premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Benefit Standards for 1990 Standardized Medicare Supplement Benefit Plans."> <paragraph num="A."> <text>General Standards.</text> <paragraph num="(1)"> <text>The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this State on or after July 14, 1992, and with an effective date for coverage before June 1, 2010.</text> </paragraph> <paragraph num="(2)"> <text>A policy or certificate may not be advertised, solicited, delivered, or issued for delivery in this State as a Medicare supplement policy or certificate unless it complies with these benefit standards.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Required Standards.</text> <paragraph num="(1)"> <text>The standards in this section apply to Medicare supplement policies and certificates and are in addition to all other requirements of these regulations.</text> </paragraph> <paragraph num="(2)"> <text>A Medicare supplement policy or certificate may not exclude or limit benefits for losses incurred more than 6 months from the effective date of coverage because it involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within 6 months before the effective date of coverage.</text> </paragraph> <paragraph num="(3)"> <text>A Medicare supplement policy or certificate may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.</text> </paragraph> <paragraph num="(4)"> <text>A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, copayment, or coinsurance amounts. Premiums may be modified to correspond with these changes.</text> </paragraph> <paragraph num="(5)"> <text>A Medicare supplement policy or certificate may not provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium.</text> </paragraph> <paragraph num="(6)"> <text>Each Medicare supplement policy shall be guaranteed renewable. The issuer may not:</text> <paragraph num="(a)"> <text>Cancel or nonrenew the policy solely on the ground of health status of the individual; or</text> </paragraph> <paragraph num="(b)"> <text>Cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under §B(9) of this regulation, the issuer shall offer certificate holders an individual Medicare supplement policy which at the option of the certificate holder provides for:</text> <paragraph num="(a)"> <text>Continuation of the benefits contained in the group policy; or</text> </paragraph> <paragraph num="(b)"> <text>Benefits which meet the requirements of these regulations.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>If an individual is a certificate holder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:</text> <paragraph num="(a)"> <text>Offer the certificate holder the conversion option described in §B(7) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the succeeding issuer shall offer coverage to all persons covered under the old group policy on the group policy's date of termination. Coverage under the new policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.</text> </paragraph> <paragraph num="(10)"> <text>If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of §B(6) of this regulation.</text> </paragraph> <paragraph num="(11)"> <text>Extension of Benefits.</text> <paragraph num="(a)"> <text>Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss that commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits.</text> </paragraph> <paragraph num="(b)"> <text>Receipt of Medicare Part D benefits may not be considered in determining a continuous loss under §B(11)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Suspension of Benefits.</text> <paragraph num="(a)"> <text>A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificate holder for a period not to exceed 24 months in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act (Medicaid), but only if the policyholder or certificate holder notifies the issuer of the policy or certificate within 90 days after the date the individual becomes entitled to medical assistance.</text> </paragraph> <paragraph num="(b)"> <text>If the suspension described in §B(12)(a) of this regulation occurs and if the policyholder or certificate holder loses entitlement to Medicaid, the policy or certificate shall be automatically reinstituted, effective as of the date of termination of entitlement, if the policyholder or certificate holder provides notice of loss of entitlement within 90 days after the date of loss of entitlement and pays the premium attributable to the period, effective as of the date of termination of entitlement.</text> </paragraph> <paragraph num="(c)"> <text>A Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended, for any period that may be provided by federal regulation, at the request of the policyholder, if the policyholder is:</text> <paragraph num="(i)"> <text>Entitled to benefits under §226(b) of the Social Security Act; and</text> </paragraph> <paragraph num="(ii)"> <text>Covered under a group health plan as defined in §1862(b)(1)(A)(v) of the Social Security Act.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>If the suspension described in §B(12)(c) of this regulation occurs and if the policyholder or the certificate holder loses coverage under the group health plan, the Medicare supplement policy shall be reinstituted automatically, effective as of the date of the loss of coverage under the group health plan, if the policyholder described in §B(12)(c):</text> <paragraph num="(i)"> <text>Provides notice of loss of coverage within 90 days after the date of the loss of group coverage; and</text> </paragraph> <paragraph num="(ii)"> <text>Pays the premium attributable to the period, effective as of the date of termination of enrollment in the group health plan.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Reinstitution of coverage under §B(12)(b) or (d) of this regulation:</text> <paragraph num="(i)"> <text>May not provide for any waiting period with respect to treatment of preexisting conditions;</text> </paragraph> <paragraph num="(ii)"> <text>Shall provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension;</text> </paragraph> <paragraph num="(iii)"> <text>If the suspended Medicare supplement policy provided coverage for outpatient prescription drugs, shall provide for the reinstitution of the policy for Medicare Part D enrollees without coverage for outpatient prescription drugs and shall otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension; and</text> </paragraph> <paragraph num="(iv)"> <text>Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(13)"> <text>Exchange Offer.</text> <paragraph num="(a)"> <text>If an issuer makes a written offer to each Medicare supplement policyholder or certificate holder of one or more of its plans, to exchange during a specified period the individual's 1990 standardized benefit plan, as described in Regulation .09 of this chapter, for a 2010 standardized benefit plan, as described in Regulation .28 of this chapter, the offer and subsequent exchange shall comply with the requirements of this subsection.</text> </paragraph> <paragraph num="(b)"> <text>An issuer need not provide justification to the Commissioner if the insured replaces a 1990 standardized benefit plan policy or certificate with an issue age rated 2010 standardized plan policy or certificate at the insured's original issue age and duration. If an insured's policy or certificate to be replaced is priced on an issue age rate schedule at the time of the offer, the rate charged to the insured for the new exchanged policy shall recognize the policy reserve buildup, due to the prefunding inherent in the use of an issue age rate basis, for the benefit of the insured. The rate method proposed to be used by an issuer shall be filed with the Commissioner in accordance with COMAR 31.10.01.02.</text> </paragraph> <paragraph num="(c)"> <text>The rating class of the new policy or certificate shall be the class closest to the insured's class of the replaced coverage.</text> </paragraph> <paragraph num="(d)"> <text>An issuer may not apply a new preexisting condition limitation or a new incontestability period to the new policy for those benefits contained in the exchanged 1990 standardized benefit plan policy or certificate of the insured, but may apply a preexisting condition limitation of not more than 6 months to any added benefits contained in the new 2010 standardized benefit plan policy or certificate not contained in the exchanged policy.</text> </paragraph> <paragraph num="(e)"> <text>The new policy or certificate shall be offered to each policyholder or certificate holder within a given plan, except where the offer or issue would be in violation of State or federal law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Standards for Basic (Core) Benefits Common to Benefit Plans A—J.</text> <paragraph num="(1)"> <text>Every issuer shall make available a policy or certificate including only the following basic core package of benefits to each prospective insured:</text> <paragraph num="(a)"> <text>Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;</text> </paragraph> <paragraph num="(b)"> <text>Coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;</text> </paragraph> <paragraph num="(c)"> <text>Upon exhaustion of the Medicare hospital inpatient coverage including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days;</text> </paragraph> <paragraph num="(d)"> <text>Coverage under Medicare Parts A and B for the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced in accordance with federal regulations;</text> </paragraph> <paragraph num="(e)"> <text>Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The provider shall accept the issuer's payment of the Medicare Part A eligible expenses for hospitalization under §C(1)(c) of this regulation as payment in full and may not bill the insured for any balance.</text> </paragraph> <paragraph num="(3)"> <text>An issuer may make available to prospective insureds any of the other Medicare supplement insurance benefit plans in addition to the basic core package, but not instead of the core package.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Standards for Additional Benefits. The following additional benefits shall be included in Medicare supplement benefit plans B through J only as provided by Regulation .09 of this chapter:</text> <paragraph num="(1)"> <text>Medicare Part A Deductible. Coverage for all of the Medicare Part A inpatient hospital deductible amount per benefit period.</text> </paragraph> <paragraph num="(2)"> <text>Skilled Nursing Facility Care. Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A.</text> </paragraph> <paragraph num="(3)"> <text>Medicare Part B Deductible. Coverage for all of the Medicare Part B deductible amount per calendar year regardless of hospital confinement.</text> </paragraph> <paragraph num="(4)"> <text>Eighty percent of the Medicare Part B Excess Charges. Coverage for 80 percent of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge.</text> </paragraph> <paragraph num="(5)"> <text>One hundred percent of the Medicare Part B Excess Charges. Coverage for all of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge.</text> </paragraph> <paragraph num="(6)"> <text>Basic Outpatient Prescription Drug Benefit.</text> <paragraph num="(a)"> <text>Coverage for 50 percent of outpatient prescription drug charges after a $250 calendar year deductible, to a maximum of $1,250 in benefits received by the insured per calendar year, to the extent not covered by Medicare.</text> </paragraph> <paragraph num="(b)"> <text>The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Extended Outpatient Prescription Drug Benefit.</text> <paragraph num="(a)"> <text>Coverage for 50 percent of outpatient prescription drug charges, after a $250 calendar year deductible to a maximum of $3,000 in benefits received by the insured per calendar year, to the extent not covered by Medicare.</text> </paragraph> <paragraph num="(b)"> <text>The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Medically Necessary Emergency Care in a Foreign Country. Coverage to the extent not covered by Medicare for 80 percent of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician, and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first 60 consecutive days of each trip outside the United States, subject to a calendar year deductible of $250, and a lifetime maximum benefit of $50,000. For purposes of this benefit “emergency care” means care needed immediately because of an injury or an illness of sudden and unexpected onset.</text> </paragraph> <paragraph num="(9)"> <text>Preventive Medical Care Benefit.</text> <paragraph num="(a)"> <text>Coverage for the following preventive health services not covered by Medicare:</text> <paragraph num="(i)"> <text>An annual clinical preventive medical history and physical examination that may include tests and services from §D(9)(a)(ii) of this regulation and patient education to address preventive health care measures; and</text> </paragraph> <paragraph num="(ii)"> <text>Preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Reimbursement shall be for the actual charges up to 100 percent of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) Codes, to a maximum of $120 annually under this benefit, and this benefit may not include payment for any procedure covered by Medicare.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>At-Home Recovery Benefit.</text> <paragraph num="(a)"> <text>Coverage for services to provide short-term, at-home assistance with activities of daily living for those recovering from an illness, injury, or surgery.</text> </paragraph> <paragraph num="(b)"> <text>For purposes of the at-home recovery benefit, the following definitions shall apply:</text> <paragraph num="(i)"> <text>“Activities of daily living” include, but are not limited to, bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self-administered, and changing bandages or other dressings.</text> </paragraph> <paragraph num="(ii)"> <text>“Care provider” means a duly qualified or licensed home health aide/homemaker, personal care aide, or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses registry.</text> </paragraph> <paragraph num="(iii)"> <text>“Home” means any place used by the insured as a place of residence, provided that this place qualifies as a residence for home health care services covered by Medicare. A hospital or skilled nursing facility may not be considered the insured's place of residence.</text> </paragraph> <paragraph num="(iv)"> <text>“At-home recovery visit” means the period of a visit required to provide at-home recovery care, without limit on the duration of the visit, except each consecutive 4 hours in a 24-hour period of services provided by a care provider is one visit.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Coverage Requirements and Limitations.</text> <paragraph num="(i)"> <text>At-home recovery services provided shall be primarily services which assist in activities of daily living.</text> </paragraph> <paragraph num="(ii)"> <text>The insured's attending physician shall certify that the specific type and frequency of at-home recovery services are necessary because of a condition for which a home care plan of treatment was approved by Medicare.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Limitation of Coverage. Coverage is limited to:</text> <paragraph num="(i)"> <text>The number and type of at-home recovery visits certified as necessary by the insured's attending physician. The total number of at-home recovery visits may not exceed the number of Medicare-approved home health care visits under a Medicare-approved home care plan of treatment.</text> </paragraph> <paragraph num="(ii)"> <text>The actual charges for each visit up to a maximum reimbursement of $40 per visit.</text> </paragraph> <paragraph num="(iii)"> <text>$1,600 per calendar year.</text> </paragraph> <paragraph num="(iv)"> <text>Seven visits in any 1 week.</text> </paragraph> <paragraph num="(v)"> <text>Care furnished on a visiting basis in the insured's home.</text> </paragraph> <paragraph num="(vi)"> <text>Services provided by a care provider as defined in §D(10)(b)(ii) of this regulation.</text> </paragraph> <paragraph num="(vii)"> <text>At-home recovery visits while the insured is covered under the policy or certificate and not otherwise excluded.</text> </paragraph> <paragraph num="(viii)"> <text>At-home recovery visits received during the period the insured is receiving Medicare-approved home care services or not more than 8 weeks after the service date of the last Medicare-approved home health care visit.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Coverage is excluded for:</text> <paragraph num="(i)"> <text>Home care visits paid for by Medicare or other government programs;</text> </paragraph> <paragraph num="(ii)"> <text>Care provided by family members, unpaid volunteers, or providers who are not care providers.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Standards for Plans K and L.</text> <paragraph num="(1)"> <text>Standardized Medicare supplement benefit plan K shall consist of the following:</text> <paragraph num="(a)"> <text>Coverage of 100 percent of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period;</text> </paragraph> <paragraph num="(b)"> <text>Coverage of 100 percent of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;</text> </paragraph> <paragraph num="(c)"> <text>Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days;</text> </paragraph> <paragraph num="(d)"> <text>Medicare Part A deductible: Coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in §E(1)(j) of this regulation;</text> </paragraph> <paragraph num="(e)"> <text>Skilled nursing facility care: Coverage for 50 percent of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in §E(1)(j) of this regulation;</text> </paragraph> <paragraph num="(f)"> <text>Hospice care: Coverage for 50 percent of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in §E(1)(j) of this regulation;</text> </paragraph> <paragraph num="(g)"> <text>Coverage for 50 percent, under Medicare Part A or B, of the reasonable cost of the first 3 pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in §E(1)(j) of this regulation;</text> </paragraph> <paragraph num="(h)"> <text>Except for coverage provided in §E(1)(i) of this regulation, coverage for 50 percent of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in §E(1)(j) of this regulation;</text> </paragraph> <paragraph num="(i)"> <text>Coverage of 100 percent of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and</text> </paragraph> <paragraph num="(j)"> <text>Coverage of 100 percent of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $4,000 in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary of the U.S. Department of Health and Human Services.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The provider shall accept the issuer's payment of the Medicare Part A eligible expenses for hospitalization under §E(1)(c) of this regulation as payment in full and may not bill the insured for any balance.</text> </paragraph> <paragraph num="(3)"> <text>Standardized Medicare supplement benefit plan L shall consist of the following:</text> <paragraph num="(a)"> <text>The benefits described in §E(1)(a)—(c) and(i) of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>The benefits described in §E(1)(d)—(h) of this regulation, but substituting 75 percent for 50 percent; and</text> </paragraph> <paragraph num="(c)"> <text>The benefit described in §E(1)(j) of this regulation, but substituting $2,000 for $4,000.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Standard Medicare Supplement Benefit Plans for 1990 Plans."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following term has the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Term Defined. “Structure, language, and format” means style, arrangement, and overall content of a benefit.</text> </paragraph> </paragraph> <paragraph num="B."> <text>General Standards.</text> <paragraph num="(1)"> <text>The standards found in §§C—I of this regulation are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this State on or after July 14, 1992, and with an effective date for coverage before June 1, 2010.</text> </paragraph> <paragraph num="(2)"> <text>A policy or certificate may not be advertised, solicited, delivered, or issued for delivery in this State as a Medicare supplement policy or certificate during the time period described in §B(1) of this regulation unless it complies with the benefit plan standards described in this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An issuer shall make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the core benefits, as defined in Regulation .08C of this chapter.</text> </paragraph> <paragraph num="D."> <text>Groups, packages, or combinations of Medicare supplement benefits other than those listed in this regulation may not be offered for sale in this State, except as may be permitted in §I of this regulation and Regulation .24 of this chapter.</text> </paragraph> <paragraph num="E."> <text>Structure of Benefits.</text> <paragraph num="(1)"> <text>Benefit plans shall be uniform in structure, language, designation, and format to the standard benefit plans A through L listed in this regulation and conform to the definitions in Regulations .02 and .03 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Each benefit shall be structured in accordance with the format provided in Regulation .08C—E of this chapter and list the benefits in the order shown in this regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>An issuer may use, in addition to the benefit plan designations required in §E of this regulation, other designations to the extent permitted by law.</text> </paragraph> <paragraph num="G."> <text>Make-up of 1990 Standardized Benefit Plans.</text> <paragraph num="(1)"> <text>Standardized Medicare supplement benefit plan A shall be limited to the basic (core) benefits common to all benefit plans, as defined in Regulation .08C of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Standardized Medicare supplement benefit plan B shall include only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible as defined in Regulation .08D(1) of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>Standardized Medicare supplement benefit plan C shall include only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .08D(1), (2), (3), and (8) of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>Standardized Medicare supplement benefit plan D shall include only the following: The core benefit, as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medically Necessary Emergency Care in a Foreign Country, and the At-Home Recovery Benefit as defined in Regulation .08D(1), (2), (8), and (10) of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>Standardized Medicare supplement benefit plan E shall include only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medically Necessary Emergency Care in a Foreign Country, and Preventive Medical Care as defined in Regulation .08D(1), (2), (8), and (9) of this chapter.</text> </paragraph> <paragraph num="(6)"> <text>Standardized Medicare supplement benefit plan F shall include only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, the Skilled Nursing Facility Care, the Part B Deductible, 100 Percent of the Medicare Part B Excess Charges, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .08D(1), (2), (3), (5), and (8) of this chapter.</text> </paragraph> <paragraph num="(7)"> <text>High Deductible Plan F.</text> <paragraph num="(a)"> <text>Standardized Medicare supplement benefit high deductible plan F shall include only 100 percent of covered expenses following the payment of the annual high deductible plan F deductible.</text> </paragraph> <paragraph num="(b)"> <text>The covered expenses include the core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, the Medicare Part B Deductible, 100 Percent of the Medicare Part B Excess Charges, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .08D(1)—(3), (5), and (8) of this chapter.</text> </paragraph> <paragraph num="(c)"> <text>The annual high deductible plan F deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement plan F policy, and is in addition to any other specific benefit deductibles.</text> </paragraph> <paragraph num="(d)"> <text>The annual high deductible plan F deductible is $1,500 for 1999, and is based on the calendar year.</text> </paragraph> <paragraph num="(e)"> <text>The deductible shall be adjusted annually after 1999 by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Standardized Medicare supplement benefit plan G shall include only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, 80 Percent of the Medicare Part B Excess Charges, Medically Necessary Emergency Care in a Foreign Country, and the At-Home Recovery Benefit as defined in Regulation .08D(1), (2), (4), (8), and (10) of this chapter.</text> </paragraph> <paragraph num="(9)"> <text>Standardized Medicare Supplement Benefit Plan H.</text> <paragraph num="(a)"> <text>Standardized Medicare supplement benefit plan H shall consist of only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Basic Prescription Drug Benefit, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .08D(1), (2), (6), and (8) of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Standardized Medicare Supplement Benefit Plan I.</text> <paragraph num="(a)"> <text>Standardized Medicare supplement benefit plan I shall consist of only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, 100 Percent of the Medicare Part B Excess Charges, Basic Prescription Drug Benefit, Medically Necessary Emergency Care in a Foreign Country, and At-Home Recovery Benefit as defined in Regulation .08D(1), (2), (5), (6), (8), and (10) of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>Standardized Medicare Supplement Benefit Plan J.</text> <paragraph num="(a)"> <text>Standardized Medicare supplement benefit plan J shall consist of only the following: The core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible, 100 Percent of the Medicare Part B Excess Charges, Extended Prescription Drug Benefit, Medically Necessary Emergency Care in a Foreign Country, Preventive Medical Care, and At-Home Recovery Benefit as defined in Regulation .08D(1)—(3) and (5)—(10) of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>High Deductible Plan J.</text> <paragraph num="(a)"> <text>Standardized Medicare supplement benefit high deductible plan J shall consist of only 100 percent of covered expenses following the payment of the annual high deductible plan J deductible.</text> </paragraph> <paragraph num="(b)"> <text>The covered expenses include the core benefit as defined in Regulation .08C of this chapter, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, extended outpatient prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care benefit, and at-home recovery benefit as defined in Regulation .08D(1)—(3), (5), and (7)—(10) of this chapter.</text> </paragraph> <paragraph num="(c)"> <text>The annual high deductible plan J deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement plan J policy, and is in addition to any other specific benefit deductibles.</text> </paragraph> <paragraph num="(d)"> <text>The annual deductible is $1,500 for 1999 and is based on a calendar year.</text> </paragraph> <paragraph num="(e)"> <text>The deductible shall be adjusted annually after 1999 by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.</text> </paragraph> <paragraph num="(f)"> <text>The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Plans Mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.</text> <paragraph num="(1)"> <text>Standardized Medicare supplement benefit plan K shall consist of only those benefits described in Regulation .08E(1) of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Standardized Medicare supplement benefit plan L shall consist of only those benefits described in Regulation .08E(3) of this chapter.</text> </paragraph> </paragraph> <paragraph num="I."> <text>New or Innovative Benefits.</text> <paragraph num="(1)"> <text>An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits in addition to the benefits provided in a policy or certificate that otherwise complies with the applicable standards.</text> </paragraph> <paragraph num="(2)"> <text>The new or innovative benefits described in §I(1) of this regulation may include benefits that are appropriate to Medicare supplement insurance, new or innovative, not otherwise available, cost-effective, and offered in a manner that is consistent with the goal of simplification of Medicare supplement policies.</text> </paragraph> <paragraph num="(3)"> <text>After December 31, 2005, the innovative benefit may not include an outpatient prescription drug benefit.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09-1" heading="Guaranteed Issue for Eligible Individuals."> <paragraph num="A."> <text>Guaranteed Issue.</text> <paragraph num="(1)"> <text>Eligible individuals are those individuals described in §B of this regulation who:</text> <paragraph num="(a)"> <text>Seek to enroll under the policy during the period specified in §C of this regulation; and</text> </paragraph> <paragraph num="(b)"> <text>Submit evidence of the date of termination, disenrollment, or Medicare Part D enrollment with the application for a Medicare supplement policy.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>With respect to eligible individuals, an issuer may not:</text> <paragraph num="(a)"> <text>Deny or condition the issuance or effectiveness of a Medicare supplement policy described in §E of this regulation that is offered and is available for issuance to new enrollees by the issuer;</text> </paragraph> <paragraph num="(b)"> <text>Discriminate in the pricing of a Medicare supplement policy described in §E of this regulation because of health status, claims experience, receipt of health care, or medical condition; and</text> </paragraph> <paragraph num="(c)"> <text>Impose an exclusion of benefits based on a preexisting condition under a Medicare supplement policy described in §E of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>An eligible individual is an individual described in any of the following:</text> <paragraph num="(1)"> <text>The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare, and the plan terminates or the plan ceases to provide all supplemental health benefits to the individual;</text> </paragraph> <paragraph num="(2)"> <text>The individual is enrolled with a Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare, and any of the following circumstances apply:</text> <paragraph num="(a)"> <text>The certification of the organization or plan under the federal Social Security Act has been terminated;</text> </paragraph> <paragraph num="(b)"> <text>The organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides;</text> </paragraph> <paragraph num="(c)"> <text>The individual is no longer eligible to elect the plan because:</text> <paragraph num="(i)"> <text>Of a change in the individual's place of residence,</text> </paragraph> <paragraph num="(ii)"> <text>Of another change in circumstances specified by the Secretary, but not including termination of the individual's enrollment on the basis described in §1851(g)(3)(B) of the federal Social Security Act (when the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under §1856 of the federal Social Security Act), or</text> </paragraph> <paragraph num="(iii)"> <text>The plan is terminated for all individuals within a residence area;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The individual demonstrates, in accordance with guidelines established by the Secretary, that:</text> <paragraph num="(i)"> <text>The organization offering the plan substantially violated a material provision of the organization's contract under Part C of Medicare in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide medically necessary covered care in accordance with applicable quality standards, or</text> </paragraph> <paragraph num="(ii)"> <text>The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual; or</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>The individual meets any other exceptional conditions as the Secretary may provide;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The individual is 65 years old or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under §1894 of the Social Security Act, and there are circumstances similar to those described in §B(2) of this regulation that would permit discontinuance of the individual's enrollment with the PACE provider if the individual were enrolled in a Medicare Advantage plan;</text> </paragraph> <paragraph num="(4)"> <text>The individual:</text> <paragraph num="(a)"> <text>Is enrolled with:</text> <paragraph num="(i)"> <text>An eligible organization under a contract under §1876 of the federal Social Security Act (Medicare cost),</text> </paragraph> <paragraph num="(ii)"> <text>A similar organization to the organization described in §B(4)(a)(i) of this regulation operating under demonstration project authority, effective for periods before April 1, 1999,</text> </paragraph> <paragraph num="(iii)"> <text>An organization under an agreement under §1833(a)(1)(A) of the federal Social Security Act (health care prepayment plan), or</text> </paragraph> <paragraph num="(iv)"> <text>An organization under a Medicare Select policy; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Ceases to be enrolled under the same circumstances that would permit discontinuance of an individual's election of coverage under §B(2) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The individual is enrolled under a Medicare supplement policy and the enrollment ceases because of:</text> <paragraph num="(a)"> <text>The insolvency of the issuer or bankruptcy of the nonissuer organization or other involuntary termination of coverage or enrollment under the policy;</text> </paragraph> <paragraph num="(b)"> <text>The issuer of the policy substantially violated a material provision of the policy; or</text> </paragraph> <paragraph num="(c)"> <text>The issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The individual:</text> <paragraph num="(a)"> <text>Was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time with:</text> <paragraph num="(i)"> <text>Any Medicare Advantage organization under a Medicare Advantage plan under Part C of Medicare,</text> </paragraph> <paragraph num="(ii)"> <text>Any eligible organization under a contract under §1876 of the federal Social Security Act (Medicare cost),</text> </paragraph> <paragraph num="(iii)"> <text>Any similar organization operating under demonstration project authority,</text> </paragraph> <paragraph num="(iv)"> <text>A Medicare Select policy, or</text> </paragraph> <paragraph num="(v)"> <text>Any Program of All-Inclusive Care for the Elderly (PACE) provider under §1894 of the Social Security Act; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Terminates the subsequent enrollment under §B(6)(a) of this regulation during any period within the first 12 months of the subsequent enrollment (during which the enrollee is permitted to terminate the subsequent enrollment under §1851(e) of the federal Social Security Act);</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>The individual, upon first becoming enrolled in Part B of Medicare at 65 years old or older, enrolls in a Medicare Advantage plan under Part C of Medicare, or with a PACE provider under §1894 of the Social Security Act, and disenrolls from the plan or program by not later than 12 months after the effective date of enrollment; or</text> </paragraph> <paragraph num="(8)"> <text>The individual:</text> <paragraph num="(a)"> <text>Enrolls in a Medicare Part D plan during the initial enrollment period;</text> </paragraph> <paragraph num="(b)"> <text>At the time of enrollment in Part D:</text> <paragraph num="(i)"> <text>Was enrolled under a Medicare supplement policy that covers outpatient prescription drugs; and</text> </paragraph> <paragraph num="(ii)"> <text>Terminates enrollment in the Medicare supplement policy described in §B(8)(b)(i) of this regulation; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Submits evidence of enrollment in Medicare Part D with the application for a policy described in §E(5) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Guaranteed Issue Time Periods.</text> <paragraph num="(1)"> <text>The guaranteed issue period for an individual described in §B(1) of this regulation:</text> <paragraph num="(a)"> <text>Begins on the later of the date:</text> <paragraph num="(i)"> <text>The individual receives a notice of termination or cessation of all supplemental health benefits, or, if the individual does not receive the notice, the date the individual receives notice that a claim has been denied because of a termination or cessation of all supplemental health benefits; or</text> </paragraph> <paragraph num="(ii)"> <text>The applicable coverage terminates or ceases; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Ends 63 days after the beginning of the period described in §C(1)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The guaranteed issue period for an individual described in §B(2)—(4), (6), or (7) of this regulation whose enrollment is terminated involuntarily:</text> <paragraph num="(a)"> <text>Begins on the date that the individual receives a notice of termination; and</text> </paragraph> <paragraph num="(b)"> <text>Ends 63 days after the date the applicable coverage is terminated.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The guaranteed issue period for an individual described in §B(5)(a) of this regulation:</text> <paragraph num="(a)"> <text>Begins on the earlier of:</text> <paragraph num="(i)"> <text>The date that the individual receives a notice of termination, a notice of the issuer's bankruptcy or insolvency, or other similar notice, if any; or</text> </paragraph> <paragraph num="(ii)"> <text>The date that the applicable coverage is terminated; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Ends on the date that is 63 days after the date the coverage is terminated.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The guaranteed issue period for an individual described in §B(2), (3), (5)(b), (5)(c), (6), or (7) of this regulation, who disenrolls voluntarily:</text> <paragraph num="(a)"> <text>Begins on the date that is 60 days before the effective date of the disenrollment; and</text> </paragraph> <paragraph num="(b)"> <text>Ends on the date that is 63 days after the effective date.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The guaranteed issue period for an individual described in §B(8) of this regulation:</text> <paragraph num="(a)"> <text>Begins on the date the individual receives notice pursuant to §1882(v)(2)(B) of the Social Security Act from the Medicare supplement issuer during the 60-day period immediately preceding the initial Part D enrollment period; and</text> </paragraph> <paragraph num="(b)"> <text>Ends on the date that is 63 days after the effective date of the individual's coverage under Medicare Part D.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The guaranteed issue period for an individual described in §B of this regulation but not described in §C(1)—(5) of this regulation:</text> <paragraph num="(a)"> <text>Begins on the effective date of disenrollment; and</text> </paragraph> <paragraph num="(b)"> <text>Ends on the date that is 63 days after the effective date of disenrollment.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Extended Medigap Access for Interrupted Trial Periods.</text> <paragraph num="(1)"> <text>A subsequent enrollment of an individual described in §B(6) of this regulation shall be deemed to be a first time enrollment described in §B(6) of this regulation if both of the following are satisfied:</text> <paragraph num="(a)"> <text>The individual's enrollment with an organization or provider described in §B(6)(a) of this regulation is involuntarily terminated within the first 12 months of enrollment; and</text> </paragraph> <paragraph num="(b)"> <text>The individual enrolls with another organization or provider described in §B(6)(a) of this regulation without an intervening enrollment.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A subsequent enrollment of an individual described in §B(7) of this regulation shall be deemed to be a first time enrollment described in §B(7) of this regulation if both of the following are satisfied:</text> <paragraph num="(a)"> <text>The individual's enrollment with a plan or in a program described in §B(7) of this regulation is involuntarily terminated within the first 12 months of enrollment; and</text> </paragraph> <paragraph num="(b)"> <text>The individual enrolls in another plan or program described in §B(7) of this regulation, without an intervening enrollment.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>For purposes of §B(6) and (7) of this regulation, an enrollment of an individual with an organization or provider described in §B(6)(a) of this regulation, or with a plan or in a program described in §B(7) of this regulation, may not be deemed to be a first time enrollment under this section after the 2-year period beginning on the date on which the individual first enrolled with the organization, provider, plan, or program.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Products to Which Eligible Individuals Are Entitled. The Medicare supplement policy to which eligible individuals are entitled under:</text> <paragraph num="(1)"> <text>§B(1)—(5) of this regulation is a Medicare supplement policy which has a benefit package classified as plan A, B, C, F, including F with a high deductible, K, or L offered by any issuer;</text> </paragraph> <paragraph num="(2)"> <text>Subject to §E(3) of this regulation, §B(6) of this regulation is the same Medicare supplement policy in which the individual was most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in §E(1) of this regulation;</text> </paragraph> <paragraph num="(3)"> <text>§B(6) of this regulation after December 31, 2005, if the individual was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit, a Medicare supplement policy described in this subsection is:</text> <paragraph num="(a)"> <text>The policy available from the same issuer but modified to remove outpatient prescription drug coverage; or</text> </paragraph> <paragraph num="(b)"> <text>At the election of the policyholder, an A, B, C, F, including F with a high deductible, K, or L policy that is offered by any issuer;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>§B(7) of this regulation shall include any Medicare supplement policy offered by any issuer; and</text> </paragraph> <paragraph num="(5)"> <text>§B(8) of this regulation is a Medicare supplement policy that has a benefit package classified as Plan A, B, C, F, including F with a high deductible, K, or L, and that is offered and is available for issuance to new enrollees by the same issuer that issued the individual's Medicare supplement policy with outpatient prescription drug coverage.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Notification Provisions.</text> <paragraph num="(1)"> <text>At the time of an event described in §B of this regulation because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of the individual's rights under this section, and of the obligations of issuers of Medicare supplement policies under §A of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The notice required by §F(1) of this regulation shall be communicated contemporaneously with the notification of termination.</text> </paragraph> <paragraph num="(3)"> <text>At the time of an event described in §B of this regulation because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of the individual's rights under this section, and of the obligations of issuers of Medicare supplement policies under §A of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The notice required by §F(3) of this regulation shall be communicated within 10 working days of the issuer receiving notification of disenrollment.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Standards for Claims Payment."> <paragraph num="A."> <text>An issuer shall comply with §1882(c)(3) of the Social Security Act, as enacted by §4081(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1987 (OBRA) 1987, Public Law No. 100-203, by:</text> <paragraph num="(1)"> <text>Accepting a notice from a Medicare carrier on dually assigned claims submitted by participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on the basis of the information contained in that notice;</text> </paragraph> <paragraph num="(2)"> <text>Notifying the participating physician or supplier and the beneficiary of the payment determination;</text> </paragraph> <paragraph num="(3)"> <text>Paying the participating physician or supplier directly;</text> </paragraph> <paragraph num="(4)"> <text>Furnishing, at the time of enrollment, each enrollee with a card listing the policy name, number, and a central mailing address to which notices from a Medicare carrier may be sent;</text> </paragraph> <paragraph num="(5)"> <text>Paying user fees for claim notices that are transmitted electronically or otherwise; and</text> </paragraph> <paragraph num="(6)"> <text>Providing to the federal Secretary of Health and Human Services, at least annually, a central mailing address to which all claims may be sent by Medicare carriers.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The issuer shall certify to compliance with requirements set forth in §A of this regulation on the Medicare supplement insurance experience reporting form.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Loss Ratio Standards and Refund or Credit of Premium."> <paragraph num="A."> <text>Loss Ratio Standards.</text> <paragraph num="(1)"> <text>An issuer may not deliver or issue for delivery a Medicare supplement policy form or certificate in this State unless the policy form or certificate can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregate benefits, not including anticipated refunds or credits, provided under the policy form or certificate form:</text> <paragraph num="(a)"> <text>At least 75 percent of the aggregate amount of premiums earned in the case of group policies; or</text> </paragraph> <paragraph num="(b)"> <text>At least 65 percent of the aggregate amount of premiums earned in the case of individual policies.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The aggregate benefits as determined in accordance with §A(1)(a) and (b) of this regulation shall be calculated on the basis of incurred claims experience, or incurred health care expenses when coverage is provided by a health maintenance organization on a service rather than reimbursement basis.</text> </paragraph> <paragraph num="(3)"> <text>Earned premiums for the period for which rates are computed shall be calculated in accordance with accepted actuarial principles and practices.</text> </paragraph> <paragraph num="(4)"> <text>Incurred health care expenses where coverage is provided by a health maintenance organization may not include:</text> <paragraph num="(a)"> <text>Home office and overhead costs;</text> </paragraph> <paragraph num="(b)"> <text>Advertising costs;</text> </paragraph> <paragraph num="(c)"> <text>Commissions and other acquisition costs;</text> </paragraph> <paragraph num="(d)"> <text>Taxes;</text> </paragraph> <paragraph num="(e)"> <text>Capital costs;</text> </paragraph> <paragraph num="(f)"> <text>Administrative costs; or</text> </paragraph> <paragraph num="(g)"> <text>Claims processing costs.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>All filings of rates and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this regulation when combined with actual experience to date. Filings of rate revisions shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards.</text> </paragraph> <paragraph num="(6)"> <text>For purposes of applying §A(1) of this regulation and Regulation .04C(3) of this chapter only, policies issued as a result of solicitations of individuals through the mails or by mass media advertising, including both print and broadcast advertising, shall be considered to be individual policies.</text> </paragraph> <paragraph num="(7)"> <text>For policies issued before July 1, 1992, expected claims in relation to premiums shall meet the:</text> <paragraph num="(a)"> <text>Originally filed anticipated loss ratio when combined with the actual experience since inception;</text> </paragraph> <paragraph num="(b)"> <text>Appropriate loss ratio requirement from §A(1)(a) and (b) of this regulation when combined with actual experience beginning with April 1, 1996,</text> </paragraph> <paragraph num="(c)"> <text>Appropriate loss ratio requirement from §A(1)(a) and (b) of this regulation over the entire future period for which the rates are computed to provide coverage.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Refund or Credit Calculation.</text> <paragraph num="(1)"> <text>An issuer shall collect and file with the Commissioner by May 31 of each year the data contained in the reporting form in Regulation .19 of this chapter for each type of standard Medicare supplement benefit plan.</text> </paragraph> <paragraph num="(2)"> <text>If, on the basis of the experience as reported, the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation shall be done on a Statewide basis for each type in a standard Medicare supplement benefit plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded.</text> </paragraph> <paragraph num="(3)"> <text>For purposes of this section, for policies or certificates issued before July 1, 1992, the issuer shall make the refund or credit calculation separately for all individual policies, including all group policies subject to an individual loss ratio standard when issued, combined and all other group policies combined for experience after April 1, 1996. The first report shall be due by May 31, 1998.</text> </paragraph> <paragraph num="(4)"> <text>A refund or credit shall be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the federal Secretary of Health and Human Services, but may not be less than the average rate of interest for 13-week Treasury notes. A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Annual Filing of Premium Rates.</text> <paragraph num="(1)"> <text>An issuer of Medicare supplement policies and certificates issued before or after the effective date of these regulations in this State shall file annually its rates, rating schedule, and supporting documentation including ratios of incurred losses to earned premiums by policy duration for approval by the Commissioner in accordance with the filing requirements and procedures required by the Commissioner. The supporting documentation shall also demonstrate in accordance with actuarial standards of practice, using reasonable assumptions, that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration shall exclude active life reserves. An expected third year loss ratio which is greater than or equal to the applicable percentage shall be demonstrated for policies or certificates in force less than 3 years.</text> </paragraph> <paragraph num="(2)"> <text>As soon as practicable, but before the effective date of enhancements in Medicare benefits, every issuer of Medicare supplement policies or certificates in this State shall file with the Commissioner in accordance with the applicable filing procedures of this State:</text> <paragraph num="(a)"> <text>Appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or certificates; and</text> </paragraph> <paragraph num="(b)"> <text>Supporting documents as necessary to justify the adjustment which shall accompany the filing.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An issuer shall make the premium adjustments which are necessary to produce an expected loss ratio under the policy or certificate to conform with minimum loss ratio standards for Medicare supplement policies in compliance with §A(1)(a) and (b) of this regulation and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for the Medicare supplement policies or certificates.</text> </paragraph> <paragraph num="(4)"> <text>A premium adjustment which would modify the loss ratio experience under the policy other than the adjustments described in §C(3) of this regulation may not be made with respect to a policy at any time other than upon its renewal date or anniversary date.</text> </paragraph> <paragraph num="(5)"> <text>If an issuer fails to make premium adjustments acceptable to the Commissioner, the Commissioner may order premium adjustments, refunds, or premium credits considered necessary to achieve the loss ratio required by this regulation.</text> </paragraph> <paragraph num="(6)"> <text>Before the effective date of changes in Medicare benefits, every issuer of Medicare supplement policies or certificates in this State shall file with the Commissioner for approval appropriate riders, endorsements, or policy forms needed to accomplish the Medicare supplement policy or certificate modifications necessary to eliminate benefit duplications with Medicare. The riders, endorsements, or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or certificate.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Public Hearings. The Commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form issued before or after the effective date of these regulations if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard. The determination of compliance is made without consideration of any refund or credit for the reporting period. Public notice of the hearing shall be furnished in a manner considered appropriate by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Permitted Compensation Arrangements."> <paragraph num="A."> <text>An issuer or other entity may provide commission or other compensation to an agent or other representative for the sale of a Medicare supplement policy or certificate only if the first year commission or other first year compensation is not more than 200 percent of the commission or other compensation paid for selling or servicing the policy or certificate in the second year or period.</text> </paragraph> <paragraph num="B."> <text>The commission or other compensation provided in subsequent renewal years shall be the same as that provided in the second year or period and shall be provided for not fewer than 5 renewal years.</text> </paragraph> <paragraph num="C."> <text>If an existing Medicare supplement policy or certificate is replaced, an issuer or other entity may not provide compensation to its agents or other producers and an agent or producer may not receive compensation greater than the renewal compensation payable by the replacing issuer on renewal policies or certificates.</text> </paragraph> <paragraph num="D."> <text>For purposes of this regulation, “compensation” includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including bonuses, gifts, prizes, awards, and finders fees.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Required Disclosure Provisions."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Form” means the language, format, type size, type proportional spacing, bold character, and line spacing.</text> </paragraph> <paragraph num="(b)"> <text>“Guide” means the Guide to Health Insurance for People with Medicare.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>General Rules.</text> <paragraph num="(1)"> <text>Medicare supplement policies and certificates shall include a renewal or continuation provision. The language or specifications of this provision shall be consistent with the type of contract issued. The provision shall be appropriately captioned and shall appear on the first page of the policy, and shall include any reservation by the issuer of the right to change premiums and any automatic renewal premium increases based on the policyholder's age.</text> </paragraph> <paragraph num="(2)"> <text>Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured, exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after the date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured. After the date of the policy or certificate issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term shall be agreed to in writing signed by the insured, unless the benefits are required by the minimum standards for Medicare supplement policies, or if the increased benefits or coverage are required by law. When a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy.</text> </paragraph> <paragraph num="(3)"> <text>Medicare supplement policies or certificates may not provide for the payment of benefits based on standards described as “usual and customary”, “reasonable and customary”, or words of similar import.</text> </paragraph> <paragraph num="(4)"> <text>If a Medicare supplement policy or certificate contains any limitations with respect to preexisting conditions, these limitations shall appear as a separate paragraph of the policy and be labeled “preexisting condition limitations”.</text> </paragraph> <paragraph num="(5)"> <text>Medicare supplement policies and certificates shall have a notice prominently printed on the first page of the policy or certificate or attached to it stating in substance that the policyholder or certificate holder shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the insured person is not satisfied for any reason.</text> </paragraph> <paragraph num="(6)"> <text>Guide to Health Insurance for People With Medicare.</text> <paragraph num="(a)"> <text>Issuers of health policies or certificates that provide hospital or medical expense coverage on an expense-incurred or indemnity basis to persons eligible for Medicare shall provide to those applicants a Guide to Health Insurance for People with Medicare in the form developed jointly by the National Association of Insurance Commissioners and the Centers for Medicare and Medicaid Services.</text> </paragraph> <paragraph num="(b)"> <text>The Guide shall be printed in a type size not smaller than 12-point type.</text> </paragraph> <paragraph num="(c)"> <text>Delivery of the Guide shall be made whether or not the policies or certificates are advertised, solicited, or issued as Medicare supplement policies or certificates as defined in this chapter.</text> </paragraph> <paragraph num="(d)"> <text>Except in the case of direct response issuers, issuers shall:</text> <paragraph num="(i)"> <text>Deliver the Guide to the applicant at the time of application; and</text> </paragraph> <paragraph num="(ii)"> <text>Obtain acknowledgement of receipt of the Guide.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Direct response issuers shall deliver the Guide to the applicant upon request, but not later than at the time the policy is delivered.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Notice Requirements.</text> <paragraph num="(1)"> <text>As soon as practicable, but not later than 30 days before the annual effective date of any Medicare benefit changes, an issuer shall notify its Medicare supplement policyholders and certificate holders of modifications the insurer has made to Medicare supplement insurance policies or certificates in a format acceptable to the Commissioner. The notice shall:</text> <paragraph num="(a)"> <text>Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement policy or certificate; and</text> </paragraph> <paragraph num="(b)"> <text>Inform each policyholder or certificate holder as to when any premium adjustment is to be made due to changes in Medicare.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The notice of benefit modifications and any premium adjustments shall be in outline form and in clear and simple terms so as to facilitate comprehension.</text> </paragraph> <paragraph num="(3)"> <text>The notice may not contain or be accompanied by a solicitation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>MMA Notice Requirements. Issuers shall comply with any notice requirements of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).</text> </paragraph> <paragraph num="E."> <text>Outline of Coverage Requirements for Medicare Supplement Policies.</text> <paragraph num="(1)"> <text>Issuers shall provide an outline of coverage to all applicants at the time the application is presented to the prospective applicant and, except for direct response policies, shall obtain an acknowledgement of receipt of the outline from the applicant.</text> </paragraph> <paragraph num="(2)"> <text>If an outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis which would require revision of the outline, the issuer shall provide the applicant with a substitute outline of coverage properly describing the policy or certificate which is delivered. The substitute outline of coverage shall contain the following statement in not less than 12-point type, immediately above the company name:</text> </paragraph> <paragraph num="(3)"> <text>Outline of Coverage.</text> <paragraph num="(a)"> <text>The outline of coverage provided to applicants in accordance with this regulation consists of four parts:</text> <paragraph num="(i)"> <text>A cover page;</text> </paragraph> <paragraph num="(ii)"> <text>Premium information;</text> </paragraph> <paragraph num="(iii)"> <text>Disclosure pages; and</text> </paragraph> <paragraph num="(iv)"> <text>Charts displaying the features of each benefit plan offered by the issuer.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The outline of coverage for 2010 standardized Medicare supplement benefit plan policies or certificates shall be in the language and format described in Regulation .30 of this chapter in not less than 12-point type.</text> </paragraph> <paragraph num="(c)"> <text>All plans shall be shown on the cover page, and the plans that are offered by the issuer shall be prominently identified.</text> </paragraph> <paragraph num="(d)"> <text>Premium information for plans that are offered shall be shown on the cover page or immediately following the cover page and shall be prominently displayed.</text> </paragraph> <paragraph num="(e)"> <text>The premium and mode shall be stated for all plans that are offered to the prospective applicant.</text> </paragraph> <paragraph num="(f)"> <text>All possible premiums for the prospective applicant shall be illustrated.</text> </paragraph> </paragraph> <aftertext>“NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued.”</aftertext> </paragraph> <paragraph num="F."> <text>Notice Regarding Policies or Certificates Which Are Not Medicare Supplement Policies.</text> <paragraph num="(1)"> <text>Any health insurance policy or certificate, other than a Medicare supplement policy, or a policy issued pursuant to a contract under §1876 of the federal Social Security Act (42 U.S.C. §1395 et seq.), disability income policy, or other policy identified in Regulation .01C of this chapter, issued for delivery in this State to persons eligible for Medicare shall contain a notice to insureds under the policy that the policy is not a Medicare supplement policy or certificate. The notice shall either be printed or attached to the first page of the outline of coverage delivered to insureds under the policy, or if no outline of coverage is delivered, to the first page of the policy or certificate delivered to the insureds. The notice shall be in not less than 12-point type and contain the following language.</text> </paragraph> <paragraph num="(2)"> <text>Disclosure Statements.</text> <paragraph num="(a)"> <text>Applications provided to persons eligible for Medicare for the health insurance policies or certificates described in §F(1) of this regulation shall disclose, using the applicable statement in Regulation .22 of this chapter, the extent to which the policy duplicates Medicare.</text> </paragraph> <paragraph num="(b)"> <text>The disclosure statement required by §F(2)(a) of this regulation shall be provided as a part of, or together with, the application for the policy or certificate.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Requirements for Application Forms and Replacement Coverage."> <paragraph num="A."> <text>Required Questions in Medicare Supplement Applications.</text> <paragraph num="(1)"> <text>Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant currently has Medicare supplement, Medicare Advantage, Medicaid coverage, or another health insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force.</text> </paragraph> <paragraph num="(2)"> <text>A supplementary application or other form to be signed by the applicant and insurance producer containing these questions and statements may be used.</text> </paragraph> <paragraph num="(1)"> <text>You do not need more than one Medicare supplement policy.</text> </paragraph> <paragraph num="(2)"> <text>If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverages.</text> </paragraph> <paragraph num="(3)"> <text>You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy.</text> </paragraph> <paragraph num="(4)"> <text>If, after purchasing this policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days of losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.</text> </paragraph> <paragraph num="(5)"> <text>If you are eligible for, and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based group health plan, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.</text> </paragraph> <paragraph num="(6)"> <text>Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the State Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low-Income Medicare Beneficiary (SLMB).</text> </paragraph> <paragraph num="(1)"> <paragraph num="(a)"> <text>Did you turn age 65 in the last 6 months?</text> </paragraph> <paragraph num="(b)"> <text>Did you enroll in Medicare Part B in the last 6 months?</text> </paragraph> <paragraph num="(c)"> <text>If yes, what is the effective date?_____________</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Are you covered for medical assistance through the State Medicaid program?</text> <paragraph num="(a)"> <text>Will Medicaid pay your premiums for this Medicare supplement policy?</text> </paragraph> <paragraph num="(b)"> <text>Do you receive any benefits from Medicaid OTHER THAN payments toward your Medicare Part B premium?</text> </paragraph> </paragraph> <paragraph num="(3)"> <paragraph num="(a)"> <text>If you had coverage from any Medicare plan other than original Medicare within the past 63 days (for example, a Medicare Advantage plan, or a Medicare HMO or PPO), fill in your start and end dates below. If you are still covered under this plan, leave “END” blank.</text> </paragraph> <paragraph num="(b)"> <text>If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy?</text> </paragraph> <paragraph num="(c)"> <text>Was this your first time in this type of Medicare plan?</text> </paragraph> <paragraph num="(d)"> <text>Did you drop a Medicare supplement policy to enroll in the Medicare plan?</text> </paragraph> </paragraph> <paragraph num="(4)"> <paragraph num="(a)"> <text>Do you have another Medicare supplement policy in force?</text> </paragraph> <paragraph num="(b)"> <text>If so, with what company, and what plan do you have {optional for Direct Mailers}?</text> </paragraph> <paragraph num="(c)"> <text>If so, do you intend to replace your current Medicare supplement policy with this policy?</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Have you had coverage under any other health insurance within the past 63 days? (For example, an employer, union, or individual plan)</text> <paragraph num="(a)"> <text>If so, with what company and what kind of policy?</text> </paragraph> <paragraph num="(b)"> <text>What are your dates of coverage under the other policy?</text> </paragraph> </paragraph> <aftertext>If you lost or are losing other health insurance coverage and received a notice from your prior insurer saying you were eligible for guaranteed issue of a Medicare supplement insurance policy, or that you had certain rights to buy such a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your prior insurer with your application. PLEASE ANSWER ALL QUESTIONS.</aftertext> </paragraph> <paragraph num="B."> <text>Agents shall list any other health insurance policies they have sold to the applicant.</text> <paragraph num="(1)"> <text>List policies sold which are still in force.</text> </paragraph> <paragraph num="(2)"> <text>List policies sold in the past five (5) years which are no longer in force.</text> </paragraph> </paragraph> <paragraph num="C."> <text>In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the insurer, shall be returned to the applicant by the insurer upon delivery of the policy.</text> </paragraph> <paragraph num="D."> <text>Upon determining that a sale will involve replacement of Medicare supplement coverage, any issuer, other than a direct response issuer, or its agent, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage. One copy of the notice signed by the applicant and the agent, except where the coverage is sold without an agent, shall be provided to the applicant and an additional signed copy shall be retained by the issuer. A direct response issuer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of Medicare supplement coverage.</text> </paragraph> <paragraph num="E."> <text>The notice required by §D of this regulation for an issuer shall be provided in substantially the following form in not less than 12-point type:</text> <paragraph num="1."> <text>Note: If the issuer of the Medicare supplement policy being applied for does not, or is otherwise prohibited from imposing preexisting condition limitations, please skip to statement 2 below. Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of a claim for benefits under the new policy, whereas a similar claim might have been payable under your present policy.</text> </paragraph> <paragraph num="2."> <text>State law provides your replacement policy or certificate may not contain new preexisting conditions, waiting periods, elimination periods, or probationary periods. The insurer will waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.</text> </paragraph> <paragraph num="3."> <text>If you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical and health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, review it carefully to be certain that all information has been properly recorded. (If the policy or certificate is guaranteed issue, this paragraph need not appear.)</text> </paragraph> </paragraph> <paragraph num="F."> <text>Paragraphs 1 and 2 of the replacement notice (applicable to preexisting conditions) may be deleted by an issuer if the replacement does not involve application of a new preexisting condition limitation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Standards for Marketing."> <paragraph num="A."> <text>An issuer, directly or through its producers, shall:</text> <paragraph num="(1)"> <text>Establish marketing procedures to assure that any comparison of policies by its agents or other producers will be fair and accurate;</text> </paragraph> <paragraph num="(2)"> <text>Establish marketing procedures to assure that excessive insurance is not sold or issued;</text> </paragraph> <paragraph num="(3)"> <text>Display prominently by type, stamp, or other appropriate means on the first page of the policy the following: “Notice to buyer: This policy may not cover all of your medical expenses.”;</text> </paragraph> <paragraph num="(4)"> <text>Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has health insurance and the types and amounts of any insurance;</text> </paragraph> <paragraph num="(5)"> <text>Establish auditable procedures for verifying compliance with this section.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In addition to the practices prohibited in Insurance Article, Title 27, Annotated Code of Maryland, the following acts and practices are prohibited:</text> <paragraph num="(1)"> <text>Twisting: Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer;</text> </paragraph> <paragraph num="(2)"> <text>High pressure tactics: Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance;</text> </paragraph> <paragraph num="(3)"> <text>Cold lead advertising: Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The terms “Medicare Supplement”, “Medigap”, “Medicare Wrap-Around”, and words of similar import may not be used unless the policy is issued in compliance with these regulations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Appropriateness of Recommended Purchase and Excessive Insurance."> <paragraph num="A."> <text>In recommending the purchase or replacement of any Medicare supplement policy or certificate an agent shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.</text> </paragraph> <paragraph num="B."> <text>Any sale of a Medicare supplement policy or certificate that will provide an individual more than one Medicare supplement policy or certificate is prohibited.</text> </paragraph> <paragraph num="C."> <text>An issuer may not issue a Medicare supplement policy or certificate to an individual enrolled in Medicare Part C unless the effective date of the coverage is after the termination date of the individual's Part C coverage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Report of Multiple Policies."> <paragraph num="A."> <text>On or before March 1 of each year, an issuer shall report the following information for every individual resident of this State for which the issuer has in force more than one Medicare supplement policy or certificate:</text> <paragraph num="(1)"> <text>Policy or certificate number; and</text> </paragraph> <paragraph num="(2)"> <text>Date of issuance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The items set forth in §A of this regulation shall be grouped by individual policyholder.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Prohibition Against Preexisting Conditions, Waiting Periods, Elimination Periods, and Probationary Periods in Replacement Policies or Certificates."> <paragraph num="A."> <text>If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate, the replacing issuer shall waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, and probationary periods in the new Medicare supplement policy or certificate to the extent time was spent under the original policy.</text> </paragraph> <paragraph num="B."> <text>If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate which has been in effect for at least 6 months, the replacing policy may not provide any time period applicable to preexisting conditions, waiting periods, elimination periods, and probationary periods.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Report Form for Calculation of Loss Ratios."> <text>The following forms are to be used for reporting loss ratios and calculating refunds for credits required under Regulation .11B of this chapter:</text> <paragraph num="A."> <text>Medicare Supplement Refund Calculation Form.</text> </paragraph> <text>Signature</text> <text>________________________________</text> <text>Name-Please Type</text> <text>________________________________</text> <text>Title-Please Type</text> <text>________________________________</text> <text>Date</text> <paragraph num="B."> <text>Reporting Form for Benchmark Ratio for Group Policies.</text> </paragraph> <paragraph num="C."> <text>Reporting Form for Benchmark Ratio for Individual Policies.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Form for Reporting Multiple Policies."> <text>The following form is to be used in making reports of multiple policies in accordance with the requirements of Regulation .17 of this chapter:</text> <text>(a)3 (b)4 (c) (d) (e) (f) (g) (h) (i) (j) (o)5 Year Earned Premium Factor (b) × (c) CumulativeLoss Ratio (d) × (e) Factor (b) × (g) CumulativeLoss Ratio (h) × (i) Policy YearLoss Ratio 1 2.770 0.442 0.000 0.000 0.4 2 4.175 0.493 0.000 0.000 0.55 3 4.175 0.493 1.194 0.659 0.65 4 4.175 0.493 2.245 0.669 0.67 5 4.175 0.493 3.170 0.678 0.69 6 4.175 0.493 3.998 0.686 0.71 7 4.175 0.493 4.754 0.695 0.73 8 4.175 0.493 5.445 0.702 0.75 9 4.175 0.493 6.075 0.708 0.76 10 4.175 0.493 6.650 0.713 0.76 11 4.175 0.493 7.176 0.717 0.76 12 4.175 0.493 7.655 0.720 0.77 13 4.175 0.493 8.093 0.723 0.77 14 4.175 0.493 8.493 0.725 0.77 15+6 4.175 0.493 8.684 0.725 0.77 ________ ________ ________ ________ Total: (k): (l): (m): (n):</text> <text>The purpose of this form is to report the following information on each resident of this state who has in force more than one Medicare supplement policy or certificate. The information is to be grouped by individual policyholder.</text> <text>FORM FOR REPORTINGMEDICARE SUPPLEMENT POLICIES Company name: ________________________________________ Address: ________________________________________ ________________________________________ Phone Number: ________________________________________ Due: March 1, annually</text> <text>Policy andCertificate # Date ofIssuance</text> </regulation> <regulation prefix="Regulation" num=".21" heading="Severability."> <text>If any regulations of this chapter or the application of these regulations to any person or circumstance is for any reason held to be invalid, the remainder of the chapter and the application of the regulations to other persons or circumstances may not be affected.</text> </regulation> <regulation prefix="Regulation" num=".22" heading="Disclosure Statements."> <paragraph num="A."> <text>Instructions.</text> <paragraph num="(1)"> <text>Section 1882(d) of the federal Social Security Act (42 U.S.C. 1395ss) prohibits the sale of a health insurance policy (the term policy includes certificate) to Medicare beneficiaries that duplicates Medicare benefits unless it will pay benefits without regard to a beneficiary's other health coverage and it includes the prescribed disclosure statement on or together with the application for the policy.</text> </paragraph> <paragraph num="(2)"> <text>All types of health insurance policies that duplicate Medicare shall include one of the attached disclosure statements, according to the particular policy type involved, on the application or together with the application. The disclosure statement may not vary from the attached statements in terms of language or format (type size, type proportional spacing, bold character, line spacing, and usage of boxes around text).</text> </paragraph> <paragraph num="(3)"> <text>State and federal law prohibits insurers from selling a Medicare supplement policy to a person that already has a Medicare supplement policy except as a replacement.</text> </paragraph> <paragraph num="(4)"> <text>Property/casualty and life insurance policies are not considered health insurance.</text> </paragraph> <paragraph num="(5)"> <text>Disability income policies are not considered to provide benefits that duplicate Medicare.</text> </paragraph> <paragraph num="(6)"> <text>Long-term care insurance policies that coordinate with Medicare and other health insurance are not considered to provide benefits that duplicate Medicare.</text> </paragraph> <paragraph num="(7)"> <text>The federal law does not preempt state laws that are more stringent than the federal requirements.</text> </paragraph> <paragraph num="(8)"> <text>The federal law does not preempt existing state form filing requirements.</text> </paragraph> <paragraph num="(9)"> <text>Section 1882 of the federal Social Security Act was amended in subsection (d)(3)(A) to allow for alternative disclosure statements. The disclosure statements already in §B of this regulation remain. Carriers may use either disclosure statement with the requisite insurance product. However, carriers shall use either the original disclosure statements or the alternative disclosure statements and not use both simultaneously.</text> </paragraph> <paragraph num="(10)"> <text>Insurers shall use the disclosure statements found in §§B and C of this regulation if the disclosure statement was printed before January 1, 2006.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Original Disclosure Statements.</text> <paragraph num="(1)"> <text>Accidental Injury Only Policies. The following is an original disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only:</text> </paragraph> <paragraph num="(2)"> <text>Specified Limited Services Policies. The following is an original disclosure statement for policies that provide benefits for specified limited services:</text> </paragraph> <paragraph num="(3)"> <text>Expense Incurred Specified Disease Policies. The following is an original disclosure statement for policies that reimburse expenses incurred for specified disease(s) or other specified impairment(s). This includes expense incurred cancer, specified disease and other types of health insurance policies that limit reimbursement to named medical conditions.</text> </paragraph> <paragraph num="(4)"> <text>Fixed Dollar Specified Disease Policies. The following is an original disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.</text> </paragraph> <paragraph num="(5)"> <text>Policies Providing Both Expense Incurred and Fixed Indemnity Benefits. The following is an Original disclosure statement for policies that provide benefits for both expenses incurred and fixed indemnity basis:</text> </paragraph> <paragraph num="(6)"> <text>Policies Providing Fixed Dollar Benefits. The following is an original disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies:</text> </paragraph> <paragraph num="(7)"> <text>Other Health Insurance Policies. The following is an original disclosure statement for other health insurance policies not specifically identified in the previous statements:</text> </paragraph> </paragraph> <paragraph num="C."> <text>Alternative Disclosure Statements.</text> <paragraph num="(1)"> <text>Accidental Injury Only Policies. The following is an alternative disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only:</text> </paragraph> <paragraph num="(2)"> <text>Specified Limited Services Policies. The following is an alternative disclosure statement for policies that provide benefits for specified limited services:</text> </paragraph> <paragraph num="(3)"> <text>Expense Incurred Specified Disease Policies. The following is an alternative disclosure statement for policies that reimburse expenses incurred for specified diseases or other specified impairments. This includes expense-incurred cancer, specified disease, and other types of health insurance policies that limit reimbursement to named medical conditions.</text> </paragraph> <paragraph num="(4)"> <text>Fixed Dollar Specified Disease Policies. The following is an alternative disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.</text> </paragraph> <paragraph num="(5)"> <text>Policies Providing Both Expense Incurred and Fixed Indemnity Benefits. The following is an alternative disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis:</text> </paragraph> <paragraph num="(6)"> <text>Policies Providing Only Fixed Dollar Benefits. The following is an alternative disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies:</text> </paragraph> <paragraph num="(7)"> <text>Other Health Insurance Policies. The following is an alternative disclosure statement for other health insurance policies not specifically identified in the preceding statements:</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Disclosure Statements Printed After December 31, 2005."> <paragraph num="A."> <text>Instructions.</text> <paragraph num="(1)"> <text>The instructions found in Regulation .22A(1)—(8) of this chapter also apply to the disclosure statements printed after December 31, 2005.</text> </paragraph> <paragraph num="(2)"> <text>Use of Original or Alternative Disclosure Statements.</text> <paragraph num="(a)"> <text>Section 1882 of the federal Social Security Act was amended in Subsection (d)(3)(A) to allow for alternative disclosure statements.</text> </paragraph> <paragraph num="(b)"> <text>Carriers may use either disclosure statement with the requisite insurance product.</text> </paragraph> <paragraph num="(c)"> <text>Carriers shall use either the original disclosure statements or the alternative disclosure statement, but not both simultaneously.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Insurers shall use the disclosure statements found in §§C and D of this regulation if the disclosure statements were printed after December 31, 2005.</text> </paragraph> <paragraph num="C."> <text>Original Disclosure Statements.</text> <paragraph num="(1)"> <text>Accidental Injury Only Policies. The following is an original disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only:</text> </paragraph> <paragraph num="(2)"> <text>Specified Limited Services Policies. The following is an original disclosure statement for policies that provide benefits for specified limited services:</text> </paragraph> <paragraph num="(3)"> <text>Expense Incurred Specified Disease Policies. The following is an original disclosure statement for policies that reimburse expenses incurred for specified diseases or other specified impairments. This includes expense-incurred cancer, specified disease, and other types of health insurance policies that limit reimbursement to named medical conditions.</text> </paragraph> <paragraph num="(4)"> <text>Fixed Dollar Specified Disease Policies. The following is an original disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.</text> </paragraph> <paragraph num="(5)"> <text>Policies Providing Fixed Dollar Benefits. The following is an original disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies:</text> </paragraph> <paragraph num="(6)"> <text>Policies Providing Both Expense Incurred and Fixed Indemnity Benefits. The following is an original disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis:</text> </paragraph> <paragraph num="(7)"> <text>Other Health Insurance Policies. The following is an original disclosure statement for other health insurance policies not specifically identified in the statements set forth in §C(1)-6) of this regulation:</text> </paragraph> </paragraph> <paragraph num="D."> <text>Alternative Disclosure Statements.</text> <paragraph num="(1)"> <text>Accidental Injury Only Policies. The following is an alternative disclosure statement for policies that provide benefits for expenses incurred for an accidental injury only:</text> </paragraph> <paragraph num="(2)"> <text>Specified Limited Services Policies. The following is an alternative disclosure statement for policies that provide benefits for specified limited services:</text> </paragraph> <paragraph num="(3)"> <text>Expense-Incurred Specified Disease Policies. The following is an alternative disclosure statement for policies that reimburse expenses incurred for specified diseases, or other specified impairments. This includes expense-incurred cancer, specified disease, and other types of health insurance policies that limit reimbursement to named medical conditions.</text> </paragraph> <paragraph num="(4)"> <text>Fixed Dollar Specified Disease Policies. The following is an alternative disclosure statement for policies that pay fixed dollar amounts for specified diseases or other specified impairments. This includes cancer, specified disease, and other health insurance policies that pay a scheduled benefit or specific payment based on diagnosis of the conditions named in the policy.</text> </paragraph> <paragraph num="(5)"> <text>Policies Providing Only Fixed Dollar Benefits. The following is an alternative disclosure statement for indemnity policies and other policies that pay a fixed dollar amount per day, excluding long-term care policies:</text> </paragraph> <paragraph num="(6)"> <text>Policies Providing Both Expense-Incurred and Fixed Indemnity Benefits. The following is an alternative disclosure statement for policies that provide benefits upon both an expense-incurred and fixed indemnity basis:</text> </paragraph> <paragraph num="(7)"> <text>Other Health Insurance Policies. The following is an alternative disclosure statement for other health insurance policies not specifically identified in the statements set forth in §D(1)-(6) of this regulation:</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Medicare Select Policies and Certificates — General Requirements."> <paragraph num="A."> <text>Applicability.</text> <paragraph num="(1)"> <text>This regulation applies to Medicare Select policies and certificates, as defined in Regulation .02 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A policy or certificate may not be advertised as a Medicare Select policy or certificate unless it meets the requirements of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner may authorize an issuer to offer a Medicare Select policy or certificate pursuant to this regulation and §4358 of the Omnibus Budget Reconciliation Act (OBRA) of 1990 if the Commissioner finds that the issuer has satisfied all of the requirements of this regulation.</text> </paragraph> <paragraph num="C."> <text>A Medicare Select issuer may not issue a Medicare Select policy or certificate in Maryland until its plan of operation has been approved by the Commissioner.</text> </paragraph> <paragraph num="D."> <text>Required Filing of Plan of Operation.</text> <paragraph num="(1)"> <text>A Medicare Select issuer shall file a proposed plan of operation with the Commissioner and with the Secretary of the Maryland Department of Health in a format prescribed by the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>The plan of operation filed with the Commissioner shall contain at least the following information:</text> <paragraph num="(a)"> <text>A statement or map providing a clear description of the service area;</text> </paragraph> <paragraph num="(b)"> <text>A description of the grievance procedure to be utilized;</text> </paragraph> <paragraph num="(c)"> <text>Copies of the written information proposed to be used by the issuer to comply with Regulation .25B of this chapter; and</text> </paragraph> <paragraph num="(d)"> <text>Any other information requested by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The plan of operation filed with the the Secretary of the Maryland Department of Health shall contain, at a minimum, the following information:</text> <paragraph num="(a)"> <text>Evidence that all covered services subject to restricted network provisions are available and accessible through network providers, including a demonstration that:</text> <paragraph num="(i)"> <text>Services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation, and after-hours care;</text> </paragraph> <paragraph num="(ii)"> <text>The number of network providers in the service area is sufficient, with respect to current and expected policyholders, either to deliver adequately all services that are subject to a restricted network provision or to make appropriate referrals;</text> </paragraph> <paragraph num="(iii)"> <text>There are written agreements with network providers describing specific responsibilities;</text> </paragraph> <paragraph num="(iv)"> <text>Emergency care is available 24 hours per day and 7 days per week; and</text> </paragraph> <paragraph num="(v)"> <text>In the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting the providers from billing or otherwise seeking reimbursement from or recourse against any individual insured under a Medicare Select policy or certificate;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A statement or map providing a clear description of the service area;</text> </paragraph> <paragraph num="(c)"> <text>A description of the quality assurance program, including:</text> <paragraph num="(i)"> <text>The formal organizational structure;</text> </paragraph> <paragraph num="(ii)"> <text>The written criteria for selection, retention and removal of network providers; and</text> </paragraph> <paragraph num="(iii)"> <text>The procedures for evaluating quality of care provided by network providers, and the process to initiate corrective action if warranted; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>A list and description, by specialty, of the network providers.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>In determining the reasonable promptness of services provided with respect to geographic location in §D(3)(a)(i) of this regulation, the geographic availability shall reflect the usual travel times within the community.</text> </paragraph> <paragraph num="(5)"> <text>In determining the reasonable promptness of services provided with respect to hours of operation and after-hours care in §D(3)(a)(i) of this regulation, the hours of operation and availability of after-hours care shall reflect usual practice in the local area.</text> </paragraph> <paragraph num="(6)"> <text>With respect to the requirements in §D(3)(a)(v) of this regulation that prohibit providers from billing or otherwise seeking reimbursement from or recourse against any individual insured under a Medicare Select policy or certificate, the prohibition is not required to be applied to supplemental charges or coinsurance amounts stated in the Medicare Select policy or certificate.</text> </paragraph> <paragraph num="(7)"> <text>The Secretary of the Maryland Department of Health shall notify the Commissioner in writing after the determining that the plan of operation filed by the issuer is acceptable.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Required Filing of Changes to Plan of Operation.</text> <paragraph num="(1)"> <text>In General.</text> <paragraph num="(a)"> <text>A Medicare Select issuer shall file with the Commissioner any proposed changes to the plan of operation, except for changes to the list of network providers, prior to implementing the changes.</text> </paragraph> <paragraph num="(b)"> <text>Changes shall be deemed approved by the Commissioner after 30 days unless specifically disapproved.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A Medicare Select issuer shall file an updated list of network providers with the Secretary of the Maryland Department of Health at least quarterly.</text> </paragraph> <paragraph num="(3)"> <text>The Secretary of the Maryland Department of Health shall notify the Commissioner in writing if the updated list of providers submitted in accordance with §E(2) of this regulation ceases to meet the criteria set forth in §D(3)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A Medicare Select policy or certificate may not restrict payment for covered services provided by nonnetwork providers if:</text> <paragraph num="(1)"> <text>The services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury, or condition; and</text> </paragraph> <paragraph num="(2)"> <text>It is not reasonable to obtain services through a network provider.</text> </paragraph> </paragraph> <paragraph num="G."> <text>A Medicare Select policy or certificate shall provide payment for full coverage under the policy for covered services that are not available through network providers.</text> </paragraph> <paragraph num="H."> <text>A Medicare Select issuer shall comply with reasonable requests for data made by state or federal agencies, including the United States Department of Health and Human Services, for the purpose of evaluating the Medicare Select Program.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Medicare Select — Consumer Protection."> <paragraph num="A."> <text>Applicability.</text> <paragraph num="(1)"> <text>This regulation shall apply to Medicare Select policies and certificates, as defined in Regulation .02 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A policy or certificate may not be advertised as a Medicare Select policy or certificate unless it meets the requirements of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Required Disclosure.</text> <paragraph num="(1)"> <text>A Medicare Select issuer shall make full and fair disclosure in writing of the provisions, restrictions, and limitations of the Medicare Select policy or certificate to each applicant.</text> </paragraph> <paragraph num="(2)"> <text>The disclosure required by §B(1) of this regulation shall include at least the following:</text> <paragraph num="(a)"> <text>An outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the Medicare Select policy or certificate with:</text> <paragraph num="(i)"> <text>Other Medicare supplement policies or certificates offered by the issuer; and</text> </paragraph> <paragraph num="(ii)"> <text>Other Medicare Select policies or certificates;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A description, including address, phone number, and hours of operation, of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers;</text> </paragraph> <paragraph num="(c)"> <text>A description of the restricted network provisions, including payments for coinsurance and deductibles if providers other than network providers are utilized;</text> </paragraph> <paragraph num="(d)"> <text>A description of coverage for emergency and urgently needed care and other out-of-service-area coverage;</text> </paragraph> <paragraph num="(e)"> <text>A description of limitations on referrals to restricted network providers and to other providers;</text> </paragraph> <paragraph num="(f)"> <text>A description of the policyholder's rights to purchase any other Medicare supplement policy or certificate otherwise offered by the issuer; and</text> </paragraph> <paragraph num="(g)"> <text>A description of the Medicare Select issuer's quality assurance program and grievance procedure.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>With regard to the description of restricted network provisions required by §B(2)(c) of this regulation, expenses incurred when using out-of-network providers may not count toward the out-of-pocket annual limit contained in plans K and L, except to the extent specified in the policy or certificate.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Before the sale of a Medicare Select policy or certificate, a Medicare Select issuer shall obtain from the applicant a signed and dated form stating that the applicant has received the information provided under §B of this regulation and that the applicant understands the restrictions of the Medicare Select policy or certificate.</text> </paragraph> <paragraph num="D."> <text>Complaints and Grievances.</text> <paragraph num="(1)"> <text>Procedures Required.</text> <paragraph num="(a)"> <text>A Medicare Select issuer shall have and use procedures for hearing complaints and resolving written grievances from the subscribers.</text> </paragraph> <paragraph num="(b)"> <text>The procedures for hearing complaints and resolving written grievances from subscribers shall be aimed at mutual agreement for settlement.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The grievance procedure shall be described in the policy and certificates and in the outline of coverage.</text> </paragraph> <paragraph num="(3)"> <text>Any grievance procedure involving coverage decisions shall comply with the requirements found in Insurance Article, Title 15, Subtitle 10D, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>Any grievance procedure involving adverse decisions shall comply with the requirements found in Insurance Article, Title 15, Subtitle 10A, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>At the time the policy or certificate is issued, the issuer shall provide detailed information to the policyholder describing how a grievance may be registered with the issuer.</text> </paragraph> <paragraph num="(6)"> <text>An issuer shall consider grievances in a timely manner and shall transmit the grievances to appropriate decision-makers who have authority to fully investigate the issue and take corrective action.</text> </paragraph> <paragraph num="(7)"> <text>If a grievance is found to be valid, an issuer shall take corrective action promptly.</text> </paragraph> <paragraph num="(8)"> <text>An issuer shall notify all concerned parties about the results of a grievance.</text> </paragraph> <paragraph num="(9)"> <text>Annual Report.</text> <paragraph num="(a)"> <text>The issuer shall report not later than March 31 of each year to the Commissioner regarding its grievance procedure.</text> </paragraph> <paragraph num="(b)"> <text>The report required by §D(9)(a) of this regulation shall be in a format prescribed by the Commissioner and shall contain the number of grievances filed in the past year and a summary of the subject, nature, and resolution of the grievances.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>At the time of initial purchase, a Medicare Select issuer shall make available to each applicant for a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate otherwise offered by the issuer.</text> </paragraph> <paragraph num="F."> <text>Right to Purchase Medicare Supplement Policy or Certificate.</text> <paragraph num="(1)"> <text>At the request of an individual insured under a Medicare Select policy or certificate, a Medicare Select issuer shall make available to the individual insured the opportunity to purchase a Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision.</text> </paragraph> <paragraph num="(2)"> <text>The issuer shall make available the policies or certificates described in §F(1) of this regulation without requiring evidence of insurability after the Medicare Select policy or certificate has been in force for 6 months.</text> </paragraph> <paragraph num="(3)"> <text>For the purposes of §F(1) of this regulation, a Medicare supplement policy or certificate shall be considered to have comparable or lesser benefits unless the Medicare supplement policy or certificate contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced.</text> </paragraph> <paragraph num="(4)"> <text>A benefit shall be considered a significant benefit under §F(3) of this regulation if the benefit includes coverage for the Medicare Part A deductible, coverage for at-home recovery services, or coverage for Part B excess charges.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Options if the Medicare Select Program is Discontinued.</text> <paragraph num="(1)"> <text>Medicare Select policies and certificates shall provide for continuation of coverage in the event the Secretary determines that Medicare Select policies and certificates issued under this regulation shall be discontinued due to either the:</text> <paragraph num="(a)"> <text>Failure of the Medicare Select Program to be reauthorized under law; or</text> </paragraph> <paragraph num="(b)"> <text>Substantial amendment of the Medicare Select Program.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the Secretary determines that Medicare Select policies and certificates should be discontinued as described in §G(1) of this regulation, each Medicare Select issuer shall make available to each individual insured under a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision.</text> </paragraph> <paragraph num="(3)"> <text>The issuer referenced in §G(2) of this regulation shall make available the policies and certificates without requiring evidence of insurability.</text> </paragraph> <paragraph num="(4)"> <text>For the purposes of §G(2) of this regulation, a Medicare supplement policy or certificate shall be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced.</text> </paragraph> <paragraph num="(5)"> <text>A benefit shall be considered a significant benefit under §G(4) of this regulation if the benefit includes coverage for the Medicare Part A deductible, coverage for at-home recovery services or coverage for Part B excess charges.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Prohibition Against Use of Genetic Information and Requests for Genetic Testing."> <paragraph num="A."> <text>This regulation applies to all policies with policy years beginning on or after July 1, 2009.</text> </paragraph> <paragraph num="B."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="(2)"> <text>Terms Defined.</text> <paragraph num="(a)"> <text>“Family member” means, with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of the individual.</text> </paragraph> <paragraph num="(b)"> <text>Genetic Information.</text> <paragraph num="(i)"> <text>“Genetic information” means, with respect to an individual, information about the individual's genetic tests, the genetic tests of a family member of the individual, and the manifestation of a disease or disorder in a family member of the individual.</text> </paragraph> <paragraph num="(ii)"> <text>“Genetic information” includes, with respect to an individual, a request for, or receipt of, genetic services, or participation in clinical research that includes genetic services, by the individual or a family member of the individual.</text> </paragraph> <paragraph num="(iii)"> <text>“Genetic information” includes, with respect to a pregnant woman, genetic information of a fetus carried by the pregnant woman,</text> </paragraph> <paragraph num="(iv)"> <text>“Genetic information” includes, with respect to an individual or family member utilizing reproductive technology, genetic information of an embryo legally held by the individual or family member.</text> </paragraph> <paragraph num="(v)"> <text>“Genetic information” does not include information about the sex or age of an individual.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Genetic services” means:</text> <paragraph num="(i)"> <text>A genetic test;</text> </paragraph> <paragraph num="(ii)"> <text>Genetic counseling, including obtaining, interpreting, or assessing genetic information; or</text> </paragraph> <paragraph num="(iii)"> <text>Genetic education.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Genetic Test.</text> <paragraph num="(i)"> <text>“Genetic test” means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations, or chromosomal changes.</text> </paragraph> <paragraph num="(ii)"> <text>“Genetic test” does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes.</text> </paragraph> <paragraph num="(iii)"> <text>“Genetic test” does not mean an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Issuer of a Medicare Supplement Policy or Certificate.</text> <paragraph num="(i)"> <text>“Issuer of a Medicare supplement policy or certificate” means an insurance company, fraternal benefit society, nonprofit health service plan, health maintenance organization, or any other entity delivering or issuing for delivery in this State Medicare supplement policies or certificates.</text> </paragraph> <paragraph num="(ii)"> <text>“Issuer of a Medicare supplement policy or certificate” includes a third-party administrator or other person acting for or on behalf of an entity described in §B(2)(e)(i) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>“Underwriting purposes” means:</text> <paragraph num="(i)"> <text>Rules for, or determination of, eligibility, including enrollment and continued eligibility, for benefits under the policy;</text> </paragraph> <paragraph num="(ii)"> <text>The computation of premium or contribution amounts under the policy;</text> </paragraph> <paragraph num="(iii)"> <text>The application of a preexisting condition exclusion under the policy; and</text> </paragraph> <paragraph num="(iv)"> <text>Other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>An issuer of a Medicare supplement policy or certificate may not:</text> <paragraph num="(1)"> <text>Deny or condition the issuance or effectiveness of the policy or certificate, including the imposition of an exclusion of benefits under the policy or certificate because of a preexisting condition, based on the genetic information with respect to an individual;</text> </paragraph> <paragraph num="(2)"> <text>Discriminate in the pricing of the policy or certificate, including the adjustment of premium rates, of an individual based on the genetic information with respect to the individual;</text> </paragraph> <paragraph num="(3)"> <text>Request or require an individual or a family member of the individual to undergo a genetic test;</text> </paragraph> <paragraph num="(4)"> <text>Request, require, or purchase genetic information for underwriting purposes; or</text> </paragraph> <paragraph num="(5)"> <text>Request, require, or purchase, in connection with an enrollment, genetic information with respect to an individual before the individual's enrollment under the policy.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The prohibitions described in §C(1) and (2) of this regulation do not limit the ability of an issuer of a Medicare supplement policy or certificate, to the extent otherwise permitted by law, from:</text> <paragraph num="(1)"> <text>Denying or conditioning the issuance or effectiveness of the policy or certificate or increasing the premium for a group based on the manifestation of a disease or disorder of an insured or applicant; or</text> </paragraph> <paragraph num="(2)"> <text>Increasing the premium for a policy issued to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy, but the manifestation of a disease or disorder in one individual may not also be used as genetic information about other group members and to further increase the premium for the group.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The prohibition described in §C(3) of this regulation does not preclude an issuer of a Medicare supplement policy or certificate from obtaining and using the results of a genetic test in making a determination regarding payment, as defined for the purposes of applying the regulations promulgated under Part C of Title XI and Section 264 of the Health Insurance Portability and Accountability Act of 1996, and consistent with §C(1) and (2) of this regulation.</text> </paragraph> <paragraph num="F."> <text>For purposes of carrying out §E of this regulation, an issuer of a Medicare supplement policy or certificate may request only the minimum amount of information necessary to accomplish the intended purpose.</text> </paragraph> <paragraph num="G."> <text>Notwithstanding §C(3) of this regulation, an issuer of a Medicare supplement policy or certificate may request, but not require, that an individual or a family member of the individual undergo a genetic test if all of the following conditions are met:</text> <paragraph num="(1)"> <text>The request is made pursuant to research that complies with Part 46 of Title 45, Code of Federal Regulations, or equivalent federal regulations, and any applicable State or local law or regulations for the protection of human subjects in research;</text> </paragraph> <paragraph num="(2)"> <text>The issuer clearly indicates to the individual, or in the case of a minor child, to the legal guardian of the child, to whom the request is made that:</text> <paragraph num="(a)"> <text>Compliance with the request is voluntary, and</text> </paragraph> <paragraph num="(b)"> <text>Noncompliance with the request will have no effect on enrollment status or premium or contribution amounts;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The issuer does not use genetic information collected or acquired under §G of this regulation to underwrite, determine eligibility to enroll or maintain enrollment status, set premium rates, or determine whether to issue, renew, or replace a policy or certificate;</text> </paragraph> <paragraph num="(4)"> <text>The issuer notifies the Secretary in writing that the issuer is conducting activities under the exception provided by §G of this regulation, and includes a description of the activities conducted; and</text> </paragraph> <paragraph num="(5)"> <text>The issuer complies with all other conditions for activities conducted under §G of this regulation, as the Secretary may require by regulation.</text> </paragraph> </paragraph> <paragraph num="H."> <text>If an issuer of a Medicare supplement policy or certificate obtains genetic information incidental to the requesting, requiring, or purchasing of other information concerning an individual, the request, requirement, or purchase will not be considered a violation of §C(5) of this regulation if the request, requirement, or purchase does not violate §C(4) of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Benefit Standards for 2010 Standardized Medicare Supplement Benefit Plans."> <paragraph num="A."> <text>General Standards.</text> <paragraph num="(1)"> <text>The standards found in §§B—D of this regulation are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this State with an effective date for coverage on or after June 1, 2010.</text> </paragraph> <paragraph num="(2)"> <text>A policy or certificate may not be advertised, solicited, delivered, or issued for delivery in this State as a Medicare supplement policy or certificate on or after June 1, 2010, unless it complies with the benefit standards found in this regulation.</text> </paragraph> <paragraph num="(3)"> <text>An issuer may not offer a 1990 standardized Medicare supplement benefit plan for sale on or after June 1, 2010. Benefit standards applicable to Medicare supplement policies and certificates issued with an effective date for coverage before June 1, 2010, remain subject to the requirements of Regulation .08 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Required Standards.</text> <paragraph num="(1)"> <text>The standards in this section apply to Medicare supplement policies and certificates and are in addition to all other requirements of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A Medicare supplement policy or certificate may not exclude or limit benefits for a loss incurred more than 6 months after the effective date of coverage because the loss involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within 6 months before the effective date of coverage.</text> </paragraph> <paragraph num="(3)"> <text>A Medicare supplement policy or certificate may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents.</text> </paragraph> <paragraph num="(4)"> <text>A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, copayment, or coinsurance amounts. Premiums may be modified to correspond with the changes to the cost-sharing amounts.</text> </paragraph> <paragraph num="(5)"> <text>A Medicare supplement policy or certificate may not provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium.</text> </paragraph> <paragraph num="(6)"> <text>Each Medicare supplement policy shall be guaranteed renewable. The issuer may not:</text> <paragraph num="(a)"> <text>Cancel or nonrenew the policy solely on the ground of the health status of the individual; or</text> </paragraph> <paragraph num="(b)"> <text>Cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under §B(9) of this regulation, the issuer shall offer each certificate holder an individual Medicare supplement policy, which at the option of the certificate holder provides for:</text> <paragraph num="(a)"> <text>Continuation of the benefits contained in the group policy; or</text> </paragraph> <paragraph num="(b)"> <text>Benefits that meet the requirements of these regulations.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>If an individual is a certificate holder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:</text> <paragraph num="(a)"> <text>Offer the certificate holder the conversion option described in §B(7) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>At the option of the group policyholder, offer the certificate holder continuation of coverage under the group policy.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to each individual covered under the old group policy on the group policy's date of termination. Coverage under the new policy may not result in an exclusion for a preexisting condition that would have been covered under the group policy being replaced.</text> </paragraph> <paragraph num="(10)"> <text>Extension of Benefits.</text> <paragraph num="(a)"> <text>Termination of a Medicare supplement policy or certificate shall be without prejudice to a continuous loss that commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned on the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits.</text> </paragraph> <paragraph num="(b)"> <text>Receipt of Medicare Part D benefits may not be considered in determining a continuous loss under §B(10)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>Suspension of Benefits.</text> <paragraph num="(a)"> <text>A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificate holder for a period not to exceed 24 months in which the policyholder or certificate holder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act, but only if the policyholder or certificate holder notifies the issuer of the policy or certificate within 90 days after the date the individual becomes entitled to medical assistance.</text> </paragraph> <paragraph num="(b)"> <text>If the suspension described in §B(11)(a) of this regulation occurs and if the policyholder or certificate holder loses entitlement to medical assistance under Title XIX of the Social Security Act, the policy or certificate shall be reinstituted automatically, effective as of the date of termination of entitlement, if the policyholder or certificate holder provides notice of loss of entitlement within 90 days after the date of loss of entitlement and pays the premium attributable to the period, effective as of the date of termination of entitlement.</text> </paragraph> <paragraph num="(c)"> <text>A Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended, for any period that may be provided by federal regulation, at the request of the policyholder, if the policyholder is:</text> <paragraph num="(i)"> <text>Entitled to benefits under §226 (b) of the Social Security Act; and</text> </paragraph> <paragraph num="(ii)"> <text>Covered under a group health plan as defined in §1862(b)(1)(A)(v) of the Social Security Act.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>If the suspension described in §B(11)(c) of this regulation occurs and if the policyholder or certificate holder loses coverage under the group health plan, the policy shall be reinstituted automatically, effective as of the date of loss of coverage under the group health plan, if the policyholder described in §B(11)(c):</text> <paragraph num="(i)"> <text>Provides notice of loss of coverage within 90 days after the date of the loss of group coverage; and</text> </paragraph> <paragraph num="(ii)"> <text>Pays the premium attributable to the period, effective as of the date of termination of enrollment in the group health plan.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Reinstitution of coverage under §B(11)(b) or (d) of this regulation:</text> <paragraph num="(i)"> <text>May not provide for any waiting period with respect to treatment of preexisting conditions;</text> </paragraph> <paragraph num="(ii)"> <text>Shall provide for resumption of coverage that is substantially equivalent to coverage in effect before the date of suspension; and</text> </paragraph> <paragraph num="(iii)"> <text>Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificate holder as the premium classification terms that would have applied to the policyholder or certificate holder had the coverage not been suspended.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Standards for Basic (Core) Benefits Common to Benefit Plans A, B, C, D, F, F with High Deductible, G, M, and N.</text> <paragraph num="(1)"> <text>Every issuer of Medicare supplement insurance benefit plans shall make available a policy or certificate including only the following basic core package of benefits to each prospective insured:</text> <paragraph num="(a)"> <text>Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period;</text> </paragraph> <paragraph num="(b)"> <text>Coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;</text> </paragraph> <paragraph num="(c)"> <text>Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days;</text> </paragraph> <paragraph num="(d)"> <text>Coverage under Medicare Parts A and B for the reasonable cost of the first 3 pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced in accordance with federal regulations;</text> </paragraph> <paragraph num="(e)"> <text>Coverage for the coinsurance amount, or, in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible; and</text> </paragraph> <paragraph num="(f)"> <text>Coverage of cost sharing for all Part A Medicare eligible hospice care and respite care expenses.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The provider shall accept the issuer's payment of the Medicare Part A eligible expenses for hospitalization under §C(1)(c) of this regulation as payment in full and may not bill the insured for any balance.</text> </paragraph> <paragraph num="(3)"> <text>An issuer may make available to prospective insureds any of the other Medicare supplement insurance benefit plans in addition to the basic core package, but not instead of it.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Standards for Additional Benefits. The following additional benefits shall be included in Medicare supplement benefit Plans B, C, D, F, F with High Deductible, G, M, and N as provided by Regulation .28 of this chapter:</text> <paragraph num="(1)"> <text>Medicare Part A Deductible—Coverage for 100 percent of the Medicare Part A inpatient hospital deductible amount per benefit period;</text> </paragraph> <paragraph num="(2)"> <text>Medicare Part A Deductible—Coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period;</text> </paragraph> <paragraph num="(3)"> <text>Skilled Nursing Facility Care—Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A;</text> </paragraph> <paragraph num="(4)"> <text>Medicare Part B Deductible—Coverage for 100 percent of the Medicare Part B deductible amount per calendar year regardless of hospital confinement;</text> </paragraph> <paragraph num="(5)"> <text>100 Percent of the Medicare Part B Excess Charges—Coverage for all of the difference between the actual Medicare Part B charges as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge; and</text> </paragraph> <paragraph num="(6)"> <text>Medically Necessary Emergency Care in a Foreign Country—Coverage to the extent not covered by Medicare for 80 percent of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician, and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first 60 consecutive days of each trip outside the United States, subject to a calendar year deductible of $250, and a lifetime maximum benefit of $50,000; for purposes of this benefit, “emergency care” means care needed immediately because of an injury or an illness of sudden and unexpected onset.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".28" heading="Standard Medicare Supplement Benefit Plans for 2010 Plans."> <paragraph num="A."> <text>Definitions.</text> <paragraph num="(1)"> <text>In this regulation, the following term has the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Term Defined. “Structure, language, and format” means style, arrangement, and overall content of a benefit.</text> </paragraph> </paragraph> <paragraph num="B."> <text>General Standards.</text> <paragraph num="(1)"> <text>The standards found in §§C—I of this regulation are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this State with an effective date for coverage on or after June 1, 2010.</text> </paragraph> <paragraph num="(2)"> <text>A policy or certificate may not be advertised, solicited, delivered, or issued for delivery in this State as a Medicare supplement policy or certificate unless it complies with the benefit plan standards set forth in this regulation.</text> </paragraph> <paragraph num="(3)"> <text>Benefit plan standards applicable to Medicare supplement policies and certificates issued with an effective date for coverage before June 1, 2010, remain subject to the requirements of Regulation .09 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An issuer shall make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the basic core benefits, as defined in Regulation .27C of this chapter.</text> </paragraph> <paragraph num="D."> <text>If an issuer makes available any of the additional benefits described in Regulation .27D of this chapter, or offers standardized benefit Plans K or L, as described in §H(8) and (9) of this regulation, then the issuer shall make available to each prospective policyholder and certificate holder:</text> <paragraph num="(1)"> <text>A policy form or certificate form with only the core benefits as described in §C of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>A policy form or certificate form containing either standardized benefit Plan C, as described in §H(3) of this regulation, or standardized benefit Plan F, as described in §H(5) of this regulation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Groups, packages, or combinations of Medicare supplement benefits other than those listed in this regulation may not be offered for sale in this State, except as may be permitted in §I of this regulation and Regulation .24 of this chapter.</text> </paragraph> <paragraph num="F."> <text>Structure of Benefits.</text> <paragraph num="(1)"> <text>Benefit plans shall be uniform in structure, language, designation, and format to the standard benefit plans listed in this regulation and conform to the definitions in Regulation .02 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Each benefit shall be structured in accordance with the format provided in Regulation .27C and D of this chapter, or in the case of plans K or L in §H(8) and (9) of this regulation, and shall list the benefits in the order shown in this regulation.</text> </paragraph> </paragraph> <paragraph num="G."> <text>An issuer may use, in addition to the benefit plan designations required in §F of this regulation, other designations to the extent permitted by law.</text> </paragraph> <paragraph num="H."> <text>Make-up of 2010 Standardized Benefit Plans.</text> <paragraph num="(1)"> <text>Standardized Medicare supplement benefit Plan A shall include only the following: The core benefits as defined in Regulation .27C of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Standardized Medicare supplement benefit Plan B shall include only the following: The core benefits as defined in Regulation .27C of this chapter, plus 100 percent of the Medicare Part A Deductible as defined in Regulation .27D(1) of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>Standardized Medicare supplement benefit Plan C shall include only the following: The core benefits as defined in Regulation .27C of this chapter, plus 100 percent of the Medicare Part A Deductible, Skilled Nursing Facility Care, 100 percent of the Medicare Part B Deductible, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .27D(1), (3), (4), and (6) of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>Standardized Medicare supplement benefit Plan D shall include only the following: The core benefits as defined in Regulation .27C of this chapter, plus 100 percent of the Medicare Part A Deductible, Skilled Nursing Facility Care, and Medically Necessary Emergency Care in an Foreign Country as defined in Regulation .27D(1), (3), and (6) of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>Standardized Medicare supplement benefit Plan F shall include only the following: The basic core benefits as defined in Regulation .27C of this chapter, plus 100 percent of the Medicare Part A Deductible, Skilled Nursing Facility Care, 100 percent of the Medicare Part B Deductible, 100 percent of the Medicare Part B Excess Charges, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .27D(1) and (3)—(6) of this chapter.</text> </paragraph> <paragraph num="(6)"> <text>Standardized Medicare Supplement Benefit Plan F With High Deductible.</text> <paragraph num="(a)"> <text>Plan F with High Deductible shall include only 100 percent of covered expenses following the payment of the annual deductible set forth in §H(6)(c) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The covered expenses include the core benefits as defined in Regulation .27C of this chapter, plus 100 percent of the Medicare Part A Deductible, Skilled Nursing Facility Care, 100 percent of the Medicare Part B Deductible, 100 percent of the Medicare Part B Excess Charges, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .27D(1) and (3)—(6) of this chapter.</text> </paragraph> <paragraph num="(c)"> <text>Annual Deductible.</text> <paragraph num="(i)"> <text>The annual deductible in Plan F with High Deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by Plan F, and is in addition to any other specific benefit deductibles.</text> </paragraph> <paragraph num="(ii)"> <text>The basis for the deductible is $1,500.</text> </paragraph> <paragraph num="(iii)"> <text>The Secretary shall adjust the deductible annually after 1999 to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with August of the preceding year, and rounded to the nearest multiple of $10.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>Standardized Medicare Supplement Benefit Plan G.</text> <paragraph num="(a)"> <text>Standardized Medicare supplement benefit Plan G shall include only the following: The core benefits as defined in Regulation .27C of this chapter, plus 100 percent of the Medicare Part A Deductible, Skilled Nursing Facility Care, 100 percent of the Medicare Part B Excess Charges, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .27D(1), (3), (5), and (6) of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>Effective January 1, 2020, the standardized benefit plan described in Regulation .31B(3) of this chapter (Re-designated Plan G High Deductible) may be offered to any individual who was eligible for Medicare prior to January 1, 2020.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Standardized Medicare Supplement Benefit Plan K.</text> <paragraph num="(a)"> <text>Plan K is mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.</text> </paragraph> <paragraph num="(b)"> <text>Plan K shall include only the following:</text> <paragraph num="(i)"> <text>Part A Hospital Coinsurance 61st Through 90th Days — Coverage of 100 percent of the Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period;</text> </paragraph> <paragraph num="(ii)"> <text>Part A Hospital Coinsurance 91st Through 150th Days — Coverage of 100 percent of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;</text> </paragraph> <paragraph num="(iii)"> <text>Part A Hospitalization After Lifetime Reserve Days are Exhausted — Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days;</text> </paragraph> <paragraph num="(iv)"> <text>Medicare Part A Deductible — Coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in §H(8)(b)(x) of this regulation;</text> </paragraph> <paragraph num="(v)"> <text>Skilled Nursing Facility Care — Coverage for 50 percent of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in §H(8)(b)(x) of this regulation;</text> </paragraph> <paragraph num="(vi)"> <text>Hospice Care — Coverage for 50 percent of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in §H(8)(b)(x) of this regulation;</text> </paragraph> <paragraph num="(vii)"> <text>Blood — Coverage for 50 percent, under Medicare Part A or B, of the reasonable cost of the first 3 pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in §H(8)(b)(x) of this regulation;</text> </paragraph> <paragraph num="(viii)"> <text>Part B Cost Sharing — Except for coverage provided in §H(8)(b)(ix) of this regulation, coverage for 50 percent of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in §H(8)(b)(x) of this regulation;</text> </paragraph> <paragraph num="(ix)"> <text>Part B Preventive Services — Coverage of 100 percent of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and</text> </paragraph> <paragraph num="(x)"> <text>Cost Sharing After Out-of-Pocket Limit — Coverage of 100 percent of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $4,000 in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The provider shall accept the issuer's payment of the Medicare Part A eligible expenses for hospitalization under §H(8)(b)(iii) of this regulation as payment in full and may not bill the insured for any balance.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Standardized Medicare Supplement Benefit Plan L.</text> <paragraph num="(a)"> <text>Plan L is mandated by The Medicare Prescription Drug, Improvement and Modernization Act of 2003.</text> </paragraph> <paragraph num="(b)"> <text>Plan L shall include only the following:</text> <paragraph num="(i)"> <text>The benefits described in §H(8)(b)(i)—(iii) and (ix) of this regulation;</text> </paragraph> <paragraph num="(ii)"> <text>The benefit described in §H(8)(b)(iv)—(viii) of this regulation, but substituting 75 percent for 50 percent; and</text> </paragraph> <paragraph num="(iii)"> <text>The benefit described in §H(8)(b)(x) of this regulation, but substituting $2,000 for $4,000.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(10)"> <text>Standardized Medicare supplement benefit Plan M shall include only the following: The core benefits as defined in Regulation .27C of this chapter, plus 50 percent of the Medicare Part A Deductible, Skilled Nursing Facility Care, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .27D(2), (3), and (6) of this chapter.</text> </paragraph> <paragraph num="(11)"> <text>Standardized Medicare Supplement Benefit Plan N.</text> <paragraph num="(a)"> <text>Plan N shall include only the following: The core benefits as defined in Regulation .27C of this chapter, plus 100 percent of the Medicare Part A Deductible, Skilled Nursing Facility Care, and Medically Necessary Emergency Care in a Foreign Country as defined in Regulation .27D(1), (3), and (6) of this chapter, with copayments in the following amounts:</text> <paragraph num="(i)"> <text>The lesser of $20 or the Medicare Part B coinsurance or copayment for each covered health care provider office visit, including visits to medical specialists; and</text> </paragraph> <paragraph num="(ii)"> <text>The lesser of $50 or the Medicare Part B coinsurance or copayment for each covered emergency room visit.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The copayment described in §H(11)(a)(ii) of this regulation shall be waived if the insured is admitted to a hospital and the emergency visit is subsequently covered as a Medicare Part A expense.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>New or Innovative Benefits.</text> <paragraph num="(1)"> <text>An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits, in addition to the standardized benefits provided in a policy or certificate that otherwise complies with the applicable standards.</text> </paragraph> <paragraph num="(2)"> <text>The new or innovative benefits described in §I(1) of this regulation shall include only benefits that are appropriate to Medicare supplement insurance, are new or innovative, are not otherwise available, and are cost-effective.</text> </paragraph> <paragraph num="(3)"> <text>Approval of new or innovative benefits may not adversely impact the goal of Medicare supplement simplification.</text> </paragraph> <paragraph num="(4)"> <text>New or innovative benefits may not include an outpatient prescription drug benefit.</text> </paragraph> <paragraph num="(5)"> <text>New or innovative benefits may not be used to change or reduce benefits, including a change of any cost-sharing provision, in any standardized plan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".29" heading="Repealed." /> <regulation prefix="Regulation" num=".30" heading="Outlines of Coverage for Standardized Medicare Supplement Benefit Plans."> <paragraph num="A."> <text>Forms.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".31" heading="Standard Medicare Supplement Benefit Plans for 2020 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery to Individuals Newly Eligible for Medicare on or After January 1, 2020."> <paragraph num="A."> <text>General Standards.</text> <paragraph num="(1)"> <text>A policy or certificate that provides coverage of the Medicare Part B deductible may not be advertised, solicited, delivered, or issued for delivery in this State as a Medicare supplement policy or certificate to individuals newly eligible for Medicare on or after January 1, 2020.</text> </paragraph> <paragraph num="(2)"> <text>Medicare supplement policies and certificates delivered or issued for delivery to individuals eligible for Medicare before January 1, 2020 remain subject to the requirements of Regulation .28 of the chapter.</text> </paragraph> <paragraph num="(3)"> <text>Medicare supplement policies or certificates delivered or issued for delivery to individuals newly eligible for Medicare on or after January 1, 2020 are subject to the requirements of Regulation .28 of this chapter, except as stated in §§B and C of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>Standardized Medicare supplement benefit Plans C, F, and F with High Deductible may not be offered to individuals newly eligible for Medicare on or after January 1, 2020.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Make-up of 2020 Standardized Benefit Plans</text> <paragraph num="(1)"> <text>Standardized Medicare supplement benefit Plan C is re-designated as Plan D and shall include the benefits contained in Regulation .28H(3) of this chapter except for coverage for 100 percent or any portion of the Medicare Part B deductible.</text> </paragraph> <paragraph num="(2)"> <text>Standardized Medicare supplement benefit Plan F is re-designated as Plan G and shall include the benefits contained in Regulation .28H(5) of this chapter except for coverage for 100 percent or any portion of the Medicare Part B deductible.</text> </paragraph> <paragraph num="(3)"> <text>Standardized Medicare Supplement Benefit Plan G With High Deductible.</text> <paragraph num="(a)"> <text>Standardized Medicare supplement benefit Plan F with High Deductible is re-designated as Plan G with High Deductible.</text> </paragraph> <paragraph num="(b)"> <text>Standardized Medicare supplement benefit Plan G with High Deductible shall include the benefits contained in Regulation .28H(6) of this chapter except for coverage for 100 percent or any portion of the Medicare Part B deductible.</text> </paragraph> <paragraph num="(c)"> <text>The Medicare Part B deductible paid by the beneficiary shall be considered an out-of-pocket expense in meeting the annual Plan G high deductible.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>In the case of an individual newly eligible for Medicare on or after January 1, 2020, the reference to Plans C or F in Regulation .28D(2) of this chapter is deemed a reference to Plans D or G, respectively.</text> </paragraph> <paragraph num="D."> <text>On or after January 1, 2020, the standardized benefit plan described in §B(3) of this regulation may be offered to an individual who was eligible for Medicare prior to January 1, 2020 in addition to the standardized plans described in Regulation .28H of this chapter.</text> </paragraph> <paragraph num="E."> <text>For purposes of Regulation .09-1E of this chapter, in the case of an individual newly eligible for Medicare on or after January 1, 2020, any reference to Plans C or F (including F With High Deductible) shall be deemed to be a reference to Plans D or G (including G With High Deductible) respectively.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-705 and 19-706; Insurance Article, §§2-109 and 8-403(b), Title 15, Subtitle 9, and Title 27; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.21 adopted as an emergency provision effective July 14, 1992 (19:16 Md. R. 1466); adopted permanently effective August 3, 1992 (19:15 Md. R. 1389)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 1, 1996 (23:6 Md. R. 475)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14A amended, and Regulation .21 repealed, and Regulations .22 and .23 recodified to Regulations .21 and .22, respectively, as an emergency provision effective April 25, 1996 (23:10 Md. R. 728); amended permanently effective September 10, 1996 (23:18 Md. R. 1317)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.90 to COMAR 31.10.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); amended permanently effective March 22, 1999 (26:6 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended as an emergency provision effective July 25, 2000 (27:16 Md. R. 1520); amended permanently effective November 13, 2000 (27:22 Md. R. 2061)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended as an emergency provision effective October 1, 2001 (28:23 Md. R. 2053); emergency status expired March 29, 2002; amended permanently effective April 1, 2002 (29:6 Md. R. 570)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); amended permanently effective March 22, 1999 (26:6 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended as an emergency provision effective January 1, 2000 (27:4 Md. R. 452); emergency status expired June 28, 2000</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective August 21, 2000 (27:16 Md. R. 1526)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); amended permanently effective March 22, 1999 (26:6 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended as an emergency provision effective July 25, 2000 (27:16 Md. R. 1520); amended permanently effective November 13, 2000 (27:22 Md. R. 2061)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended as an emergency provision effective October 1, 2001 (28:23 Md. R. 2053); emergency status expired March 29, 2002; amended permanently effective April 1, 2002 (29:6 Md. R. 570)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); amended permanently effective March 22, 1999 (26:6 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09-1 adopted as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); adopted permanently effective March 22, 1999 (26:6 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09-1 amended as an emergency provision effective July 25, 2000 (27:16 Md. R. 1520); amended permanently effective November 13, 2000 (27:22 Md. R. 2061)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09-1 amended as an emergency provision effective October 1, 2001 (28:23 Md. R. 2053); emergency status expired March 29, 2002; amended permanently effective April 1, 2002 (29:6 Md. R. 570)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); amended permanently effective March 22, 1999 (26:6 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended as an emergency provision effective July 25, 2000 (27:16 Md. R. 1520); amended permanently effective November 13, 2000 (27:22 Md. R. 2061)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22 amended as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); amended permanently effective March 22, 1999 (26:6 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .23 adopted as an emergency provision effective October 1, 2001 (28:23 Md. R. 2053); emergency status expired March 29, 2002; adopted permanently effective April 1, 2002 (29:6 Md. R. 570)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24 adopted as an emergency provision effective October 1, 2001 (28:23 Md. R. 2053); emergency status expired March 29, 2002; adopted permanently effective April 1, 2002 (29:6 Md. R. 570)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 2006 (32:18 Md. R. 1522)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective September 21, 2009 (36:19 Md. R. 1439); January 14, 2019 (46:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective August 21, 2023 (50:16 Md. R. 729)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective September 21, 2009 (36:19 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective September 21, 2009 (36:19 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective September 21, 2009 (36:19 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective September 21, 2009 (36:19 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13E amended effective November 29, 2010 (37:24 Md. R. 1660)</annotation> <annotation type="History" subtype="Administrative History">Regulation .26 adopted effective June 29, 2009 (36:13 Md. R. 901)</annotation> <annotation type="History" subtype="Administrative History">Regulations .27—.30 adopted effective September 21, 2009 (36:19 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .28H amended effective November 29, 2010 (37:24 Md. R. 1660); January 14, 2019 (46:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .29 repealed effective November 29, 2010 (37:24 Md. R. 1660)</annotation> <annotation type="History" subtype="Administrative History">Regulation .30 amended effective January 14, 2019 (46:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .30I, J amended effective November 29, 2010 (37:24 Md. R. 1660)</annotation> <annotation type="History" subtype="Administrative History">Regulation .31 adopted effective January 14, 2019 (46:1 Md. R. 13)</annotation> </annotations> </chapter> <chapter num="07" heading="Limited Benefits Policies — Reporting Requirements" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: December 21, 1992 (19:25 Md. R. 2205)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.92 to COMAR 31.10.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective October 5, 1998 (25:20 Md. R. 1534)</annotation> </annotations> </chapter> <chapter num="08" heading="Limited Benefits Policies — Minimum Loss Ratio" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: December 21, 1992 (19:25 Md. R. 2205)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.93 to COMAR 31.10.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective October 5, 1998 (25:20 Md. R. 1534)</annotation> </annotations> </chapter> <chapter num="09" heading="Hospice Care Benefits"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter is applicable to each:</text> <paragraph num="(1)"> <text>Group, blanket, or individual health insurance contract written on an expense-incurred basis which is issued or renewed in the State on or after April 1, 1997;</text> </paragraph> <paragraph num="(2)"> <text>Individual or group nonprofit health service plan contract which is issued or renewed on or after April 1, 1997; and</text> </paragraph> <paragraph num="(3)"> <text>Individual or group contract issued or renewed by a health maintenance organization on or after April 1, 1997.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter does not apply to a comprehensive health benefit plan issued to a small employer in accordance with Insurance Article, Title 15, Subtitle 12, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Bereavement counseling” means counseling provided to the immediate family or family caregiver of the insured after the insured's death to help the immediate family or family caregiver cope with the death of the insured.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” means an insurer, a nonprofit health service plan, or a health maintenance organization.</text> </paragraph> <paragraph num="(3)"> <text>Expense Incurred.</text> <paragraph num="(a)"> <text>“Expense incurred” means the benefits payable under the contract are based on the medical expenses the insured incurs.</text> </paragraph> <paragraph num="(b)"> <text>For the purpose of this chapter, a contract which includes both expense-incurred benefits and indemnity benefits shall be considered to be written on an “expense-incurred” basis.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Family caregiver” means a relative by blood, marriage, or adoption who lives with or is the primary caregiver of the terminally ill insured.</text> </paragraph> <paragraph num="(5)"> <text>“Family counseling” means counseling given to the immediate family or family caregiver of the terminally ill insured for the purpose of learning to care for the insured and to adjust to the death of the insured.</text> </paragraph> <paragraph num="(6)"> <text>“Hospice care program” means a coordinated, interdisciplinary program of hospice care services for meeting the special physical, psychological, spiritual, and social needs of terminally ill individuals and their families, by providing palliative and supportive medical, nursing, and other health services through home or inpatient care during the illness and bereavement to:</text> <paragraph num="(a)"> <text>Individuals who have no reasonable prospect of cure as estimated by a physician; and</text> </paragraph> <paragraph num="(b)"> <text>The immediate families or family caregivers of those individuals described in §B(6)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Immediate family” means the spouse, parents, siblings, grandparents, and children of the terminally ill insured.</text> </paragraph> <paragraph num="(8)"> <text>“Indemnity” means the benefits payable under the contract are flat amounts which are not related to the expenses the insured incurs, such as a hospital indemnity contract which pays a flat fee for each day the insured is confined in a hospital regardless of the actual expenses the insured incurs during the hospital confinement.</text> </paragraph> <paragraph num="(9)"> <text>“Insured” means a person who is covered under a:</text> <paragraph num="(a)"> <text>Group, blanket, or individual health insurance policy written on an expense-incurred basis;</text> </paragraph> <paragraph num="(b)"> <text>Nonprofit health service plan contract; or</text> </paragraph> <paragraph num="(c)"> <text>Health maintenance organization contract.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Respite care” means temporary care provided to the terminally ill insured to relieve the family caregiver from the daily care of the insured.</text> </paragraph> <paragraph num="(11)"> <text>“Terminally ill” means a medical prognosis given by a physician that the insured's life expectancy is 6 months or less.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Hospice Care Benefit Options."> <paragraph num="A."> <text>A carrier shall offer the policyholder the option of purchasing the minimum hospice care benefits required by this chapter when the policyholder applies for coverage.</text> </paragraph> <paragraph num="B."> <text>Contracts Issued Before April 1, 1997.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, if a policyholder purchases a contract with hospice care benefits before April 1, 1997, the carrier shall revise the contract to include at least the minimum benefits required by this chapter on the renewal date occurring on or after April 1, 1997.</text> </paragraph> <paragraph num="(2)"> <text>Section B(1) of this regulation does not apply to guaranteed renewable or noncancellable contracts.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Minimum Hospice Care Benefits."> <paragraph num="A."> <text>Except as provided in §B of this regulation, the hospice care benefit offered shall include the following minimum benefits provided through a hospice care program:</text> <paragraph num="(1)"> <text>30 days of inpatient care per insured;</text> </paragraph> <paragraph num="(2)"> <text>Part-time nursing care by or supervised by a registered graduate nurse;</text> </paragraph> <paragraph num="(3)"> <text>Counseling, including dietary counseling, for the terminally ill insured;</text> </paragraph> <paragraph num="(4)"> <text>Family counseling for the immediate family and the family caregiver before the death of the terminally ill insured;</text> </paragraph> <paragraph num="(5)"> <text>Bereavement counseling for the immediate family or family caregiver of the insured for at least the 6-month period following the insured's death or 15 visits, whichever occurs first;</text> </paragraph> <paragraph num="(6)"> <text>Respite care subject to the following:</text> <paragraph num="(a)"> <text>The annual benefit shall be at least 14 days, and</text> </paragraph> <paragraph num="(b)"> <text>The carrier may limit any one inpatient stay for respite care to 5 consecutive days; and</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Medical supplies, equipment, and medication required to maintain the comfort and manage the pain of the terminally ill insured.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a contract does not include inpatient benefits, the carrier shall offer the benefits described in §A(2)—(7) of this regulation.</text> </paragraph> <paragraph num="C."> <text>If a contract contains hospital indemnity benefits but is defined as an expense incurred policy according to Regulation .02B(3) of this chapter, the hospice care benefit may limit the hospice daily inpatient benefit to the amount payable for hospital confinement under the contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Prohibited Exclusions and Limitations."> <paragraph num="A."> <text>The hospice care benefit may not be subject to a lifetime maximum which is separate from the lifetime maximum applicable to other benefits in the contract.</text> </paragraph> <paragraph num="B."> <text>The hospice care benefit may not be subject to an annual maximum benefit which is separate from the annual maximum applicable to other benefits in the contract.</text> </paragraph> <paragraph num="C."> <text>A carrier may not exclude immediate family members or family caregivers of the insured from the family counseling benefit or the bereavement counseling benefit because the immediate family member or family caregiver is not otherwise covered under the contract which provides coverage to the insured.</text> </paragraph> <paragraph num="D."> <text>A carrier may not exclude the siblings of a terminally ill child from the family counseling benefit or the bereavement counseling benefit, even if the siblings are not otherwise covered under the same contract as the terminally ill child.</text> </paragraph> <paragraph num="E."> <text>A hospice care benefit may not exclude inpatient benefits if the hospice care benefit appears in a contract which includes other inpatient benefits.</text> </paragraph> <paragraph num="F."> <text>The benefits provided as part of the hospice care benefit may not be subject to separate dollar maximum limits, except as provided in this chapter.</text> </paragraph> <paragraph num="G."> <text>The carrier may not condition the inpatient hospice care benefits on a prior hospital confinement.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 12-204, 12-205, and 15-809; Health-General Article, §§19-703(c) and 19-901; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 7, 1997 (24:7 Md. R. 553)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.15 to COMAR 31.10.09 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="10" heading="Summary Explanation of Benefits"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <text>This chapter applies to all health insurers, including nonprofit health service plans, authorized to do business in Maryland, which provide benefits for inpatient hospitalization or outpatient surgical care on an expense-incurred basis in group or individual contracts, both for insured business and business for which the insurer is an administrator.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Claimant” means an insured individual resident in Maryland making a claim against the insurer for benefits, who is a:</text> <paragraph num="(a)"> <text>Policyholder covered by an individual policy; or</text> </paragraph> <paragraph num="(b)"> <text>Certificate holder covered under a group policy or under an administration contract.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Service” means any service for which a charge is made which is covered under the policy or contract, including charges for, but not limited to:</text> <paragraph num="(a)"> <text>Fees of surgeons, anesthetists, and other physicians;</text> </paragraph> <paragraph num="(b)"> <text>Room and board charges;</text> </paragraph> <paragraph num="(c)"> <text>Operating room charges;</text> </paragraph> <paragraph num="(d)"> <text>Recovery room charges; and</text> </paragraph> <paragraph num="(e)"> <text>Nursing care charges.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Summary Form."> <paragraph num="A."> <text>An insurer which provides benefits for inpatient hospitalization or outpatient surgical care on an expense-incurred basis shall provide claimants annually a consolidated summary explanation regarding benefits claimed for those services during each calendar year.</text> </paragraph> <paragraph num="B."> <text>The summary shall identify the provider by name and shall state the:</text> <paragraph num="(1)"> <text>Date of the service;</text> </paragraph> <paragraph num="(2)"> <text>Amount claimed;</text> </paragraph> <paragraph num="(3)"> <text>Amount which was paid or is payable by the insurer on claims processed during the year; and</text> </paragraph> <paragraph num="(4)"> <text>Balance to be paid by the covered individual, if the balance is determinable from the claim forms submitted.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The summary referred to in §B of this regulation shall be provided by insurers to claimants between January 1 and February 15 for claims made during the preceding calendar year.</text> </paragraph> <paragraph num="D."> <text>At the insurer's option, the summary may include information pertaining to benefits other than those specified in §A of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Group Coverage."> <text>Instead of the procedure outlined in Regulation .03 of this chapter, an insurer may make the annual summary to claimants who are covered under group policies, or who are covered under employer-employee groups administered by the insurer, within 36 days after the annual anniversary of the group policy, or of the administration contract, for the 12-month period ending with that anniversary.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Group Coverage — Election of Alternate Procedure."> <paragraph num="A."> <text>An insurer desiring to use the alternate procedure specified in Regulation .04 of this chapter may elect the procedure for:</text> <paragraph num="(1)"> <text>All groups; or</text> </paragraph> <paragraph num="(2)"> <text>Groups in excess of a certain size.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An insurer shall notify the Insurance Commissioner of its election under this regulation and Regulation .04 of this chapter within 90 days of the effective date of this chapter.</text> </paragraph> <paragraph num="C."> <text>An insurer that follows the procedures set forth in Regulation .03 of this chapter, or that elects to comply with the procedures set forth in this regulation and Regulation .04 of this chapter, may change its procedures only after approval by the Commissioner.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-1007, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 1, 1993 (20:20 Md. R. 1570)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.95 to COMAR 31.10.10 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="11" heading="Uniform Claims Forms"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <paragraph num="A."> <text>This chapter is applicable to all:</text> <paragraph num="(1)"> <text>Claims submitted to third-party payors as defined in Regulation .02B(22) of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Claims submitted by health care practitioners as defined in Regulation .02B(12) of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Claims submitted by hospitals as defined in Health-General Article, §19-301(g), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(4)"> <text>Claims submitted by other persons entitled to reimbursement from a third-party payor who submit claims to third-party payors on the HCFA Form 1500 or HCFA Form UB-92.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter is not applicable to claims submitted by members.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Applicable standard code set” means the most recent versions, as of the date of service, of the following:</text> <paragraph num="(a)"> <text>For services rendered by health care practitioners, the Current Procedural Terminology (CPT) maintained and distributed by the American Medical Association, including its codes and modifiers, and codes for anesthesia services;</text> </paragraph> <paragraph num="(b)"> <text>For dental services, the Current Dental Terminology (CDT) maintained and distributed by the American Dental Association;</text> </paragraph> <paragraph num="(c)"> <text>For all professional and hospital services, the International Classification of Diseases, Clinical Modification (ICD-9 CM);</text> </paragraph> <paragraph num="(d)"> <text>For other health-related services, including prescribed drugs covered under a medical benefit of a contract issued by a third-party payor, the Centers for Medicare and Medicaid Services Common Procedure Coding System (HCPCS) levels I and II and modifiers maintained and distributed by the U.S. Department of Health and Human Services;</text> </paragraph> <paragraph num="(e)"> <text>For prescribed drugs covered under a pharmacy benefit of a contract issued by a third-party payor, the National Drug Codes (NDC) maintained and distributed by the U.S. Department of Health and Human Services;</text> </paragraph> <paragraph num="(f)"> <text>For anesthesia services, the codes maintained and distributed by the American Society of Anesthesiologists;</text> </paragraph> <paragraph num="(g)"> <text>For psychiatric services, the DSM-IV codes distributed by the American Psychiatric Association;</text> </paragraph> <paragraph num="(h)"> <text>For hospital and other applicable health-care services, including home health services, the State UB-92, Uniform Billing Data Elements Specification Manual;</text> </paragraph> <paragraph num="(i)"> <text>For hospital services pursuant to a Maryland contract or insurance policy, a revenue code:</text> <paragraph num="(i)"> <text>Approved by the Health Services Cost Review Commission for a hospital located in the State, or</text> </paragraph> <paragraph num="(ii)"> <text>Of the National or State Uniform Billing Data Elements Specifications for a hospital not located in the State; and</text> </paragraph> </paragraph> <paragraph num="(j)"> <text>For services rendered pursuant to Health-General Article, §15-103(b)(2), Annotated Code of Maryland, a code established by the Medicaid Program.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Auto code” means an ICD-9 code designed by a third-party payor as a diagnosis that is an emergency service.</text> </paragraph> <paragraph num="(3)"> <text>“CDT-1 Codes” means the current dental terminology, and its successors, required by the American Dental Association.</text> </paragraph> <paragraph num="(4)"> <text>“Clean claim” means a claim for reimbursement submitted to a third-party payor by a health care practitioner, pharmacy or pharmacist, hospital, or person entitled to reimbursement, that contains:</text> <paragraph num="(a)"> <text>In the case of a health care practitioner or person entitled to reimbursement:</text> <paragraph num="(i)"> <text>The data elements required by Regulation .08 of this chapter, and</text> </paragraph> <paragraph num="(ii)"> <text>Any attachments requested by the third-party payor pursuant to Regulation .10 of this chapter;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>In the case of a hospital or person entitled to reimbursement;</text> <paragraph num="(i)"> <text>The data elements required by Regulation .09 of this chapter, and</text> </paragraph> <paragraph num="(ii)"> <text>Any attachments requested by the third-party payor pursuant to Regulation .10 of this chapter; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>In the case of a pharmacy or pharmacist, the data elements set forth on the Universal Prescription Drug Claim Form or its electronic equivalent.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“CMS” means the federal Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services.</text> </paragraph> <paragraph num="(6)"> <text>“CPT-4 Codes” means the Current Procedural Terminology published by the American Medical Association.</text> </paragraph> <paragraph num="(7)"> <text>“Emergency services” has the meaning stated in Health-General Article, §19-701(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Global contract” means an agreement between a third-party payor, and a health care practitioner, hospital, or person entitled to reimbursement in which:</text> <paragraph num="(a)"> <text>For billing and payment purposes:</text> <paragraph num="(i)"> <text>The services of one or more health care practitioners, hospitals, or persons entitled to reimbursement are bundled together; and</text> </paragraph> <paragraph num="(ii)"> <text>The third-party payor agrees to pay, and the health care practitioner, hospital, or person entitled to reimbursement, agrees to accept a single rate for the applicable technical, facility, ancillary, and professional components of the services specified in the agreement; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The third-party payor agrees to pay, and the health care practitioner, hospital, or person entitled to reimbursement, agrees to accept a daily or per diem rate for the services related to home infusion therapy.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>HCFA Form 1500.</text> <paragraph num="(a)"> <text>“HCFA Form 1500” means the health insurance claims form and its electronic successor or equivalent published by CMS for use by health care practitioners or persons entitled to reimbursement.</text> </paragraph> <paragraph num="(b)"> <text>“HCFA Form 1500” includes any successor to HCFA Form 1500 published by CMS.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>HCFA Form UB-92.</text> <paragraph num="(a)"> <text>“HCFA Form UB-92” means the Revenue Code Summary UB-92 health insurance claim form and its electronic successor or equivalent published by CMS for use by hospitals, or person entitled to reimbursement.</text> </paragraph> <paragraph num="(b)"> <text>“HCFA Form UB-92” includes any successor to HCFA Form UB-92 published by the CMS.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“HCPCS” means CMS's current Healthcare Common Procedural Coding System.</text> </paragraph> <paragraph num="(12)"> <text>Health Care Practitioner.</text> <paragraph num="(a)"> <text>“Health care practitioner” means a physician or any other person licensed or certified under Health Occupations Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Health care practitioner” does not include a physician or other person licensed or certified under Health Occupations Article, Annotated Code of Maryland, who:</text> <paragraph num="(i)"> <text>Is compensated by a health maintenance organization on a salaried or capitated basis; or</text> </paragraph> <paragraph num="(ii)"> <text>Is rendering care to a member or subscriber of the health maintenance organization on a salaried or capitated system basis.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Hospital” means a hospital as defined in Health-General Article, §19-301(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>ICD 9-CM Codes.</text> <paragraph num="(a)"> <text>“ICD-9-CM Codes” means the current disease and procedure codes in the international classification of diseases published by the U.S. Department of Health and Human Services.</text> </paragraph> <paragraph num="(b)"> <text>“ICD-9-CM Codes” includes any successor to ICD-9-CM Codes published by the U.S. Department of Health and Human Services.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“J512 Form” means the uniform dental claim form approved by the American Dental Association for use by dentists and its electronic successor or equivalent.</text> </paragraph> <paragraph num="(16)"> <text>Member.</text> <paragraph num="(a)"> <text>“Member” means an individual entitled to health care benefits under a policy, plan, or certificate issued or delivered in the State by a carrier.</text> </paragraph> <paragraph num="(b)"> <text>“Member” includes a subscriber or an insured.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Modifier” means a code that is appended to a CPT or HCPCS code to provide more specific information about a medical procedure.</text> </paragraph> <paragraph num="(18)"> <text>“Person entitled to reimbursement” means:</text> <paragraph num="(a)"> <text>A health care practitioner as defined in §B(12) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>Any other person who furnishes health care services or supplies.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Primary care” has the meaning stated in COMAR 31.11.06.02B(49).</text> </paragraph> <paragraph num="(20)"> <text>“Primary payor” means a third-party payor that, pursuant to the terms of an insurance policy or contract, is required to provide coverage for benefits to the insured or member:</text> <paragraph num="(a)"> <text>Before any other third-party payor provides benefits; and</text> </paragraph> <paragraph num="(b)"> <text>Regardless of whether benefits are available under any other insurance policy or contract.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Secondary payor” means a third-party payor that, pursuant to the terms of an insurance policy or contract, is required to pay all or some portion of the difference between the total amount of a claim and the amount paid by the primary payor, subject to the limitations of the insurance policy or contract.</text> </paragraph> <paragraph num="(22)"> <text>“Third-party payor” means a person that administers or provides reimbursement for health care benefits on an expense-incurred basis including:</text> <paragraph num="(a)"> <text>A health maintenance organization issued a certificate of authority in accordance with Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>A health insurer or nonprofit health service plan authorized to offer health insurance policies or contracts in this State in accordance with the Insurance Article, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>A third-party administrator registered under Insurance Article, Title 8, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Universal Prescription Drug Claim Form” means the uniform prescription drug claim form developed by the National Council for Prescription Drug Programs, Inc. and its electronic successor or equivalent.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Requirements for Use of HCFA Form 1500."> <paragraph num="A."> <text>Except as provided in Regulation .10 of this chapter, third-party payors shall accept the HCFA Form 1500 and instructions provided by CMS for use of the HCFA 1500 as the sole instrument for filing claims with third-party payors for professional services.</text> </paragraph> <paragraph num="B."> <text>The requirement set forth in §A of this regulation does not apply to:</text> <paragraph num="(1)"> <text>Dental services which are billed by dentists using the J512 Form, or its equivalent, and CDT-1 Codes; or</text> </paragraph> <paragraph num="(2)"> <text>Pharmacists or pharmacies which are filing claims for prescription drugs.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Except for parties to a global contract, a third-party payor may not require a health care practitioner or other person entitled to reimbursement to use any code or modifier for the filing of claims for health care services that is different from, or in addition to, what is required under the applicable standard code set for the professional services provided.</text> </paragraph> <paragraph num="D."> <text>Except as provided in Regulation .10 of this chapter, a third-party payor may not use, and may not require a health care practitioner or other person entitled to reimbursement to use, any other descriptor with a code or to furnish additional information with the initial submission of a HCFA Form 1500 that is different from, or in addition to, the applicable standard code set for the professional services provided.</text> </paragraph> <paragraph num="E."> <text>A health care practitioner or other person entitled to reimbursement whose billing is based on the amount of time involved shall indicate the start and stop time or number of minutes in field 24G, currently titled Days or Units, of the HCFA Form 1500 if it is not used to specify the number of days of treatment.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Requirements for Use of J512 Form."> <paragraph num="A."> <text>Third-party payors shall accept the J512 Form, or its equivalent, and most recent version of the instructions provided by the American Dental Association CDT-1 for use of the J512 Form, or its equivalent, as the sole instrument for filing claims with third-party payors for dental services.</text> </paragraph> <paragraph num="B."> <text>A third-party payor may not require a dentist to use any code other than the CDT-1 codes for the initial filing of claims for dental care services.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Requirements for Use of HCFA Form UB-92."> <paragraph num="A."> <text>Third-party payors shall accept HCFA Form UB-92, and its successors, and the instructions provided by CMS for use of the HCFA Form UB-92, as the sole instrument for filing claims with third-party payors for hospital and other health-care services.</text> </paragraph> <paragraph num="B."> <text>Except for parties to a global contract, a third-party payor may not use, and may not require a hospital, or person entitled to reimbursement, to use any code or modifier for the filing of claims for hospital or other health-care services that is different from or in addition to, what is required under the applicable standard code set for the hospital or other health-care services provided.</text> </paragraph> <paragraph num="C."> <text>Except as provided in Regulation .10 of this chapter, a third-party payor may not use and may not require a hospital or person entitled to reimbursement to furnish additional information with the initial submission of the UB-92 that is different from, or in addition to, the applicable standard code set or for the hospital or other health-care services provided.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Requirements for Use of Universal Prescription Drug Claim Form."> <text>Third-party payors shall accept the Universal Prescription Drug Claim Form, or its electronic equivalent, as the sole instrument for filing claims with third-party payors for prescription drugs.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="General Provisions."> <paragraph num="A."> <text>A third-party payor shall accept a clean claim which is submitted in compliance with these regulations for the processing of the third-party payor's claims.</text> </paragraph> <paragraph num="B."> <text>A third-party payor is subject to the provisions of Insurance Article, §15-1005, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>If a third party payor delegates its claims processing to another entity, the third-party payor is responsible for a violation by the entity of any regulation under this chapter.</text> </paragraph> <paragraph num="D."> <text>A third-party payor shall accept current coding changes by the effective date of the changes set forth by the developers of the codes.</text> </paragraph> <paragraph num="E."> <text>If a referral is required under Regulation .10 of this chapter, a third party payor may not deny a claim on the basis that a referral was not received unless the third party payor could not identify the member using the member's name and the following information specified on the referral form:</text> <paragraph num="(1)"> <text>Date of birth;</text> </paragraph> <paragraph num="(2)"> <text>Subscriber's plan identification number; or</text> </paragraph> <paragraph num="(3)"> <text>Other personally identifying information.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Essential Data Elements for Clean Claims by Health Care Practitioners or Persons Entitled to Reimbursement."> <paragraph num="A."> <text>In General. To qualify as a clean claim, a claim submitted to a third-party payor by a health care practitioner as provided in Regulation .03 of this chapter, or by a person entitled to reimbursement, shall conform to the applicable standard code set and include the following data elements:</text> <paragraph num="(1)"> <text>Subscriber's plan ID number (HCFA Form 1500, field 1a);</text> </paragraph> <paragraph num="(2)"> <text>Patient's name (HCFA Form 1500, field 2);</text> </paragraph> <paragraph num="(3)"> <text>Patient's date of birth and gender (HCFA Form 1500, field 3);</text> </paragraph> <paragraph num="(4)"> <text>Subscriber's name (HCFA Form 1500, field 4);</text> </paragraph> <paragraph num="(5)"> <text>Patient's address (street or P.O. box, city, and zip code) (HCFA Form 1500, field 5);</text> </paragraph> <paragraph num="(6)"> <text>Patient's relationship to the subscriber (HCFA Form 1500, field 6);</text> </paragraph> <paragraph num="(7)"> <text>Subscriber's address (street or P.O. box, city, and zip code) (HCFA Form 1500, field 7);</text> </paragraph> <paragraph num="(8)"> <text>Except in the case of a laboratory issued a license pursuant to Health-General Article, §17-205, Annotated Code of Maryland, patient status (HCFA Form 1500, field 8);</text> </paragraph> <paragraph num="(9)"> <text>Whether the patient's condition is related to employment (HCFA Form 1500, field 10(a));</text> </paragraph> <paragraph num="(10)"> <text>Whether the patient's condition is related to an auto accident (HCFA Form 1500, field 10(b));</text> </paragraph> <paragraph num="(11)"> <text>Whether the patient's condition is related to an accident other than an auto accident (HCFA Form 1500, field 10(c));</text> </paragraph> <paragraph num="(12)"> <text>Subscriber's policy number (HCFA Form 1500, field 11);</text> </paragraph> <paragraph num="(13)"> <text>Except in the case of a laboratory issued a license pursuant to Health-General Article, §17-205, Annotated Code of Maryland, subscriber's birth date and gender (HCFA Form 1500, field 11a);</text> </paragraph> <paragraph num="(14)"> <text>Except in the case of a laboratory issued a license pursuant to Health-General Article, §17-205, Annotated Code of Maryland, name of the third-party payor (HCFA Form 1500, field 11c);</text> </paragraph> <paragraph num="(15)"> <text>Disclosure of any other health benefit plans (HCFA Form 1500, field 11d);</text> </paragraph> <paragraph num="(16)"> <text>Patient's or authorized person's signature or notation that the signature is on file with the health care practitioner (HCFA Form 1500, field 12);</text> </paragraph> <paragraph num="(17)"> <text>Subscriber's or authorized person's signature or notation that the signature is on file with the health care practitioner or person entitled to reimbursement, if applicable (HCFA Form 1500, field 13);</text> </paragraph> <paragraph num="(18)"> <text>Except in the case of a laboratory issued a license pursuant to Health-General Article, §17-205, Annotated Code of Maryland, date of current illness, injury, or pregnancy (HCFA Form 1500, field 14);</text> </paragraph> <paragraph num="(19)"> <text>Except in the case of a health care practitioner for emergency services, or a laboratory issued a license pursuant to Health-General Article, §17-205, Annotated Code of Maryland, whether the patient has had the same or a similar illness (HCFA Form 1500, field 15);</text> </paragraph> <paragraph num="(20)"> <text>Except in the case of a health care practitioner for emergency services, the name of the referring physician or health maintenance organization (HCFA Form 1500, field 17);</text> </paragraph> <paragraph num="(21)"> <text>Hospitalization dates related to current services, if applicable (HCFA Form 1500, field 18);</text> </paragraph> <paragraph num="(22)"> <text>Diagnosis codes or nature of the illness or injury (HCFA Form 1500, field 21);</text> </paragraph> <paragraph num="(23)"> <text>Date of service (HCFA Form 1500, field 24A);</text> </paragraph> <paragraph num="(24)"> <text>Place of service codes for all claims, as designated by HFCA for Medicare (HCFA Form 1500, field 24B);</text> </paragraph> <paragraph num="(25)"> <text>Procedure code (HCFA Form 1500, field 24D);</text> </paragraph> <paragraph num="(26)"> <text>Diagnosis code by specific service (HCFA Form 1500, field 24E);</text> </paragraph> <paragraph num="(27)"> <text>Charge for each listed service (HCFA Form 1500, field 24F);</text> </paragraph> <paragraph num="(28)"> <text>Number of days, time (minutes), start and stop time, or units (HCFA Form 1500, field 24G);</text> </paragraph> <paragraph num="(29)"> <text>The carrier-assigned rendering provider number until the National Provider Identifier is developed and assigned, if applicable (HCFA Form 1500, field 24K);</text> </paragraph> <paragraph num="(30)"> <text>Health care practitioner's or person entitled to reimbursement's federal tax ID number (HCFA Form 1500, field 25);</text> </paragraph> <paragraph num="(31)"> <text>Patient's account number (HCFA Form 1500, field 26);</text> </paragraph> <paragraph num="(32)"> <text>Total charge (HCFA Form 1500, field 28);</text> </paragraph> <paragraph num="(33)"> <text>For claims:</text> <paragraph num="(a)"> <text>Submitted electronically, a computer-printed name as the signature of the health care practitioner or person entitled to reimbursement (HCFA Form 1500, field 31), or</text> </paragraph> <paragraph num="(b)"> <text>Not submitted electronically, the signature of the health care practitioner who provided the service, or person entitled to reimbursement who provided the service, or notation that the signature is on file with the HMO or preferred provider carrier (HCFA Form 1500, field 31);</text> </paragraph> </paragraph> <paragraph num="(34)"> <text>Name and address of the facility where services were rendered (if other than home or office) (HCFA Form 1500, field 32);</text> </paragraph> <paragraph num="(35)"> <text>Health care practitioner's or person entitled to reimbursement's billing name, address, zip code, phone number, and, if applicable, carrier-assigned provider number until the National Provider Identifier (NPI) is developed and assigned, including a provider number pursuant to Health-General Article, §19-710.1(b)(3), Annotated Code of Maryland, (HCFA Form 1500, field 33); and</text> </paragraph> <paragraph num="(36)"> <text>Any other field or essential data element necessary to comply with the applicable standard code set.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Specific Circumstances. In addition to the data elements required by §A of this regulation, to qualify as a clean claim, a claim submitted to a third-party payor by a health care practitioner or person entitled to reimbursement shall include the following data elements if circumstances exist that render the data elements applicable to the specific claim being filed:</text> <paragraph num="(1)"> <text>The other insured's or enrollee's name (HCFA Form 1500, field 9) is applicable if the patient is covered by more than one health benefit plan;</text> </paragraph> <paragraph num="(2)"> <text>The other insured's or enrollee's policy/group number (HCFA Form 1500, field 9a) is applicable if the patient is covered by more than one health benefit plan;</text> </paragraph> <paragraph num="(3)"> <text>The other insured's or enrollee's date of birth (HCFA Form 1500, field 9b) is applicable if the patient is covered by more than one health benefit plan;</text> </paragraph> <paragraph num="(4)"> <text>The other insured's or enrollee's plan name (employer, school, etc.) (HCFA Form 1500, field 9c) is applicable if the patient is covered by more than one health benefit plan;</text> </paragraph> <paragraph num="(5)"> <text>The other insured's or enrollee's HMO or insurer name (HCFA Form 1500, field 9d) is applicable if the patient is covered by more than one health benefit plan;</text> </paragraph> <paragraph num="(6)"> <text>Except in the case of a laboratory issued a license pursuant to Health-General Article, §17-205, Annotated Code of Maryland, the subscriber's plan name (employer, school, etc.) (HCFA Form 1500, field 11(b)) is applicable if the health benefit plan is a group plan;</text> </paragraph> <paragraph num="(7)"> <text>The prior authorization number (HCFA Form 1500, field 23) is applicable when prior authorization is required;</text> </paragraph> <paragraph num="(8)"> <text>A code pursuant to a global contract (HCFA Form 1500, field 24D) is applicable if the claim is between parties to a global contract;</text> </paragraph> <paragraph num="(9)"> <text>A code established by the Medicaid Program (HCFA Form 1500, field 24D) is applicable if the claim is for services rendered pursuant to Health-General Article, §15-103(b)(2), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(10)"> <text>The modifier code (HCFA Form 1500, field 24(D)) is applicable when a modifier code is used to explain unusual circumstances;</text> </paragraph> <paragraph num="(11)"> <text>Whether an assignment was accepted (HCFA Form 1500, field 27) is applicable when an assignment has been accepted;</text> </paragraph> <paragraph num="(12)"> <text>The amount paid (HCFA Form 1500, field 29) is applicable if an amount has been paid to the health care practitioner or person entitled to reimbursement submitting the claim, by the patient or subscriber, or on behalf of the patient or subscriber; and</text> </paragraph> <paragraph num="(13)"> <text>The balance due (HCFA Form 1500, field 30) is applicable if an amount has been paid to the health care practitioner or person entitled to reimbursement submitting the claim, by the patient or subscriber, or on behalf of the patient or subscriber.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A third-party payor may not use or require a health care practitioner or person entitled to reimbursement to use any field for purposes that are inconsistent with these essential data elements or in addition to the applicable standard code set.</text> </paragraph> <paragraph num="D."> <text>A third-party payor may accept a HCFA Form 1500 that includes data elements in addition to those set forth in §§A and B of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Essential Data Elements for Clean Claims by Hospitals."> <paragraph num="A."> <text>In General. To qualify as a clean claim, a claim submitted to a third-party payor by a hospital, or person entitled to reimbursement, shall conform to the applicable standard code set and include the following data elements:</text> <paragraph num="(1)"> <text>Hospital's, or person entitled to reimbursement's, name, address, and telephone number (HCFA Form UB-92, field 1);</text> </paragraph> <paragraph num="(2)"> <text>Patient's control number (HCFA Form UB-92, field 3);</text> </paragraph> <paragraph num="(3)"> <text>Type of bill code (HCFA Form UB-92, field 4);</text> </paragraph> <paragraph num="(4)"> <text>Hospital's, or person entitled to reimbursement's, federal tax ID number (HCFA Form UB-92, field 5);</text> </paragraph> <paragraph num="(5)"> <text>Beginning and ending date of claim period (HCFA Form UB-92, field 6);</text> </paragraph> <paragraph num="(6)"> <text>Patient's name (HCFA Form UB-92, field 12);</text> </paragraph> <paragraph num="(7)"> <text>Patient's address (HCFA Form UB-92, field 13);</text> </paragraph> <paragraph num="(8)"> <text>Patient's date of birth (HCFA Form UB-92, field 14);</text> </paragraph> <paragraph num="(9)"> <text>Patient's gender (HCFA Form UB-92, field 15);</text> </paragraph> <paragraph num="(10)"> <text>Patient's marital status (HCFA Form UB-92, field 16);</text> </paragraph> <paragraph num="(11)"> <text>Date of admission (HCFA Form UB-92, field 17);</text> </paragraph> <paragraph num="(12)"> <text>Admission hour (HCFA Form UB-92, field 18);</text> </paragraph> <paragraph num="(13)"> <text>Type of admission (for example, emergency, urgent, elective, newborn) (HCFA Form UB-92, field 19);</text> </paragraph> <paragraph num="(14)"> <text>Source of admission code (HCFA Form UB-92, field 20);</text> </paragraph> <paragraph num="(15)"> <text>Patient-status-at-discharge code (HCFA Form UB-92, field 22);</text> </paragraph> <paragraph num="(16)"> <text>Medical record number (HCFA Form UB-92, field 23);</text> </paragraph> <paragraph num="(17)"> <text>Responsible party name and address (HCFA Form UB-92, field 38);</text> </paragraph> <paragraph num="(18)"> <text>Value code and amounts (HCFA Form UB-92, fields 39—41);</text> </paragraph> <paragraph num="(19)"> <text>Applicable revenue code (HCFA Form UB-92, field 42) of:</text> <paragraph num="(a)"> <text>The Health Services Cost Review Commission, for hospitals located in the State, or</text> </paragraph> <paragraph num="(b)"> <text>The National or State Uniform Billing Data Elements Specifications, for hospitals not located in the State;</text> </paragraph> </paragraph> <paragraph num="(20)"> <text>Revenue description (HCFA Form UB-92, field 43);</text> </paragraph> <paragraph num="(21)"> <text>Service date (HCFA Form UB-92, field 45);</text> </paragraph> <paragraph num="(22)"> <text>Units of service (HCFA Form UB-92, field 46);</text> </paragraph> <paragraph num="(23)"> <text>Total charge (HCFA Form UB-92, field 47);</text> </paragraph> <paragraph num="(24)"> <text>Noncovered charges (HCFA Form UB-92, field 48);</text> </paragraph> <paragraph num="(25)"> <text>Name of the third-party payor (HCFA Form UB-92, field 50);</text> </paragraph> <paragraph num="(26)"> <text>Provider number (HCFA Form UB-92, field 51);</text> </paragraph> <paragraph num="(27)"> <text>Release of information (HCFA Form UB-92, field 52);</text> </paragraph> <paragraph num="(28)"> <text>Assignment of benefits (HCFA Form UB-92, field 53);</text> </paragraph> <paragraph num="(29)"> <text>Estimated amount due (HCFA Form UB-92, field 55);</text> </paragraph> <paragraph num="(30)"> <text>Subscriber's name (HCFA Form UB-92, field 58);</text> </paragraph> <paragraph num="(31)"> <text>Patient's relationship to the subscriber (HCFA Form UB-92, field 59);</text> </paragraph> <paragraph num="(32)"> <text>Patient's/subscriber's certificate number, health claim number, and ID number (HCFA Form UB-92, field 60);</text> </paragraph> <paragraph num="(33)"> <text>Treatment authorization code (HCFA Form UB-92, field 63);</text> </paragraph> <paragraph num="(34)"> <text>Principal diagnosis code (HCFA Form UB-92, field 67);</text> </paragraph> <paragraph num="(35)"> <text>Admitting diagnosis (HCFA Form UB-92, field 76);</text> </paragraph> <paragraph num="(36)"> <text>Attending physician ID (HCFA Form UB-92, field 82);</text> </paragraph> <paragraph num="(37)"> <text>Other physician ID (HCFA Form UB-92, field 83);</text> </paragraph> <paragraph num="(38)"> <text>Signature of the provider representative or notation that the signature is on file with the third-party payor (HCFA Form UB-92, field 85);</text> </paragraph> <paragraph num="(39)"> <text>Date the bill was submitted (HCFA Form UB-92, field 86); and</text> </paragraph> <paragraph num="(40)"> <text>Any other field or essential data element necessary to comply with the applicable standard code set.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Specific Circumstances. In addition to the data elements required by §A of this regulation, to qualify as a clean claim, a claim submitted to a third-party payor by a hospital, or person entitled to reimbursement, shall include the following data elements if circumstances exist that render the data elements applicable to the specific claim being filed:</text> <paragraph num="(1)"> <text>Covered days (HCFA Form UB-92, field 7) is applicable if Medicare is a primary or secondary payor;</text> </paragraph> <paragraph num="(2)"> <text>Noncovered days (HFCA Form UB-92, field 8) is applicable if Medicare is a primary or secondary payor;</text> </paragraph> <paragraph num="(3)"> <text>Coinsurance days (HFCA Form UB-92, field 9) is applicable if Medicare is a primary or secondary payor;</text> </paragraph> <paragraph num="(4)"> <text>Lifetime reserve days (HCFA Form UB-92, field 10) is applicable if Medicare is a primary or secondary payor and the patient was an inpatient;</text> </paragraph> <paragraph num="(5)"> <text>The discharge hour (HCFA Form UB-92, field 21) is applicable if the patient was an inpatient or was admitted for outpatient observation;</text> </paragraph> <paragraph num="(6)"> <text>The condition codes (HCFA Form UB-92, fields 24—30) are applicable if the HCFA Form UB-92 manual contains a condition code appropriate to the patient's condition;</text> </paragraph> <paragraph num="(7)"> <text>The occurrence codes and dates (HCFA Form UB-92, fields 32—35) are applicable if the HCFA Form UB-92 manual contains an occurrence code appropriate to the patient's condition;</text> </paragraph> <paragraph num="(8)"> <text>The occurrence span code and from and through dates (HCFA Form UB-92 field 36) are applicable if the HCFA Form UB-92 manual contains an occurrence span code appropriate to the patient's condition;</text> </paragraph> <paragraph num="(9)"> <text>HCPCS/Rates (HCFA Form UB-92, field 44) are applicable if there is a primary or secondary payor;</text> </paragraph> <paragraph num="(10)"> <text>A code pursuant to a global contract (HCFA Form UB-92, field 44) is applicable if the claim is between parties to a global contract;</text> </paragraph> <paragraph num="(11)"> <text>Prior payments (HCFA Form UB-92, field 54) are applicable if payments have been made to the hospital by the patient or another payor;</text> </paragraph> <paragraph num="(12)"> <text>The employment status code (HCFA Form UB-92, field 64) is applicable if there are payors of higher priority than the third-party payor, including workers' compensation;</text> </paragraph> <paragraph num="(13)"> <text>The employer name (HCFA Form UB-92, field 65) is applicable if there are payors of higher priority than the third-party payor, including workers' compensation;</text> </paragraph> <paragraph num="(14)"> <text>The employer location (HCFA Form UB-92, field 66) is applicable if there is workers' compensation involvement;</text> </paragraph> <paragraph num="(15)"> <text>Diagnoses codes other than the principal diagnosis code (HCFA Form UB-92, field 68—75) are applicable if there are diagnoses other than the principal diagnosis;</text> </paragraph> <paragraph num="(16)"> <text>Diagnoses codes describing the patient's signs, or presenting symptoms, or both (HCFA Form UB 92, field 76) are applicable for services provided in a hospital emergency department;</text> </paragraph> <paragraph num="(17)"> <text>The procedure coding methods used (HCFA Form UB-92, field 79) are applicable if the HCFA Form UB-92 manual indicates a procedural coding method appropriate to the patient's condition;</text> </paragraph> <paragraph num="(18)"> <text>The principal procedure code (HCFA Form UB-92, field 80) is applicable if the patient has undergone an inpatient or outpatient surgical procedure; and</text> </paragraph> <paragraph num="(19)"> <text>Other procedure codes (HCFA Form UB-92, field 81) are applicable as an extension of §B(17) of this regulation if additional surgical procedures were performed.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A third-party payor may not use or require a hospital to use any field for purposes that are inconsistent with these data elements or in addition to the applicable standard code set.</text> </paragraph> <paragraph num="D."> <text>A third-party payor may accept the HCFA Form UB-92 that includes data elements in addition to those set forth in §§A and B of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Attachments to Uniform Claims Forms."> <paragraph num="A."> <text>A third-party payor may require a health care practitioner, hospital, or person entitled to reimbursement to include any of the following attachments to a HCFA Form UB-92 or HCFA Form 1500, respectively, for a claim to qualify as a clean claim:</text> <paragraph num="(1)"> <text>A referral or consultant treatment plan submitted by the specialist, if the claim is for specialty services under an HMO plan or in-network point-of-service plan, unless the third-party payor requires the provider of primary care services to submit directly to it the referral or consultant treatment plan for specialty services;</text> </paragraph> <paragraph num="(2)"> <text>An explanation of benefits statement from the primary payor to the secondary payor, unless an electronic remittance notice has been sent by the primary payor to the secondary payor;</text> </paragraph> <paragraph num="(3)"> <text>A Medicare remittance notice, if the claim involves Medicare as a primary payor and the third-party payor provides evidence that it does not have a crossover agreement to accept an electronic remittance notice;</text> </paragraph> <paragraph num="(4)"> <text>A description of the procedure or service, which may include the medical record, if a procedure or service rendered has no corresponding Current Procedural Terminology (CPT) or HCPCS code, or additional description information relating to a CDT code;;</text> </paragraph> <paragraph num="(5)"> <text>Operative notes, if the claim is for multiple surgeries, or includes modifier 22, 58, 62, 66, 78, 80, 81, or 82;</text> </paragraph> <paragraph num="(6)"> <text>Anesthesia records documenting the time spent on the service, if the claim for anesthesia services rendered includes modifiers P4 or P5;</text> </paragraph> <paragraph num="(7)"> <text>Documents referenced as contractual requirements in the global contract, if there is a global contract between a third-party payor and a health care practitioner, hospital, or person entitled to reimbursement;</text> </paragraph> <paragraph num="(8)"> <text>An ambulance trip report, if the claim is for ambulance services submitted by an ambulance company licensed by the Maryland Institute for Emergency Medical Services Systems;</text> </paragraph> <paragraph num="(9)"> <text>Office visit notes, if the claim includes modifier 21 or 22;</text> </paragraph> <paragraph num="(10)"> <text>Information related to the audit as specified in writing by the third-party payor, if the third-party payor's audit of the health care practitioner, hospital, or person entitled to reimbursement demonstrated a pattern of fraud, improper billing, or improper coding;</text> </paragraph> <paragraph num="(11)"> <text>Admitting notes, except in the case of services rendered in accordance with Health-General Article, §§19-701(d) and 19-712.5, Annotated Code of Maryland, if the claim is for inpatient services provided outside of the time or scope of the authorization;</text> </paragraph> <paragraph num="(12)"> <text>Physician notes, except in the case of services rendered in accordance with Health-General Article, §§19-701(d) and 19-712.5, Annotated Code of Maryland, if the claim for services provided is outside of the time or scope of the authorization, or when there is an authorization in dispute;</text> </paragraph> <paragraph num="(13)"> <text>Itemized bills, except in the case of services rendered in accordance with Health-General Article, §§19-701(d) and 19-712.5, Annotated Code of Maryland, if the claim is for services:</text> <paragraph num="(a)"> <text>Rendered in a hospital and the hospital claim has no prior authorization for admission, or</text> </paragraph> <paragraph num="(b)"> <text>Inconsistent with a third-party payor's concurrent review determination rendered before the delivery of services, regarding the medical necessity of the service;</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>Adjunct claims documentation pursuant to Health-General Article, §19-710.1(b)(3), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(15)"> <text>A treatment plan from a child’s health care practitioner that includes one or more specific treatment goals, if the claim is for habilitative services for a child diagnosed with autism or autism spectrum disorder.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In its manual, or other document that sets forth the claim filing procedures pursuant to Insurance Article, §15-1004(d), Annotated Code of Maryland, a third-party payor shall:</text> <paragraph num="(1)"> <text>List the attachments to an HCFA Form UB-92 or HCFA Form 1500 that it may require under §A of this regulation for a claim to qualify as a clean claim; and</text> </paragraph> <paragraph num="(2)"> <text>Describe the circumstances under which each attachment may be required.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A third-party payor may accept any additional attachments with the HCFA Form 1500 or HCFA Form UB-92.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Additional Information."> <paragraph num="A."> <text>The following are permissible categories of disputed claims for which third-party payors may request additional information pursuant to Insurance Article, §§15-1004(c) and 15-1005(c), Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>Except in cases of services rendered in accordance with Health-General Article, §§19-701(d) and 19-712.5, Annotated Code of Maryland, the legitimacy, medical necessity, or appropriateness of the health care service, if:</text> <paragraph num="(a)"> <text>There is no authorization; or</text> </paragraph> <paragraph num="(b)"> <text>There was preauthorization and the third-party payor disputes the claim:</text> <paragraph num="(i)"> <text>Consistent with the bases for a carrier's denial as set forth in Insurance Article, §15-1009(b), Annotated Code of Maryland, or</text> </paragraph> <paragraph num="(ii)"> <text>Because the claim is for services provided outside of the time or scope of the authorization and the applicable attachment required in Regulation .10 of this chapter was not submitted with the claim;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Eligibility for benefits or coverage in accordance with Insurance Article, §15-1004(e)(1), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>The appropriateness of a service, procedure, or durable medical equipment rendered or provided by a specialist not requested by the primary care provider of an enrollee of a health maintenance organization on a referral form or consultant treatment plan;</text> </paragraph> <paragraph num="(4)"> <text>In the case of a claim made pursuant to a global contract, the information necessary to adjudicate the claim consistent with the global contract;</text> </paragraph> <paragraph num="(5)"> <text>A reasonable belief of incorrect billing in accordance with Insurance Article, §15-1005(c)(2)(ii), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(6)"> <text>The insured's or enrollee's liability for the service under the insurance policy or contract, subject to the third-party payor obtaining the additional information from its insured or enrollee within 30 days from receipt of the claim;</text> </paragraph> <paragraph num="(7)"> <text>Legibility of the claim in a material matter;</text> </paragraph> <paragraph num="(8)"> <text>A reasonable belief of fraudulent or improper coding consistent with the bases for a carrier's retroactive denial as set forth in Insurance Article, §15-1008(e), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(9)"> <text>A reasonable belief that a claim for emergency services may not meet the standards for an emergency service pursuant to Health-General Article, §19-701(d), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(10)"> <text>The essential information required for a third-party payor to adjudicate a claim for dental services; and</text> </paragraph> <paragraph num="(11)"> <text>A category approved by the Commissioner by regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A third-party payor may not request additional information if an attachment containing the same type of information was submitted with the claim pursuant to Regulation .10 of this chapter.</text> </paragraph> <paragraph num="C."> <text>Except as provided for in §A(1) and (2) of this regulation, a third-party payor may not request medical records if:</text> <paragraph num="(1)"> <text>The claim is for services as set forth in Regulation .10A(12) of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>An itemized bill was submitted with the claim.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The following are impermissible categories of disputed claims for which third-party payors may not request additional information pursuant to Insurance Article, §§15-1004(c) and 15-1005(c), Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>Except for global contracts, a description of the procedure or service that is inconsistent with the applicable standard code set;</text> </paragraph> <paragraph num="(2)"> <text>Reimbursement for hospital services, in accordance with the rates approved by the Health Services Cost Review Commission pursuant to Insurance Article, §15-1214, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>Except for the bases for a carrier's denial of reimbursement for preauthorized or approved services as set forth in Insurance Article, §15-1009(b), Annotated Code of Maryland, services that were preauthorized by the third-party payor or a private review agent.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Receipt of a Claim."> <paragraph num="A."> <text>Each third-party payor shall:</text> <paragraph num="(1)"> <text>Date-stamp the claim with the date received, for a written claim; or</text> </paragraph> <paragraph num="(2)"> <text>Assign to the document a batch number that includes the date received for an electronic claim.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Each third-party payor shall maintain a written or electronic record of the date of receipt of a claim.</text> </paragraph> <paragraph num="C."> <text>Except as provided in §E of this regulation, a claim is presumed to have been received by a third-party payor according to the date of receipt of the claim stated in the written or electronic record required under §B of this regulation.</text> </paragraph> <paragraph num="D."> <text>Pursuant to a request for claim receipt verification by a health care practitioner, hospital, or person entitled to reimbursement, a third-party payor shall provide within 5 working days verification of the date of claim receipt as stated in the written or electronic record, either in:</text> <paragraph num="(1)"> <text>Electronic form, if the request was for electronic verification; or</text> </paragraph> <paragraph num="(2)"> <text>Written form, including microfilm, if the request was for written verification.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A claim is presumed to have been received by a third-party payor:</text> <paragraph num="(1)"> <text>3 working days from the date the submitting health care practitioner, hospital, or person entitled to reimbursement placed the claim in the U.S. mail, if the health care practitioner, hospital, or person entitled to reimbursement maintains the stamped certificate of mailing for the claim; or</text> </paragraph> <paragraph num="(2)"> <text>On the date recorded by the courier, if the claim was delivered by courier.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Disclosure."> <paragraph num="A."> <text>Third-party payors shall follow the disclosure requirements set forth in Insurance Article, §15-1004(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>If a third-party payor uses auto codes to determine whether health care services provided in a hospital emergency facility are “emergency services” as defined in Health-General Article, §19-701(e), Annotated Code of Maryland, the third-party payor shall provide to all contracting health care practitioners or hospitals rendering emergency services, or to all health care practitioners or hospitals rendering emergency services that request them:</text> <paragraph num="(1)"> <text>Auto codes used by the third-party payor to determine emergency services; and</text> </paragraph> <paragraph num="(2)"> <text>Updated auto codes for emergency services at least 30 days before an update of the auto codes will be used, stating the date on which the updated auto codes for emergency services will be used.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Claims Data Filing."> <paragraph num="A."> <text>Required.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, twice each calendar year a third-party payor shall submit to the Commissioner a claims data filing that documents the payment and denial practices for claims from health care practitioners, hospitals, and other persons entitled to reimbursement of:</text> <paragraph num="(a)"> <text>The third-party payor; and</text> </paragraph> <paragraph num="(b)"> <text>Each entity to which the third-party payor has delegated claims processing.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Each claims data filing required pursuant to this regulation shall include, at a minimum, data documenting:</text> <paragraph num="(a)"> <text>The number of claims received;</text> </paragraph> <paragraph num="(b)"> <text>The number of claims received that were clean claims pursuant to Regulations .08, .09, and .10 of this chapter;</text> </paragraph> <paragraph num="(c)"> <text>Claims for which additional information was requested by the third-party payor, or the entity to which the third-party payor has delegated claims processing, pursuant to Regulation .11 of this chapter; and</text> </paragraph> <paragraph num="(d)"> <text>As to all claims received, compliance or noncompliance with the requirements of Insurance Article, §15-1005, Annotated Code of Maryland, including timeliness of processing claims and paying interest.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Filing Deadlines.</text> <paragraph num="(1)"> <text>The claim data filing shall be in the form approved by the Commissioner and shall be submitted to the Commissioner not later than:</text> <paragraph num="(a)"> <text>September 1 of each year, beginning on September 1, 2002, for all claims received for the period of January 1—June 30 of the same calendar year; and</text> </paragraph> <paragraph num="(b)"> <text>March 1 of each year, beginning on March 1, 2003, for all claims received for the period of July 1—December 31 of the preceding calendar year.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the Commissioner has evidence that a third-party payor, or an entity to which a third-party payor has delegated claims processing, is not in compliance with Insurance Article, §15-1003, 15-1004, or 15-1005, Annotated Code of Maryland, the Commissioner may require a third-party payor to submit a claims data filing more frequently than twice a year.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Use of Data by Commissioner. The Commissioner shall use the claims data filings to determine the general business practices of third-party payors and entities to which third-party payors have delegated claims processing pursuant to Insurance Article, §15-1005, Annotated Code of Maryland.</text> </paragraph> <paragraph num="D."> <text>Confidentiality of Information.</text> <paragraph num="(1)"> <text>A claims data filing submitted to the Commissioner pursuant to this regulation is confidential commercial information pursuant to State Government Article, §10-617, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §D(3) of this regulation, the Commissioner shall deny inspection of a claims data filing.</text> </paragraph> <paragraph num="(3)"> <text>If information from a claims data filing is used as the basis for imposing interest or penalties on a third-party payor, the information shall be available for public inspection only as to the portions pertinent to the imposition of interest or penalties.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Commissioner may impose penalties if a third-party payor submits inaccurate information required by §A of this regulation, in an amount not to exceed the penalty amount set forth in Insurance Article, §4-113(d)(1), Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>The Commissioner may act in accordance with Insurance Article, §4-113(b) or (d), Annotated Code of Maryland, if a third-party payor willfully submits inaccurate information required by §A of this regulation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health Occupations Article, §1-208; Insurance Article, §§2-108, 2-109, and 15-1003—15-1005; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 adopted as an emergency provision effective July 22, 1993 (20:16 Md. R. 1274); adopted permanently effective October 25, 1993 (20:21 Md. R. 1653)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.56 to COMAR 31.10.11 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 7, 2001 (28:12 Md. R. 1113); December 11, 2003 (30:24 Md. R. 1747)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 1, 2015 (42:15 Md. R. 1019)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07E adopted effective January 26, 2009 (36:2 Md. R. 102)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10A amended effective March 17, 2014 (41:5 Md. R. 348)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14C amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="12" heading="Uniform Consultation Referral"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <text>This chapter is applicable to all:</text> <paragraph num="A."> <text>Carriers as defined in Regulation .02B(1) of this chapter;</text> </paragraph> <paragraph num="B."> <text>Consultant/facility providers as defined in Regulation .02B(2) of this chapter; and</text> </paragraph> <paragraph num="C."> <text>Primary or requesting providers as defined in Regulation .02B(4) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization; or</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Consultant/facility provider” means:</text> <paragraph num="(a)"> <text>A person licensed or certified under Health Occupations Article, Annotated Code of Maryland, who receives a referral from a primary or requesting provider; or</text> </paragraph> <paragraph num="(b)"> <text>Hospitals and related institutions that receive a referral from a primary or requesting provider.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Hospital” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Primary or requesting provider” means a person licensed or certified under the Health Occupations Article, Annotated Code of Maryland, who refers patients for consultation to a consultant/facility provider.</text> </paragraph> <paragraph num="(5)"> <text>“Related institution” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Uniform consultation referral form” means:</text> <paragraph num="(a)"> <text>For dentists referring patients for dental care procedures or services, the Maryland Uniform Dental Consultation Referral Form or its electronic equivalent shown in Regulation .08 of this chapter; or</text> </paragraph> <paragraph num="(b)"> <text>For all other health care professionals referring patients for health, medical, or dental care procedures or services, the Maryland Uniform Consultation Referral Form or its electronic equivalent shown in Regulation.06 of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Uniform Consultation Referral Form — Carrier Requirements."> <paragraph num="A."> <text>If a carrier requires a covered person to have a written referral in order to receive services, the carrier shall use the uniform consultation referral form as defined in Regulation .02B(6) of this chapter.</text> </paragraph> <paragraph num="B."> <text>The carrier may not impose as a condition of coverage a requirement to:</text> <paragraph num="(1)"> <text>Modify the uniform consultation referral form, except as provided in §E of this regulation; or</text> </paragraph> <paragraph num="(2)"> <text>Submit additional consultation referral forms.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The carrier may provide a separate set of instructions for properly completing the Uniform Consultation Referral Form.</text> </paragraph> <paragraph num="D."> <text>For the uniform consultation referral form, the carrier’s specific instructions:</text> <paragraph num="(1)"> <text>If applicable, may be preprinted on the back of the uniform consultation referral form, if the instructions do not result in any modifications in the format of, or information categories directed to be supplied on the front of, the uniform consultation referral form; and</text> </paragraph> <paragraph num="(2)"> <text>Shall be made available to primary or requesting providers on the carrier’s website.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Notwithstanding the provisions of §B of this regulation, the carrier may provide stamps or preprinted stickers to include additional information to the carrier information block on the uniform consultation referral form.</text> </paragraph> <paragraph num="F."> <text>The carrier may preprint the designated carrier information in the carrier information field on the Maryland uniform consultation referral form.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Uniform Consultation Referral Form — Primary or Requesting Provider."> <paragraph num="A."> <text>The primary or requesting provider shall use the uniform consultation referral form as defined in Regulation .02B(6) of this chapter and instructions as provided in Regulation .03C of this chapter.</text> </paragraph> <paragraph num="B."> <text>The uniform consultation referral form shall be properly completed by the primary or requesting provider.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Uniform Consultation Referral Form — Consultant/Facility Provider."> <text>The consultant/facility provider shall accept a properly completed uniform consultation referral form.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="General Provisions."> <paragraph num="A."> <text>The requirements under these regulations do not apply to an entity that would be using a consultation form solely for internal purposes.</text> </paragraph> <paragraph num="B."> <text>The Maryland Uniform Consultation Referral Form shall read as follows:</text> </paragraph> <paragraph num="C."> <text>The electronic equivalent of the uniform consultation referral form is as follows:</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Electronic Transfer of the Uniform Consultation Referral Form."> <paragraph num="A."> <text>A transmission by facsimile is not considered an electronic transfer for the purposes of this chapter.</text> </paragraph> <paragraph num="B."> <text>A carrier shall accept the electronic transfer of the uniform consultation referral form.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Uniform Consultation Referral Form — Required Forms."> <paragraph num="A."> <text>The Maryland Uniform Dental Consultation Referral Form shall read as follows:</text> </paragraph> <paragraph num="B."> <text>The electronic equivalent of the uniform consultation referral form is as follows:</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-120, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 21, 1996 (23:21 Md. R. 1467)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective January 28, 1997 (24:4 Md. R. 289); adopted permanently effective May 19, 1997 (24:10 Md. R. 710)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 adopted as an emergency provision effective January 28, 1997 (24:4 Md. R. 289); adopted permanently effective May 19, 1997 (24:10 Md. R. 710)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.23 to COMAR 31.10.12 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 1, 2005 (31:23 Md. R. 1655); January 13, 2011 (38:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective January 13, 2011 (38:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective January 1, 2005 (31:23 Md. R. 1655)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective January 1, 2005 (31:23 Md. R. 1655)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective January 13, 2011 (38:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective January 13, 2011 (38:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06D amended effective January 1, 2005 (31:23 Md. R. 1655)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective January 13, 2011 (38:1 Md. R. 12)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 adopted effective January 1, 2005 (31:23 Md. R. 1655); January 13, 2011 (38:1 Md. R. 12)</annotation> </annotations> </chapter> <chapter num="13" heading="Return of Premium, Cash Surrender, or Other Nonforfeiture Benefits in Health Insurance Policies"> <regulation prefix="Regulation" num=".01" heading="Preface."> <text>The issuance or delivery of health insurance policies in Maryland in any manner not in compliance with this chapter shall be deemed to constitute the transaction of insurance business hazardous to policyholders and the public and contrary to the public interest and otherwise contrary to requirements of the Insurance Article. Insurance Article, §2-109, Annotated Code of Maryland, authorizes the Commissioner to make reasonable regulations necessary for or as an aid to implementing any provision of the Insurance Article. Insurance Article, §12-203, Annotated Code of Maryland, provides, in part, that no health insurance policy form shall be delivered or issued for delivery in this State unless the form has been filed with and approved by the Commissioner. Insurance Article, §12-205, Annotated Code of Maryland, authorizes the Commissioner to disapprove any policy form if it contains an inequitable provision or a provision without substantial benefit to the policyholder or if the policy benefits are unreasonable in relation to the premium charged or if the policy benefits are not of real economic value to the insured.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability."> <text>This chapter applies to individual policies of health insurance and its application varies with the types of benefit provided by a policy. For this purpose, the benefits which have been found to appear in individual policies of health insurance are classified as follows:</text> <paragraph num="A."> <text>Type 1: A benefit payable if an event involving a morbidity risk occurs or commences during the premium paying period of the policy. Most accident and health insurance benefits fall into this category.</text> </paragraph> <paragraph num="B."> <text>Type 2: A deferred benefit in the form of a payment at the expiration date of the policy or at a date specified instead of an expiration date. This payment may be defined as an amount equal to all or a stated portion of the accumulated premiums for the policy, with or without interest, or the amount may be defined without regard to the premiums.</text> </paragraph> <paragraph num="C."> <text>Type 3: A deferred periodic benefit providing for specified amounts payable at one or more specified times or intervals during the premium paying period. The specified amounts may be defined as equal to all or a stated portion of the premiums paid during a specified period, with or without interest, or the amounts of the payments may be defined without regard to the premiums.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Purpose."> <text>The purpose of this chapter is to serve the interests of continuing policyholders and to afford reasonable protection to the interests of those policyholders who are forced to discontinue their policies prematurely by regulating the design of the policies in a manner which is equitable to the policyholder and which provides benefits reasonable in relation to the premium charged and which provides benefits of economic value to the insured.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Construction."> <text>The classification in Regulation .02 of this chapter applies to the benefit rather than to the policy. A policy may contain benefits of more than one type. Benefits of Type 2 and Type 3 are deemed supplementary to Type 1 benefits. Premiums for Type 2 benefits and Type 3 benefits are normally payable at the same time as premiums for other benefits of the policy, but payments of Type 2 and Type 3 benefits will normally be made only after the passage of a considerable period of time.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Guaranteed renewable” when used in connection with an individual health insurance policy means that the insured has the right to continue the policy in force by the timely payment of premiums:</text> <paragraph num="(a)"> <text>Until at least age 50; or</text> </paragraph> <paragraph num="(b)"> <text>In the case of a policy issued after age 44, for at least 5 years from its date of issue, during which period the insurer has no right to make unilaterally any change in any policy provision except the right to change premiums in accordance with the terms of the policy.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Withdrawal benefit” means:</text> <paragraph num="(a)"> <text>Any paid-up nonforfeiture benefit, for example, extended insurance for a limited period of time or insurance continued for the original term of the policy but for a reduced amount of benefit, providing coverage for morbidity risks; or</text> </paragraph> <paragraph num="(b)"> <text>Any cash surrender nonforfeiture benefit or any endowment or annuity payment which is payable without reference to any morbidity risk.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Morbidity risk” means any loss resulting from injury, sickness, childbirth, or health care.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Type 1 Benefit."> <text>Provision for a withdrawal benefit in connection with a nondeferred benefit, Type 1, is not required. However, provision for a withdrawal benefit in connection with a Type 1 benefit may be used at the insurer's option, if any payment under it is not greater than an amount corresponding to a reserve which might properly be held at the time of withdrawal with respect to the Type 1 benefit to which it is related.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Type 2 or Type 3 Benefit."> <paragraph num="A."> <text>No deferred benefit of Type 2 or Type 3, or any provision for a withdrawal benefit, may be used in any individual policy of health insurance unless the policy is guaranteed renewable.</text> </paragraph> <paragraph num="B."> <text>An individual policy containing a provision for a Type 2 or Type 3 benefit shall make further provision for a withdrawal benefit. In the event of discontinuance by the policyholder on or after the fifth anniversary of the effective date of the policy, or any earlier date which the policy may specify, the withdrawal benefit shall be payable. The value of the withdrawal benefit before any reduction because of provision for claim payments offset (see §F of this regulation), shall be not less than an amount computed (without provision for claim payments offset for the purpose of this section) in the same manner as the minimum reserve required with respect to the Type 2 or Type 3 benefit to which it is related but on a 5-year preliminary term basis with an interest rate of 5 percent per annum, using mortality and morbidity tables which are approved by the Commissioner as acceptable for reserve purposes.</text> </paragraph> <paragraph num="C."> <text>If the policy gives the policy owner the option of electing one of two or more withdrawal benefits, the right of election shall extend for at least 60 days after the date the policy ceases to be in force, and one of the withdrawal benefits shall be designated as the automatic benefit in event the policy owner does not make a timely election.</text> </paragraph> <paragraph num="D."> <text>If the policy gives the policy owner the option of electing one of two or more withdrawal benefits, and one of these benefits provides for extended insurance, the extended insurance benefit shall be in effect from the date the policy lapses until the earlier of the date the policyholder exercises his option to elect an alternate benefit or until the date an alternate benefit becomes effective as an automatic withdrawal benefit. The insurer may deduct the cost of the extended insurance benefit from the value of an alternate withdrawal benefit which later becomes effective.</text> </paragraph> <paragraph num="E."> <text>If the policy provides a cash surrender nonforfeiture benefit upon lapse before the expiry date stated in the policy, the insurer may provide the policyholder the option of electing an arrangement for automatic premium loans. The insurer may charge the amount advanced as automatic premium loans, together with interest thereon at an effective rate not to exceed 8 percent per annum, against the cash surrender value or against the value of any other withdrawal benefit which may later become effective under the policy.</text> </paragraph> <paragraph num="F."> <text>Claim Payments Offset. An individual health insurance policy may provide that a Type 2 benefit or a Type 3 benefit, or any withdrawal benefit associated with a Type 2 or Type 3 benefit, shall be reduced because of prior claim payments under the policy. No provision may be used which could cause the amount of a Type 2 or Type 3 benefit, or any associated withdrawal benefit, to be reduced by more than the amount of any currently incurred and prior claims.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Combining Withdrawal Provisions."> <text>If a policy provides for withdrawal benefits in connection with more than one benefit or more than one type of benefit, provision for these withdrawal benefits may be combined in a single part of the policy.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Death of an Insured."> <text>Any cash withdrawal benefit provided by a policy shall be payable on death of an insured.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Policies Insuring More Than One Life."> <text>If a policy covers more than one life, any provision of the regulation defining a minimum withdrawal benefit shall be construed, when appropriate, to be applicable separately to each covered life. The benefit provision shall be specific in regard to the determination of the amount of benefits under these cases.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Dividends."> <text>For purposes of this chapter, dividends to policyholders may not be regarded as claims paid, but may be regarded as reductions of premiums paid.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Premium Waiver."> <text>For purposes of this chapter, a waived premium shall be regarded both as a premium paid and a claim paid.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Premium Notices."> <text>The insurer shall send the policyholder timely advance notice of each premium as it comes due, unless the premium installments are payable on a payroll savings or salary deduction plan, or by a series of preauthorized checks or bank drafts, or a similar plan.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Advertising."> <text>A sales presentation or advertising concerning any Type 2 or Type 3 benefit may not state, or in any manner indicate or imply, or tend to cause the policyholder to believe, that any withdrawal benefit is provided free or without additional cost or charge to the policyholder.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 12-203—12-205, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 10, 1979 (6:16 Md. R. 1330)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.46 to COMAR 31.10.13 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="14" heading="Minimum Loss Ratio with Respect to Specified Disease Policies"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish minimum loss ratios with respect to specified disease policies in order to assure that the benefits provided in those policies are reasonable in relation to the premium charged and may be approved under the requirements of Insurance Article, §§12-203—12-205, and 15-109, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Claim reserve” means the sum of the present value of amounts not yet due on claims plus the reserve for future contingent benefits included in Exhibit 9, Part B of the Annual Statement. All numerical references to the Annual Statement in this regulation are to the National Association of Insurance Commissioners form for Life and Accident and Health insurers, current edition.</text> </paragraph> <paragraph num="(2)"> <text>“Claims liability” means the amount included in Line 4a of Exhibit 11, Part 1 of the Annual Statement.</text> </paragraph> <paragraph num="(3)"> <text>“Loss ratio” means the ratio of losses incurred to premiums earned on specified disease policies.</text> </paragraph> <paragraph num="(4)"> <text>“Policy reserves” means the sum of the additional reserves plus the reserve for future contingent benefits included in Lines 2 and 3 of Exhibit 9, Part A of the Annual Statement.</text> </paragraph> <paragraph num="(5)"> <text>“Premium reserve” means unearned premiums plus advance premiums plus reserve for dividends, refunds, and retrospective rate credits.</text> </paragraph> <paragraph num="(6)"> <text>“Premiums written” means premiums due during the current year and is equal to premiums collected during the current year plus premiums uncollected at the end of the current year less premiums uncollected at the end of the previous year.</text> </paragraph> <paragraph num="(7)"> <text>Specified Disease Policy.</text> <paragraph num="(a)"> <text>“Specified disease policy” means a health insurance policy that provides:</text> <paragraph num="(i)"> <text>Benefits only for a disease or diseases specified in the policy or for treatment unique to a specified disease or diseases; or</text> </paragraph> <paragraph num="(ii)"> <text>Additional benefits for a disease or diseases specified in the policy or for treatment unique to a specified disease or diseases, provided the actuarial net premium for the additional benefits exceeds 33 percent of the actuarial net premium for all of the health insurance benefits provided in the policy.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If an insurer issues a health insurance policy to which a rider providing coverage for a specified disease or diseases may be added at the option of the policy owner and if the actuarial net premium for the benefits provided by the rider exceeds 33 percent of the actuarial net premium for all of the health insurance benefits provided by the policy including the rider, then either the policy to which the rider is attached, or the rider separately, shall be considered to be a “specified disease policy”, whichever the insurer elects.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Minimum Loss Ratio."> <paragraph num="A."> <text>In order to assure that benefits under specified disease policies are reasonable in relation to the premium charged, the insurer shall establish premiums for specified disease policies in accordance with generally accepted actuarial principles and practices so as to return to policyholders in the form of aggregate benefits provided under the policy during the period for which rates are computed at least 75 percent of the aggregate premiums earned in the case of group and blanket policies, and at least 60 percent of the aggregate premiums earned in the case of individual policies.</text> </paragraph> <paragraph num="B."> <text>Policies issued as a result of solicitation of individuals through the mail or mass media advertising, including both print and broadcast advertising, shall be considered individual policies for purposes of this regulation.</text> </paragraph> <paragraph num="C."> <text>The benefits provided in a specified disease policy shall be considered unreasonable in relation to the premium charged if the actual or anticipated loss ratio is less than 75 percent in the case of group and blanket policies, or less than 60 percent in the case of individual policies.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Rate Filings."> <text>In filing a specified disease policy for approval, the insurer shall also file the premium rates proposed to be charged for the policy and shall include an actuarial memorandum based on credible data to show that the anticipated loss ratio under the policy will be not less than the ratios required by Regulation .03 of this chapter. The actuarial memorandum shall describe how the rates were determined and how the anticipated loss ratio was calculated and shall include a general description and the source of each assumption used in the memorandum. This filing as well as those required under Regulations .05 and .06 of this chapter shall assume a reasonable rate of interest to be earned on claim and policy reserves.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Reports to the Commissioner."> <paragraph num="A."> <text>On or before June 30 of each calendar year, each insurer issuing specified disease policies in Maryland shall file with the Commissioner a report regarding the loss ratio being experienced under each specified disease policy form being issued by the insurer in this State. Experience with regard to substantially similar policy forms may be combined as if they were the same form.</text> </paragraph> <paragraph num="B."> <text>The report as to each policy form or combination of similar policy forms shall show for each of the 5 preceding calendar years, or for the preceding years since the policy form was first issued, the following information regarding experience on direct business (before reinsurance ceded or assumed) issued, delivered, or renewed in Maryland:</text> <paragraph num="(1)"> <text>Premiums written;</text> </paragraph> <paragraph num="(2)"> <text>Dividends, refunds, and retrospective rate credits paid or allowed;</text> </paragraph> <paragraph num="(3)"> <text>Premiums written net of §B(2) of this regulation;</text> </paragraph> <paragraph num="(4)"> <text>Premium reserve at end of previous year;</text> </paragraph> <paragraph num="(5)"> <text>Premium reserve at end of current year;</text> </paragraph> <paragraph num="(6)"> <text>Premiums earned (§B(3) + (4) - (5));</text> </paragraph> <paragraph num="(7)"> <text>Claims paid;</text> </paragraph> <paragraph num="(8)"> <text>Claims liability at end of current year;</text> </paragraph> <paragraph num="(9)"> <text>Claim reserve at end of current year;</text> </paragraph> <paragraph num="(10)"> <text>Policy reserves at end of current year;</text> </paragraph> <paragraph num="(11)"> <text>Claims liability at end of previous year;</text> </paragraph> <paragraph num="(12)"> <text>Claim reserve at end of previous year;</text> </paragraph> <paragraph num="(13)"> <text>Policy reserves at end of previous year;</text> </paragraph> <paragraph num="(14)"> <text>Losses incurred (§B(7) + (8) + (9) + (10) - (11) - (12) - (13));</text> </paragraph> <paragraph num="(15)"> <text>Loss ratio (§B(14) divided by (6)).</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the amount of the insurer's specified disease business in Maryland is not sufficient to make the report credible from a statistical standpoint, upon application to and with the approval of the Commissioner, the insurer may make the report based on its entire national experience.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Procedure for Rate Reduction."> <paragraph num="A."> <text>If the report referred to in Regulation .05 of this chapter with respect to a policy form or combination of similar policy forms indicates that the form or forms are not meeting the loss ratio requirements of Regulation .03 of this chapter, the insurer, within 30 days after the due date of the report, shall file for an appropriate reduction in premium to be effective not later than 90 days after the due date of the report. The filing shall include an actuarial memorandum as described in Regulation .04 of this chapter. If the insurer does not propose a reduced premium which in the opinion of the Commissioner meets the requirements of these regulations, the Commissioner shall afford the insurer a hearing upon due notice. If, as a result of the hearing, the Commissioner finds that the premium proposed to be charged by the insurer would not be likely to result in a loss ratio meeting the requirements of these regulations, he may withdraw approval of the affected policy form or forms in accordance with Insurance Article, §12-203(c)(5), Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>If a reduced premium is required, the insurer may offer the policy owner the option of obtaining increased benefits instead of the reduction in premium. The proposed benefit increase should be filed in accordance with Regulation .04 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Applicability."> <text>These regulations apply to all insurers to whom Insurance Article, §15-109, Annotated Code of Maryland, is applicable.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 12-203—12-205, and 15-109, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 15, 1982 (9:5 Md. R. 527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective November 6, 1995 (22:22 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.57 to COMAR 31.10.14 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective September 21, 2009 (36:19 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="15" heading="Substantial, Available, and Affordable Coverage Plan" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: October 11, 1993 (20:20 Md. R. 1570)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.96 to COMAR 31.10.15 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter, Reporting of Benefits for Child Wellness Services and Mammograms, repealed effective October 5, 1998 (25:20 Md. R. 1534)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.10, Substantial, Available, and Affordable Coverage Plan, adopted effective November 16, 1998 (25:23 Md. R. 1697)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended as an emergency provision effective June 28, 1999 (26:15 Md. R. 1146); emergency status expired December 15, 1999</annotation> <annotation type="History" subtype="Administrative History">Regulation .01E amended as an emergency provision effective November 10, 1999 (26:25 Md. R1896); emergency status expired April 5, 2000</annotation> <annotation type="History" subtype="Administrative History">Regulation .01E amended as an emergency provision effective April 5, 2000 (27:8 Md. R. 795); amended permanently effective July 24, 2000 (27:14 Md. R. 1344)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective August 7, 2000 (27:19 Md. R. 1724); revised permanently effective November 27, 2000 (27:23 Md. R. 2150)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01E amended effective April 16, 2001 (28:7 Md. R. 692)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective March 18, 2002 (29:5 Md. R. 506)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective April 16, 2001 (28:7 Md. R. 692); March 18, 2002 (29:5 Md. R. 506)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E amended effective April 16, 2001 (28:7 Md. R. 692)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05H amended effective April 16, 2001 (28:7 Md. R. 692)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective April 16, 2001 (28:7 Md. R. 692)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended effective March 18, 2002 (29:5 Md. R. 506)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08C amended effective April 16, 2001 (28:7 Md. R. 692)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective April 16, 2001 (28:7 Md. R. 692)</annotation> <annotation type="History" subtype="Administrative History">Chapter repealed effective June 17, 2008 (35:12 Md. R. 1121)</annotation> </annotations> </chapter> <chapter num="16" heading="Carrier Provider Panels — Application Process"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter applies to all insurers, nonprofit health service plans, health maintenance organizations, dental plans, and to any other person or organization which utilizes a provider panel and which provides health benefit plans subject to regulation in this State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Carrier.</text> <paragraph num="(a)"> <text>“Carrier” means:</text> <paragraph num="(i)"> <text>An insurer;</text> </paragraph> <paragraph num="(ii)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(iii)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(iv)"> <text>A dental plan organization; and</text> </paragraph> <paragraph num="(v)"> <text>Any other person or organization that provides health benefit plans subject to State regulation.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Carrier” includes an entity that arranges a provider panel for a carrier.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Provider” means a health care practitioner or a group of health care practitioners licensed or otherwise authorized by law to provide health care services.</text> </paragraph> <paragraph num="(3)"> <text>Provider Panel.</text> <paragraph num="(a)"> <text>“Provider panel” means those providers with which a carrier contracts to provide health care services to the carrier's enrollees under the carrier's health benefit plan.</text> </paragraph> <paragraph num="(b)"> <text>“Provider panel” does not include an arrangement between a carrier and providers in which a provider may participate solely on the basis of the provider's contracting with the carrier to provide services at a discounted fee-for-service rate.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Requirements for Application Process."> <paragraph num="A."> <text>A carrier that utilizes a provider panel shall establish written procedures for reviewing applications for participation in the provider panel.</text> </paragraph> <paragraph num="B."> <text>A carrier that utilizes a provider panel shall, upon request, make its applications publicly available.</text> </paragraph> <paragraph num="C."> <text>The form of application:</text> <paragraph num="(1)"> <text>Shall include instructions for completion of the application;</text> </paragraph> <paragraph num="(2)"> <text>Shall provide a specifically designated space for dating the receipt of the application by the carrier; and</text> </paragraph> <paragraph num="(3)"> <text>Shall comply with federal and State laws concerning the Americans with Disability Act.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A carrier shall maintain an application log which, at a minimum, provides the following information:</text> <paragraph num="(1)"> <text>Name of the provider requesting or submitting the application;</text> </paragraph> <paragraph num="(2)"> <text>Date the provider requested an application, if applicable;</text> </paragraph> <paragraph num="(3)"> <text>Date the application is sent or delivered to the provider, if applicable;</text> </paragraph> <paragraph num="(4)"> <text>Date the application is received from the provider;</text> </paragraph> <paragraph num="(5)"> <text>Date the application is returned to the provider with a request for additional information to complete the application, if applicable;</text> </paragraph> <paragraph num="(6)"> <text>Date of receipt by the carrier of an application previously returned for additional information, if applicable;</text> </paragraph> <paragraph num="(7)"> <text>Date that the provider is notified of:</text> <paragraph num="(a)"> <text>Rejection, or</text> </paragraph> <paragraph num="(b)"> <text>Carrier's intent to continue the credentialing process; and</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Date after completion of credentialing that the provider is notified of acceptance or rejection in the provider panel.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The log shall be available for inspection by the Commissioner.</text> </paragraph> <paragraph num="F."> <text>Notice.</text> <paragraph num="(1)"> <text>A carrier shall:</text> <paragraph num="(a)"> <text>If the carrier maintains a web site:</text> <paragraph num="(i)"> <text>Post on the web site a notice of how to apply to the carrier's provider panel; and</text> </paragraph> <paragraph num="(ii)"> <text>Provide, on request, a paper copy of the notice of how to apply to the carrier's provider panel; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the carrier does not maintain a web site, provide on request a paper copy of the notice of how to apply to the carrier's provider panel.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The notice required pursuant to §F(1) of this regulation shall include relevant addresses and telephone numbers for contact purposes.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Application Fees."> <paragraph num="A."> <text>A carrier may charge a reasonable fee for any application that a provider submits to the carrier.</text> </paragraph> <paragraph num="B."> <text>The fee shall be nonrefundable and uniform for all applicants within a practice specialty.</text> </paragraph> <paragraph num="C."> <text>The fee may not exceed $75 for each provider application.</text> </paragraph> <paragraph num="D."> <text>A carrier may not charge additional fees for processing an application which was returned because of insufficient information.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Document Retention."> <paragraph num="A."> <text>A carrier shall maintain its provider application log for a minimum of 3 years or until its next market conduct examination, whichever occurs last.</text> </paragraph> <paragraph num="B."> <text>A carrier shall:</text> <paragraph num="(1)"> <text>Date stamp each application received from a provider upon initial receipt; and</text> </paragraph> <paragraph num="(2)"> <text>Maintain a legible copy of each application, and any correspondence regarding that application, for a minimum of 3 years or until its next market conduct examination, whichever occurs last.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-112, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 17, 1996 (23:12 Md. R. 870)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.13 to COMAR 31.10.16 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03C amended effective April 21, 2008 (35:8 Md. R. 812)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03D amended effective May 9, 2016 (43:9 Md. R. 532)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03F amended effective December 23, 2002 (29:25 Md. R. 1984)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective December 6, 2018 (45:24 Md. R. 1164)</annotation> </annotations> </chapter> <chapter num="17" heading="Health Care Consumer Information and Education Act"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all carriers that provide health care services to enrollees or otherwise make health care services available to enrollees through contracts with providers.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization;</text> </paragraph> <paragraph num="(e)"> <text>Any person or entity acting as a third-party administrator; or</text> </paragraph> <paragraph num="(f)"> <text>Except for a managed care organization as defined in Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland, any other person that provides health benefit plans subject to regulation by the State.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Enrollment sales materials” means any materials provided by a carrier to:</text> <paragraph num="(a)"> <text>An employer at the time of plan selection; or</text> </paragraph> <paragraph num="(b)"> <text>Enrollees at the time of enrollment.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Information to be Disclosed."> <paragraph num="A."> <text>Each carrier that provides health care services to enrollees, or otherwise makes health care services available to enrollees through contracts with providers, shall disclose in its enrollment sales material the:</text> <paragraph num="(1)"> <text>Methodology or methodologies that the carrier uses to compensate the physicians for health care services rendered to enrollees; and</text> </paragraph> <paragraph num="(2)"> <text>Distribution of each $100 it receives in premium dollars from enrollees for the preceding calendar year.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The information required to be disclosed under §A of this regulation shall be based on Maryland-specific information.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Disclosure of Compensation Methodologies."> <paragraph num="A."> <text>Each carrier shall include the following in its enrollment sales materials:</text> <paragraph num="(1)"> <text>The following disclosure statement typeset in bold italic type:</text> </paragraph> <paragraph num="(2)"> <text>The table, specified in §C of this regulation, defining methods of paying physicians and giving an example of each method; and</text> </paragraph> <paragraph num="(3)"> <text>A statement of:</text> <paragraph num="(a)"> <text>The payment method or methods used to compensate physicians during the preceding year, and</text> </paragraph> <paragraph num="(b)"> <text>An estimated percentage of physicians under contract with the carrier compensated by each payment method.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Requests Pursuant to Disclosure.</text> <paragraph num="(1)"> <text>Each carrier shall provide information in response to requests made pursuant to the disclosure requirement set forth in §A(1) of this regulation with respect to provider compensation by disclosing the method by which a specific physician is compensated.</text> </paragraph> <paragraph num="(2)"> <text>A carrier is not required to state the dollar amount of compensation or otherwise provide more specific information about the compensation arrangement it has with a specific physician.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Methods of Paying Physicians.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Disclosure of Distribution of Premium Dollars."> <paragraph num="A."> <text>The disclosure required under this regulation shall:</text> <paragraph num="(1)"> <text>Be in the form of a pie chart or bar graph; and</text> </paragraph> <paragraph num="(2)"> <text>Identify, in layman's terms, the proportion of every $100 in premium dollars that the carrier uses to pay:</text> <paragraph num="(a)"> <text>Providers for the provision of health care services to enrollees, including what proportion is for direct medical care expenses, and</text> </paragraph> <paragraph num="(b)"> <text>For plan administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The computation used in the pie chart or bar graph shall be in accordance with the National Association of Insurance Commissioners' instructions and formulas used in deriving the 5-year historical data page of the carrier's annual statement.</text> </paragraph> <paragraph num="C."> <text>The pie chart or bar graph to be included in enrollment sales material shall be based on the annual statement of the:</text> <paragraph num="(1)"> <text>Immediate prior year for enrollment sales material used on or after July 1 of each year; and</text> </paragraph> <paragraph num="(2)"> <text>Year before the immediate prior year for enrollment sales material used before July 1 of each year.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The computation used under §B of this regulation shall be limited to benefits under policies which make health care services available through contracts with providers.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Manner of Disclosure."> <text>The disclosures required by this chapter may be on a separate form, which shall be provided to employers at the time of plan selection and to enrollees at the time of enrollment.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Other Permitted Disclosures."> <paragraph num="A."> <text>A carrier may disclose on the pie chart or bar graph that the administrative expenses do not include taxes.</text> </paragraph> <paragraph num="B."> <text>A carrier may disclose on the pie chart or bar graph whether the carrier includes dental benefits as part of the underlying benefit plan.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-121; Health-General Article, §19-706; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 12, 1998 (25:14 Md. R. 1132)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.26 to COMAR 31.10.17 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="18" heading="Denials of Coverage Based on Medical Necessity"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to carriers and to private review agents to whom the internal grievance process has been delegated by a carrier.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Adverse Decision.</text> <paragraph num="(a)"> <text>“Adverse decision” means a utilization review determination by a private review agent, a carrier, or a health care provider acting on behalf of a carrier that:</text> <paragraph num="(i)"> <text>A proposed or delivered health care service which would otherwise be covered under the member's contract is not or was not medically necessary, appropriate, or efficient; and</text> </paragraph> <paragraph num="(ii)"> <text>May result in noncoverage of the health care service.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Adverse decision” does not include a decision concerning a person's status as a member.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-10A-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Complaint” means a protest filed with the Commissioner involving an adverse decision or grievance decision concerning a member.</text> </paragraph> <paragraph num="(4)"> <text>“Emergency case” means a case involving an adverse decision for which an expedited review is required under Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Filing date” means the earlier of:</text> <paragraph num="(a)"> <text>5 days after the date of mailing; or</text> </paragraph> <paragraph num="(b)"> <text>The date of receipt.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Grievance” means a protest filed by a member, a member’s representative, or a health care provider on behalf of a member with a carrier through the carrier's internal grievance process regarding an adverse decision concerning the member.</text> </paragraph> <paragraph num="(7)"> <text>“Grievance decision” means a final determination by a carrier that arises from a grievance filed with the carrier under its internal grievance process regarding an adverse decision concerning a member.</text> </paragraph> <paragraph num="(8)"> <text>“Health Advocacy Unit” means the Health Education and Advocacy Unit in the Division of Consumer Protection of the Office of the Attorney General established under Commercial Law Article, Title 13, Subtitle 4A, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Health care provider” means:</text> <paragraph num="(a)"> <text>An individual who is:</text> <paragraph num="(i)"> <text>Licensed or otherwise authorized in this State to provide health care services in the ordinary course of business or practice of a profession, and</text> </paragraph> <paragraph num="(ii)"> <text>A treating provider of a member; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A hospital, as defined in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Health care service” has the meaning stated in Insurance Article, §15-10A-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>Member.</text> <paragraph num="(a)"> <text>“Member” means a person entitled to health care benefits under a policy, plan, or certificate issued or delivered in the State by a carrier.</text> </paragraph> <paragraph num="(b)"> <text>“Member” includes:</text> <paragraph num="(i)"> <text>A subscriber; and</text> </paragraph> <paragraph num="(ii)"> <text>Unless preempted by federal law, a Medicare recipient.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Member” does not include a Medicaid recipient.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Member’s representative” has the meaning stated in Insurance Article, §15-10A-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Private review agent” has the meaning stated in Insurance Article, §15-10B-01, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Repealed." /> <regulation prefix="Regulation" num=".04" heading="Health Advocacy Unit Information in Notice of Adverse Decision."> <text>A carrier shall include in each notice of adverse decision the following disclosure in at least 12-point typeface, with the first sentence in bold capital typeface:</text> <text>"THERE IS HELP AVAILABLE TO YOU IF YOU WISH TO DISPUTE THE DECISION OF THE PLAN ABOUT PAYMENT FOR HEALTH CARE SERVICES. You may contact the Health Advocacy Unit of Maryland's Consumer Protection Division at (phone number, address, fax, e-mail).</text> <text>The Health Advocacy Unit can help you, your representative, and your health care provider prepare a grievance to file under the carrier's internal grievance procedure. That unit can also attempt to mediate a resolution to your dispute. The Health Advocacy Unit is not available to represent or accompany you during any proceeding of the internal grievance process.</text> <text>Additionally, you, your representative, or your health care provider may file a complaint with the Maryland Insurance Administration, without having to first file a grievance with the plan, if:</text> <paragraph num="(1)"> <text>The plan has denied authorization for a health care service not yet provided to you; and</text> </paragraph> <paragraph num="(2)"> <text>You, your representative, or your provider can show a compelling reason to file a complaint, including that a delay in receiving the health care service could result in loss of life, serious impairment to a bodily function, or serious dysfunction of a bodily organ or part, or the member remaining seriously mentally ill with symptoms that cause the member to be in danger to self or others. INFORMATION DESCRIBED IN THIS NOTICE MAY ALSO BE FOUND IN (cite policy, plan, certificate, enrollment materials, or other evidence of coverage)."</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Procedures for Emergency Cases."> <paragraph num="A."> <text>An expedited review of an adverse decision in accordance with this regulation is required if the:</text> <paragraph num="(1)"> <text>Adverse decision is rendered for health care services that are proposed but have not been delivered; and</text> </paragraph> <paragraph num="(2)"> <text>Services are necessary to treat a condition or illness that, without immediate medical attention, would:</text> <paragraph num="(a)"> <text>Seriously jeopardize the life or health of the member of the member’s ability to regain maximum functions;</text> </paragraph> <paragraph num="(b)"> <text>Cause the member to be in danger to self or others; or</text> </paragraph> <paragraph num="(c)"> <text>Cause the member to continue using intoxicating substances in an imminently dangerous manner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The content of any written notice by a carrier of an adverse decision or grievance decision under this regulation shall comply with Regulation .04 of this chapter and Insurance Article, §15-10A-02(f) and(i), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Establishment, Filing, and Reporting of Internal Grievance Process."> <paragraph num="A."> <text>Each carrier shall establish an internal grievance process.</text> </paragraph> <paragraph num="B."> <text>Each carrier shall:</text> <paragraph num="(1)"> <text>File with the Commissioner its internal grievance process not more than 30 days after the effective date of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>File with the Commissioner each amendment to its internal process at least 30 days before its intended use;</text> </paragraph> <paragraph num="(3)"> <text>Include with the filing the circumstances, if any, under which the internal grievance process will be delegated to a private review agent;</text> </paragraph> <paragraph num="(4)"> <text>Include with the filing a copy of the applicable part of the policy, plan, certificate, enrollment materials, or other evidence of coverage that shows the information required under Insurance Article, §15-10A-02(k), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(5)"> <text>Submit to the Health Advocacy Unit the document describing the details of its internal grievance process and procedures that the carrier will send to a member, member’s representative, or health care provider when the member, member’s representative, or provider contacts the carrier about an adverse decision.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each carrier shall submit its internal grievance process and any amendments to the Health Advocacy Unit not later than the date on which the carrier begins to use the process or amendment.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Requirements for Internal Grievance Process."> <text>An internal grievance process shall:</text> <paragraph num="A."> <text>Meet the requirements established under this chapter; and</text> </paragraph> <paragraph num="B."> <text>Include an expedited procedure for use in an emergency case for purposes of rendering a grievance decision within 24 hours after filing the grievance pursuant to the carrier's internal grievance process, that includes an explanation about:</text> <paragraph num="(1)"> <text>Who will make the determination whether an emergency case exists when a grievance asserts an emergency case,</text> </paragraph> <paragraph num="(2)"> <text>How the determination will be made about the existence of an emergency case,</text> </paragraph> <paragraph num="(3)"> <text>How the disclosure to the member, the member’s representative, or health care provider required by Insurance Article, §15-10A-02(g), Annotated Code of Maryland, will be provided when the grievance asserts that an emergency case exists; and</text> </paragraph> <paragraph num="(4)"> <text>How the notice to the member and, if applicable, the member’s representative and health care provider required by Insurance Article, §15-10A-02(i), Annotated Code of Maryland, will be provided when the grievance asserts that an emergency case exists.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Time for Rendering Final Decisions Resulting from Internal Grievance Process."> <paragraph num="A."> <text>Except as otherwise provided in this regulation, a carrier shall render a final decision on a grievance that involves a:</text> <paragraph num="(1)"> <text>Prospective denial in a nonemergency case within 30 working days after the filing date; and</text> </paragraph> <paragraph num="(2)"> <text>Retrospective denial within 45 working days after the filing date.</text> </paragraph> </paragraph> <paragraph num="B."> <text>With the written consent of the member, member’s representative, or health care provider who filed a grievance on behalf of the member, a carrier may extend the period for making a final decision for an additional period of not longer than 30 working days.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Repealed." /> <regulation prefix="Regulation" num=".10" heading="Repealed." /> <regulation prefix="Regulation" num=".11" heading="Demonstration of Compelling Reason to File Complaint."> <paragraph num="A."> <text>A member, a member’s representative, or a health care provider on behalf of a member may file a complaint without first exhausting the internal grievance process of a carrier if the complaint demonstrates to the satisfaction of the Commissioner a compelling reason to do so. A compelling reason includes showing that the potential delay in receipt of a health care service until after the member or health care provider exhausts the internal grievance process and obtains a final decision under the grievance process could result in:</text> <paragraph num="(1)"> <text>Loss of life;</text> </paragraph> <paragraph num="(2)"> <text>Serious impairment to a bodily function;</text> </paragraph> <paragraph num="(3)"> <text>Serious dysfunction of a bodily organ;</text> </paragraph> <paragraph num="(4)"> <text>The member remaining seriously mentally ill or using intoxicating substances with symptoms that cause the member to be in danger to self or others; or</text> </paragraph> <paragraph num="(5)"> <text>The member continuing to experience severe withdrawal symptoms.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A member is considered to be in danger to self or others if the member is unable to function in activities of daily living or care for self without imminent dangerous consequences.</text> </paragraph> <paragraph num="C."> <text>In a case involving a retrospective denial, there is no compelling reason to allow a member, a member’s representative, or a health care provider on behalf of a member to file a complaint without first exhausting the internal grievance process of a carrier.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="General Procedures for Complaints."> <paragraph num="A."> <text>Consent Form.</text> <paragraph num="(1)"> <text>For services rendered on or after January 1, 1999, the Commissioner shall request the signed consent of the member that filed the complaint, or a legally authorized designee of the member, authorizing the release of the member's medical records to the Commissioner or the Commissioner's designee that are needed in order for the Commissioner to make a final decision on the complaint.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may refuse to investigate a complaint if the member or legally authorized designee of the member fails to sign a consent form.</text> </paragraph> <paragraph num="(3)"> <text>In the case of alcohol and drug abuse, the member shall deliver the member's medical records to the Health Advocacy Unit or to the Commissioner, or to both, pursuant to federal law and regulations.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner may refer complaints not within the Commissioner's jurisdiction to the Health Advocacy Unit or any other appropriate federal or state government agency or unit for disposition or resolution.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 15, Subtitle 10A, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted as an emergency provision effective January 1, 1999 (26:2 Md. R. 104); adopted permanently effective March 22, 1999 (26:6 Md. R. 490)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 11, 2005 (32:7 Md. R. 686)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 16, 2012 (39:7 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective July 30, 2018 (45:15 Md. R. 728)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective July 30, 2018 (45:15 Md. R. 728)</annotation> </annotations> </chapter> <chapter num="19" heading="Independent Review Organizations and Medical Experts"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Adverse Decision.</text> <paragraph num="(a)"> <text>“Adverse decision” means a utilization review determination by a private review agent, a carrier, or a health care provider acting on behalf of a carrier that:</text> <paragraph num="(i)"> <text>A proposed or delivered health care service that is otherwise covered under the member's contract is not or was not medically necessary, appropriate, or efficient; and</text> </paragraph> <paragraph num="(ii)"> <text>May result in noncoverage of the health care service.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Adverse decision” does not include a decision concerning a subscriber's status as a member.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Affiliate” means a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer that offers health insurance other than long-term care insurance or disability insurance;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization; or</text> </paragraph> <paragraph num="(e)"> <text>Any other person that provides health benefit plans subject to regulation by the State.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Complaint” means a protest filed with the Commissioner involving an adverse decision or grievance decision concerning a member.</text> </paragraph> <paragraph num="(5)"> <text>“Emergency case” means a case involving an adverse decision for which an expedited review is required under COMAR 31.10.18.05.</text> </paragraph> <paragraph num="(6)"> <text>“Expert reviewer” means a physician or other appropriate health care provider who contracts with or is retained by an independent review organization to conduct external review of a carrier's adverse decision pursuant to Insurance Article, §15-10A-05, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Health care provider” means:</text> <paragraph num="(a)"> <text>An individual who is:</text> <paragraph num="(i)"> <text>Licensed under the Health Occupations Article, Annotated Code of Maryland, or holds a nonrestricted license in a state of the United States to provide health care services in the ordinary course of business or practice of a profession, and</text> </paragraph> <paragraph num="(ii)"> <text>A treating provider of the member; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A hospital, as defined in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Health care service” means a health or medical care procedure or service rendered by a health care provider including:</text> <paragraph num="(a)"> <text>Testing, diagnosis, or treatment of a human disease or dysfunction;</text> </paragraph> <paragraph num="(b)"> <text>Dispensing of drugs, medical devices, medical appliances, or medical goods for the treatment of a human disease or dysfunction; and</text> </paragraph> <paragraph num="(c)"> <text>Any other care, service, or treatment of disease or injury, the correction of defects, or the maintenance of the physical and mental well-being of human beings.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Independent review organization” means an entity that contracts with the Commissioner to conduct independent review of a carrier's adverse decision pursuant to Insurance Article, §15-10A-05, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Medical expert” means a physician or other appropriate health care provider who contracts with the Commissioner to conduct external review of a carrier's adverse decision pursuant to Insurance Article, §15-10A-05, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Medical record” has the meaning stated in Health-General Article, §4-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>Member.</text> <paragraph num="(a)"> <text>“Member” means a person entitled to health care benefits under a policy, plan, or certificate issued or delivered in the State by a carrier.</text> </paragraph> <paragraph num="(b)"> <text>“Member” includes:</text> <paragraph num="(i)"> <text>A subscriber; and</text> </paragraph> <paragraph num="(ii)"> <text>Unless preempted by federal law, a Medicare recipient.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Member” does not include a Medicaid recipient.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Member’s representative” has the meaning stated in Insurance Article, §15-10A-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Private review agent” has the meaning stated in Insurance Article, §15-10B-01, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Use of Independent Review Organizations and Medical Experts."> <paragraph num="A."> <text>In cases considered appropriate by the Commissioner, the Commissioner shall seek advice concerning adverse decisions from an independent review organization or medical expert, as provided in Insurance Article, §15-10A-05, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>For any independent review organization or medical expert that contracts with the Commissioner, the independent review organization or medical expert shall have a quality assurance mechanism in place that assures the:</text> <paragraph num="(1)"> <text>Timeliness and quality of the reviews;</text> </paragraph> <paragraph num="(2)"> <text>Qualifications and independence of the expert reviewers and the independent review organization, or the medical expert; and</text> </paragraph> <paragraph num="(3)"> <text>Confidentiality of medical records and review materials, consistent with federal and State laws.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An independent review organization seeking to contract with the Commissioner shall submit to the Commissioner a copy of the accreditation certificate issued by a nationally recognized private accrediting organization.</text> </paragraph> <paragraph num="D."> <text>An independent review organization designated by the Commissioner to review an adverse decision shall have the authority and powers as delegated by the Commissioner for the following functions related to conducting an independent review:</text> <paragraph num="(1)"> <text>Obtaining all information relative to the complaint from the carrier, the provider, the member, and the member’s representative;</text> </paragraph> <paragraph num="(2)"> <text>Assigning the expert reviewer for review of an adverse decision; and</text> </paragraph> <paragraph num="(3)"> <text>Performing conflicts checks relative to the independent review organization and the expert reviewer assigned to review the adverse decision.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A medical expert designated by the Commissioner to review an adverse decision shall have the authority and powers, as delegated by the Commissioner, for obtaining all information relative to the complaint from the:</text> <paragraph num="(1)"> <text>Carrier;</text> </paragraph> <paragraph num="(2)"> <text>Provider;</text> </paragraph> <paragraph num="(3)"> <text>Member; and</text> </paragraph> <paragraph num="(4)"> <text>Member’s representative.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Conflicts of Interest Standards for Independent Review Organizations and Medical Experts."> <paragraph num="A."> <text>An independent review organization or medical expert may not be an affiliate of a trade association of:</text> <paragraph num="(1)"> <text>Health benefit plans; or</text> </paragraph> <paragraph num="(2)"> <text>Health care providers.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The independent review organization shall provide to the Commissioner the following:</text> <paragraph num="(1)"> <text>The name and biographical information for each director, officer, and management employee of the independent review organization, and a description of any relationship, either direct or indirect, the named individual has that represents ownership of or income from any of the following entities:</text> <paragraph num="(a)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(b)"> <text>An insurer;</text> </paragraph> <paragraph num="(c)"> <text>A private review agent;</text> </paragraph> <paragraph num="(d)"> <text>A nonprofit health corporation;</text> </paragraph> <paragraph num="(e)"> <text>A carrier dental plan organization;</text> </paragraph> <paragraph num="(f)"> <text>A health care provider or health care provider group; or</text> </paragraph> <paragraph num="(g)"> <text>Any group acting on behalf of any of the entities described by §B(1)(a)—(f) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the independent review organization is a publicly held organization, the names of all stockholders and owners of more than 5 percent of any stock or options of the independent review organization;</text> </paragraph> <paragraph num="(3)"> <text>The names of all holders of bonds or notes in excess of $100,000;</text> </paragraph> <paragraph num="(4)"> <text>A list of any currently outstanding loans or contracts to provide services between the independent review organization and any entity listed in §B(1) of this regulation;</text> </paragraph> <paragraph num="(5)"> <text>The names of all affiliates of the independent review organization and the nature and extent of any ownership or control, including:</text> <paragraph num="(a)"> <text>The affiliate's type of business; and</text> </paragraph> <paragraph num="(b)"> <text>A chart or list clearly identifying the relationships between the independent review organization and any affiliates; and</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A list of any currently outstanding loans or contracts to provide services between the independent review organization and any affiliates.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The medical expert, or independent review organization on behalf of the expert reviewer, shall provide to the Commissioner the following:</text> <paragraph num="(1)"> <text>The name and biographical information for the medical expert or expert reviewer, and a description of any relationship, either direct or indirect, the medical expert or expert reviewer has which represents ownership of or income from any of the following entities:</text> <paragraph num="(a)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(b)"> <text>An insurer;</text> </paragraph> <paragraph num="(c)"> <text>A private review agent;</text> </paragraph> <paragraph num="(d)"> <text>A nonprofit health organization;</text> </paragraph> <paragraph num="(e)"> <text>A carrier dental plan organization;</text> </paragraph> <paragraph num="(f)"> <text>A health care provider or health care provider group; or</text> </paragraph> <paragraph num="(g)"> <text>Any group activity on behalf of any of the entities described by §C(1)(a)—(f) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A list of any currently outstanding loans or contracts to provide services between the medical expert or expert reviewer and any entity listed in §B(1) of this regulation;</text> </paragraph> <paragraph num="(3)"> <text>The names of all affiliates of the medical expert or expert reviewer and the nature and extent of any ownership or control, including:</text> <paragraph num="(a)"> <text>The affiliate's type of business; and</text> </paragraph> <paragraph num="(b)"> <text>A chart or list clearly identifying the relationships between the medical expert or expert reviewer and any of the affiliates; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A list of any currently outstanding loans or contracts to provide services between the medical expert or expert reviewer and any affiliates.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An expert reviewer assigned by an independent review organization or a medical expert selected by the Commissioner may not have a material professional, familial, or financial conflict of interest with any of the following:</text> <paragraph num="(1)"> <text>The carrier that is the subject of the complaint;</text> </paragraph> <paragraph num="(2)"> <text>Any officer, director, or management employee of the carrier that is the subject of the complaint;</text> </paragraph> <paragraph num="(3)"> <text>The member that is subject to the adverse decision;</text> </paragraph> <paragraph num="(4)"> <text>The health care provider, the health care provider's medical group, or the independent practice association that rendered or is proposing to render the health care service that is under review;</text> </paragraph> <paragraph num="(5)"> <text>The health care facility at which the health care service was provided or will be provided; or</text> </paragraph> <paragraph num="(6)"> <text>The developer or manufacturer of the principal drug, device, procedure, or other therapy that is being proposed for the member.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The independent review organization or medical expert shall report any material changes in the information submitted to the Commissioner not later than the 30th day before the date on which the change takes effect.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Assignment of an Independent Review Organization or Medical Expert."> <paragraph num="A."> <text>Concurrently with the assignment of a complaint to an independent review organization or a medical expert, the Commissioner shall notify the member, member’s representative, or health care provider acting on behalf of the member, and the carrier of the assignment.</text> </paragraph> <paragraph num="B."> <text>If the complaint is assigned to an independent review organization, the independent review organization shall screen its expert reviewer for potential material conflicts of interest.</text> </paragraph> <paragraph num="C."> <text>The Commissioner shall have the discretion to determine whether a material conflict of interest exists for the expert reviewer of an independent review organization or the medical experts subject to this regulation and as provided by Insurance Article, §15-10A-05, Annotated Code of Maryland.</text> </paragraph> <paragraph num="D."> <text>An expert reviewer or medical expert shall:</text> <paragraph num="(1)"> <text>Be an expert in the treatment of the member's specific medical condition;</text> </paragraph> <paragraph num="(2)"> <text>Be knowledgeable about the recommended health care service or treatment through actual clinical experience as determined by the Commissioner based on the period of time:</text> <paragraph num="(a)"> <text>Actually treating patients with the same or similar specific medical condition, and</text> </paragraph> <paragraph num="(b)"> <text>That has elapsed between the clinical experience and the present;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Hold:</text> <paragraph num="(a)"> <text>A nonrestricted license as a physician or other appropriate health care provider in a state of the United States; and</text> </paragraph> <paragraph num="(b)"> <text>For physicians, a current certification by a recognized American Medical Specialty Board in the area appropriate to the subject of review;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Be licensed in the same health care occupation as the health care provider who considers the health care service that is the subject of the carrier's adverse decision to be medically necessary, appropriate, or efficient; and</text> </paragraph> <paragraph num="(5)"> <text>Have no history of disciplinary investigations, actions, or sanctions, including loss of staff privileges or participation restrictions that have been taken or are pending by any hospital, governmental agency or unit, or regulatory body, that raises a substantial question as to the expert reviewer's or medical expert's physical, mental or professional competence or moral character as determined by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>To allow the Commissioner to determine whether an expert reviewer assigned by the independent review organization or a medical expert has a history of disciplinary investigations, actions, or sanctions that raises a substantial question as to the expert reviewer's or medical expert's physical, mental, or professional competence or moral character, the independent review organization or medical expert shall disclose to the Commissioner any:</text> <paragraph num="(1)"> <text>Pending investigation or action against the expert reviewer or medical expert relating to health care of which the expert reviewer or medical expert has notice, and the nature of the action;</text> </paragraph> <paragraph num="(2)"> <text>Civil or criminal investigation or action against the expert reviewer or medical expert relating to health care, and the nature of the action; and</text> </paragraph> <paragraph num="(3)"> <text>Investigation, conviction, or plea of guilty or nolo contendere with respect to a crime of moral turpitude against the expert reviewer or medical expert, regardless of whether any appeal or other proceeding is pending to have the conviction or plea set aside.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The information relevant to the consideration by the Commissioner of whether the expert reviewer or medical expert meets the requirements of this regulation will be handled in accordance with State Government Article, §10-618, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Independent Review."> <paragraph num="A."> <text>In conducting a review of an adverse decision, each independent review organization or medical expert shall, after reviewing all relevant medical and contractual information, advise the Commissioner in writing on whether the service was medically necessary.</text> </paragraph> <paragraph num="B."> <text>The advice to the Commissioner shall state in writing the specific factual bases for the decision of the expert reviewer or the medical expert and reference the specific criteria and standards, including interpretive guidelines, on which the expert reviewer's or the medical expert's decision was based.</text> </paragraph> <paragraph num="C."> <text>The Commissioner shall preserve the confidentiality of commercial information and a member's medical records and personal records in accordance with:</text> <paragraph num="(1)"> <text>State Government Article, §10-611 et seq., Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Health-General Article, §4-301, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>Any pertinent federal laws.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Payment of Fees."> <paragraph num="A."> <text>The carrier that is the subject of the complaint is responsible for paying the reasonable expenses for the complaint under review by the independent review organization or medical expert selected by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The independent review organization or medical expert for each complaint under review shall:</text> <paragraph num="(1)"> <text>Present to the carrier:</text> <paragraph num="(a)"> <text>An invoice detailing the expenses incurred by the independent review organization or medical expert related to the complaint under review, and</text> </paragraph> <paragraph num="(b)"> <text>Any other information required in the event that the contract between the independent review organization or the medical expert and the Commissioner requires a flat fee; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Provide a copy of the invoice for each complaint under review to the Commissioner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Payment by Carrier.</text> <paragraph num="(1)"> <text>A carrier shall pay the reasonable expenses of an independent review organization or medical expert related to the complaint under review directly within 30 days of receipt of an invoice.</text> </paragraph> <paragraph num="(2)"> <text>Failure by a carrier to pay an invoice from an independent review organization or medical expert for the complaint under review within 30 days of receipt shall result in the issuance of an order for payment by the Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>Failure by a carrier to pay in accordance with the order for payment issued by the Commissioner shall constitute a violation of the Insurance Article and the Health-General Article, Annotated Code of Maryland, subject to penalty pursuant to Health-General Article, §19-730, Annotated Code of Maryland, and Insurance Article, §27-305, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The carrier that is the subject of the complaint may not pay and an independent review organization or medical expert may not accept any compensation for the complaint under review in addition to the payment for reasonable expenses under §A of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Time for Rendering Final Decisions on Complaints."> <paragraph num="A."> <text>Except for an emergency case as provided in COMAR 31.10.18.05 or as provided in §B of this regulation, the Commissioner shall make a final written decision on a complaint within 45 days after a complaint is filed.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may extend the period within which a final written decision is to be made under §A of this regulation for up to an additional 30 working days if the:</text> <paragraph num="(1)"> <text>Commissioner has not yet received the information requested by the Commissioner; and</text> </paragraph> <paragraph num="(2)"> <text>Information requested is necessary for the Commissioner to render a final written decision on the complaint.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 15-10A-05, and 15-10A-09, Annotated Code of Maryland;</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 adopted as an emergency provision effective January 1, 1999 (25:26 Md. R. 1917); adopted permanently effective February 22, 1999 (26:4 Md. R. 274)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective April 16, 2012 (39:7 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective April 16, 2012 (39:7 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A, D amended effective April 16, 2012 (39:7 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06C amended effective April 16, 2012 (39:7 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective April 16, 2012 (39:7 Md. R. 496)</annotation> </annotations> </chapter> <chapter num="20" heading="Certification of HMO Medical Directors"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Board” means the State Board of Physician Quality Assurance established under Health Occupations Article, Title 14, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Certificate” means a certificate, issued by the Commissioner under this chapter, to act as a medical director.</text> </paragraph> <paragraph num="(4)"> <text>“Commissioner” means the State Insurance Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>“Contact information” means an individual’s name, job title and department, address, telephone number, facsimile number, and email address.</text> </paragraph> <paragraph num="(6)"> <text>“Department” means the Maryland Department of Health.</text> </paragraph> <paragraph num="(7)"> <text>“Governing authority” means the person or persons designated in the bylaws with the responsibility for operating the health maintenance organization.</text> </paragraph> <paragraph num="(8)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>Medical Director.</text> <paragraph num="(a)"> <text>“Medical director” means a physician employed by or under contract with a health maintenance organization who is responsible for:</text> <paragraph num="(i)"> <text>The establishment or maintenance of the policies and procedures at the health maintenance organization for quality assurance and utilization management;</text> </paragraph> <paragraph num="(ii)"> <text>Compliance with the quality assurance and utilization management policies and procedures of the health maintenance organization; and</text> </paragraph> <paragraph num="(iii)"> <text>Oversight of utilization review decisions of private review agents employed by or under contract with the health maintenance organization.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Medical director” includes an associate medical director or an assistant medical director who has been delegated any of the functions of a medical director.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Quality assurance” means a formal set of activities to review the quality of medical services provided to those persons covered by the health maintenance organization including implementation of corrective actions to address any deficiencies identified in the care and services provided to those persons covered by the health maintenance organization.</text> </paragraph> <paragraph num="(11)"> <text>“Utilization management” means the process of evaluating and determining the appropriateness of the utilization of covered medical services, including prior authorization, concurrent review, retrospective review, discharge planning, and case management.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Issuance of a Temporary Certificate."> <paragraph num="A."> <text>Not later than the date of hire, a medical director seeking temporary certification shall submit to the Commissioner an application for certification on a form specified by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The medical director shall attach the following additional information to the application:</text> <paragraph num="(1)"> <text>A description of the applicant's professional qualifications, including medical education, medical training and experience, clinical experience, history of malpractice claims; and licensures;</text> </paragraph> <paragraph num="(2)"> <text>Evidence of one of the following:</text> <paragraph num="(a)"> <text>An advanced health-related degree;</text> </paragraph> <paragraph num="(b)"> <text>Current board certification from either the American Board of Medical Specialties (ABMS) or the American Osteopathic Association (AOA); or</text> </paragraph> <paragraph num="(c)"> <text>A minimum of 5 years clinical experience;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Evidence of licensure status;</text> </paragraph> <paragraph num="(4)"> <text>Disclosure of any disciplinary action or sanction taken by any hospital, professional board, or regulating entity;</text> </paragraph> <paragraph num="(5)"> <text>The name, address, phone number, and facsimile number of the health maintenance organization, and the name of the governing authority of the health maintenance organization that the applicant is employed by or contracted with as a medical director; and</text> </paragraph> <paragraph num="(6)"> <text>The date of hire or expected date of hire.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A certificate issued under this regulation is effective for 90 days from the date of the applicant's employment as a medical director with the health maintenance organization.</text> </paragraph> <paragraph num="D."> <text>Extension of Temporary Certificate.</text> <paragraph num="(1)"> <text>Unless the Commissioner extends for good cause under §D(2) of this regulation, a certificate issued under this regulation may not be renewed.</text> </paragraph> <paragraph num="(2)"> <text>At the Commissioner's discretion, the Commissioner may extend for good cause for a 30-day period a temporary certificate issued under this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Certification."> <paragraph num="A."> <text>A medical director shall hold a certificate from the Commissioner that authorizes the applicant to act as the medical director of a health maintenance organization.</text> </paragraph> <paragraph num="B."> <text>To qualify for a certificate to act as a medical director of a health maintenance organization, the applicant:</text> <paragraph num="(1)"> <text>Shall be a physician licensed to practice medicine in Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Shall have one of the following:</text> <paragraph num="(a)"> <text>An advanced health-related degree;</text> </paragraph> <paragraph num="(b)"> <text>Current board certification from either the American Board of Medical Specialties (ABMS) or the American Osteopathic Association (AOA); or</text> </paragraph> <paragraph num="(c)"> <text>A minimum of 5 years clinical experience;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>May not receive any direct or indirect financial compensation that:</text> <paragraph num="(a)"> <text>Violates Health-General Article, §19-705.1, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Deters the delivery of medically appropriate care to an enrollee; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Shall be of good character and trustworthy.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An applicant for a certificate to act as a medical director of a health maintenance organization does not qualify if there is a history of disciplinary action or sanction taken by any hospital, professional board, or regulating entity that raises a substantial question as to the applicant's physical, mental, or professional competence.</text> </paragraph> <paragraph num="D."> <text>An applicant seeking certification as a medical director shall submit to the Commissioner an application for certification on a form specified by the Commissioner.</text> </paragraph> <paragraph num="E."> <text>A medical director shall submit to the Commissioner the contact information of one person who will be available to respond to inquiries from the Maryland Insurance Administration. If the contact information for the designated person changes, the medical director shall:</text> <paragraph num="(1)"> <text>Notify the Commissioner in writing within 30 days; and</text> </paragraph> <paragraph num="(2)"> <text>Provide new contact information.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The medical director shall attach the following additional information to the application:</text> <paragraph num="(1)"> <text>A description of the applicant's professional qualifications, including medical education, medical training and experience, history of malpractice claims, and licensures;</text> </paragraph> <paragraph num="(2)"> <text>Evidence of education;</text> </paragraph> <paragraph num="(3)"> <text>Evidence of internship or residency training;</text> </paragraph> <paragraph num="(4)"> <text>Evidence of board certification from either ABMS or AOA, as appropriate;</text> </paragraph> <paragraph num="(5)"> <text>Evidence of licensure status;</text> </paragraph> <paragraph num="(6)"> <text>Disclosure of any disciplinary action or sanction taken by any hospital, professional board, or regulating entity;</text> </paragraph> <paragraph num="(7)"> <text>Verification of status through the federal national practitioner data bank;</text> </paragraph> <paragraph num="(8)"> <text>Disclosure of all methods of compensation to the applicant by the health maintenance organization;</text> </paragraph> <paragraph num="(9)"> <text>Unless already on file with the Commissioner, the utilization management procedures and policies to be used by the health maintenance organization;</text> </paragraph> <paragraph num="(10)"> <text>Certification by the medical director that the utilization management procedures and policies are:</text> <paragraph num="(a)"> <text>Objective;</text> </paragraph> <paragraph num="(b)"> <text>Clinically valid;</text> </paragraph> <paragraph num="(c)"> <text>Compatible with established principles of health care; and</text> </paragraph> <paragraph num="(d)"> <text>Flexible enough to allow deviations from the norms when justified on a case by case basis;</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>A list of all staff who conduct utilization management; and</text> </paragraph> <paragraph num="(12)"> <text>Payment to the Commissioner of the nonrefundable application fee of $100.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The delegation by a medical director of any of the medical director's responsibilities under this chapter to an associate medical director or an assistant medical director does not prevent the medical director, regardless of the delegation, from being held responsible for any violation of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Denial or Revocation of Certification."> <paragraph num="A."> <text>The Commissioner shall deny a certificate to an applicant if the Commissioner finds that the initial application does not meet the requirements of this chapter.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may revoke the certification of a medical director:</text> <paragraph num="(1)"> <text>Who violates any provision of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Who fails to meet the requirements for certification under Regulation .04B of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>Who obtains certification based on inaccurate information;</text> </paragraph> <paragraph num="(4)"> <text>Who fraudulently or deceptively obtains, attempts to obtain, or uses a certificate; or</text> </paragraph> <paragraph num="(5)"> <text>If the Commissioner finds a pattern that the utilization management procedures and policies used by the medical director in making utilization review decisions or used by a private review agent employed by or under contract with the health maintenance organization over whose utilization review decisions the medical director has responsibility are not:</text> <paragraph num="(a)"> <text>Objective;</text> </paragraph> <paragraph num="(b)"> <text>Clinically valid;</text> </paragraph> <paragraph num="(c)"> <text>Compatible with established principles of health care; or</text> </paragraph> <paragraph num="(d)"> <text>Flexible enough to allow deviations from the norms when justified on a case by case basis.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Before denying an initial application for certification or revoking an issued certificate, the Commissioner shall provide the applicant or certificate holder with:</text> <paragraph num="(1)"> <text>Reasonable time to supply additional information which demonstrates compliance with the requirements of this chapter and the opportunity to request a hearing;</text> </paragraph> <paragraph num="(2)"> <text>Written notice of the reasons for the denial or revocation; and</text> </paragraph> <paragraph num="(3)"> <text>30 days in which to request a hearing in accordance with State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Term of Certification and Recertification."> <paragraph num="A."> <text>A certificate:</text> <paragraph num="(1)"> <text>Is not transferable; and</text> </paragraph> <paragraph num="(2)"> <text>Expires on the second anniversary of its effective date unless certification has been renewed for another 2-year term.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Before certification expires, a medical director may renew certification if the certified medical director:</text> <paragraph num="(1)"> <text>Otherwise is entitled to be certified;</text> </paragraph> <paragraph num="(2)"> <text>Pays to the Commissioner the nonrefundable renewal fee of $100; and</text> </paragraph> <paragraph num="(3)"> <text>Submits to the Commissioner:</text> <paragraph num="(a)"> <text>A renewal application on a form that the Commissioner requires; and</text> </paragraph> <paragraph num="(b)"> <text>An update of the information required under Regulation .04B of this chapter.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Notification to the Board of Physician Quality Assurance."> <paragraph num="A."> <text>The Commissioner shall annually provide to the Board a list of certified individuals authorized by the Commissioner to act as a medical director.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall notify the Board of the revocation of a certificate issued under this chapter.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-10C-02, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.07 adopted as an emergency provision effective January 1, 1999 (26:1 Md. R. 18); adopted permanently effective March 22, 1999 (26:6 Md. R. 490)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective May 9, 2016 (43:9 Md. R. 532)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective August 27, 2018 (45:17 Md. R. 804)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective August 27, 2018 (45:17 Md. R. 804)</annotation> </annotations> </chapter> <chapter num="21" heading="Private Review Agents"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accrediting organization” means an entity that accredits or certifies the utilization management activities of a private review agent.</text> </paragraph> <paragraph num="(2)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(3)"> <text>Adverse Decision.</text> <paragraph num="(a)"> <text>“Adverse decision” means a utilization review determination made by a private review agent that a proposed or delivered health care service that is otherwise covered under the patient's contract:</text> <paragraph num="(i)"> <text>Is or was not medically necessary, appropriate, or efficient; and</text> </paragraph> <paragraph num="(ii)"> <text>May result in noncoverage of the health care service.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Adverse decision” does not include a decision concerning a subscriber's status as a member.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Approved accrediting organization” means an accrediting organization that has been approved by the Commissioner as having accreditation standards that meet or exceed standards in this chapter.</text> </paragraph> <paragraph num="(5)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-10A-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Certificate” means a certificate of registration granted by the Commissioner to a private review agent.</text> </paragraph> <paragraph num="(7)"> <text>“Commissioner” means the State Insurance Commissioner.</text> </paragraph> <paragraph num="(8)"> <text>“Contact information” means an individual’s name, job title and department, address, telephone number, facsimile number, and email address.</text> </paragraph> <paragraph num="(9)"> <text>“Emergency case” means a case involving an adverse decision for which an expedited review is required under COMAR 31.10.18.05.</text> </paragraph> <paragraph num="(10)"> <text>Employee Assistance Program.</text> <paragraph num="(a)"> <text>“Employee assistance program” means a health care service plan that, in accordance with a contract with an employer or labor union:</text> <paragraph num="(i)"> <text>Consults with employees or members of an employee's family or both to identify the employee's or the employee's family member's mental health, alcohol, or substance abuse problems, and refers the employee or the employee's family member to health care providers or other community resources for counseling, therapy, or treatment; and</text> </paragraph> <paragraph num="(ii)"> <text>Performs utilization review for the purpose of making claims or payment decisions on behalf of the employer's or labor union's health insurance or health benefit plan.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Employee assistance program” does not include a health care service plan operated by a hospital solely for employees, or members of an employee's family, of that hospital.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>Grievance.</text> <paragraph num="(a)"> <text>“Grievance” means a protest filed by a patient or health care provider on behalf of a patient with a private review agent through the private review agent's internal grievance process regarding an adverse decision concerning a patient.</text> </paragraph> <paragraph num="(b)"> <text>“Grievance” does not include a verbal request for reconsideration of a utilization review determination.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Grievance decision” means a final determination by a private review agent that arises from a grievance filed with the private review agent under its internal grievance process regarding an adverse decision concerning a patient.</text> </paragraph> <paragraph num="(13)"> <text>“Health care facility” means:</text> <paragraph num="(a)"> <text>A hospital as defined in Health-General Article, §19-301, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>A related institution as defined in Health-General Article, §19-301, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>An ambulatory surgical facility or center which is any entity or part of an entity that operates primarily for the purpose of providing surgical services to patients not requiring hospitalization and seeks reimbursement from third-party payors as an ambulatory surgical facility or center;</text> </paragraph> <paragraph num="(d)"> <text>A facility that is organized primarily to help in the rehabilitation of disabled individuals;</text> </paragraph> <paragraph num="(e)"> <text>A home health agency as defined in Health-General Article, §19-401, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(f)"> <text>A hospice as defined in Health-General Article, §19-901, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(g)"> <text>A facility that provides radiological or other diagnostic imagery services;</text> </paragraph> <paragraph num="(h)"> <text>A medical laboratory as defined in Health-General Article, §17-201, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(i)"> <text>An alcohol abuse and drug abuse treatment program as defined in Health-General Article, §8-403, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Health care provider” means:</text> <paragraph num="(a)"> <text>An individual who is:</text> <paragraph num="(i)"> <text>Licensed or otherwise authorized to provide health care services in the ordinary course of business or practice of a profession, and</text> </paragraph> <paragraph num="(ii)"> <text>A treating provider of the patient; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A hospital, as defined in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Health care service” means a health or medical care procedure or service rendered by a health care provider licensed or authorized to provide health care services that:</text> <paragraph num="(a)"> <text>Provides testing, diagnosis, or treatment of a human disease or dysfunction;</text> </paragraph> <paragraph num="(b)"> <text>Dispenses drugs, medical devices, medical appliances, or medical goods for the treatment of a human disease or dysfunction; or</text> </paragraph> <paragraph num="(c)"> <text>Provides any other care, service, or treatment of disease or injury, the correction of defects, or the maintenance of the physical and mental well-being of human beings.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Private review agent” means:</text> <paragraph num="(a)"> <text>A non-hospital-affiliated person or entity performing utilization review that is either affiliated with, under contract with, or acting on behalf of a Maryland business entity, or a third party that pays for, provides, or administers health care services to citizens of this State; or</text> </paragraph> <paragraph num="(b)"> <text>A person or entity including a hospital-affiliated person performing utilization review for the purpose of making claims or payment decisions for health care services on behalf of the employer's or labor union's health insurance plan under an employee assistance program for employees other than the employees:</text> <paragraph num="(i)"> <text>Employed by the hospital; or</text> </paragraph> <paragraph num="(ii)"> <text>Employed by a business wholly owned by the hospital.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Reconsideration” means a verbal request or verbal inquiry by a patient, the patient's representative, or a provider regarding an adverse decision.</text> </paragraph> <paragraph num="(18)"> <text>“Significant beneficial interest” means the ownership of any financial interest that is greater than the lesser of:</text> <paragraph num="(a)"> <text>5 percent of the whole; or</text> </paragraph> <paragraph num="(b)"> <text>$5,000.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Specific criteria and standards” means professionally developed objective measures used during utilization review to make determinations to authorize or certify the appropriate use and efficient allocation of health care resources.</text> </paragraph> <paragraph num="(20)"> <text>“Uniform treatment plan form” means a form specified by the Commissioner to be used for utilization review of services for the treatment of a mental illness, emotional disorder, or a substance abuse disorder.</text> </paragraph> <paragraph num="(21)"> <text>“Utilization review” means a system for reviewing the appropriate and efficient allocation of health care resources and services given or proposed to be given to a patient or group of patients.</text> </paragraph> <paragraph num="(22)"> <text>“Utilization review plan” means a description of the standards governing utilization review activities performed by a private review agent.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Certification."> <paragraph num="A."> <text>A private review agent shall hold a certificate from the Commissioner to conduct utilization review in this State.</text> </paragraph> <paragraph num="B."> <text>A private review agent shall submit to the Commissioner the contact information of one person who will be available to respond to inquiries from the Maryland Insurance Administration. If the contact information for the designated person changes, the private review agent shall:</text> <paragraph num="(1)"> <text>Notify the Commissioner in writing within 30 days; and</text> </paragraph> <paragraph num="(2)"> <text>Provide new contact information.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A private review agent seeking certification shall submit to the Commissioner an application for certification on a form specified by the Commissioner so that the Commissioner can determine whether the private review agent meets the requirements of this regulation. The private review agent shall attach the following additional information to the application:</text> <paragraph num="(1)"> <text>A utilization review plan which includes the following:</text> <paragraph num="(a)"> <text>Types of reviews performed and a written protocol describing each type of review, including:</text> <paragraph num="(i)"> <text>Preauthorization;</text> </paragraph> <paragraph num="(ii)"> <text>Preadmission;</text> </paragraph> <paragraph num="(iii)"> <text>Admission;</text> </paragraph> <paragraph num="(iv)"> <text>Emergency admission;</text> </paragraph> <paragraph num="(v)"> <text>Second surgical opinion;</text> </paragraph> <paragraph num="(vi)"> <text>Discharge planning;</text> </paragraph> <paragraph num="(vii)"> <text>Concurrent; or</text> </paragraph> <paragraph num="(viii)"> <text>Retrospective;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Copies of specific criteria and standards to be used in conducting utilization reviews of proposed or delivered health care services, including:</text> <paragraph num="(i)"> <text>A list of the interpretive guidelines used by the private review agent that identifies the title, author, publisher, and edition of the guidelines; and</text> </paragraph> <paragraph num="(ii)"> <text>Copies of interpretive guidelines for which there are no applicable copyright laws;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Forms that are completed during the review;</text> </paragraph> <paragraph num="(d)"> <text>Specified time frames in which the private review agent makes determinations to authorize or certify services;</text> </paragraph> <paragraph num="(e)"> <text>A written protocol describing the following:</text> <paragraph num="(i)"> <text>The grievance procedure by which a patient, a patient's representative, or a patient's health care provider may file a grievance with a private review agent;</text> </paragraph> <paragraph num="(ii)"> <text>The grievance procedure for receipt of an emergency case, including the initial acceptance of a verbal grievance by a patient, a patient's representative, or a patient's health care provider; and</text> </paragraph> <paragraph num="(iii)"> <text>Any procedures for handling a verbal request for reconsideration of a utilization review determination;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Forms to be completed by a private review agent, a patient, or a patient's representative, including a health care provider, during the grievance procedure;</text> </paragraph> <paragraph num="(g)"> <text>Specified time frames in which a private review agent shall make a final grievance decision in writing;</text> </paragraph> <paragraph num="(h)"> <text>Qualifications of the personnel making the final grievance determinations; and</text> </paragraph> <paragraph num="(i)"> <text>The circumstances, if any, under which utilization review may be delegated to a hospital utilization review program and, if applicable, a list of the carriers for whom the private review agent:</text> <paragraph num="(i)"> <text>Is performing utilization review; and</text> </paragraph> <paragraph num="(ii)"> <text>Has been delegated the internal grievance process pursuant to Insurance Article, Title 15, Subtitle 10A, Annotated Code of Maryland;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Type and qualifications of the personnel either employed or under contract to perform utilization review which includes:</text> <paragraph num="(a)"> <text>Registered nurses;</text> </paragraph> <paragraph num="(b)"> <text>Medical records technicians or similar personnel supported and supervised by physicians as may be required;</text> </paragraph> <paragraph num="(c)"> <text>Physicians; or</text> </paragraph> <paragraph num="(d)"> <text>Other appropriate health care providers;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Policies and procedures to ensure that a representative of a private review agent is reasonably accessible to patients and providers 7 days a week, 24 hours a day in this State;</text> </paragraph> <paragraph num="(4)"> <text>Policies and procedures to ensure that all applicable State and federal laws protecting the confidentiality of individual medical records are followed;</text> </paragraph> <paragraph num="(5)"> <text>A copy of materials designed to inform patients and providers of requirements of the utilization review plan;</text> </paragraph> <paragraph num="(6)"> <text>A list of third-party payors for which a private review agent is performing utilization review in this State;</text> </paragraph> <paragraph num="(7)"> <text>Policies and procedures to ensure that a private review agent has a formal program for the effective orientation and training of the personnel either employed or under contract to perform utilization review;</text> </paragraph> <paragraph num="(8)"> <text>An outline of the training program which includes content and schedule of presentation;</text> </paragraph> <paragraph num="(9)"> <text>Qualifications of health care providers involved in establishing the specific criteria and standards to be used in conducting utilization review if nationally recognized criteria are not used;</text> </paragraph> <paragraph num="(10)"> <text>Certification by a private review agent that the criteria and standards to be used in conducting utilization review are:</text> <paragraph num="(a)"> <text>Objective;</text> </paragraph> <paragraph num="(b)"> <text>Clinically valid;</text> </paragraph> <paragraph num="(c)"> <text>Compatible with established principles of health care; and</text> </paragraph> <paragraph num="(d)"> <text>Flexible enough to allow deviations from norms when justified on a case-by-case basis; and</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>A nonrefundable application fee of $1,500.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02-1" heading="Uniform Treatment Plan."> <paragraph num="A."> <text>Scope. This regulation does not apply to a person that uses a treatment plan form solely for internal purposes, unless the private review agent requires the information to authorize treatment.</text> </paragraph> <paragraph num="B."> <text>Form Required. If a private review agent requires a health care provider to submit a treatment plan or telephonically provide the information requested on the uniform treatment plan, to enable the private review agent to conduct utilization review of services for the treatment of a mental illness, emotional disorder, or a substance abuse disorder, the private review agent shall use the uniform treatment plan form set forth in §H of this regulation.</text> </paragraph> <paragraph num="C."> <text>Acceptance of Form by Private Review Agent. A private review agent shall accept the uniform treatment plan form as a properly submitted treatment plan form and may not require a health care provider to:</text> <paragraph num="(1)"> <text>Modify the uniform treatment plan form or its content except as provided in this regulation; or</text> </paragraph> <paragraph num="(2)"> <text>Submit additional treatment plan forms.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Instructions. A private review agent may provide a set of instructions for use by the health care provider regarding the private review agent's specific managed care requirements.</text> </paragraph> <paragraph num="E."> <text>Modification of Form Prohibited. A private review agent may not modify the uniform treatment plan form in any manner.</text> </paragraph> <paragraph num="F."> <text>Use of Form by Health Care Provider. A health care provider shall use and properly complete the uniform treatment plan form as provided in this regulation.</text> </paragraph> <paragraph num="G."> <text>Submission of Form by Electronic Transfer. The uniform treatment plan form may be submitted by electronic transfer.</text> </paragraph> <paragraph num="H."> <text>The uniform treatment plan form required by this regulation shall read as follows:</text> </paragraph> <paragraph num="I."> <text>Telephonic Review. If a private review agent conducts utilization review of services for the treatment of a mental illness, emotional disorder, or a substance abuse disorder telephonically, the private review agent may not require the health care provider to provide any information that is not requested on the uniform treatment plan form.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Specific Criteria and Standards."> <paragraph num="A."> <text>Required Copies. Upon the written request of a person or health care facility, a private review agent shall provide one copy of the specific criteria and standards to be used in conducting utilization review of proposed or delivered services and any subsequent revisions or modifications to the specific criteria and standards.</text> </paragraph> <paragraph num="B."> <text>Fee for Copy. A private review agent shall:</text> <paragraph num="(1)"> <text>Make available a copy of specific criteria and standards used in conducting utilization review of proposed or delivered services for inspection on the premises during normal business hours;</text> </paragraph> <paragraph num="(2)"> <text>Provide a copy of the specific criteria and standards to a person or health care facility upon request at a reasonable fee determined by the private review agent; and</text> </paragraph> <paragraph num="(3)"> <text>Provide a copy of the specific criteria and standards upon request to a State agency at no charge to the agency.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Determinations."> <paragraph num="A."> <text>Nonemergency Treatment. A private review agent shall make all initial determinations on whether to authorize or certify a nonemergency course of treatment for a patient within the time period specified in Insurance Article, §15-10B-06, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Extended Stays or Additional Health Care Services. A private review agent shall make all determinations on whether to authorize or certify an extended stay in a health care facility or additional health care services within the time period specified in Insurance Article, §15-10B-06, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Patient Referrals by Private Review Agents."> <paragraph num="A."> <text>Except as provided in §B of this regulation, this regulation does not apply to:</text> <paragraph num="(1)"> <text>A private review agent referring an individual to a health care provider or facility that participates in a health maintenance organization;</text> </paragraph> <paragraph num="(2)"> <text>A preferred provider organization network of participating health care providers or facilities to which the individual would otherwise be referred as part of the individual's membership or insurance contract; or</text> </paragraph> <paragraph num="(3)"> <text>An employee assistance program referring an individual to a network of participating health care providers or facilities in accordance with a contract with the individual's employer or labor union to provide comprehensive mental health and substance abuse services.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A private review agent or other individual who is affiliated with, under contract with, or acting on behalf of a private review agent, may not approve or fail to approve treatment based on whether the treatment is delivered by a provider who is a participating or nonparticipating provider in the preferred provider organization or an employee assistance program network.</text> </paragraph> <paragraph num="C."> <text>Prohibited Referrals. A private review agent or individual who is affiliated with, under contract with, or acting on behalf of a private review agent may not:</text> <paragraph num="(1)"> <text>Refer a patient who has undergone utilization review by that private review agent to:</text> <paragraph num="(a)"> <text>A health care facility in which the private review agent owns a significant beneficial interest; or</text> </paragraph> <paragraph num="(b)"> <text>A health care practice owned by the private review agent;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Pay, agree to pay, accept, or agree to accept a sum for bringing or referring a patient to a private review agent; or</text> </paragraph> <paragraph num="(3)"> <text>Provide for different insurance coverage or benefits based on the patient receiving service from a health care facility or provider in which a private review agent owns a significant beneficial interest.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Authorized Referrals.</text> <paragraph num="(1)"> <text>A private review agent, or individual who is affiliated with, under contract with, or acting on behalf of a private review agent, may refer a patient to another health care provider if:</text> <paragraph num="(a)"> <text>The patient or health care provider requests the private review agent to provide the patient with the name of a health care provider appropriate to meet the health care needs of the patient; or</text> </paragraph> <paragraph num="(b)"> <text>The patient has no attending physician.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If §D(1) of this regulation is satisfied the private review agent shall provide the patient with names of at least two health care providers appropriate to meet the health care needs of the patient.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Denial or Revocation of Certification."> <paragraph num="A."> <text>The Commissioner shall deny a certificate to an applicant if the Administration finds that the initial application does not include all requirements of Regulation .02 of this chapter.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may revoke the certification of a private review agent:</text> <paragraph num="(1)"> <text>That violates any provision of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>That fraudulently or deceptively obtains, attempts to obtain, or uses a certificate;</text> </paragraph> <paragraph num="(3)"> <text>That fails to meet the requirements for certification under Regulation .02B of this chapter;</text> </paragraph> <paragraph num="(4)"> <text>That obtains certification based on inaccurate information; or</text> </paragraph> <paragraph num="(5)"> <text>If the Commissioner finds a pattern that the utilization management procedures and policies used by a private review agent are not:</text> <paragraph num="(a)"> <text>Objective,</text> </paragraph> <paragraph num="(b)"> <text>Clinically valid,</text> </paragraph> <paragraph num="(c)"> <text>Compatible with established principles of health care, or</text> </paragraph> <paragraph num="(d)"> <text>Flexible enough to allow deviations from the norms when justified on a case by case basis.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Before denying an initial application for certification or revoking an issued certificate, the Commissioner shall provide the applicant or certificate holder with:</text> <paragraph num="(1)"> <text>Reasonable time to supply additional information which demonstrates compliance with the requirements of this chapter and the opportunity to request a hearing;</text> </paragraph> <paragraph num="(2)"> <text>Written notice of the reasons for the denial or revocation; and</text> </paragraph> <paragraph num="(3)"> <text>30 days in which to request a hearing in accordance with State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Term of Certification and Recertification."> <paragraph num="A."> <text>A certificate of registration:</text> <paragraph num="(1)"> <text>Is not transferable; and</text> </paragraph> <paragraph num="(2)"> <text>Expires on the second anniversary of its effective date unless certification has been renewed for another 2-year term.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Before certification expires, a private review agent may renew its certification if the certified private review agent:</text> <paragraph num="(1)"> <text>Otherwise is entitled to be certified;</text> </paragraph> <paragraph num="(2)"> <text>Pays to the Commissioner the nonrefundable renewal fee of $1,500; and</text> </paragraph> <paragraph num="(3)"> <text>Submits to the Commissioner:</text> <paragraph num="(a)"> <text>A renewal application on a form that the Commissioner requires, and</text> </paragraph> <paragraph num="(b)"> <text>An update of the information required under Regulation .02B of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner shall renew the certification of each certified private review agent if the requirements of this chapter are met.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Penalties."> <paragraph num="A."> <text>Criminal Penalty. A person who violates a provision of this chapter shall be guilty of a misdemeanor, and on conviction is subject to a penalty not exceeding $1,000. Each day a violation is continued after the first conviction is a separate offense.</text> </paragraph> <paragraph num="B."> <text>Administrative Penalty. In addition to, or instead of, the criminal penalty described in §A of this regulation, the Commissioner may impose an administrative penalty not to exceed $5,000 for violation of any regulation of this chapter.</text> </paragraph> <paragraph num="C."> <text>When considering whether conditions warrant the imposition of an administrative penalty, the Commissioner shall consider the following factors:</text> <paragraph num="(1)"> <text>The nature and seriousness of each condition of noncompliance;</text> </paragraph> <paragraph num="(2)"> <text>The number of conditions of noncompliance;</text> </paragraph> <paragraph num="(3)"> <text>The extent to which a condition of noncompliance is part of an ongoing pattern;</text> </paragraph> <paragraph num="(4)"> <text>The efforts made by, and the ability of the private review agent to correct, the condition of noncompliance in a timely manner; and</text> </paragraph> <paragraph num="(5)"> <text>Other factors as justice may require.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Commissioner may impose an administrative penalty for any one of the factors in §C of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Hearings and Appeals."> <text>A private review agent subject to an administrative penalty, or to denial or revocation of certification, has the right to a hearing and the right to appeal from an action of the Commissioner in accordance with Insurance Article, §§2-210—2-215, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Exemptions."> <text>The Commissioner may waive the requirements of this chapter for a private review agent that operates solely under contract with the federal government for utilization review of patients eligible for hospital services under Title XVIII of the Social Security Act.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Accredited Private Review Agents and Filing Requirement Waivers."> <paragraph num="A."> <text>Determination of Approved Accrediting Organization.</text> <paragraph num="(1)"> <text>An accrediting organization is not an approved accrediting organization until the Commissioner issues a letter of approval to the accrediting organization.</text> </paragraph> <paragraph num="(2)"> <text>For the purpose of determining which entities are approved accrediting organizations, the Commissioner shall consider whether:</text> <paragraph num="(a)"> <text>Some or all of the accreditation standards required to be met for accreditation by the accrediting organization meet or exceed the requirements of Insurance Article, Title 15, Subtitles 10A and 10B, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>The accrediting organization measures an applicant's ability to meet each standard; and</text> </paragraph> <paragraph num="(c)"> <text>The accrediting organization agrees to notify the Commissioner at least 30 days in advance if it revises its accreditation standards or changes the method in which it reviews private review agents.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The approved accrediting organization continues to be approved by the Commissioner until notified in writing by the Commissioner that its approval has been withdrawn.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Demonstration by Applicant of Meeting Filing Requirement through Accreditation.</text> <paragraph num="(1)"> <text>An applicant for a private review agent certification may request an exemption from a particular filing requirement of this chapter if the applicant:</text> <paragraph num="(a)"> <text>Is accredited by an approved accrediting organization; and</text> </paragraph> <paragraph num="(b)"> <text>Submits the following information to the Commissioner for approval:</text> <paragraph num="(i)"> <text>A list of the filing items for which the private review agent applicant is requesting exemption;</text> </paragraph> <paragraph num="(ii)"> <text>The letter of accreditation from an approved accrediting organization;</text> </paragraph> <paragraph num="(iii)"> <text>The standards by which the private review agent applicant was measured by the approved accrediting organization; and</text> </paragraph> <paragraph num="(iv)"> <text>Evidence that the private review agent applicant met or exceeded each accreditation standard for which the private review agent applicant is requesting a filing exemption.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>In addition to the information specified in §B(1) of this regulation, the Commissioner may request additional information before granting the filing exemption provided by this regulation.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 15-10B-03(h), and 15-802(d)(5), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 6, 1994 (21:11 Md. R. 951)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised and recodified from COMAR 10.07.19 to COMAR 31.10.21 as an emergency provision effective January 1, 1999 (26:2 Md. R. 104); amended and recodified permanently effective March 22, 1999 (26:6 Md. R. 491)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1 adopted effective August 21, 2000 (27:16 Md. R. 1526)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 12, 2004 (31:7 Md. R. 587)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective August 27, 2018 (45:17 Md. R. 804)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective August 27, 2018 (45:17 Md. R. 804)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1 repealed and new Regulation .02-1 adopted effective January 30, 2006 (33:2 Md. R. 83)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1 amended effective May 17, 2010 (37:10 Md. R. 724)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1H amended as an emergency provision effective January 1, 2013 (40:6 Md. R. 470); amended permanently effective April 15, 2013 (40:7 Md. R. 613)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1H amended effective May 11, 2015 (42:9 Md. R. 648); February 24, 2020 (47:4 Md. R. 264)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective August 15, 2016 (43:16 Md. R. 902)</annotation> </annotations> </chapter> <chapter num="22" heading="Provider-Sponsored Organizations"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>The scope of this chapter is the scope of Health-General Article, Title 19, Subtitle 7A, Annotated Code of Maryland, as it relates to the Insurance Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>“Contract” means the contractual agreement for the provision of health care services on a prepaid, capitated basis entered into between a provider-sponsored organization and the Health Care Finance Administration to provide health care benefits to medicare program beneficiaries.</text> </paragraph> <paragraph num="(3)"> <text>“Enrollee” means an individual who is enrolled in a provider-sponsored organization.</text> </paragraph> <paragraph num="(4)"> <text>Health Care Delivery Assets.</text> <paragraph num="(a)"> <text>“Health care delivery assets” means any tangible asset that is part of a provider-sponsored organization operation.</text> </paragraph> <paragraph num="(b)"> <text>“Health care delivery assets” includes:</text> <paragraph num="(i)"> <text>Hospitals, medical facilities, and their ancillary equipment; and</text> </paragraph> <paragraph num="(ii)"> <text>Property as may reasonably be required for a provider-sponsored organization's principal office or for such purposes as may be necessary in the transaction of the business of a provider-sponsored organization.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Health Care Finance Administration” means the Health Care Finance Administration of the federal Department of Health and Human Services.</text> </paragraph> <paragraph num="(6)"> <text>“Health care services” means a health or medical procedure or service rendered by a health care provider that:</text> <paragraph num="(a)"> <text>Provides testing, diagnosis, or treatment of a human disease or dysfunction; or</text> </paragraph> <paragraph num="(b)"> <text>Dispenses drugs, medical devices, medical appliances, or medical goods for the treatment of a human disease or dysfunction.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Insolvent” means the condition of having been:</text> <paragraph num="(a)"> <text>Declared as not meeting the fiscal requirements for continued licensing; or</text> </paragraph> <paragraph num="(b)"> <text>Placed under an order of liquidation by a court of competent jurisdiction.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Leasehold estate improvements” means improvements made to property that is leased by a provider-sponsored organization and used by it to provide health care services directly.</text> </paragraph> <paragraph num="(9)"> <text>“Net worth” means the excess of total admitted assets over liabilities, but the liabilities may not include fully subordinated debt.</text> </paragraph> <paragraph num="(10)"> <text>“Provider” means a physician, hospital, or other person licensed or otherwise authorized to provide health care services.</text> </paragraph> <paragraph num="(11)"> <text>“Provider-sponsored organization” has the meaning stated in Health-General Article, §19-7A-01(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Subordinated debt” means a surplus account item derived from the subordination of provider-sponsored organization debts to owners, medical providers, or other creditors.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Certificate of Authority Required."> <text>Before a person may operate as a provider-sponsored organization under the federal Medicare+Choice Program, the person shall obtain a certificate of authority from the Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Application for Certificate of Authority."> <paragraph num="A."> <text>Submission of Application. An applicant shall submit an application for a certificate of authority to the Commissioner at least 90 days before the date that the applicant proposes to engage in business in the State.</text> </paragraph> <paragraph num="B."> <text>Provision of Application Form. The Commissioner shall provide an application form to an applicant on request.</text> </paragraph> <paragraph num="C."> <text>Filing of Information. Each applicant seeking a certificate of authority to transact business in the State shall file the following items with the Commissioner:</text> <paragraph num="(1)"> <text>If incorporated, a copy of the articles of incorporation of the applicant and any amendments to the articles of incorporation, certified by the Department of Assessments and Taxation;</text> </paragraph> <paragraph num="(2)"> <text>A copy of the applicant's current bylaws, certified by the appropriate officer of the applicant;</text> </paragraph> <paragraph num="(3)"> <text>A list of the names, addresses, and official capacity with the applicant of the individuals who are to be responsible for conducting the applicant's affairs, including all members of the governing body, the officers and directors in the case of a corporation, and the partners or associates in the case of a partnership or association;</text> </paragraph> <paragraph num="(4)"> <text>A resume of the qualifications of the administrator, the medical director, each officer, and each other individual associated with the applicant or as requested by the Commissioner;</text> </paragraph> <paragraph num="(5)"> <text>A statement generally describing the:</text> <paragraph num="(a)"> <text>Applicant and its structure,</text> </paragraph> <paragraph num="(b)"> <text>Applicant's operations,</text> </paragraph> <paragraph num="(c)"> <text>The location of the facilities at which health care services will be regularly available to members, and</text> </paragraph> <paragraph num="(d)"> <text>The type, specialty, and number of physicians and health care personnel engaged or contracted with to provide health care services;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A statement describing with reasonable certainty the geographic area to be served by the applicant;</text> </paragraph> <paragraph num="(7)"> <text>A certified statement of the financial condition of the applicant, including:</text> <paragraph num="(a)"> <text>Sources of financial support,</text> </paragraph> <paragraph num="(b)"> <text>Assets and liabilities and minimum net worth, and</text> </paragraph> <paragraph num="(c)"> <text>Other financial information the Commissioner requires for adequate financial evaluation;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Copies of proposed techniques and methods of marketing the services of the applicant;</text> </paragraph> <paragraph num="(9)"> <text>A power of attorney duly executed by the applicant appointing the Commissioner and the Commissioner's duly authorized deputies as the true and lawful attorney of the applicant in and for the State on whom may be served all lawful process in any action, proceeding, or cause of action arising in the State against the applicant;</text> </paragraph> <paragraph num="(10)"> <text>A certificate of compliance evidencing employee coverage under the Maryland Workers' Compensation Act (Labor and Employment Article, Title 9, Annotated Code of Maryland); and</text> </paragraph> <paragraph num="(11)"> <text>A prospective budget and expected cash flow analysis for the first 12 months of the applicant's anticipated operation, demonstrating its financial viability based on reasonable assumptions.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Disclosure. Each individual who is responsible for the conduct of the affairs of an applicant shall disclose to the Commissioner and the governing body of the applicant the extent and nature of any contracts or arrangements between the individual and the applicant, including any possible conflicts of interest.</text> </paragraph> <paragraph num="E."> <text>Insurance—General Liability and Medical Malpractice.</text> <paragraph num="(1)"> <text>An applicant may not obtain a certificate of authority until the applicant:</text> <paragraph num="(a)"> <text>Submits to the Commissioner evidence of general liability and medical malpractice insurance or a plan of self-insurance to cover general liability and medical malpractice; and</text> </paragraph> <paragraph num="(b)"> <text>Obtains approval of its insurance or plan of self-insurance from the Commissioner with respect to the amount of coverage and type of coverage.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>With each annual report, a provider-sponsored organization shall submit to the Commissioner evidence of renewal of insurance or continuation of self-insurance.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Advertising. Before using any advertising that has been approved by the Health Care Financing Administration, a provider-sponsored organization shall file a copy of the advertising with the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Net Worth Requirements."> <paragraph num="A."> <text>Initial Net Worth. An applicant may not obtain a certificate of authority unless the applicant has an initial net worth of at least:</text> <paragraph num="(1)"> <text>$1,500,000; or</text> </paragraph> <paragraph num="(2)"> <text>$1,000,000, based on evidence from the applicant's financial plan, as required by 42 CFR §422.384, demonstrating to the Commissioner's satisfaction that the applicant has available to it an administrative infrastructure that the Commissioner considers appropriate to reduce, control, or eliminate start-up administrative costs.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minimum Net Worth.</text> <paragraph num="(1)"> <text>After issuance of a certificate of authority, a provider-sponsored organization shall maintain at least the minimum net worth required under this section.</text> </paragraph> <paragraph num="(2)"> <text>Except as provided in §C of this regulation, each provider-sponsored organization shall maintain a minimum net worth equal to the greater of:</text> <paragraph num="(a)"> <text>$1,000,000;</text> </paragraph> <paragraph num="(b)"> <text>2 percent of annual premium revenues as reported on the most recent annual financial statement filed with the Commissioner on the first $150,000,000 of premium and 1 percent of annual premium revenues on the premium in excess of $150,000,000;</text> </paragraph> <paragraph num="(c)"> <text>An amount equal to the sum of 3 months uncovered health care expenditures as reported on the most recent financial statement filed with the Commissioner; or</text> </paragraph> <paragraph num="(d)"> <text>Using the most recent annual financial statement filed with the Commissioner, an amount equal to the sum of:</text> <paragraph num="(i)"> <text>8 percent of annual health care expenditures paid on a non-capitated basis to non-affiliated providers,</text> </paragraph> <paragraph num="(ii)"> <text>4 percent of annual health care expenditures paid on a capitated basis to non-affiliated providers plus annual health care expenditures paid on a non-capitated basis to affiliated providers, and</text> </paragraph> <paragraph num="(iii)"> <text>Annual health care expenditures that are paid on a capitated basis to affiliated providers that are not included in the calculation of the net worth requirement under §§A and B(2)(d)(i) and (ii) of this regulation.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Determining Net Worth. In determining net worth:</text> <paragraph num="(1)"> <text>A debt may not be considered fully subordinated unless the subordination clause is in a form acceptable to the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>Any interest obligation relating to the repayment of a subordinated debt shall be similarly subordinated;</text> </paragraph> <paragraph num="(3)"> <text>The interest expense relating to the repayment of any fully subordinated debt shall be considered covered expenses; and</text> </paragraph> <paragraph num="(4)"> <text>Any debt incurred by a note meeting the requirements of this section, and otherwise acceptable to the Commissioner, is not considered a liability and shall be recorded as equity.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Composition of Assets. To meet the minimum net worth requirements, a provider-sponsored organization shall have the following composition of assets:</text> <paragraph num="(1)"> <text>At the time of application, at least $750,000 of the minimum net worth shall be in cash or cash equivalents;</text> </paragraph> <paragraph num="(2)"> <text>After the effective date of the Medicare+Choice contract, the greater of $750,000 or 40 percent of the minimum net worth amount shall be in cash or cash equivalents;</text> </paragraph> <paragraph num="(3)"> <text>During the licensing process, up to 10 percent of the minimum net worth amount may be comprised of intangible assets except that, if a provider-sponsored organization keeps $1,000,000 in cash or cash equivalents and does not use the administrative reduction, then up to 20 percent of that provider-sponsored organization's minimum net worth may be comprised of intangible assets;</text> </paragraph> <paragraph num="(4)"> <text>After the licensing process, a provider-sponsored organization shall keep the greater of $1,000,000 or 67 percent of the ongoing minimum net worth in cash or cash equivalents to qualify for the 20 percent level on intangibles;</text> </paragraph> <paragraph num="(5)"> <text>Subject to §D(1)—(4) of this regulation, health care delivery assets may be admitted at 100 percent of their value according to generally accepted accounting principles (GAAP); and</text> </paragraph> <paragraph num="(6)"> <text>Subject to §D(1)—(5) of this regulation, other assets may be admitted according to their value under statutory accounting practices (SAP).</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Determination of Financial Condition."> <paragraph num="A."> <text>Additional Assets. In any determination of the financial condition of an applicant or provider-sponsored organization, in addition to the assets under Regulation .05 of this chapter, the following assets are allowed:</text> <paragraph num="(1)"> <text>Cash in the possession of the applicant or provider-sponsored organization or in transit under its control, and the balance of any deposit of the applicant or provider-sponsored organization in a solvent bank or trust company;</text> </paragraph> <paragraph num="(2)"> <text>Investments and securities owned and held by the applicant or provider-sponsored organization, free and clear of any liens, encumbrances, pledges, or judgements, and the income due or accrued on the investments and securities;</text> </paragraph> <paragraph num="(3)"> <text>Member premium charges in the course of collection, not more than 90 days past due (the foregoing limitation does not apply to amounts payable directly by the federal government under the Medicare+Choice contract);</text> </paragraph> <paragraph num="(4)"> <text>Health care delivery assets in accordance with Regulation .05C of this chapter;</text> </paragraph> <paragraph num="(5)"> <text>Prepaid charges on contracts with other organizations or hospitals, or other persons as approved by the Commissioner;</text> </paragraph> <paragraph num="(6)"> <text>Pharmaceutical and medical supply inventories;</text> </paragraph> <paragraph num="(7)"> <text>Cost of land and depreciated cost of buildings owned and occupied by the applicant or provider-sponsored organization and used to directly provide health care, in excess of any encumbrances on it;</text> </paragraph> <paragraph num="(8)"> <text>Leasehold estate improvements, if the initial cost is amortized over the useful life of the improvements but not beyond the termination of the lease;</text> </paragraph> <paragraph num="(9)"> <text>Electronic, mechanical, and computer hardware including the operating system software used for data processing and accounting purposes, the cost of which shall be amortized in full over a period not to exceed 5 calendar years; and</text> </paragraph> <paragraph num="(10)"> <text>Other assets, not inconsistent with the foregoing provisions, deemed by the Commissioner available for the provision of health care, at values to be determined by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Non-Admitted Assets. The following may not be allowed as assets in determining the financial condition of an applicant or provider-sponsored organization:</text> <paragraph num="(1)"> <text>Deferred acquisition costs;</text> </paragraph> <paragraph num="(2)"> <text>Subject to the provisions of Regulation .05 of this chapter, good will, trade names, and other similar intangible assets;</text> </paragraph> <paragraph num="(3)"> <text>Advances to officers, whether secured or not, and advances to employees, agents, and other persons on personal security only;</text> </paragraph> <paragraph num="(4)"> <text>Stock of the applicant or provider-sponsored organization, owned by it, or any equity in it or loans secured by it, or any proportionate interest in the stock through the ownership by the applicant or provider-sponsored organization or an interest in another firm, corporation, or business unit;</text> </paragraph> <paragraph num="(5)"> <text>The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the applicant or provider-sponsored organization exceeds the aggregate value of the investments as determined by the values approved annually by the Securities Valuation Office of the National Association of Insurance Commissioners; and</text> </paragraph> <paragraph num="(6)"> <text>Furniture and fixtures, leasehold improvements other than leasehold estate improvements which qualify under §A(8) of this regulation, vehicles, and maintenance equipment.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Liabilities Chargeable Against Assets. In any determination of the financial condition of an applicant or provider-sponsored organization, liabilities to be charged against its assets shall include:</text> <paragraph num="(1)"> <text>The amount of its capital stock outstanding, if any;</text> </paragraph> <paragraph num="(2)"> <text>The estimated amount necessary to pay for all accrued benefits to enrollees and all claims, both reported or unreported, incurred on or before the date of the statement, together with estimated costs of adjusting or settling disputed claims;</text> </paragraph> <paragraph num="(3)"> <text>The pro rata amount of premium charges paid by or on behalf of enrollees for any period of coverage beyond the date of the statement; and</text> </paragraph> <paragraph num="(4)"> <text>Its other liabilities, including but not limited to taxes, expenses, and other obligations due or accrued at the date of the statement.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Earned Charges.</text> <paragraph num="(1)"> <text>Charge Defined.</text> <paragraph num="(a)"> <text>In this section, “charge” means consideration for health services regardless of the name given to the consideration.</text> </paragraph> <paragraph num="(b)"> <text>In this section, “charge” includes an assessment, membership fee, policy fee, survey fee, inspection fee, service fee, or similar fee or charge in consideration for the provider-sponsored organization contract.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Earned charges shall include Medicare+Choice contract charges and premium charges, including all determined excess and additional charges, less:</text> <paragraph num="(a)"> <text>Return charges;</text> </paragraph> <paragraph num="(b)"> <text>Charges on canceled contracts; and</text> </paragraph> <paragraph num="(c)"> <text>Unearned charges on contracts in force as shown by the provider-sponsored organization's annual statement.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Every provider-sponsored organization shall maintain an unearned charge reserve on all health care contracts in force. This reserve shall be set up as a liability.</text> </paragraph> <paragraph num="(4)"> <text>All prepaid charges shall be considered unearned.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Standards for Investments.</text> <paragraph num="(1)"> <text>An applicant or provider-sponsored organization may not make or engage in an investment unless the investment has been authorized or ratified by:</text> <paragraph num="(a)"> <text>The board of directors; or</text> </paragraph> <paragraph num="(b)"> <text>A committee of the board of directors charged with the duty of supervising investments.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All investments of the applicant or provider-sponsored organization may be held in a custodial account pursuant to COMAR 31.09.04.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Deposit of Securities."> <paragraph num="A."> <text>Deposit Required. The Commissioner may not issue or renew a certificate of authority for a provider-sponsored organization unless it has deposited and maintains in trust with the State Treasurer, for the protection of its members or its members and creditors, cash or government securities of the type described in Health-General Article, §19-710, Annotated Code of Maryland, in the market value amount of $100,000.</text> </paragraph> <paragraph num="B."> <text>Assets.</text> <paragraph num="(1)"> <text>For purposes of determining net worth, the deposit is an admitted asset of the provider-sponsored organization.</text> </paragraph> <paragraph num="(2)"> <text>All income from deposits is an asset of the provider-sponsored organization.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Withdrawal of Deposit. A provider-sponsored organization that has made a securities deposit may withdraw that deposit, or any part of the deposit, after making a substitute deposit of cash, securities, or any combination of these, or other measures of equal amount and value.</text> </paragraph> <paragraph num="D."> <text>Approval of Commissioner. Securities shall be approved by the Commissioner before being deposited or substituted.</text> </paragraph> <paragraph num="E."> <text>Use of Deposit. The deposit shall be used to:</text> <paragraph num="(1)"> <text>Protect the interests of the provider-sponsored organization's enrollees; and</text> </paragraph> <paragraph num="(2)"> <text>Assure continuation of health care services to enrollees of a provider-sponsored organization that is in rehabilitation, conservation, or liquidation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Term and Renewal of Certificate of Authority."> <paragraph num="A."> <text>Expiration. Unless previously suspended or revoked, each original and renewal certificate of authority issued to a provider-sponsored organization expires at midnight on the November 30 after its effective date in accordance with Health-General Article, §19-721(a), Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Renewal. On payment of an annual renewal fee of $25 by the provider-sponsored organization before the expiration date of its certificate of authority, its certificate of authority remains in effect until a new certificate of authority is issued or specifically refused in accordance with Health-General Article, §19-721, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>Refusal to Renew. The Commissioner may refuse to renew a certificate of authority in accordance with Health-General Article, §19-722, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Disciplinary Action."> <text>If a provider-sponsored organization violates any provision of Health-General Article, §19-729, Annotated Code of Maryland, the Commissioner may take any action against the provider-sponsored organization that is authorized pursuant to Health-General Article, §19-730, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Change of Name."> <text>A provider-sponsored organization may not:</text> <paragraph num="A."> <text>Use a name that has not been approved by the Commissioner; or</text> </paragraph> <paragraph num="B."> <text>Change its name without the prior approval of the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Termination of Services"> <paragraph num="A."> <text>Notice of Intent to Terminate. When a provider-sponsored organization desires to cease offering a service under the contract, the provider-sponsored organization shall provide written notice of the intent to terminate to the Commissioner at least 30 days before ceasing to offer the service.</text> </paragraph> <paragraph num="B."> <text>Permissible Reasons for Cancellation or Nonrenewal of Enrollment. A provider-sponsored organization may cancel or nonrenew enrollment in the provider-sponsored organization only for the following reasons:</text> <paragraph num="(1)"> <text>Change of the place of residence of the member from the geographical area served by the provider-sponsored organization;</text> </paragraph> <paragraph num="(2)"> <text>Failure of the member to pay any deductible or co-payment charges permitted under a contract;</text> </paragraph> <paragraph num="(3)"> <text>Fraudulent use of the provider-sponsored organization's identification card on the part of the member or the alteration or sale of prescriptions by the member;</text> </paragraph> <paragraph num="(4)"> <text>Failure of the enrollee to pay a premium charge when due;</text> </paragraph> <paragraph num="(5)"> <text>Termination of the contract.</text> </paragraph> <paragraph num="(6)"> <text>Termination of the plan with respect to all individuals in the area in which the enrollee resides; or</text> </paragraph> <paragraph num="(7)"> <text>The enrollee has:</text> <paragraph num="(a)"> <text>Engaged in disruptive behavior as specified in standards under 42 U.S.C. §1395w-21,</text> </paragraph> <paragraph num="(b)"> <text>Lost entitlement to Part A or Part B of Title 42, Chapter 7, Subchapter XVIII of the U.S. Code, or</text> </paragraph> <paragraph num="(c)"> <text>Died.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Annual Report."> <paragraph num="A."> <text>Required. Each licensed provider-sponsored organization shall file with the Commissioner a report, certified by at least two principal officers, showing its financial condition on the last day of the preceding calendar year.</text> </paragraph> <paragraph num="B."> <text>Form. The report shall be on the form adopted by the Commissioner.</text> </paragraph> <paragraph num="C."> <text>Filing Deadline. Unless the time is extended for good cause, a provider-sponsored organization shall file its annual report with the Commissioner on or before the first day of March of each year.</text> </paragraph> <paragraph num="D."> <text>Supplemental Information. The report shall be supplemented with a description of any changes in the information submitted with the last previous annual report or with the provider-sponsored organization's original application for a certificate of authority.</text> </paragraph> <paragraph num="E."> <text>Audited Financial Statement. A provider-sponsored organization shall file a certified audited financial statement on or before June 1 of each year.</text> </paragraph> <paragraph num="F."> <text>Additional Reports. The Commissioner may require additional reports as are deemed necessary and appropriate to enable the Commissioner to carry out the duties of the Commissioner under the law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Fiscal Examination."> <paragraph num="A."> <text>Frequency of Examination. The Commissioner may examine the operation of a provider-sponsored organization as often as the Commissioner deems necessary for the protection of the interest of the people of Maryland, but the examinations may not be less frequent than once every 5 years.</text> </paragraph> <paragraph num="B."> <text>Cost of Examination.</text> <paragraph num="(1)"> <text>The Commissioner shall assess the provider-sponsored organization being examined for the cost of the examination.</text> </paragraph> <paragraph num="(2)"> <text>The provider-sponsored organization shall remit the cost of the examination to the Commissioner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="General Operations of a Provider-Sponsored Organization."> <paragraph num="A."> <text>Effective Date of Contract. A provider-sponsored organization shall inform the Commissioner of the effective date of its contract.</text> </paragraph> <paragraph num="B."> <text>Review of Agreements by Commissioner. All signed written agreements, including those defining physicians' services, shall be on file and available for review by the Commissioner at all times in the provider-sponsored organization's central office.</text> </paragraph> <paragraph num="C."> <text>Duration of Agreements. All agreements shall have a duration of 12 months.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Insurance — Catastrophic or Back-Up Coverage."> <paragraph num="A."> <text>Insurance Coverage Required. Unless the Commissioner grants an exemption from the requirements of this section, a provider-sponsored organization shall secure insurance coverage to provide:</text> <paragraph num="(1)"> <text>Payments or services required to be made or furnished under the health care contract to those enrollees who are injured or become ill outside the geographic limits served by the provider-sponsored organization; and</text> </paragraph> <paragraph num="(2)"> <text>Reinsurance protection to the provider-sponsored organization in the event of catastrophic or unusual losses that would be in excess of the levels of loss that the provider-sponsored organization assumes in the basis of its calculation of premium charges.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Term and Renewal of Exemptions.</text> <paragraph num="(1)"> <text>Any exemption to the requirements of §A shall be for a period of 1 year, and may be renewed from year to year after that.</text> </paragraph> <paragraph num="(2)"> <text>The provider-sponsored organization shall make any request for renewal of an exemption at least 90 days before the expiration date of the then-current exemption.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Reinsurance. With the approval of the Commissioner, a provider-sponsored organization may reinsure any portion or aspect of its operation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, Title 19, Subtitle 7A, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.15 adopted as an emergency provision effective June 29, 1999 (26:15 Md. R. 1146); emergency status extended at 27:3 Md. R. 326; emergency status expired April 17, 2000; adopted permanently effective May 15, 2000 (27:9 Md. R. 860)</annotation> </annotations> </chapter> <chapter num="23" heading="Penalties for Failure to Make Prompt Payment of Claims"> <regulation prefix="Regulation" num=".01" heading="Violations Subject to Penalties."> <paragraph num="A."> <text>Violations. In addition to the requirement that an insurer, nonprofit health service plan, or health maintenance organization pay interest as required under Insurance Article, §15-1005(f), Annotated Code of Maryland, an insurer, nonprofit health service plan, or health maintenance organization is subject to the penalties set forth in §B of this regulation if the insurer, nonprofit health service plan, or health maintenance organization:</text> <paragraph num="(1)"> <text>Fails to:</text> <paragraph num="(a)"> <text>Pay a claim within 30 days after receipt of a claim for reimbursement from a:</text> <paragraph num="(i)"> <text>Person entitled to reimbursement under Insurance Article, §15-701(a), Annotated Code of Maryland, or</text> </paragraph> <paragraph num="(ii)"> <text>Hospital or related institution as defined in Health-General Article, §19-301, Annotated Code of Maryland; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Send a notice of receipt and status of the claim in accordance with Insurance Article, §15-1005(c)(2), Annotated Code of Maryland;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Requests additional information that is not reasonably necessary to determine if all or part of the claim will be reimbursed, in accordance with Insurance Article, §15-1005(c)(2)(ii), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Fails to pay a claim within 30 days after receipt of all reasonable and necessary documentation in accordance with Insurance Article, §15-1005(e)(1), Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(4)"> <text>Fails to pay interest in accordance with Insurance Article, §15-1005(e)(2) or (f), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Penalties. The penalties for insurers, nonprofit health service plans, and health maintenance organizations for the commission of an act listed in §A of this regulation are as follows:</text> <paragraph num="(1)"> <text>Up to $500 for a single commission of an act listed in §A of this regulation that is arbitrary or capricious based on all available information; and</text> </paragraph> <paragraph num="(2)"> <text>As provided in Insurance Article, §4-113(d), Annotated Code of Maryland, for commission of an act listed in §A of this regulation with the frequency to indicate a general business practice as defined by regulation by the Commissioner.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-729, and 19-730; Insurance Article, §§4-113 and 15-1005; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 adopted as an emergency provision effective April 12, 1999 (26:10 Md. R. 796); emergency status expired October 1, 1999</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 adopted as an emergency provision effective October 1, 1999 (26:23 Md. R. 1776); emergency status expired November 15, 1999; adopted permanently effective December 13, 1999 (26:25 Md. R. 1900)</annotation> </annotations> </chapter> <chapter num="24" heading="Discount Medical Plan Organizations and Discount Drug Plan Organizations"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to discount medical plans and discount drug plans sold, marketed, or solicited in Maryland in accordance with the requirements of Insurance Article, Title 14, Subtitle 6, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Discount drug plan” has the meaning stated in Insurance Article, §14-601(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Discount drug plan organization” has the meaning stated in Insurance Article, §14-601(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Discount medical plan” has the meaning stated in Insurance Article, §14-601(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Discount medical plan organization” has the meaning stated in Insurance Article, §14-601(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Medical services” has the meaning stated in Insurance Article, §14-601(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Nominal fee” means the fee that may be retained by a discount drug plan organization or a discount medical plan organization if a plan member's membership in a discount drug plan or discount medical plan is canceled within the first 30 calendar days after the effective date of enrollment.</text> </paragraph> <paragraph num="(7)"> <text>“Plan member” has the meaning stated in Insurance Article, §14-601(i), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Cancellations."> <paragraph num="A."> <text>A discount drug plan organization or discount medical plan organization shall reimburse all monies collected from a plan member if the plan member cancels membership in the discount drug plan or the discount medical plan within the first 30 calendar days after the effective date of enrollment.</text> </paragraph> <paragraph num="B."> <text>If electronic fund transfer is employed as a method of payment for discount drug plan or discount medical plan membership and membership is canceled within the first 30 calendar days after the effective date of enrollment, the discount drug plan organization or discount medical plan organization has 30 days from the date of cancellation in which to reverse the electronic fund transfer less the applicable nominal fee for this period.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Nominal Fee."> <paragraph num="A."> <text>Notwithstanding the provisions of Regulation .03 of this chapter, a discount drug plan organization or a discount medical plan organization may retain a nominal fee if a plan member cancels membership in the discount drug plan or discount medical plan within the first 30 calendar days after the effective date of enrollment, if:</text> <paragraph num="(1)"> <text>The discount drug plan organization or the discount medical plan organization has filed the applicable nominal fee with the Insurance Commissioner prior to use; and</text> </paragraph> <paragraph num="(2)"> <text>The nominal fee does not exceed the lesser of $5, or the actual expenses incurred for issuing a plan member's discount drug plan card or discount medical plan card.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A discount drug plan or discount medical plan shall disclose the amount of the nominal fee and the circumstances when the discount drug plan organization or discount medical plan organization may retain the nominal fee in writing in 12 point type and in all marketing materials relating to an application or contract soliciting prospective members, including all:</text> <paragraph num="(1)"> <text>Printed materials;</text> </paragraph> <paragraph num="(2)"> <text>Brochures; and</text> </paragraph> <paragraph num="(3)"> <text>Websites.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 14, Subtitle 6; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted as an emergency provision effective October 1, 2008 (35:22 Md. R. 1955); adopted permanently effective January 26, 2009 (36:2 Md. R. 103)</annotation> </annotations> </chapter> <chapter num="25" heading="Required Standard Provisions for Individual Nonprofit Health Service Plan Contracts"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to each individual nonprofit health service plan contract issued or delivered in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means a nonprofit health service plan.</text> </paragraph> <paragraph num="(2)"> <text>“Covered individual” means an individual covered under an individual contract.</text> </paragraph> <paragraph num="(2-1)"> <text>“Coverage period” means the interval of time the individual contract provides protection to the insured, in exchange for the payment of a particular premium.</text> </paragraph> <paragraph num="(2-2)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Individual contract” means a contract issued by a nonprofit health service plan to a subscriber covering:</text> <paragraph num="(a)"> <text>The subscriber;</text> </paragraph> <paragraph num="(b)"> <text>The subscriber's dependents; or</text> </paragraph> <paragraph num="(c)"> <text>The subscriber and the subscriber's dependents.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Preferred provider” means a provider that has entered into a provider service contract.</text> </paragraph> <paragraph num="(5)"> <text>“Preferred provider benefit” means a benefit that appears in an individual contract under which health care services are to be provided to the covered individual by a preferred provider.</text> </paragraph> <paragraph num="(6)"> <text>“Provider service contract” means a contract between a provider and a carrier or other entity, under which the provider agrees to provide health care services on a preferential basis under contracts containing preferred provider benefits.</text> </paragraph> <paragraph num="(7)"> <text>“Subscriber” means the individual to whom the nonprofit health service plan contract is issued.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Standard Provisions."> <paragraph num="A."> <text>An individual contract may not be delivered in Maryland unless it contains in substance the provisions listed in Regulation .04 of this chapter, or provisions which in the opinion of the Commissioner are not less favorable in any respect to the subscriber and covered individuals.</text> </paragraph> <paragraph num="B."> <text>Inapplicable and Inconsistent Provisions. If a provision required by Regulation .04 of this chapter is wholly or partly inapplicable to or inconsistent with the coverage provided by a particular contract, the carrier shall:</text> <paragraph num="(1)"> <text>Omit from the contract the inapplicable provision or part of the provision; or</text> </paragraph> <paragraph num="(2)"> <text>Modify the inconsistent provision or part of the provision to make it consistent with the coverage provided by the contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Standard Provisions."> <paragraph num="A."> <text>Entire Contract; Changes. Each individual contract shall contain in substance the following provision: “Entire contract; changes: This certificate, including the endorsements and the attached papers, if any, constitutes the entire contract of insurance. No change in this certificate shall be valid until approved by an executive officer of the carrier and unless such approval is endorsed on the certificate or attached to the certificate. No agent has authority to change this certificate or to waive any of its provisions.”</text> </paragraph> <paragraph num="B."> <text>Time Limit on Certain Defenses.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, each individual contract shall contain in substance the following provision: “Time limit on certain defenses:(1) After two years from the date of issue of this contract no misstatements, except fraudulent misstatements, made by the applicant in the application for the contract shall be used to void the contract or to deny a claim for loss incurred after two years from the date of issue of the contract. (2) No claim for loss incurred after two years from the date of issue of this contract shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this contract.”</text> </paragraph> <paragraph num="(2)"> <text>The first provision set forth in §B(1) of this regulation does not:</text> <paragraph num="(a)"> <text>Affect a legal requirement for avoidance of a policy or denial of a claim during the initial 2-year period after the issuance of the contract; or</text> </paragraph> <paragraph num="(b)"> <text>Limit the application of the provision found in Regulation .06E of this chapter if there is a misstatement with respect to age.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Contract Incontestable After 2 Years.</text> <paragraph num="(a)"> <text>This subsection applies only to a contract that the subscriber may continue in effect subject to its terms by the timely payment of premiums:</text> <paragraph num="(i)"> <text>Until the subscriber is at least 50 years old; or</text> </paragraph> <paragraph num="(ii)"> <text>If the contract is issued after the subscriber is 44 years old, for at least 5 years after its date of issue.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A contract subject to this subsection may omit the first provision set forth in §B(1) of this regulation and substitute in substance the following provision under the caption “Incontestable”: “After this contract has been in force for a period of two years during the lifetime of the subscriber, it shall become incontestable as to the statements contained in the application.”</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Grace Period.</text> <paragraph num="(1)"> <text>If the individual contract is guaranteed renewable for the life of the contract, the contract shall contain in substance the following provision: “Grace period: A grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”</text> </paragraph> <paragraph num="(2)"> <text>If the contract gives the carrier the right to refuse renewal, the contract shall contain in substance the following provision: “Grace period: Unless at least 30 days prior to the premium due date the carrier has delivered to the subscriber, or has mailed to the subscriber's last address as shown by the records of the carrier, written notice of its intention not to renew this contract beyond the period for which the premium has been accepted, a grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this policy shall continue in force.”</text> </paragraph> <paragraph num="(2-1)"> <text>The grace period provisions described in §C(1) and (2) of this regulation shall not apply to an individual contract that is a health benefit plan under which the subscriber is receiving advance payment of federal premium tax credits.</text> </paragraph> <paragraph num="(2-2)"> <text>If the individual contract is a health benefit plan under which the subscriber is receiving advance payment of federal premium tax credits, the individual contract shall contain the grace period provision required by Insurance Article, §15-1315, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>If an individual contract lapses due to nonpayment of premium, a carrier may not charge a premium for the time coverage continues in force under the grace period, except as permitted in the unpaid premiums provision in Regulation .06F of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>A carrier may not apply the unpaid premiums provision to recover a premium due for the grace period as described in §C(3) of this regulation, unless the carrier includes the unpaid premiums provision in the individual's contract.</text> </paragraph> <paragraph num="(5)"> <text>An individual contract may not require the subscriber to notify the carrier in advance of the subscriber's intention to terminate the individual contract.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Reinstatement.</text> <paragraph num="(1)"> <text>Each individual contract shall contain in substance the following provision: “Reinstatement: If any renewal premium is not paid in full within the time granted the subscriber for payment, a later acceptance of premium in full by the carrier or by any agent authorized by the carrier to accept the premium, without requiring a reinstatement application in connection with the acceptance of the premium in full, shall reinstate the contract. However, if the carrier or the agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the contract will be reinstated upon approval of the application by the carrier or, lacking approval, upon the forty-fifth day following the date of the conditional receipt unless the carrier has previously notified the subscriber in writing of its disapproval of the reinstatement application. The subscriber and carrier shall have the same rights under the reinstated contract as they had under the contract immediately before the due date of the defaulted premium, subject to any provisions endorsed on the contract or attached to the contract in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than 60 days prior to the date of reinstatement.”</text> </paragraph> <paragraph num="(2)"> <text>The last sentence of the provision set forth in §D(1) of this regulation may be omitted from a contract that the subscriber may continue in effect subject to its terms by the timely payment of premiums:</text> <paragraph num="(a)"> <text>Until the subscriber is at least 50 years old; or</text> </paragraph> <paragraph num="(b)"> <text>If the contract is issued after the subscriber is 44 years old, for at least 5 years after its date of issue.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The reinstatement provision of an individual contract that is not a health benefit plan may also include the following sentence: “The reinstated contract shall cover only loss resulting from accidental injury sustained after the date of reinstatement and loss due to sickness that first manifests itself more than ten days after the date of reinstatement.”</text> </paragraph> </paragraph> <paragraph num="E."> <text>Notice of Claim.</text> <paragraph num="(1)"> <text>Each individual contract shall contain a provision describing how and when a claim form can be requested from a carrier.</text> </paragraph> <paragraph num="(2)"> <text>If the carrier requires written notice of claim for the carrier to send a claim form to the claimant, the provision shall indicate that:</text> <paragraph num="(a)"> <text>The written notice of claim may not be required before 20 days after the occurrence or commencement of the loss covered by the policy;</text> </paragraph> <paragraph num="(b)"> <text>The carrier may not invalidate or reduce a claim if it is shown that:</text> <paragraph num="(i)"> <text>It was not reasonably possible to give notice within 20 days, and</text> </paragraph> <paragraph num="(ii)"> <text>Notice was given as soon as was reasonably possible.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Claims Forms. Each individual contract shall contain in substance the following provision: “Claim forms: The carrier, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If claim forms are not furnished within 15 days after the giving of notice the claimant shall be deemed to have complied with the requirements of this contract as to proof of loss upon submitting, within the time fixed in the contract for filing proof of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.”</text> </paragraph> <paragraph num="G."> <text>Proofs of Loss. Each individual contract shall contain in substance the following provision: “Proofs of loss: Written proof of loss must be furnished to the carrier within 90 days after the date of the loss. Failure to furnish proof within the time required shall not invalidate or reduce any claim if it was not reasonably possible to give proof within the required time, provided proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.”</text> </paragraph> <paragraph num="H."> <text>Time of Payment of Claims. Each individual contract shall contain in substance the following provision: “Time of payment of claims: Benefits under this contract will be paid within 30 days after receipt of written proof of loss.”</text> </paragraph> <paragraph num="I."> <text>Payment of Claims.</text> <paragraph num="(1)"> <text>Each individual contract shall contain a provision that:</text> <paragraph num="(a)"> <text>All benefits, other than those described in §I(1)(b) of this regulation, will be payable to the subscriber; and</text> </paragraph> <paragraph num="(b)"> <text>Any accrued benefits unpaid at the subscriber's death shall be paid to the subscriber's estate.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an individual contract contains a preferred provider benefit, the contract may indicate that the preferred provider benefits will be paid directly to the preferred provider.</text> </paragraph> <paragraph num="(3)"> <text>At the option of the carrier, the substance of the following paragraph may be added to the provision described in §I(1) of this regulation: “If any benefit of this contract shall be payable to the estate of the subscriber, or to a subscriber who is under 18 years of age or otherwise not competent to give a valid release, the carrier may pay the benefit, up to an amount not exceeding $5,000, to any relative by blood or connection by marriage of the subscriber who is deemed by the carrier to be equitably entitled to the benefit. Any payment made by the carrier in good faith pursuant to this provision shall fully discharge the carrier to the extent of the payment.”</text> </paragraph> </paragraph> <paragraph num="J."> <text>Legal Actions. Each individual contract shall contain in substance the following provision: “Legal actions: No action at law or in equity shall be brought to recover on this contract prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this contract. No such action shall be brought after the expiration of three years after the written proof of loss is required to be furnished.”</text> </paragraph> <paragraph num="K."> <text>10-Day Right to Examine Contract.</text> <paragraph num="(1)"> <text>Subject to §K(2) of this regulation, a notice shall be prominently printed on or attached to the face of the contract that states that:</text> <paragraph num="(a)"> <text>The contract may be surrendered to the carrier for cancellation within 10 days after the date the contract is delivered to the subscriber; and</text> </paragraph> <paragraph num="(b)"> <text>If the contract is canceled during the 10-day period, a pro rata premium for the unexpired term of the contract shall be returned to the subscriber.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The subscriber shall notify the carrier of the cancellation in writing.</text> </paragraph> <paragraph num="(3)"> <text>The carrier may print or attach the notice required under §K(1) of this regulation or a notice of equal prominence that, in the opinion of the Commissioner, is not less favorable to the subscriber.</text> </paragraph> </paragraph> <paragraph num="L."> <text>Age Limit; Misstatement of Age.</text> <paragraph num="(1)"> <text>The individual contract shall state that the contract will continue in effect until the end of the period for which the carrier has accepted the premium if an individual contract establishes, as an age limit or otherwise, a date after which the coverage provided by the contract will not be effective and:</text> <paragraph num="(a)"> <text>The date falls within a period for which the carrier accepts a premium for the contract; or</text> </paragraph> <paragraph num="(b)"> <text>The carrier accepts a premium for the contract after the date specified in this section.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The individual contract shall state that the liability of the carrier is limited to the refund, on request, of the premiums paid for the period not covered by the contract if the age of the covered individual is misstated and according to the correct age of the covered individual, the coverage provided by the contract would:</text> <paragraph num="(a)"> <text>Not have become effective; or</text> </paragraph> <paragraph num="(b)"> <text>Have ceased before the acceptance of the premium for the contract.</text> </paragraph> </paragraph> </paragraph> <paragraph num="M."> <text>Premium Due Date.</text> <paragraph num="(1)"> <text>Each individual contract shall specify the premium due date.</text> </paragraph> <paragraph num="(2)"> <text>The premium due date shall be no earlier than the date the coverage period begins.</text> </paragraph> <paragraph num="(3)"> <text>A carrier may offer each subscriber the option to pay the premium through an electronic payment.</text> </paragraph> <paragraph num="(4)"> <text>If the subscriber elects an electronic payment, the carrier may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the subscriber.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Limitations and Exclusions."> <paragraph num="A."> <text>Crime.</text> <paragraph num="(1)"> <text>An individual contract may not include a limitation or exclusion for loss to which a contributing cause was the covered individual's commission of or attempt to commit a crime.</text> </paragraph> <paragraph num="(2)"> <text>An individual contract may not include a limitation or exclusion for loss for which a contributing cause was the commission of or the attempt to commit a crime by an individual other than the covered individual.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Illegal Occupation. An individual contract may not include a limitation or exclusion for loss to which a contributing cause was the covered individual's being engaged in an illegal occupation.</text> </paragraph> <paragraph num="C."> <text>Intoxicants or Narcotics or Use of Intoxicants or Narcotics.</text> <paragraph num="(1)"> <text>An individual contract may not include a limitation or exclusion for loss sustained or contracted in consequence of the covered individual's being intoxicated or under the influence of any drug.</text> </paragraph> <paragraph num="(2)"> <text>An individual contract may not include a limitation or exclusion for loss due to:</text> <paragraph num="(a)"> <text>The use of alcohol;</text> </paragraph> <paragraph num="(b)"> <text>The use of drugs or narcotics; or</text> </paragraph> <paragraph num="(c)"> <text>Alcoholism or drug addiction.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Preexisting Condition. If an individual contract contains a preexisting condition limitation or exclusion, the limitation or exclusion may not apply to a condition which the applicant revealed in the application for the contract, unless the condition is excluded by means of a signed waiver rider attached to the contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Optional Provisions."> <paragraph num="A."> <text>A carrier may include any of the optional provisions described in §§C—G of this regulation.</text> </paragraph> <paragraph num="B."> <text>A carrier may not include an optional provision dealing with the same subjects set forth in §§C—G of this regulation if the provision is drafted in a manner that is less favorable to the subscriber or any covered individual than the corresponding optional provision set forth in §§C—G of this regulation.</text> </paragraph> <paragraph num="C."> <text>Physical Examination.</text> <paragraph num="(1)"> <text>A carrier may include a provision in an individual contract giving the carrier the right to examine the covered individual when and as often as it may reasonably require during the pendency of a claim under the contract.</text> </paragraph> <paragraph num="(2)"> <text>If the carrier includes the provision described in §C(1) of this regulation, the provision shall indicate that any physical examination required by the carrier will be performed at the expense of the carrier.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Autopsy.</text> <paragraph num="(1)"> <text>A carrier may include a provision in an individual contract giving the carrier the right to make an autopsy in case of death when an autopsy is not forbidden by law.</text> </paragraph> <paragraph num="(2)"> <text>If the carrier includes the provision described in §D(1) of this regulation, the provision shall indicate that any autopsy required by the carrier will be performed at the expense of the carrier.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Misstatement of Age. An individual contract may contain the following provision: “Misstatement of age: If the age of the covered individual has been misstated, all amounts payable under this contract shall be such as the premium would have purchased at the correct age.”</text> </paragraph> <paragraph num="F."> <text>Unpaid Premiums. An individual contract may contain in substance the following provision: “Unpaid premiums: Upon the payment of a claim under this contract, any premium then due and unpaid or covered by any note or written order may be deducted from the claim payment.”</text> </paragraph> <paragraph num="G."> <text>Arbitration.</text> <paragraph num="(1)"> <text>A carrier may include a provision in an individual contract giving the covered individual the option of entering binding arbitration to settle a dispute with the carrier.</text> </paragraph> <paragraph num="(2)"> <text>If the carrier includes the provision described in §G(1) of this regulation, the provision may not require the covered individual to enter binding arbitration.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §12-203(g), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 30, 2000 (27:21 Md. R. 1978)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 18, 2010 (37:21 Md. R. 1438); May 9, 2016 (43:9 Md. R. 532)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended effective November 7, 2005 (32:22 Md. R. 1760)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C, D amended effective May 9, 2016 (43:9 Md. R. 532)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04M adopted effective October 18, 2010 (37:21 Md. R. 1438)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04M amended effective April 22, 2019 (46:8 Md. R. 402)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended as an emergency provision effective May 9, 2003 (30:11 Md. R. 732); amended permanently effective October 27, 2003 (30:21 Md. R. 1531)</annotation> </annotations> </chapter> <chapter num="26" heading="Uniform Credentialing Form"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all:</text> <paragraph num="A."> <text>Carriers as defined in Regulation .02B(1) of this chapter; and</text> </paragraph> <paragraph num="B."> <text>Credentialing intermediaries as defined in Regulation .02B(2) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Carrier.</text> <paragraph num="(a)"> <text>“Carrier” means:</text> <paragraph num="(i)"> <text>An insurer;</text> </paragraph> <paragraph num="(ii)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(iii)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(iv)"> <text>A dental plan organization; or</text> </paragraph> <paragraph num="(v)"> <text>Any other person that provides health benefit plans subject to regulation by the State.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Carrier” includes an entity that arranges a provider panel for a carrier.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Credentialing intermediary” means a person to whom a carrier has delegated credentialing or recredentialing authority and responsibility.</text> </paragraph> <paragraph num="(3)"> <text>“Health benefit plan” means:</text> <paragraph num="(a)"> <text>A hospital or medical policy, contract, or certificate, including those issued under multiple employer trusts or associations;</text> </paragraph> <paragraph num="(b)"> <text>A hospital or medical policy, contract, or certificate issued by a nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization contract; or</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization contract.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Health care provider” means an individual who is licensed, certified, or otherwise authorized under the Health Occupations Article, Annotated Code of Maryland, to provide health care services.</text> </paragraph> <paragraph num="(5)"> <text>“Provider panel” means the health care providers that contract with a carrier to provide health care services to the enrollees under a health benefit plan of the carrier.</text> </paragraph> <paragraph num="(6)"> <text>“Uniform credentialing form” means the form designated by the Insurance Commissioner for use by a carrier or its credentialing intermediary for credentialing and recredentialing a health care provider for participation on a provider panel.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Uniform Credentialing Form — Carrier and Credentialing Intermediary Requirements."> <paragraph num="A."> <text>A carrier or its credentialing intermediary shall:</text> <paragraph num="(1)"> <text>Accept the uniform credentialing form as the sole application for a health care provider to become credentialed or recredentialed for a provider panel of the carrier; and</text> </paragraph> <paragraph num="(2)"> <text>Make the uniform credentialing form available to any health care provider that is to be credentialed or recredentialed by the carrier or credentialing intermediary.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A carrier may not, for purposes of credentialing or recredentialing, require a health care provider to:</text> <paragraph num="(1)"> <text>Modify the uniform credentialing form;</text> </paragraph> <paragraph num="(2)"> <text>Submit additional credentialing forms;</text> </paragraph> <paragraph num="(3)"> <text>Use any other credentialing form not designated by the Commissioner; or</text> </paragraph> <paragraph num="(4)"> <text>Submit any additional information not specified by the uniform credentialing form, except as stated in §F of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier may preprint the designated carrier information on the uniform credentialing form.</text> </paragraph> <paragraph num="D."> <text>A carrier may not deny a uniform credentialing form because the form does not include the designated carrier information of the carrier.</text> </paragraph> <paragraph num="E."> <text>A carrier may require a health care provider to submit a new Authorization to Release Information and Affirmation page, with an original signature and date, for the purpose of credentialing or recredentialing.</text> </paragraph> <paragraph num="F."> <text>A carrier that is a managed care organization may require a provider to make the disclosure required by 42 CFR §1002.3.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Electronic Filing."> <paragraph num="A."> <text>The uniform credentialing form may be obtained in an electronic format.</text> </paragraph> <paragraph num="B."> <text>The uniform credentialing form may be transmitted by facsimile.</text> </paragraph> <paragraph num="C."> <text>A transmission by facsimile is not considered an electronic transfer for the purposes of this chapter.</text> </paragraph> <paragraph num="D."> <text>Capability of Electronic Filing.</text> <paragraph num="(1)"> <text>The uniform credentialing form developed under this chapter shall be capable of electronic filing.</text> </paragraph> <paragraph num="(2)"> <text>The uniform credentialing form may be filed electronically in any format that contains the data required to be contained in the uniform credentialing form.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Effective Date."> <text>The regulations in this chapter are applicable for all credentialing and recredentialing forms used on or after January 1, 2008.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-112.1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 25, 2000 (27:25 Md. R. 2285)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective December 6, 2007 (34:24 Md. R. 2159)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective January 20, 2014 (41:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03F adopted effective January 20, 2014 (41:1 Md. R. 13)</annotation> </annotations> </chapter> <chapter num="27" heading="Health Insurance — Notice of the Maryland Health Insurance Plan" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.06 adopted as an emergency provision effective October 1, 2001 (28:22 Md. R. 1932); emergency status expired effective March 29, 2002; adopted permanently effective April 1, 2002 (29:6 Md. R. 570)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective January 1, 2003 (30:5 Md. R. 365); revised permanently effective January 6, 2003 (29:26 Md. R. 2028)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective January 1, 2005 (31:22 Md. R. 1599)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 repealed effective February 15, 2016 (43:3 Md. R. 274)</annotation> </annotations> </chapter> <chapter num="28" heading="Individual Health Insurance Contracts — Standard Provisions and Exclusions"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter is applicable to each individual health insurance contract issued or delivered in Maryland on or after the effective date of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Coverage period” means the interval of time the individual health insurance contract provides protection to the insured, in exchange for the payment of a particular premium.</text> </paragraph> <paragraph num="(2)"> <text>“Individual health insurance contract” means a health insurance contract issued by an insurer to a policyholder that provides health insurance coverage for permissible individuals as described in Insurance Article, §15-201(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Insured” means a person covered under an individual health insurance contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Limitations and Exclusions."> <paragraph num="A."> <text>Crime.</text> <paragraph num="(1)"> <text>Except as provided in §A(3) of this regulation, an individual health insurance contract may not include a limitation or exclusion for loss to which a contributing cause was the insured's commission of or attempt to commit a crime.</text> </paragraph> <paragraph num="(2)"> <text>An individual health insurance contract may not include a limitation or exclusion for loss for which a contributing cause was the commission of or the attempt to commit a crime by an individual other than the insured.</text> </paragraph> <paragraph num="(3)"> <text>A disability benefit or an accidental death and dismemberment benefit in an individual health insurance contract:</text> <paragraph num="(a)"> <text>May be subject to exclusion or limitation for loss to which a contributing cause was the insured's commission of or attempt to commit a felony; and</text> </paragraph> <paragraph num="(b)"> <text>May not be subject to an exclusion or limitation regarding the commission of or attempt to commit a crime that is more restrictive to the insured than the exclusion or limitation set forth in §A(3)(a) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Illegal Occupation.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, an individual health insurance contract may not include a limitation or exclusion for loss to which a contributing cause was the insured's being engaged in an illegal occupation.</text> </paragraph> <paragraph num="(2)"> <text>A disability benefit or an accidental death and dismemberment benefit in an individual health insurance contract:</text> <paragraph num="(a)"> <text>May be subject to an exclusion or limitation for loss to which a contributing cause was the insured's being engaged in an illegal occupation; and</text> </paragraph> <paragraph num="(b)"> <text>May not be subject to an exclusion or limitation regarding an illegal occupation that is more restrictive to the insured than the exclusion or limitation set forth in §B(2)(a) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Intoxicants and Narcotics.</text> <paragraph num="(1)"> <text>Except as provided in §C(2) of this regulation, an individual health insurance contract may not include a limitation or exclusion for loss:</text> <paragraph num="(a)"> <text>Sustained or contracted in consequence of the insured's being intoxicated or under the influence of any drug;</text> </paragraph> <paragraph num="(b)"> <text>Due to the use of alcohol;</text> </paragraph> <paragraph num="(c)"> <text>Due to the use of drugs or narcotics; or</text> </paragraph> <paragraph num="(d)"> <text>Due to alcoholism or drug addiction.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A disability benefit or an accidental death and dismemberment benefit in an individual health insurance contract:</text> <paragraph num="(a)"> <text>May be subject to an exclusion or limitation for loss sustained or contracted in consequence of the insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician; and</text> </paragraph> <paragraph num="(b)"> <text>May not be subject to an exclusion or limitation regarding the use of alcohol or drugs that is more restrictive to the insured than the exclusion or limitation set forth in §C(2)(a) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Preexisting Condition Limitation. If an individual health insurance contract contains a preexisting condition limitation or exclusion, the limitation or exclusion may not apply to a condition that the applicant revealed in the application for the contract, unless the condition is excluded by means of a signed waiver rider attached to the contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Arbitration."> <text>If an insurer includes an arbitration provision in an individual health insurance contract, the arbitration provision may not require the insured to use arbitration to settle disputes with the insurer.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Premium Due Date."> <paragraph num="A."> <text>Each individual health insurance contract shall specify the premium due date.</text> </paragraph> <paragraph num="B."> <text>The premium due date shall be no earlier than the date the coverage period begins.</text> </paragraph> <paragraph num="C."> <text>An insurer may offer each individual policyholder the option to pay the premium through an electronic payment.</text> </paragraph> <paragraph num="D."> <text>If the individual policyholder elects an electronic payment, the insurer may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the individual policyholder.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 12-203(g), and 12-205(b)(4), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted as an emergency provision effective January 1, 2002 (28:26 Md. R. 2270); adopted permanently effective June 10, 2002 (29:11 Md. R. 891)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 18, 2010 (37:21 Md. R. 1438)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended as an emergency provision effective May 9, 2003 (30:11 Md. R. 733); amended permanently effective October 27, 2003 (30:21 Md. R. 1531)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 adopted effective October 18, 2010 (37:21 Md. R. 1438)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B amended effective April 22, 2019 (46:8 Md. R. 402)</annotation> </annotations> </chapter> <chapter num="29" heading="Complaint Process for Coverage Decisions"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to carriers and representatives of carriers making coverage decisions.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Appeal” means a protest filed by a member, a member’s representative, or a health care provider with a carrier under its internal appeal process regarding a coverage decision concerning a member.</text> </paragraph> <paragraph num="(2)"> <text>“Appeal decision” means a final determination by a carrier that arises from an appeal filed with the carrier under its appeal process regarding a coverage decision concerning a member.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means a person that offers a health benefit plan and is:</text> <paragraph num="(a)"> <text>An authorized insurer that provides health insurance in the State;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization; or</text> </paragraph> <paragraph num="(e)"> <text>Except for a managed care organization, as defined in Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland, any other person that offers a health benefit plan subject to regulation by the State.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Complaint” means a protest filed with the Commissioner involving a coverage decision other than that which is covered by Insurance Article, Title 15, Subtitle 10A, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Coverage decision” has the meaning stated in Insurance Article, §15-10D-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>Health Benefit Plan.</text> <paragraph num="(a)"> <text>“Health benefit plan” means:</text> <paragraph num="(i)"> <text>A hospital or medical policy or contract, including a policy or contract issued under a multiple employer trust or association;</text> </paragraph> <paragraph num="(ii)"> <text>A hospital or medical policy or contract issued by a nonprofit health service plan;</text> </paragraph> <paragraph num="(iii)"> <text>A health maintenance organization contract; or</text> </paragraph> <paragraph num="(iv)"> <text>A dental plan organization contract.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Health benefit plan” does not include one or more, or any combination, of the following:</text> <paragraph num="(i)"> <text>Long-term care insurance;</text> </paragraph> <paragraph num="(ii)"> <text>Disability insurance;</text> </paragraph> <paragraph num="(iii)"> <text>Accidental travel and accident death and dismemberment insurance;</text> </paragraph> <paragraph num="(iv)"> <text>Credit health insurance;</text> </paragraph> <paragraph num="(v)"> <text>A health benefit plan issued by a managed care organization, as defined in Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(vi)"> <text>Disease-specific insurance; or</text> </paragraph> <paragraph num="(vii)"> <text>Fixed indemnity insurance.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Health care provider” means:</text> <paragraph num="(a)"> <text>An individual who is licensed under the Health Occupations Article, Annotated Code of Maryland, to provide health care services in the ordinary course of business or practice of a profession and is a treating provider of the member; or</text> </paragraph> <paragraph num="(b)"> <text>A hospital, as defined in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Health care service” means a health or medical care procedure or service rendered by a health care provider that:</text> <paragraph num="(a)"> <text>Provides testing, diagnosis, or treatment of a human disease or dysfunction; or</text> </paragraph> <paragraph num="(b)"> <text>Dispenses drugs, medical devices, medical appliances, or medical goods for the treatment of a human disease or dysfunction.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Internal appeal process” means the appeal process required by Insurance Article, Title 15, Subtitle 10D, Annotated Code of Maryland, to be adopted by the carrier for use by its members and health care providers to dispute coverage decisions made by the carrier or a representative of the carrier.</text> </paragraph> <paragraph num="(10)"> <text>Member.</text> <paragraph num="(a)"> <text>“Member” means a person entitled to health care services under a policy, plan, or contract issued or delivered in the State by a carrier.</text> </paragraph> <paragraph num="(b)"> <text>“Member” includes:</text> <paragraph num="(i)"> <text>A subscriber; and</text> </paragraph> <paragraph num="(ii)"> <text>Unless preempted by federal law, a Medicare recipient.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Member” does not include a Medicaid recipient.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Member’s representative” has the meaning stated in Insurance Article, §15-10D-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Urgent medical condition” means a condition that satisfies either of the following:</text> <paragraph num="(a)"> <text>A medical condition, including a physical condition, a mental condition, or a dental condition, where the absence of medical attention within 72 hours could reasonably be expected by an individual, acting on behalf of a carrier, applying the judgment of a prudent layperson who possesses an average knowledge of health and medicine, to result in:</text> <paragraph num="(i)"> <text>Placing the member's life or health in serious jeopardy;</text> </paragraph> <paragraph num="(ii)"> <text>The inability of the member to regain maximum function;</text> </paragraph> <paragraph num="(iii)"> <text>Serious impairment to bodily function;</text> </paragraph> <paragraph num="(iv)"> <text>Serious dysfunction of any bodily organ or part; or</text> </paragraph> <paragraph num="(v)"> <text>The member remaining seriously mentally ill with symptoms that cause the member to be a danger to self or others; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A medical condition, including a physical condition, a mental health condition, or a dental condition, where the absence of medical attention within 72 hours in the opinion of a health care provider with knowledge of the member's medical condition, would subject the member to severe pain that cannot be adequately managed without the care or treatment that is the subject of the coverage decision.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Retrospective denial” means a coverage decision which is made by the carrier after the health care service has been rendered to the member.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Exhaustion of Internal Appeal Process."> <paragraph num="A."> <text>Except as provided in §B of this regulation, the carrier's internal appeal process shall be exhausted before filing a complaint with the Commissioner under this chapter.</text> </paragraph> <paragraph num="B."> <text>In a case involving a prospective denial, a member, a member’s representative, or a health care provider filing a complaint on behalf of a member may file a complaint with the Commissioner without first filing an appeal with a carrier and receiving a final decision on the appeal if the member, the member’s representative, or the health care provider gives sufficient information and supporting documentation in the complaint that demonstrates an urgent medical condition exists as defined under this chapter.</text> </paragraph> <paragraph num="C."> <text>In a case involving a retrospective denial, an urgent medical condition is not deemed to exist to allow a member, a member’s representative, or a health care provider on behalf of a member to file to a complaint without first exhausting the internal appeal process of a carrier.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§15-10D-02(d) and 15-10D-04, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 10, 2002 (29:11 Md. R. 891)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective April 16, 2012 (39:7 Md. R. 497)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B, C amended effective April 16, 2012 (39:7 Md. R. 497)</annotation> </annotations> </chapter> <chapter num="30" heading="Disability Benefit Claims Procedures"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to insurers that issue or deliver individual or group health insurance policies in Maryland that include a disability benefit.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Adverse appeal determination” means a decision made by an insurer on an appeal of an adverse benefit determination to uphold:</text> <paragraph num="(a)"> <text>A denial, reduction, or termination of a disability benefit;</text> </paragraph> <paragraph num="(b)"> <text>A failure to provide or make payment, in whole or in part, for a disability benefit; or</text> </paragraph> <paragraph num="(c)"> <text>Any denial, reduction, termination, or failure to provide or make payment that is based on a determination of a covered individual's eligibility for coverage of a disability benefit.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Adverse benefit determination” means a determination arising from a claim for disability benefits which results in:</text> <paragraph num="(a)"> <text>A denial, reduction, or termination of a disability benefit;</text> </paragraph> <paragraph num="(b)"> <text>A failure to provide or make payment, in whole or in part, for a disability benefit; or</text> </paragraph> <paragraph num="(c)"> <text>Any denial, reduction, termination, or failure to provide or make payment that is based on a determination of a covered individual's eligibility for coverage of a disability benefit.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Authorized representative” means a person, including a health care provider, authorized by the covered individual to act on behalf of the covered individual.</text> </paragraph> <paragraph num="(4)"> <text>“Covered individual” means an individual covered under an insurance policy that provides a disability benefit.</text> </paragraph> <paragraph num="(5)"> <text>Disability benefit.</text> <paragraph num="(a)"> <text>“Disability benefit” means a benefit that is payable based on the disability of a covered individual.</text> </paragraph> <paragraph num="(b)"> <text>“Disability benefit” does not include:</text> <paragraph num="(i)"> <text>Benefits under a long-term care insurance policy;</text> </paragraph> <paragraph num="(ii)"> <text>A benefit that is payable based solely on a dismemberment of a covered individual;</text> </paragraph> <paragraph num="(iii)"> <text>Benefits in a life insurance policy that operate to safeguard the contract from lapse or to provide a special surrender value, special benefit, or annuity in the event of total and permanent disability; or</text> </paragraph> <paragraph num="(iv)"> <text>Benefits in a health insurance policy that operate to safeguard the contract from lapse due to disability.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Establishment of Claim and Appeal Procedures."> <paragraph num="A."> <text>Each insurer subject to this chapter shall establish procedures for processing disability benefits claims and appeals of adverse benefit determinations in accordance with this chapter.</text> </paragraph> <paragraph num="B."> <text>The procedures established by an insurer shall:</text> <paragraph num="(1)"> <text>Be in writing;</text> </paragraph> <paragraph num="(2)"> <text>Contain administrative processes and safeguards designed to ensure and to verify that benefit claim determinations are made in accordance with the insurance policy provisions and that, where appropriate, the insurance policy provisions have been applied consistently with respect to similarly situated covered individuals;</text> </paragraph> <paragraph num="(3)"> <text>Allow covered individuals at least 180 days following receipt of a notice of an adverse benefit determination to request an appeal of the adverse benefit determination;</text> </paragraph> <paragraph num="(4)"> <text>Provide covered individuals an opportunity to submit written comments, documents, records, and other information relating to the claim for disability benefits;</text> </paragraph> <paragraph num="(5)"> <text>Provide a covered individual who is appealing or has appealed an adverse benefit determination, upon request and free of charge, reasonable access to, and copies of all documents, records, and other information relevant to the covered individual's claim for disability benefits;</text> </paragraph> <paragraph num="(6)"> <text>Provide for a review that takes into account all comments, documents, records, and other information submitted by the covered individual appealing an adverse benefit determination, without regard to whether the information was submitted or considered in the initial adverse benefit determination;</text> </paragraph> <paragraph num="(7)"> <text>Require that the review on appeal of an adverse benefit determination be conducted by an individual who is neither the individual who made the adverse benefit determination nor a subordinate of the individual who made the adverse benefit determination;</text> </paragraph> <paragraph num="(8)"> <text>Provide that the review on appeal of an adverse benefit determination may not afford deference to the initial adverse benefit determination;</text> </paragraph> <paragraph num="(9)"> <text>Provide for the identification of medical or vocational experts whose advice was obtained on behalf of the insurer in connection with a covered individual's adverse benefit determination, without regard to whether the advice was relied upon in making the adverse benefit determination;</text> </paragraph> <paragraph num="(10)"> <text>Require the individual deciding an appeal of an adverse benefit determination, based in whole or in part on a medical judgment, to consult with a health care professional who:</text> <paragraph num="(a)"> <text>Has appropriate training and experience in the field of medicine involved in the medical judgment; and</text> </paragraph> <paragraph num="(b)"> <text>Is not:</text> <paragraph num="(i)"> <text>The health care professional consulted in connection with the initial adverse benefit determination; or</text> </paragraph> <paragraph num="(ii)"> <text>The subordinate of the health care professional;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(11)"> <text>Ensure that all claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision, and, accordingly, decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual, such as a claims adjudicator or medical or vocational expert, may not be made based upon the likelihood that the individual will support the denial of benefits;</text> </paragraph> <paragraph num="(12)"> <text>Provide that, before the insurer issues an adverse appeal determination, the insurer shall provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the insurer or other person making the benefit determination in connection with the claim, which shall be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse appeal determination is required to be provided to give the covered individual a reasonable opportunity to respond prior to that date; and</text> </paragraph> <paragraph num="(13)"> <text>Provide that, before the insurer can issue an adverse appeal determination based on a new or additional rationale, the insurer shall provide the claimant, free of charge, with the rationale, which shall be provided as soon as possible and sufficiently in advance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The claims procedures established by the insurer:</text> <paragraph num="(1)"> <text>May not:</text> <paragraph num="(a)"> <text>Preclude an authorized representative of a covered individual from acting on behalf of the covered individual in filing a benefit claim or an appeal of an adverse benefit determination;</text> </paragraph> <paragraph num="(b)"> <text>Require the payment of a fee or costs as a condition to filing a claim or appealing an adverse benefit determination;</text> </paragraph> <paragraph num="(c)"> <text>Require a covered individual to complete more than two appeals of an adverse benefit determination before filing a complaint with the Commissioner; or</text> </paragraph> <paragraph num="(d)"> <text>Require a covered individual to submit a dispute regarding a claim for disability benefits to binding arbitration; but</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>May include reasonable procedures for determining whether a person has been authorized to act on behalf of a covered individual.</text> </paragraph> </paragraph> <paragraph num="D."> <text>For purposes of §B(5) of this regulation and Regulation .05F(3) of this chapter, a document, record, or other information shall be considered relevant to a covered individual's claim if the document, record, or other information:</text> <paragraph num="(1)"> <text>Was relied on in making the adverse benefit determination;</text> </paragraph> <paragraph num="(2)"> <text>Was submitted, considered, or generated in the course of making the adverse benefit determination, without regard to whether the document, record, or other information was relied upon in making the adverse benefit determination;</text> </paragraph> <paragraph num="(3)"> <text>Demonstrates compliance with the procedures required by §B(2) of this regulation; or</text> </paragraph> <paragraph num="(4)"> <text>Constitutes a statement of policy or guidance of the insurer concerning the denied disability benefit without regard to whether the statement was relied upon in making the adverse benefit determination.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Timing and Content of Notice of Adverse Benefit Determination."> <paragraph num="A."> <text>An insurer shall give written or electronic notice that complies with the standards imposed by 29 CFR §2520.104b-1(c)(1)(i), (iii), and (iv), of an adverse benefit determination to a covered individual within a reasonable period of time, but not later than 45 days after receipt of a claim for disability benefits, unless the 45-day period is extended in accordance with this regulation.</text> </paragraph> <paragraph num="B."> <text>Subject to §F(2) of this regulation, the period of time within which a benefit determination shall be made begins at the time a claim is received, without regard to whether all the information necessary to make a benefit claim determination accompanies the filing.</text> </paragraph> <paragraph num="C."> <text>The 45-day time period under §A of this regulation may be extended for up to 30 days if the insurer:</text> <paragraph num="(1)"> <text>Determines that the extension is necessary due to matters beyond the control of the insurer; and</text> </paragraph> <paragraph num="(2)"> <text>Provides the notice required under §E of this regulation to the covered individual before the expiration of the initial 45-day period.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The first 30-day extension may be extended for an additional 30 days if the insurer:</text> <paragraph num="(1)"> <text>Determines that, due to matters beyond the control of the insurer, a decision cannot be rendered within the first 30-day extension period; and</text> </paragraph> <paragraph num="(2)"> <text>Provides the notice required under §E of this regulation to the covered individual before the expiration of the first 30-day extension period.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The notice of an extension under §§C and D of this regulation shall be in writing and include:</text> <paragraph num="(1)"> <text>A description of the circumstances requiring the extension of time;</text> </paragraph> <paragraph num="(2)"> <text>The date by which the insurer plans to render a decision;</text> </paragraph> <paragraph num="(3)"> <text>A specific explanation of:</text> <paragraph num="(a)"> <text>The standards on which entitlement to a disability benefit is based;</text> </paragraph> <paragraph num="(b)"> <text>The unresolved issues that prevent a decision on the claim; and</text> </paragraph> <paragraph num="(c)"> <text>The additional information needed to resolve the issues; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A statement that the covered individual shall be given at least 45 days within which to provide the specified information.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If the period of time within which a benefit determination is required to be made is extended under §C or D of this regulation due to a covered individual's failure to submit information necessary to decide a claim:</text> <paragraph num="(1)"> <text>The covered individual shall be given at least 45 days within which to provide the information; and</text> </paragraph> <paragraph num="(2)"> <text>The period for making the benefit determination is tolled (temporarily suspended) from the date on which the notice of the extension is sent to the covered individual until the date on which the covered individual responds to the request for additional information.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The notice of an adverse benefit determination shall include:</text> <paragraph num="(1)"> <text>The specific reason or reasons for the adverse benefit determination;</text> </paragraph> <paragraph num="(2)"> <text>A reference to the specific policy provisions on which the adverse benefit determination is based;</text> </paragraph> <paragraph num="(3)"> <text>A description of any additional material or information necessary for the covered individual to perfect the claim and an explanation of why the material or information is necessary;</text> </paragraph> <paragraph num="(4)"> <text>A description of the insurer's appeal procedures and the time limits applicable to the procedures;</text> </paragraph> <paragraph num="(5)"> <text>If an internal rule, guideline, protocol, or similar criterion was relied on in making the adverse benefit determination, either:</text> <paragraph num="(a)"> <text>The specific rule, guideline, protocol, or other similar criterion; or</text> </paragraph> <paragraph num="(b)"> <text>A statement that:</text> <paragraph num="(i)"> <text>An internal rule, guideline, protocol, or other similar criterion was relied on in making the adverse benefit determination; and</text> </paragraph> <paragraph num="(ii)"> <text>A copy of the rule, guideline, protocol, or other similar criterion will be provided on request free of charge to the covered individual; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>A discussion of the decision, including an explanation of the basis for disagreeing with or not following:</text> <paragraph num="(a)"> <text>The views presented by the claimant to the plan of health care professionals treating the claimant and vocational professionals who evaluated the claimant;</text> </paragraph> <paragraph num="(b)"> <text>The views of medical or vocational experts whose advice was obtained on behalf of the plan in connection with a claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and</text> </paragraph> <paragraph num="(c)"> <text>A disability determination regarding the claimant presented by the claimant to the plan made by the Social Security Administration.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>The notification shall be provided in a culturally and linguistically appropriate manner.</text> </paragraph> <paragraph num="I."> <text>An insurer is considered to provide relevant notices in a culturally and linguistically appropriate manner if:</text> <paragraph num="(1)"> <text>The insurer provides oral language services, such as a telephone customer assistance hotline, that include answering questions in any applicable non-English language and providing assistance with filing claims and appeals in any applicable non-English language;</text> </paragraph> <paragraph num="(2)"> <text>The insurer provides, upon request, a notice in any applicable non-English language; and</text> </paragraph> <paragraph num="(3)"> <text>The insurer includes in the English version of all notices a statement prominently displayed in any applicable non-English language, clearly indicating how to access the language services provided by the insurer.</text> </paragraph> </paragraph> <paragraph num="J."> <text>With respect to an address in any United States county to which a notice is sent, a non-English language is an applicable non-English language if 10 percent or more of the population residing in the county is literate only in the same non-English language, as determined in guidance published by the U.S. Secretary of Labor</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Timing and Notice of an Appeal Determination."> <paragraph num="A."> <text>An insurer shall give written or electronic notice that complies with the standards imposed by 29 CFR §2520.104b-1(c)(1)(i), (iii), and (iv), of an appeal determination to a covered individual within a reasonable period of time, but not later than 45 days after receipt of an appeal of an adverse benefit determination, unless the 45-day period is extended in accordance with this regulation.</text> </paragraph> <paragraph num="B."> <text>Subject to §E of this regulation, the period of time within which an appeal determination shall be made begins at the time an appeal is received, without regard to whether all the information necessary to make an appeal determination accompanies the filing.</text> </paragraph> <paragraph num="C."> <text>The initial 45-day time period under §A of this regulation may be extended for a period not to exceed 45 days if the insurer:</text> <paragraph num="(1)"> <text>Determines that the extension is necessary due to special circumstances; and</text> </paragraph> <paragraph num="(2)"> <text>Provides the notice required under §D of this regulation to the covered individual prior to the expiration of the initial 45-day period.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The notice of an extension under §C of this regulation shall be in writing and include:</text> <paragraph num="(1)"> <text>A description of the special circumstances requiring the extension of time; and</text> </paragraph> <paragraph num="(2)"> <text>The date by which the insurer plans to render a decision.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If the period of time within which an appeal determination is required to be made is extended under §C of this regulation due to a covered individual's failure to submit information necessary to decide the appeal, the period for making the appeal determination shall be tolled (temporarily suspended) from the date on which the notice of the extension is sent to the covered individual until the date on which the covered individual responds to the request for additional information.</text> </paragraph> <paragraph num="F."> <text>The notice of an adverse appeal determination shall include:</text> <paragraph num="(1)"> <text>The specific reason or reasons for the adverse appeal determination;</text> </paragraph> <paragraph num="(2)"> <text>A reference to the specific policy provisions on which the adverse appeal determination is based;</text> </paragraph> <paragraph num="(3)"> <text>A statement that the covered individual is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the covered individual's claim for benefits; and</text> </paragraph> <paragraph num="(4)"> <text>If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse appeal determination, either:</text> <paragraph num="(a)"> <text>The specific rule, guideline, protocol, or other similar criterion; or</text> </paragraph> <paragraph num="(b)"> <text>A statement that:</text> <paragraph num="(i)"> <text>An internal rule, guideline, protocol, or other similar criterion was relied on in making the adverse appeal determination; and</text> </paragraph> <paragraph num="(ii)"> <text>A copy of the rule, guideline, protocol, or other similar criterion will be provided on request free of charge to the covered individual; and</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>The address, telephone number, and facsimile number of the Commissioner.</text> </paragraph> </paragraph> <paragraph num="G."> <text>An insurer shall provide access to, and copies of, documents, records, and other information described in §F(3) and (4) of this regulation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-1010, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: August 2, 2004 (31:15 Md. R. 1186)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective April 15, 2024 (51:7 Md. R. 334)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective April 15, 2024 (51:7 Md. R. 334)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective April 15, 2024 (51:7 Md. R. 334)</annotation> </annotations> </chapter> <chapter num="31" heading="Behavioral Health Care Expense Form"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to each carrier that provides behavioral health care services through:</text> <paragraph num="(1)"> <text>A company owned wholly or partly by the carrier; or</text> </paragraph> <paragraph num="(2)"> <text>A contract with a managed behavioral health care organization.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter does not apply to a person that, for an administrator fee only, solely arranges a provider panel for a carrier for the provision of behavioral health care services on a discounted fee-for-service basis.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Behavioral Health Care Administrative Expenses.</text> <paragraph num="(a)"> <text>“Behavioral health care administrative expenses” means any expenses that are for administrative functions including:</text> <paragraph num="(i)"> <text>Billing and collection expenses;</text> </paragraph> <paragraph num="(ii)"> <text>Accounting and financial reporting expenses;</text> </paragraph> <paragraph num="(iii)"> <text>Quality assurance and utilization management program or activity expenses;</text> </paragraph> <paragraph num="(iv)"> <text>Promotion and marketing expenses;</text> </paragraph> <paragraph num="(v)"> <text>Taxes, fees, and assessments;</text> </paragraph> <paragraph num="(vi)"> <text>Legal expenses;</text> </paragraph> <paragraph num="(vii)"> <text>Salary expenses for employees that are not related to the delivery of behavioral health care services to patients;</text> </paragraph> <paragraph num="(viii)"> <text>Computer expenses;</text> </paragraph> <paragraph num="(ix)"> <text>Provider credentialing;</text> </paragraph> <paragraph num="(x)"> <text>Collection and administrative review of treatment plans;</text> </paragraph> <paragraph num="(xi)"> <text>Auditing the financial report submitted to the Commissioner under Insurance Article, §15-127, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(xii)"> <text>Debt payment and debt service; and</text> </paragraph> <paragraph num="(xiii)"> <text>Other general and administrative expenses.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Behavioral health care administrative expenses” does not include expenses incurred for behavioral health care services.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Behavioral Health Care Services.</text> <paragraph num="(a)"> <text>“Behavioral health care services” means procedures or services rendered by a health care provider for the treatment of mental illness, emotional disorders, drug abuse, or alcohol abuse.</text> </paragraph> <paragraph num="(b)"> <text>“Behavioral health care services” includes any quality assurance or utilization management activities or treatment plan reviews that are clinical in nature.</text> </paragraph> <paragraph num="(c)"> <text>“Behavioral health care services” does not include administrative functions.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>A health insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(d)"> <text>A preferred provider organization;</text> </paragraph> <paragraph num="(e)"> <text>A third party administrator; or</text> </paragraph> <paragraph num="(f)"> <text>Except for a managed care organization as defined in Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland, any other person that provides health benefit plans subject to regulation by the State.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Direct behavioral health care expenses” means any payment to a health care provider by a managed behavioral health care organization for the provision of behavioral health care services to a member.</text> </paragraph> <paragraph num="(5)"> <text>“Direct payments” means the money that a carrier disburses to a managed behavioral health care organization for the provision of behavioral health care services to a member.</text> </paragraph> <paragraph num="(6)"> <text>“Managed behavioral health care organization” means a company, organization, private review agent, or subsidiary that:</text> <paragraph num="(a)"> <text>Contracts with a carrier to provide, undertake to arrange, or administer behavioral health care services to members; or</text> </paragraph> <paragraph num="(b)"> <text>Otherwise makes behavioral health care services available to members through contracts with health care providers.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Member.</text> <paragraph num="(a)"> <text>“Member” means an individual entitled to behavioral health care services from a carrier or a managed behavioral health care organization under a policy or plan issued or delivered in the State.</text> </paragraph> <paragraph num="(b)"> <text>“Member” includes a subscriber.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Provider” means a person licensed, certified, or otherwise authorized under Health Occupations Article, or Health-General Article, Annotated Code of Maryland, to provide health care services.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Behavioral Health Care Expense Form."> <text>Within 90 days after the end of each calendar year, each carrier shall complete the form developed by the Commissioner by obtaining, as necessary, and entering on the form the following information:</text> <paragraph num="A."> <text>The name of each managed behavioral health care organization with which the carrier has a contract;</text> </paragraph> <paragraph num="B."> <text>The calendar year for which the data is reported;</text> </paragraph> <paragraph num="C."> <text>Total direct payments made by the carrier to each managed behavioral health care organization during the calendar year;</text> </paragraph> <paragraph num="D."> <text>Direct behavioral health care expenses during the calendar year;</text> </paragraph> <paragraph num="E."> <text>Amounts included in direct behavioral health care expenses for quality assurance or utilization management activities or treatment plan reviews;</text> </paragraph> <paragraph num="F."> <text>Behavioral health care administrative expenses during the calendar year; and</text> </paragraph> <paragraph num="G."> <text>The name, title, telephone number, and signature of the individual completing the form and the date that the form was completed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Maintenance of Form."> <paragraph num="A."> <text>A carrier shall maintain each form that the carrier is required to complete under Regulation .03 of this chapter for at least 5 years after the date that the form is required to be completed.</text> </paragraph> <paragraph num="B."> <text>A carrier may maintain a form in paper, photographic, microprocessed, magnetic, mechanical, electronic, digital, or any other media provided that the form is maintained in a manner that:</text> <paragraph num="(1)"> <text>Is clear and legible;</text> </paragraph> <paragraph num="(2)"> <text>Reproduces accurately the original form in its entirety, including any attachments to the form;</text> </paragraph> <paragraph num="(3)"> <text>Is capable of producing a clear and legible hard copy of the original form; and</text> </paragraph> <paragraph num="(4)"> <text>Preserves evidence of the signature contained on the original form.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier shall make copies of each form that the carrier is required to complete and maintain publicly available to an individual, enrollee, or member, on request, and may charge:</text> <paragraph num="(1)"> <text>A reasonable preparation fee not to exceed $15 for each form requested; and</text> </paragraph> <paragraph num="(2)"> <text>The actual cost for any postage and handling required to provide copies of the requested forms.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §15-127(f), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: February 16, 2004 (31:3 Md. R. 209)</annotation> </annotations> </chapter> <chapter num="32" heading="Nonprofit Health Service Plans — Material Modification"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to each nonprofit health service plan that is subject to Insurance Article, §14-115(d), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Baltimore metro region” means Anne Arundel County, Baltimore City, Baltimore County, Carroll County, Harford County, and Howard County.</text> </paragraph> <paragraph num="(2)"> <text>“Cost-sharing arrangement” includes:</text> <paragraph num="(a)"> <text>A deductible;</text> </paragraph> <paragraph num="(b)"> <text>A co-insurance amount;</text> </paragraph> <paragraph num="(c)"> <text>A co-payment amount;</text> </paragraph> <paragraph num="(d)"> <text>An annual limit;</text> </paragraph> <paragraph num="(e)"> <text>A lifetime limit; and</text> </paragraph> <paragraph num="(f)"> <text>An out-of-pocket maximum.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“DC metro region” means Montgomery County and Prince George's County.</text> </paragraph> <paragraph num="(4)"> <text>“Eastern Shore region” means Caroline County, Cecil County, Dorchester County, Kent County, Queen Anne's County, Somerset County, Talbot County, Wicomico County, and Worcester County.</text> </paragraph> <paragraph num="(5)"> <text>Health Benefit Plan.</text> <paragraph num="(a)"> <text>“Health benefit plan” means a hospital or medical policy, contract, or certificate issued by a nonprofit health service plan.</text> </paragraph> <paragraph num="(b)"> <text>“Health benefit plan” includes:</text> <paragraph num="(i)"> <text>A Medicare supplement policy, contract, or certificate;</text> </paragraph> <paragraph num="(ii)"> <text>A long-term care policy, contract, or certificate; or</text> </paragraph> <paragraph num="(iii)"> <text>A stop loss contract.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Health care provider” has the meaning stated in Insurance Article, §14-101(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Key specialty” means:</text> <paragraph num="(a)"> <text>Cardiology;</text> </paragraph> <paragraph num="(b)"> <text>Dermatology;</text> </paragraph> <paragraph num="(c)"> <text>Family practice;</text> </paragraph> <paragraph num="(d)"> <text>Gastroenterology;</text> </paragraph> <paragraph num="(e)"> <text>Geriatrics;</text> </paragraph> <paragraph num="(f)"> <text>Internal medicine;</text> </paragraph> <paragraph num="(g)"> <text>Obstetrics/Gynecology (Ob/Gyn);</text> </paragraph> <paragraph num="(h)"> <text>Ophthalmology;</text> </paragraph> <paragraph num="(i)"> <text>Orthopedic surgery; or</text> </paragraph> <paragraph num="(j)"> <text>Pediatrics.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Market” means:</text> <paragraph num="(a)"> <text>The individual Medigap market;</text> </paragraph> <paragraph num="(b)"> <text>The individual non-Medigap market;</text> </paragraph> <paragraph num="(c)"> <text>The small-employer market governed by Insurance Article, Title 15, Subtitle 12, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(d)"> <text>The group market other than the small-employer market governed by Insurance Article, Title 15, Subtitle 12, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Nonprofit health service plan” means a corporation that:</text> <paragraph num="(a)"> <text>Holds a certificate of authority from the Commissioner to act as a nonprofit health service plan; and</text> </paragraph> <paragraph num="(b)"> <text>Has been assigned a National Association of Insurance Commissioners (NAIC) company code number.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Option” means a benefit or cost-sharing arrangement that:</text> <paragraph num="(a)"> <text>Is available in a health benefit plan; and</text> </paragraph> <paragraph num="(b)"> <text>If chosen, would alter the cost of the health benefit plan.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Product” means a category of one or more health benefits plans sold by a nonprofit health service plan in a particular market.</text> </paragraph> <paragraph num="(12)"> <text>“Southern Maryland region” means Calvert County, Charles County, and St. Mary's County.</text> </paragraph> <paragraph num="(13)"> <text>“Western Maryland region” means Allegany County, Frederick County, Garrett County, and Washington County.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Material Modification."> <text>For purposes of Insurance Article, §14-115(d)(11)(i), Annotated Code of Maryland, a modification is material if it modifies:</text> <paragraph num="A."> <text>The options available in a health benefit plan marketed in the State in a manner that results in a change of 20 percent or more in the actuarial benefit value of the health benefit plan;</text> </paragraph> <paragraph num="B."> <text>A provider network in a manner that results in a change of:</text> <paragraph num="(1)"> <text>10 percent or more in the number of health care providers in the provider network:</text> <paragraph num="(a)"> <text>For the entire State: or</text> </paragraph> <paragraph num="(b)"> <text>In the Baltimore metro region or DC metro region;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>7 percent or more in the number of health care providers in the provider network in the Southern Maryland region;</text> </paragraph> <paragraph num="(3)"> <text>5 percent or more in the number of health care providers in the provider network in the Eastern Shore region or Western Maryland region;</text> </paragraph> <paragraph num="(4)"> <text>10 percent or more in the number of health care providers in a key specialty in the provider network:</text> <paragraph num="(a)"> <text>For the entire State; or</text> </paragraph> <paragraph num="(b)"> <text>In the Baltimore metro region, DC metro region, Eastern Shore region, Southern Maryland region, or Western Maryland region;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>10 percent or more in the amount of reimbursement paid to health care providers in the provider network:</text> <paragraph num="(a)"> <text>For the entire State; or</text> </paragraph> <paragraph num="(b)"> <text>In the Baltimore metro region or DC metro region;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>7 percent or more in the amount of reimbursement paid to health care providers in the provider network in the Southern Maryland region; or</text> </paragraph> <paragraph num="(7)"> <text>5 percent or more in the amount of reimbursement paid to health care providers in the provider network in the Eastern Shore region or the Western Maryland region;</text> </paragraph> </paragraph> <paragraph num="C."> <text>Underwriting guidelines for a product of a nonprofit health insurance plan in a manner that results in:</text> <paragraph num="(1)"> <text>A refusal to provide the least expensive rate for the product of a nonprofit health service plan to 20 percent or more of applicants for the product; or</text> </paragraph> <paragraph num="(2)"> <text>A relative increase of 50 percent or more in the current level of refusals to provide the least expensive rate for the product of a nonprofit health service plan to applicants; or</text> </paragraph> </paragraph> <paragraph num="D."> <text>Rates or rating plans that are required to be approved by the Commissioner in a manner that results in:</text> <paragraph num="(1)"> <text>A rate increase of 15 percent or more in 1 year for any product sold by a nonprofit health service plan in a particular market; or</text> </paragraph> <paragraph num="(2)"> <text>A rate increase of 25 percent or more in 1 year for coverage variations within a product sold by a nonprofit health service plan in a particular market.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Marketing Plan."> <paragraph num="A."> <text>Development and Submission of Marketing Plan. Each year, a nonprofit health service plan shall:</text> <paragraph num="(1)"> <text>Develop a marketing plan; and</text> </paragraph> <paragraph num="(2)"> <text>Submit the marketing plan and any changes to the marketing plan to the board of directors of the nonprofit health service plan for approval.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Contents of Marketing Plan. A nonprofit health service plan shall include in the marketing plan all of the nonprofit health service plan's marketing goals and objectives in the State, including any plan to:</text> <paragraph num="(1)"> <text>Reenter a market;</text> </paragraph> <paragraph num="(2)"> <text>Retain or expand enrollment in a market or market segment;</text> </paragraph> <paragraph num="(3)"> <text>Change the product portfolio of the nonprofit health service plan;</text> </paragraph> <paragraph num="(4)"> <text>Establish or change distribution methods or sales systems of the nonprofit health service plan;</text> </paragraph> <paragraph num="(5)"> <text>Establish or change a pricing strategy;</text> </paragraph> <paragraph num="(6)"> <text>Form a partnership with another entity for marketing purposes;</text> </paragraph> <paragraph num="(7)"> <text>Establish or change a communication and image strategy;</text> </paragraph> <paragraph num="(8)"> <text>Engage in community outreach and education;</text> </paragraph> <paragraph num="(9)"> <text>Market membership through one company in a holding company system rather than another company in the holding company system; or</text> </paragraph> <paragraph num="(10)"> <text>Move subscribers from one company in a holding company system to another company in the holding company system.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Approval Required. A nonprofit health service plan may not wholly or partially implement a marketing plan or any change to the marketing plan unless the board of the nonprofit health service plan has approved the marketing plan or the change to the marketing plan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Evaluation Report."> <text>One year after the effective date of this chapter, the board of directors of a nonprofit health service plan shall submit to the Commissioner an evaluation report that contains:</text> <paragraph num="A."> <text>The number of items that were required to be submitted to the board during the preceding year under each category contained in Regulation .03 of this chapter; and</text> </paragraph> <paragraph num="B."> <text>An evaluation of whether Regulation .03 of this chapter is effective in ensuring that the board of a nonprofit health service plan reviews items that are appropriate for review by the board without being unduly burdened by review of items that are not appropriate for review by the board.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Fiduciary Duty."> <text>Compliance with Insurance Article, §14-115(d)(11)(i), Annotated Code of Maryland, and this chapter does not relieve the board of directors of a nonprofit health service plan or the individual members of the board from taking or refraining from taking any action otherwise required to comply with their fiduciary duties.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 14-115(d)(11)(ii), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 26, 2005 (32:19 Md. R. 1588)</annotation> </annotations> </chapter> <chapter num="33" heading="Utilization Review of Surgical Treatment of Morbid Obesity"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter establishes the manner in which carriers and private review agents acting on behalf of carriers may apply utilization review criteria and impose documentation requirements to the surgical treatment of the morbid obesity benefit mandated by Insurance Article, §15-839, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Body mass index” has the meaning stated in Insurance Article, §15-839, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” means an insurer, a nonprofit health service plan, or a health maintenance organization.</text> </paragraph> <paragraph num="(3)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Member” means an individual who is covered by a contract that:</text> <paragraph num="(a)"> <text>Is issued or delivered by a carrier in the State; and</text> </paragraph> <paragraph num="(b)"> <text>Includes a benefit for the surgical treatment of morbid obesity.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Morbid obesity” has the meaning stated in Insurance Article, §15-839, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Nonprofit health service plan” means a person who has received a certificate of authority from the Commissioner to act as a nonprofit health service plan in the State.</text> </paragraph> <paragraph num="(9)"> <text>“Private review agent” has the meaning stated in Insurance Article, §15-10B-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Utilization review” has the meaning stated in Insurance Article, §15-10B-01, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Utilization Review Criteria for Surgical Treatment of Morbid Obesity."> <paragraph num="A."> <text>When establishing utilization review criteria for the surgical treatment of morbid obesity as a covered benefit under Insurance Article, §15-839, Annotated Code of Maryland, a carrier or a private review agent acting on behalf of a carrier:</text> <paragraph num="(1)"> <text>Shall limit the criteria to the permissible criteria listed in §B of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>May not use any criteria that is more restrictive to the member than the criteria listed in §B of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Permissible Criteria for Utilization Review Decisions.</text> <paragraph num="(1)"> <text>Body Mass Index.</text> <paragraph num="(a)"> <text>Except as permitted under §B(1)(b) of this regulation, a carrier or a private review agent acting on behalf of a carrier shall consider a member to meet the body mass index criterion if the member has a body mass index greater than 40 kilograms per meter squared.</text> </paragraph> <paragraph num="(b)"> <text>If the member has a comorbid medical condition, the carrier or private review agent acting on behalf of the carrier may not impose the criterion described in §B(1)(a) of this regulation, but shall consider the member to meet the body mass index criterion if the member has a body mass index equal to or greater than 35 kilograms per meter squared.</text> </paragraph> <paragraph num="(c)"> <text>In determining whether the member has a comorbid medical condition under §B(1)(b) of this regulation, the carrier or the private review agent acting on behalf of the carrier shall consider the member to have a comorbid condition if the member has one of the following conditions:</text> <paragraph num="(i)"> <text>Hypertension;</text> </paragraph> <paragraph num="(ii)"> <text>A cardiopulmonary condition;</text> </paragraph> <paragraph num="(iii)"> <text>Sleep apnea;</text> </paragraph> <paragraph num="(iv)"> <text>Diabetes; or</text> </paragraph> <paragraph num="(v)"> <text>Any life threatening or serious medical condition that is weight induced.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>The carrier or private review agent acting on behalf of the carrier may establish a utilization review criterion that limits the benefit for surgical treatment of morbid obesity to adults who are 18 years old or older.</text> </paragraph> <paragraph num="(3)"> <text>The carrier or private review agent acting on behalf of the carrier may establish a utilization review criterion that requires the member to complete a psychological examination of the member's readiness and fitness for surgery and the necessary postoperative lifestyle changes before undergoing surgical treatment of morbid obesity.</text> </paragraph> <paragraph num="(4)"> <text>Completion of a Structured Diet Program.</text> <paragraph num="(a)"> <text>If a carrier or a private review agent acting on behalf of a carrier establishes a criterion that requires a member to complete a structured diet program, the carrier or private review agent acting on behalf of the carrier may not establish a criterion that is more restrictive than described in §B(4)(b) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The carrier or the private review agent acting on behalf of the carrier shall consider the member to have completed a structured diet program, if the member completes either of the following in the 2-year period that immediately precedes the request for the surgical treatment of morbid obesity:</text> <paragraph num="(i)"> <text>One structured diet program for 6 consecutive months; or</text> </paragraph> <paragraph num="(ii)"> <text>Two structured diet programs for 3 consecutive months.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A carrier or a private review agent acting on behalf of a carrier shall use flexibility with regard to defining a structured diet program.</text> </paragraph> <paragraph num="(d)"> <text>A carrier or a private review agent acting on behalf of a carrier shall consider commonly available diet programs, such as Weight Watchers or Jenny Craig, to be structured diet programs.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Documentation Requirements for Structured Diet Programs."> <paragraph num="A."> <text>The carrier or private review agent acting on behalf of the carrier shall accept any one of the items listed in §B of this regulation as acceptable documentation that the member has completed the structured diet program required by Regulation .03B(4) of this chapter.</text> </paragraph> <paragraph num="B."> <text>Acceptable documentation of completion of a structured diet program includes:</text> <paragraph num="(1)"> <text>Physician notes;</text> </paragraph> <paragraph num="(2)"> <text>Notes of health care providers, other than physicians;</text> </paragraph> <paragraph num="(3)"> <text>Receipts of payment for a structured diet program; or</text> </paragraph> <paragraph num="(4)"> <text>Diet or weight loss logs from a structured diet program.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-893, Annotated Code of Maryland; Ch. 301, Acts of 2005</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 10, 2006 (33:7 Md. R. 676)</annotation> </annotations> </chapter> <chapter num="34" heading="Carrier Provider Panels"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to:</text> <paragraph num="A."> <text>Establish standards for the creation and maintenance of provider panels by insurers, nonprofit health service plans, and dental plan organizations; and</text> </paragraph> <paragraph num="B."> <text>Assure the availability of health care providers to meet the health care needs of enrollees.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter applies to insurers, nonprofit health service plans, and dental plan organizations that use provider panels.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accredited hospital” means a hospital accredited by the Joint Commission on Accreditation of Healthcare Organizations.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” means an insurer, a nonprofit health service plan, or a dental plan organization.</text> </paragraph> <paragraph num="(3)"> <text>“Enrollee” means an individual entitled to health care benefits from a carrier.</text> </paragraph> <paragraph num="(4)"> <text>“Hospital-based physician” means an anesthesiologist, pathologist, radiologist, neonatologist, hospitalist, intensivist, or emergency medicine physician that practices exclusively within an accredited hospital and provides care to enrollees only as a result of the enrollees being directed to the hospital.</text> </paragraph> <paragraph num="(5)"> <text>“Prominent carrier” means a carrier reporting at least $90,000,000 in written premium for medical benefits in Maryland in the most recent annual statement.</text> </paragraph> <paragraph num="(6)"> <text>“Provider” means a health care practitioner or group of health care practitioners licensed, certified, or otherwise authorized by law to provide health care services.</text> </paragraph> <paragraph num="(7)"> <text>“Provider panel” means the providers that contract either directly or through a subcontracting entity with a carrier to provide health care services to the carrier's enrollees under the carrier's health benefit plan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Provider Panel Sufficiency."> <paragraph num="A."> <text>A carrier shall maintain a provider panel that is sufficient in numbers and types of available providers to meet the health care needs of enrollees.</text> </paragraph> <paragraph num="B."> <text>Standards to meet the health care needs of enrollees shall be determined in accordance with the requirements of this chapter, and may be established by reference to any reasonable criteria used by the carrier, including but not limited to:</text> <paragraph num="(1)"> <text>Provider-enrollee ratios by specialty;</text> </paragraph> <paragraph num="(2)"> <text>Primary care provider-enrollee ratios;</text> </paragraph> <paragraph num="(3)"> <text>Geographic accessibility;</text> </paragraph> <paragraph num="(4)"> <text>Waiting times for appointments with providers;</text> </paragraph> <paragraph num="(5)"> <text>Hours of operation; and</text> </paragraph> <paragraph num="(6)"> <text>The volume of technological and specialty services available to serve the needs of enrollees requiring technologically advanced or specialty care.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Availability Plan."> <paragraph num="A."> <text>A carrier shall implement an availability plan describing:</text> <paragraph num="(1)"> <text>If the carrier is an insurer or nonprofit health service plan, the quantifiable and measurable standards for the number and geographic distribution of:</text> <paragraph num="(a)"> <text>General and internal medicine providers;</text> </paragraph> <paragraph num="(b)"> <text>Family practitioners;</text> </paragraph> <paragraph num="(c)"> <text>Pediatricians;</text> </paragraph> <paragraph num="(d)"> <text>Obstetricians and gynecologists;</text> </paragraph> <paragraph num="(e)"> <text>High-volume specialty behavioral health care providers, including psychiatrists, psychologists, clinical social workers, and any other behavioral health care providers identified by the carrier; and</text> </paragraph> <paragraph num="(f)"> <text>High-volume specialty health care providers, identified by the carrier; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the carrier is a dental plan organization, or an insurer or nonprofit health service plan that provides coverage only for dental services, the quantifiable and measurable standards for the number and geographic distribution of:</text> <paragraph num="(a)"> <text>Dentists; and</text> </paragraph> <paragraph num="(b)"> <text>Any other dental service provider identified by the carrier.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The availability plan required by §A of this regulation shall also include:</text> <paragraph num="(1)"> <text>The method used to annually assess the carrier's performance against the standards specified in the availability plan;</text> </paragraph> <paragraph num="(2)"> <text>The method used to ensure timely access to health care services, as identified by the carrier; and</text> </paragraph> <paragraph num="(3)"> <text>The carrier's process for monitoring and assuring on an ongoing basis the sufficiency of the provider panel to meet the health care needs of enrollees.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Availability Plan and Annual Performance Assessment.</text> <paragraph num="(1)"> <text>A carrier shall:</text> <paragraph num="(a)"> <text>On an annual basis, review and update the availability plan required by §A of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>On an annual basis, conduct a performance assessment regarding its compliance with its availability plan using the method provided in §B(1) of this regulation; and</text> </paragraph> <paragraph num="(c)"> <text>Submit its availability plan and its annual performance assessment to the Commissioner upon request.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In addition to the requirements of §C(1) of this regulation, a prominent carrier shall submit to the Commissioner the prominent carrier's:</text> <paragraph num="(a)"> <text>Availability plan not later than:</text> <paragraph num="(i)"> <text>90 days after the effective date of this chapter, if the carrier is a prominent carrier on the effective date of this chapter; or</text> </paragraph> <paragraph num="(ii)"> <text>90 days after the carrier becomes a prominent carrier, if the carrier becomes a prominent carrier after the effective date of this chapter; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Annual performance assessment:</text> <paragraph num="(i)"> <text>Not later than November 1, 2008, for the period beginning on the effective date of this regulation; and</text> </paragraph> <paragraph num="(ii)"> <text>Within 30 days of completing the annual performance assessment, for calendar year 2009 and thereafter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>In addition to the requirements of §C(2) of this regulation, a prominent carrier shall:</text> <paragraph num="(a)"> <text>File with the Commissioner the availability plan described in §C(2)(a) of this regulation not later than 30 days after the carrier makes any change to the availability plan;</text> </paragraph> <paragraph num="(b)"> <text>Provide annually to the Commissioner a list of the hospital-based physician specialties available on the prominent carrier's provider panel; and</text> </paragraph> <paragraph num="(c)"> <text>Submit the report required in §A of this regulation with the submission of the prominent carrier's performance assessment required by §C(2)(b) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The Commissioner may request additional information from the carrier in order to evaluate the carrier's performance with the availability plan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Enforcement."> <paragraph num="A."> <text>In addition to any other enforcement powers available to the Commissioner, if a carrier violates this chapter, the Commissioner may order a carrier to take reasonably appropriate corrective action.</text> </paragraph> <paragraph num="B."> <text>The reasonably appropriate corrective action required by the Commissioner in §A of this regulation may include, but not be limited to, ordering the carrier to:</text> <paragraph num="(1)"> <text>Meet the standards specified in the carrier's availability plan by increasing the number of providers by specialty or geographic area in the carrier's provider panel; and</text> </paragraph> <paragraph num="(2)"> <text>Make restitution to an enrollee who received services during the time the carrier failed to meet the standards specified in the carrier's availability plan, from a provider that was not on the carrier's provider panel, if the carrier fails to take a corrective action ordered by the Commissioner.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-108(2) and 15-112(b)(1)(i)1, Annotated Code of Maryland;</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 17, 2008 (35:14 Md. R. 1247)</annotation> </annotations> </chapter> <chapter num="35" heading="Domestic Partner Coverage"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish:</text> <paragraph num="A."> <text>The use of the term domestic partner in a contract; and</text> </paragraph> <paragraph num="B."> <text>The proof that a carrier may use to determine if an individual is a domestic partner of another individual.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means an insurer, a nonprofit health service plan, or a health maintenance organization.</text> </paragraph> <paragraph num="(2)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>“Contract” means either of the following:</text> <paragraph num="(a)"> <text>A health insurance contract that is issued or delivered in Maryland by an insurer or a nonprofit health service plan that provides inpatient hospital, medical, or surgical benefits to individuals or groups on an expense-incurred basis; or</text> </paragraph> <paragraph num="(b)"> <text>A contract issued or delivered in Maryland by a health maintenance organization to individuals or groups.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Insurer” has the meaning defined in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Nonprofit health service plan” means a person who has received a certificate of authority from the Commissioner to act as a nonprofit health service plan in the State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Domestic Partner Coverage."> <paragraph num="A."> <text>The term “domestic partner” in a contract or rider to a contract shall include individuals of the same and the opposite sex.</text> </paragraph> <paragraph num="B."> <text>If an individual makes an application to include a domestic partner or a child dependent of a domestic partner as a dependent under a contract, the carrier may require the individual to submit not more than the following as proof of the domestic partner relationship:</text> <paragraph num="(1)"> <text>The affidavit described in §C of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>Proof that the individual meets one criteria from §D of this regulation; and</text> </paragraph> <paragraph num="(3)"> <text>Proof that the individual meets one criteria from §E of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Affidavit Attesting to Domestic Partnership.</text> <paragraph num="(1)"> <text>An affidavit signed by both the insured and the domestic partner shall include only the following attestations:</text> <paragraph num="(a)"> <text>Both individuals are 18 years old or older;</text> </paragraph> <paragraph num="(b)"> <text>Neither individual is related to the other by blood or marriage within four degrees of consanguinity under civil law rule;</text> </paragraph> <paragraph num="(c)"> <text>Neither individual is married or in a civil union or domestic partnership with another individual;</text> </paragraph> <paragraph num="(d)"> <text>Both individuals have been financially interdependent for at least 6 consecutive months prior to application in which each individual contributes to some extent to the other individual's maintenance and support with the intention of remaining in the relationship indefinitely; and</text> </paragraph> <paragraph num="(e)"> <text>Both individuals share a common primary residence.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Carriers may develop their own affidavits or may use the affidavit set forth in §C(3) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The following is a sample affidavit that complies with the requirements of §B(1) of this regulation:AFFIDAVIT OF DOMESTIC PARTNERSHIP</text> </paragraph> </paragraph> <text>Instructions:</text> <text>In order to enroll your Domestic Partner for medical benefits, you and your Domestic Partner must sign this Affidavit of Domestic Partnership. Please carefully read this Affidavit and the information below.</text> <text>Both you and your Domestic Partner must certify that you are Domestic Partners by completing and signing below.</text> <text>I, {Name of Subscriber} and {Name of Partner} certify that we are Domestic Partners and that we:</text> <paragraph num="1."> <text>Are at least 18 years old;</text> </paragraph> <paragraph num="2."> <text>Are not related to the other by blood or marriage within four degrees of consanguinity under civil law rule;</text> </paragraph> <paragraph num="3."> <text>Are not married or in a civil union or domestic partnership with another individual;</text> </paragraph> <paragraph num="4."> <text>Have been financially interdependent for at least 6 consecutive months prior to application in which each individual contributes to some extent to the other individual's maintenance and support with the intention of remaining in the relationship indefinitely; and</text> </paragraph> <paragraph num="5."> <text>Share a common primary residence.</text> </paragraph> <text>We understand that a civil action may be brought against us for losses, including reasonable attorney fees and court costs, because of willful falsification of information in this Affidavit of Domestic Partnership.</text> <text>We understand that willful falsification of information contained in this Affidavit may result in our termination of enrollment.</text> <text>We certify under penalty of perjury under applicable state laws, that the foregoing is true and accurate to the best of our knowledge.</text> <text>_________________________________________________________________________</text> <text>Signature of Subscriber Date</text> <text>_________________________________________________________________________</text> <text>Signature of Domestic Partner Date</text> <paragraph num="D."> <text>The carrier shall accept any one of the following documents as proof of a common primary residence between domestic partners:</text> <paragraph num="(1)"> <text>Common ownership of the primary residence via joint deed or mortgage agreement;</text> </paragraph> <paragraph num="(2)"> <text>Common leasehold interest in the primary residence;</text> </paragraph> <paragraph num="(3)"> <text>Driver's license or State-issued identification listing a common address; or</text> </paragraph> <paragraph num="(4)"> <text>Utility or other household bill with both the name of the insured and the name of the domestic partner appearing.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The carrier shall accept any one of the following documents as proof of financial interdependence between domestic partners:</text> <paragraph num="(1)"> <text>Joint bank account or credit account;</text> </paragraph> <paragraph num="(2)"> <text>Designation as the primary beneficiary for life insurance or retirement benefits of the domestic partner;</text> </paragraph> <paragraph num="(3)"> <text>Designation as primary beneficiary under the domestic partner's will;</text> </paragraph> <paragraph num="(4)"> <text>Mutual assignments of valid durable powers of attorney under Estates and Trusts Article, §13-601, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(5)"> <text>Mutual valid written advanced directives under Health-General Article, §5-601 et seq., Annotated Code of Maryland, approving the other domestic partner as health care agent;</text> </paragraph> <paragraph num="(6)"> <text>Joint ownership or holding of investments; or</text> </paragraph> <paragraph num="(7)"> <text>Joint ownership or lease of a motor vehicle.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A carrier may require a group policyholder to obtain the documents specified under this chapter prior to enrolling a domestic partner or a child dependent of a domestic partner.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-403.2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted as an emergency provision effective January 10, 2008 (35:3 Md. R. 287); emergency status expired July 8, 2008</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted effective July 8, 2008 (35:12 Md. R. 1122)</annotation> </annotations> </chapter> <chapter num="36" heading="Pharmacy Benefit Managers — Approval of an Accrediting Organization"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish the factors the Commissioner shall consider when approving an accrediting organization for the purposes of Insurance Article, §15-1618, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Accrediting organization” means an entity that accredits a pharmacy benefits manager.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means a pharmacy benefits manager that is applying for a registration from the Commissioner to act as a pharmacy benefits manager in Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>“Pharmacy and therapeutics committee” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Pharmacy benefits manager” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Determination of Approved Accrediting Organization."> <paragraph num="A."> <text>An accrediting organization is not an approved accrediting organization for the purposes of Insurance Article, §15-601, Annotated Code of Maryland, until the Commissioner issues a letter of approval to the accrediting organization.</text> </paragraph> <paragraph num="B."> <text>For the purpose of determining which entities are approved accrediting organizations, the Commissioner shall consider whether:</text> <paragraph num="(1)"> <text>The accreditation standards required to be met for accreditation by the accrediting organization meet or exceed the requirements of Insurance Article, §§15-1614 and 15-1617, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>The accrediting organization measures an applicant's pharmacy and therapeutics committee's ability to meet each standard; and</text> </paragraph> <paragraph num="(3)"> <text>The accrediting organization agrees to notify the Commissioner at least 30 days in advance if it revises its accreditation standards that pertain to a pharmacy and therapeutics committee or changes the method in which it reviews a pharmacy and therapeutics committee of an applicant.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An accrediting organization continues to be approved by the Commissioner until notified in writing by the Commissioner that its approval has been withdrawn.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 15-1618, and 15-1619, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 4, 2009 (36:9 Md. R. 654)</annotation> </annotations> </chapter> <chapter num="37" heading="Delivery of Policy or Certificate"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish time frames in which carriers are required to provide:</text> <paragraph num="A."> <text>Health insurance contracts, nonprofit health service plan contracts, health maintenance organization contracts, and dental plan organization contracts to individual contract holders and group contract holders; and</text> </paragraph> <paragraph num="B."> <text>Health insurance certificates, nonprofit health service plan certificates, health maintenance organization certificates, and dental plan organization certificates to certificate holders.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Blanket insurance” has the meaning stated in Insurance Article, §15-305, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” means any of the following:</text> <paragraph num="(a)"> <text>An insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization; and</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Certificate” or “summary plan description” means the benefit summary that sets forth the essential elements of a group contract and that is required to be provided by a carrier to individuals covered under a group contract.</text> </paragraph> <paragraph num="(4)"> <text>“Certificate holder” means an individual who is eligible to be covered under a group contract by reason of satisfying the eligibility requirements of the group contract, other than an individual who is covered under a group contract as the spouse, domestic partner, or dependent of the certificate holder.</text> </paragraph> <paragraph num="(5)"> <text>“Contract holder” means the entity to whom a contract is issued.</text> </paragraph> <paragraph num="(6)"> <text>“Group contract” means a health insurance contract, a nonprofit health service plan contract, a health maintenance organization contract, or a dental plan organization contract issued by a carrier to a group for the purpose of covering:</text> <paragraph num="(a)"> <text>Employees or members of the group;</text> </paragraph> <paragraph num="(b)"> <text>The dependents of employees or members of the group; or</text> </paragraph> <paragraph num="(c)"> <text>The employees, or members of the group, and the employee's, or member's dependents.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Health insurance” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Individual contract” means a health insurance contract, a nonprofit health service plan contract, a health maintenance organization contract, or a dental plan organization contract issued by a carrier to a contract holder covering:</text> <paragraph num="(a)"> <text>The contract holder;</text> </paragraph> <paragraph num="(b)"> <text>The contract holder's dependents; or</text> </paragraph> <paragraph num="(c)"> <text>The contract holder, and the contract holder's dependents.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Delivery Requirements for Contracts and Policies."> <paragraph num="A."> <text>Except as described in §B of this regulation, a carrier shall deliver an individual health insurance contract, an individual nonprofit health service plan contract, an individual health maintenance organization contract, or an individual dental plan organization contract to the contract holder within 60 days of the effective date of the contract.</text> </paragraph> <paragraph num="B."> <text>If a carrier back dates an individual health insurance contract so that the individual health insurance contract is written at a younger age, the carrier shall deliver the individual health insurance contract to the contract holder within 60 days of the later of the:</text> <paragraph num="(1)"> <text>Effective date of the individual health insurance contract; or</text> </paragraph> <paragraph num="(2)"> <text>Date the carrier approves the application for the individual health insurance contract.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier shall deliver a group or blanket health insurance contract, a group nonprofit health service plan, a group health maintenance organization contract, or a group dental plan organization contract to the contract holder within 60 days of the later of the:</text> <paragraph num="(1)"> <text>Effective date of the contract; or</text> </paragraph> <paragraph num="(2)"> <text>Date the contract holder provides all the information needed to finalize the benefits offered under the contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Delivery Requirements for Certificates."> <paragraph num="A."> <text>A carrier shall deliver a certificate under a group health insurance contract, a group nonprofit health service plan contract, a group health maintenance organization contract, or a group dental plan organization contract to the:</text> <paragraph num="(1)"> <text>Certificate holder within 60 days of the effective date of the certificate holder's coverage; or</text> </paragraph> <paragraph num="(2)"> <text>Group contract holder within 60 days of the effective date of the certificate holder's effective date of coverage, for delivery to each certificate holder.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A carrier may satisfy the requirement of §A of this regulation by making the certificate available to the certificate holder on the Internet, if:</text> <paragraph num="(1)"> <text>Written notice of the availability of the certificate on the Internet is provided to the:</text> <paragraph num="(a)"> <text>Certificate holder in writing within 60 days of the date of the certificate holder's effective date of coverage; or</text> </paragraph> <paragraph num="(b)"> <text>Group contract holder or insurance producer of record within 60 days of the effective date of the certificate holder's effective date of coverage, for the group contract holder or insurance producer of record to provide delivery to the certificate holder; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The written notice described in §B(1) of this regulation includes an option for the certificate holder to request the certificate be delivered to the certificate holder by mail.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The certificate requested under §B of this regulation shall be made available in paper form within 60 days of the receipt by the carrier of the request for the paper certificate from the certificate holder.</text> </paragraph> <paragraph num="D."> <text>If a carrier cannot comply with the requirements of §A of this regulation because the group contract holder delays providing the necessary information to the carrier to issue the certificate, the carrier's time limit to provide the certificate is extended to the shorter of:</text> <paragraph num="(1)"> <text>30 days from the date the employer group provides the information to the carrier; or</text> </paragraph> <paragraph num="(2)"> <text>120 days from the effective date of the employer group contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Compliance."> <text>Failure of a carrier to deliver a contract or certificate as provided in Regulations .03 and .04 of this chapter shall constitute:</text> <paragraph num="A."> <text>A violation of Insurance Article, §4-113, Annotated Code of Maryland, for a carrier, other than a health maintenance organization; or</text> </paragraph> <paragraph num="B."> <text>A violation of Health-General Article, §19-729, Annotated Code of Maryland, for a health maintenance organization.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-705(a)(2), and 19-729; Insurance Article, §§2-109(a)(1), 4-113, and 12-20; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 14, 2010 (37:1 Md. R. 16)</annotation> </annotations> </chapter> <chapter num="38" heading="Wellness Program Incentives"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish a limit on the value of incentives offered by carriers in wellness programs.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter applies only to the wellness programs as defined in Regulation .03 of this chapter, and Insurance Article, §27-210(h)(1), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization; or</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Wellness program” has the meaning stated in Insurance Article, §27-210(h)(1), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Incentive Permitted."> <text>A carrier may offer an incentive for participation in a wellness program if the incentive:</text> <paragraph num="A."> <text>Is reasonably related to the wellness program; and</text> </paragraph> <paragraph num="B."> <text>Does not have a value that exceeds any limit established by Regulation .05 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Value of Incentive Offered."> <text>An incentive offered for participation in a wellness program by a carrier may not have a value that exceeds $500 per year, per individual who is an insured, a subscriber, or a member.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 27-210(h)(4), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 29, 2009 (36:13 Md. R. 907)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective June 6, 2016 (43:11 Md. R. 635)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective March 8, 2010 (37:5 Md. R. 433); June 6, 2016 (43:11 Md. R. 635)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 8, 2010 (37:5 Md. R. 433); June 6, 2016 (43:11 Md. R. 635)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective June 6, 2016 (43:11 Md. R. 635)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective June 6, 2016 (43:11 Md. R. 635)</annotation> </annotations> </chapter> <chapter num="39" heading="Utilization Review of Treatment for Autism and Autism Spectrum Disorders"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter establishes the manner in which carriers and private review agents acting on behalf of carriers may apply utilization review criteria and impose documentation requirements regarding the treatment of children diagnosed with autism or autism spectrum disorders, when covered under a habilitative services benefit under a health benefit plan.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Applied behavior analysis” means the design, implementation, and evaluation of environmental modifications, using behavioral stimuli and consequences, to produce socially significant improvement in human behavior, including the use of direct observation, measurement, and functional analysis of the relationship between environment and behavior.</text> </paragraph> <paragraph num="(2)"> <text>“Behavioral health treatment” means professional counseling and treatment programs, including applied behavior analysis, that are necessary to develop, maintain, or restore, to the maximum extent practicable, the functioning of an individual.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means an insurer, a nonprofit health service plan, or a health maintenance organization.</text> </paragraph> <paragraph num="(4)"> <text>“Child” means an individual who is:</text> <paragraph num="(a)"> <text>Younger than 19 years of age; and</text> </paragraph> <paragraph num="(b)"> <text>Diagnosed with autism or autism spectrum disorder.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(6)"> <text>“Habilitative services” has the meaning stated in Insurance Article, §15-835, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Nonprofit health service plan” means a person who has received a certificate of authority from the Commissioner to act as a nonprofit health service plan in the State.</text> </paragraph> <paragraph num="(11)"> <text>“Private review agent” has the meaning stated in Insurance Article, §15-10B-01, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>Psychological Care.</text> <paragraph num="(a)"> <text>“Psychological care” means direct or consultative services provided by a psychologist licensed in the state in which the services are provided or by a social worker licensed in the state in which in which the services are provided.</text> </paragraph> <paragraph num="(b)"> <text>“Psychological care” includes psychotherapy.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Therapeutic care” means services provided by a speech-language pathologist, occupational therapist, or physical therapist licensed in the state in which the services are provided.</text> </paragraph> <paragraph num="(14)"> <text>“Utilization review” has the meaning stated in Insurance Article, §15-10B-01, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Utilization Review Criteria for Treatment of Autism and Autism Spectrum Disorders."> <paragraph num="A."> <text>The utilization review criteria of a carrier or private review agent acting on behalf of a carrier to determine medical necessity or appropriateness may not be more restrictive for habilitative services for the treatment of autism and autism spectrum disorders than the criteria listed in this regulation.</text> </paragraph> <paragraph num="B."> <text>The carrier’s criteria for habilitative services shall include criteria for behavioral health treatment, psychological care, and therapeutic care.</text> </paragraph> <paragraph num="C."> <text>Utilization review criteria of a carrier or private review agent acting on behalf of a carrier may require:</text> <paragraph num="(1)"> <text>A comprehensive evaluation of a child by the child’s primary care provider or specialty physician identifying the need for habilitative services for the treatment of autism or autism spectrum disorder;</text> </paragraph> <paragraph num="(2)"> <text>A prescription from a child’s primary care provider or specialty physician that includes specific treatment goals; and</text> </paragraph> <paragraph num="(3)"> <text>An annual review by the prescribing primary care provider or specialty physician, in consultation with the habilitative services provider, that includes:</text> <paragraph num="(a)"> <text>Documentation of benefit to the child;</text> </paragraph> <paragraph num="(b)"> <text>Identification of new or continuing treatment goals; and</text> </paragraph> <paragraph num="(c)"> <text>Development of a new or continuing treatment plan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>A carrier or private review agent acting on behalf of a carrier may not deny coverage based solely on the number of hours of habilitative services prescribed, for:</text> <paragraph num="(1)"> <text>Less than or equal to 25 hours per week in the case of a child who is at least 18 months of age and who has not reached the child’s sixth birthday, or</text> </paragraph> <paragraph num="(2)"> <text>Less than or equal to 10 hours per week in the case of a child who has reached the child’s sixth birthday and who has not reached the child’s nineteenth birthday.</text> </paragraph> <paragraph num="(3)"> <text>Notwithstanding §D(1) and (2) of this regulation, a carrier may authorize additional hours of habilitative services that are medically necessary and appropriate for the treatment of autism or autism spectrum disorders.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A carrier may limit payment for habilitative services to payment for services provided by individuals who are licensed, certified, or otherwise authorized under the Health Occupations Article or similar licensing, certification, or authorization requirements of another state or U.S. territory where the habilitative services are provided.</text> </paragraph> <paragraph num="F."> <text>Location of services.</text> <paragraph num="(1)"> <text>A carrier may not deny payment for habilitative services if a treatment goal identifies the location of the habilitative services as the child’s educational setting.</text> </paragraph> <paragraph num="(2)"> <text>Nothing in §F(1) of this regulation shall be construed to require a carrier to provide services to a child under an individualized education program or any obligation imposed on a public school by the Individuals With Disabilities Education Act, 20 U.S.C. 1400 et seq., as amended from time to time.</text> </paragraph> </paragraph> <paragraph num="G."> <text>A carrier or a private review agent acting on behalf of a carrier may not deny payment for applied behavior analysis on the basis that it is experimental or investigational.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Coverage for Habilitative Services."> <text>Coverage required under this chapter may be subject to limitations in a health benefit plan relating to coordination of benefits, participating provider requirements, restrictions on services provided by family or household members, case management provisions, and co-payments, co-insurance, and deductible amounts.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-835, Annotated Code of MarylandCh. 294, §2, Acts of 2012</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 17, 2014 (41:5 Md. R. 348)</annotation> </annotations> </chapter> <chapter num="40" heading="Child Only Policies" reason="Repealed."> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted as an emergency provision effective December 14, 2010 (38:2 Md. R. 81); adopted permanently effective March 7, 2011 (38:5 Md. R. 320)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 repealed effective June 23, 2014 (41:12 Md. R. 669)</annotation> </annotations> </chapter> <chapter num="41" heading="Assignment of Benefits to Nonpreferred Providers"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter applies to preferred provider insurance policies that are issued, renewed, or delivered by a carrier in the State on or after July 1, 2011.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Allowed amount” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Assignment of benefits” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means an insurer or nonprofit health service plan.</text> </paragraph> <paragraph num="(4)"> <text>“Covered service” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Explanation of benefits” means the document that is provided by a carrier to an insured that explains the claims paid, reduced, or denied by the carrier.</text> </paragraph> <paragraph num="(6)"> <text>“Hospital-based physician” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland and does not include an on-call physician.</text> </paragraph> <paragraph num="(7)"> <text>“Insured” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Nonpreferred provider” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Nonprofit health service plan” means a person who has a certificate of authority to operate as a nonprofit health service plan in Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“On-call physician” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Preferential basis” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Preferred provider insurance policy” means a policy or insurance contract issued or delivered in the State by a carrier under which health care services furnished by a preferred provider are paid on a preferential basis.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Assignment of Benefits — On-Call Physicians."> <paragraph num="A."> <text>A nonpreferred provider who is an on-call physician may accept an assignment of benefits under a preferred provider insurance policy.</text> </paragraph> <paragraph num="B."> <text>A nonpreferred provider who is an on-call physician and accepts an assignment of benefits under a preferred provider insurance policy shall:</text> <paragraph num="(1)"> <text>Accept the carrier’s allowed amount as payment in full for the covered services provided;</text> </paragraph> <paragraph num="(2)"> <text>Collect or attempt to collect from the insured only the monies for the items identified in Insurance Article, §14-205.2(b)(3), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Submit to the carrier the uniform claims form required by COMAR 31.10.11.03 and indicate acceptance of the assignment of benefits in box 27 of the uniform claims form to satisfy the notice requirements under Insurance Article, §14-205.2(a)(3), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(4)"> <text>Designate CPT code 99026, or its successor, on the uniform claims form.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier shall reimburse a nonpreferred provider who is an on-call physician and who has provided the information specified in §B(3) and (4) of this regulation in accordance with the provisions of Insurance Article, §14-205.2(c), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Assignment of Benefits — Hospital-Based Physicians."> <paragraph num="A."> <text>A nonpreferred provider who is a hospital-based physician may accept an assignment of benefits under a preferred provider insurance policy.</text> </paragraph> <paragraph num="B."> <text>A nonpreferred provider who is a hospital-based physician and accepts an assignment of benefits under a preferred provider insurance policy shall:</text> <paragraph num="(1)"> <text>Accept the carrier’s allowed amount as payment in full for the covered services provided;</text> </paragraph> <paragraph num="(2)"> <text>Collect or attempt to collect from the insured only the monies for the items identified in Insurance Article, §14-205.2(b)(3), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>Submit to the carrier the uniform claims form required by COMAR 31.10.11.03 and indicate acceptance of the assignment of benefits in box 27 of the uniform claims form to satisfy the notice requirements of Insurance Article, §14-205.2(a)(3), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier shall reimburse a nonpreferred provider who is a hospital-based physician and who has provided the information specified in §B(3) of this regulation in accordance with the provisions of Insurance Article, §14-205.2(d), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Assignment of Benefits — Nonpreferred Providers."> <paragraph num="A."> <text>This regulation applies to carriers who receive claims for services provided by physicians who are nonpreferred providers but are not on-call physicians or hospital-based physicians.</text> </paragraph> <paragraph num="B."> <text>A carrier shall permit a nonpreferred provider described in §A of this regulation to accept an assignment of benefits under a preferred provider insurance policy offered by the carrier.</text> </paragraph> <paragraph num="C."> <text>Except as provided in Insurance Article, §14-205.3(g), Annotated Code of Maryland, a carrier that receives a claim for services provided by a nonpreferred provider described in §A of this regulation who accepts an assignment of benefits under a preferred provider insurance policy shall pay the nonpreferred provider directly if the nonpreferred provider:</text> <paragraph num="(1)"> <text>Provides a copy of the disclosure set forth in Regulation .06 of this chapter to an insured before performing a health care service for the insured; and</text> </paragraph> <paragraph num="(2)"> <text>Submits a copy of the signed disclosure set forth in Regulation .06 of this chapter to the carrier.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Required Disclosure for Nonpreferred Providers Seeking Assignment of Benefits."> <paragraph num="A."> <text>Except for a nonpreferred provider who is an on-call physician or a hospital-based physician, a nonpreferred provider who is a physician shall provide a copy of the disclosure set forth in §B of this regulation to each insured before performing a health care service for the insured in order to qualify for an assignment of benefits under a preferred provider insurance policy.</text> </paragraph> <paragraph num="B."> <text>The disclosure text required by §A of this regulation shall be printed in at least 12 point type and shall read as follows:</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Notice to Insureds by Carriers."> <paragraph num="A."> <text>A carrier shall provide the information listed in §B of this regulation with the payment to the insured for health care services if:</text> <paragraph num="(1)"> <text>The carrier receives a claim for health care services provided by a physician who is a nonpreferred provider and who is not an on-call physician or a hospital-based physician; and</text> </paragraph> <paragraph num="(2)"> <text>The insured did not provide an assignment of benefits to the physician who provided the health care services.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The information required by §A of this regulation shall include:</text> <paragraph num="(1)"> <text>The specific claim covered by the payment;</text> </paragraph> <paragraph num="(2)"> <text>The amount paid for the claim;</text> </paragraph> <paragraph num="(3)"> <text>The amount that is the insured’s responsibility; and</text> </paragraph> <paragraph num="(4)"> <text>A statement instructing the insured to use the payment to pay the nonpreferred provider in the event the insured has not paid the nonpreferred provider in full for the health care services rendered by the nonpreferred provider.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the payment for a claim is sent to the insured by the carrier with an explanation of benefits, the carrier shall include the information required to be provided under §§A and B of this regulation on the explanation of benefits or on a separate page included with the explanation of benefits.</text> </paragraph> <paragraph num="D."> <text>If the payment for a claim is sent to the insured by the carrier separately from the explanation of benefits, the carrier shall include the information required under §§A and B of this regulation with the payment of claim.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 14-205.2, and 14-205.3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 19, 2011 (38:19 Md. R. 1148)</annotation> </annotations> </chapter> <chapter num="42" heading="Continuity of Health Care Notice"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to each:</text> <paragraph num="A."> <text>Receiving carrier that issues or delivers individual or group health benefit plans in Maryland; and</text> </paragraph> <paragraph num="B."> <text>Receiving managed care organization that enrolls Program recipients in Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer authorized to sell health insurance;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization; or</text> </paragraph> <paragraph num="(e)"> <text>Any other entity providing a plan of health insurance, health benefits, or health services authorized under the Insurance Article of the Annotated Code of Maryland or the Affordable Care Act.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Enrollee” means a:</text> <paragraph num="(a)"> <text>Person entitled to health care benefits from a carrier; or</text> </paragraph> <paragraph num="(b)"> <text>Program recipient who is enrolled in a managed care organization.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-140, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Managed care organization” means:</text> <paragraph num="(a)"> <text>A certified health maintenance organization that is authorized to receive medical assistance prepaid capitation payments;</text> </paragraph> <paragraph num="(b)"> <text>A corporation that:</text> <paragraph num="(i)"> <text>Is a managed care system that is authorized to receive medical assistance prepaid capitation payments;</text> </paragraph> <paragraph num="(ii)"> <text>Enrolls only Program recipients or individuals or families served under the Maryland Children’s Health Program; and</text> </paragraph> <paragraph num="(iii)"> <text>Is subject to the requirements of Health-General Article, §15-102.4, Annotated Code of Maryland.; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A prepaid dental plan that receives fees to manage dental services.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Program recipient” means an individual who receives benefits under the Maryland Medical Assistance Program.</text> </paragraph> <paragraph num="(6)"> <text>“Receiving carrier” means the carrier that issues the new health benefit plan when an enrollee transitions from another carrier or a managed care organization.</text> </paragraph> <paragraph num="(7)"> <text>“Receiving managed care organization” means the managed care organization that accepts the enrollee when the enrollee transitions from another managed care organization or a carrier.</text> </paragraph> <paragraph num="(8)"> <text>“Relinquishing carrier” means a carrier that issued the prior health benefit plan when an enrollee transitions to a new carrier or a managed care organization.</text> </paragraph> <paragraph num="(9)"> <text>“Relinquishing managed care organization” means a managed care organization in which an enrollee had been enrolled prior to the enrollee’s transition to a new managed care organization or a carrier.</text> </paragraph> <paragraph num="(10)"> <text>“Transitioning enrollee” means an enrollee:</text> <paragraph num="(a)"> <text>Who has an effective date of coverage with a receiving carrier or a receiving managed care organization on or after January 1, 2015, under a contract that is issued or renewed on or after January 1, 2015; and</text> </paragraph> <paragraph num="(b)"> <text>Whose coverage under the receiving carrier or receiving managed care organization began within 1 month of the date coverage terminated under the:</text> <paragraph num="(i)"> <text>Health benefit plan with a relinquishing carrier; or</text> </paragraph> <paragraph num="(ii)"> <text>Relinquishing managed care organization.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Requirement to Provide Continuity of Health Care Notice."> <paragraph num="A."> <text>A receiving carrier shall send a transitioning enrollee the Continuity of Health Care Notice set forth in Regulation .04A of this chapter:</text> <paragraph num="(1)"> <text>Except as provided in §A(2) of this regulation, within 30 days of the enrollee’s effective date of coverage; and</text> </paragraph> <paragraph num="(2)"> <text>If the enrollee’s coverage is made effective retroactively, within 30 days of the date the receiving carrier is notified of the enrollment.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A receiving managed care organization shall send a transitioning enrollee the Continuity of Health Care Notice set forth in Regulation .04B of this chapter:</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, within 30 days of the enrollee’s effective date of coverage; and</text> </paragraph> <paragraph num="(2)"> <text>If the enrollee’s coverage is made effective retroactively, within 30 days of the date the receiving managed care organization is notified of the enrollment.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Continuity of Health Care Notices shall be in the language and format described in Regulation .04 of this chapter in not less than 12-point type.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Continuity of Health Care Notice."> <paragraph num="A."> <text>The following form is to be used by receiving carriers as the Continuity of Health Care Notice required by Regulation .03A of this chapter.</text> </paragraph> <paragraph num="B."> <text>The following form is to be used by receiving managed care organizations as the Continuity of Health Care Notice required by Regulation .03B of this chapter.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1), 15-140, and 15-10D-01, Annotated Code of Maryland and Ch. 159, §3, Acts of 2013</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted as an emergency provision effective January 1, 2015 (42:1 Md. R. 16); adopted permanently effective April 27, 2015 (42:8 Md. R. 608)</annotation> </annotations> </chapter> <chapter num="43" heading="Medical Stop-Loss Insurance Disclosure"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to carriers that sell medical stop-loss insurance to small employers in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means an insurer or nonprofit health service plan that sells medical stop loss insurance in Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Medical stop-loss insurance” has the meaning stated in Insurance Article, §15-129, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Medical stop-loss insurance disclosure form” means the form shown in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>“Small employer” has the meaning stated in Insurance Article, §31-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Rules for Providing the Medical Stop-Loss Insurance Disclosure Form."> <paragraph num="A."> <text>Before entering into a policy or contract of medical stop-loss insurance with a small employer, a carrier shall provide the small employer a completed medical stop-loss insurance disclosure form.</text> </paragraph> <paragraph num="B."> <text>When determining whether an employer satisfies the definition of a small employer, the carrier shall base the determination on the definition that applies on the proposed effective date of the medical stop-loss insurance policy or contract.</text> </paragraph> <paragraph num="C."> <text>The medical stop-loss insurance disclosure form shall be printed in at least 12-point type.</text> </paragraph> <paragraph num="D."> <text>The portion of the medical stop-loss insurance disclosure form that requires a listing of any limitations in the medical stop-loss insurance policy or contract is required to include any:</text> <paragraph num="(1)"> <text>Dollar limitations in the medical stop-loss insurance policy or contract, such as annual limitations;</text> </paragraph> <paragraph num="(2)"> <text>Day or visit limits on the services covered under the medical stop-loss insurance policy or contract;</text> </paragraph> <paragraph num="(3)"> <text>Limitations or exclusions that apply to benefits covered under the medical stop-loss insurance policy or contract, such as:</text> <paragraph num="(a)"> <text>Pre-existing condition exclusions;</text> </paragraph> <paragraph num="(b)"> <text>Exclusions or limitations for particular services, such as an exclusion or limitation for prescription drugs or mental health services;</text> </paragraph> <paragraph num="(c)"> <text>Exclusions or limitations for particular medical conditions, such as AIDS;</text> </paragraph> <paragraph num="(d)"> <text>Limitations or exclusions for non-medically necessary services; and</text> </paragraph> <paragraph num="(e)"> <text>Limitations or exclusions for experimental or investigational services; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Different attachment points for any particular service, such as organ transplants.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Medical Stop-Loss Insurance Disclosure Form."> <text>The medical stop-loss insurance disclosure form shall read as follows:</text> <text>FORM AT END OF CHAPTER</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-129(f)(3), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.04 adopted effective January 1, 2016 (42:23 Md. R. 1436)</annotation> </annotations> </chapter> <chapter num="44" heading="Network Adequacy"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to carriers that issue or renew health benefit plans in Maryland and use a provider panel for a health benefit plan offered in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Access plan” means the materials that each carrier is required to file annually with the Commissioner to demonstrate that each of the carrier’s provider panels is adequate to meet the needs of its enrollees.</text> </paragraph> <paragraph num="(2)"> <text>“Ambulatory infusion therapy center” means any location authorized to administer chemotherapy or infusion services on an outpatient basis.</text> </paragraph> <paragraph num="(3)"> <text>“Behavioral health care” means care for mental health or a substance use disorder.</text> </paragraph> <paragraph num="(4)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer authorized to sell health insurance;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Certified registered nurse practitioner” means an individual who is licensed as a certified nurse practitioner under Health Occupations Article, Title 8, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Continuing care patient” means an individual who, with respect to a provider or facility:</text> <paragraph num="(a)"> <text>Is undergoing a course of treatment for a serious and complex condition from the provider or facility;</text> </paragraph> <paragraph num="(b)"> <text>Is undergoing a course of institutional or inpatient care from the provider or facility;</text> </paragraph> <paragraph num="(c)"> <text>Is scheduled to undergo nonelective surgery from the provider or facility, including receipt of postoperative care from such provider or facility with respect to such a surgery;</text> </paragraph> <paragraph num="(d)"> <text>Is pregnant and undergoing a course of treatment for the pregnancy from the provider or facility; or</text> </paragraph> <paragraph num="(e)"> <text>Is or was determined to be terminally ill, as determined under Section 1861(dd)(3)(A) of the Social Security Act, and is receiving treatment for such illness from such provider or facility</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Enrollee” means a person entitled to health care benefits from a carrier under a policy or contract subject to Maryland law.</text> </paragraph> <paragraph num="(8)"> <text>“Essential community provider” means a provider that serves predominantly low-income or medically underserved individuals. “Essential community provider” includes:</text> <paragraph num="(a)"> <text>Local health departments;</text> </paragraph> <paragraph num="(b)"> <text>Outpatient mental health and community based substance use disorder programs;</text> </paragraph> <paragraph num="(c)"> <text>Any entity listed in 45 CFR §156.235(c);and</text> </paragraph> <paragraph num="(d)"> <text>School-based health centers.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Group model HMO” means a type of health maintenance organization that:</text> <paragraph num="(a)"> <text>Contracts with one multispecialty group of physicians who are employed by and shareholders of the multispecialty group; and</text> </paragraph> <paragraph num="(b)"> <text>Provides or arranges for the provision of physician and other health care services to patients at medical facilities operated by the HMO or employs its own physicians and other providers on a salaried basis in health maintenance organization buildings to provide care to enrollees of the health maintenance organization.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-112, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Health care facility” has the meaning stated in Insurance Article, §15-112, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Health professional shortage area” means those geographic areas in Maryland which have been designated by the Health Resources and Services Administration as such, as a result of having a shortage of primary medical care or behavioral health providers.</text> </paragraph> <paragraph num="(13)"> <text>“HEDIS” means the Healthcare Effectiveness Data and Information Set of standardized performance measures, developed and used by the National Committee for Quality Assurance, to evaluate managed care health plan performance for care and services provided.</text> </paragraph> <paragraph num="(14)"> <text>“Hospital” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Hospital-based physician” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Material change to an access plan” means a change to an access plan that affects a carrier’s ability to comply with the requirements of this chapter.</text> </paragraph> <paragraph num="(17)"> <text>“Network” means:</text> <paragraph num="(a)"> <text>A carrier’s participating providers and the health care facilities with which a carrier contracts to provide health care services to the carrier’s enrollees under the carrier’s health benefit plan.</text> </paragraph> <paragraph num="(b)"> <text>If a carrier uses a provider panel developed by a subcontracting entity, “network” includes providers and health care facilities that contract with the subcontracting entity to provide health care services to the carrier’s enrollees under the carrier’s health benefit plan.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Network adequacy waiver” means the Commissioner’s decision to relieve a carrier of the obligation to comply with certain network adequacy standards in this chapter for 1 year.</text> </paragraph> <paragraph num="(19)"> <text>“On-call physician” has the meaning stated in Insurance Article, §14-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“Opioid treatment services provider” means a program with a valid and current accreditation-based license under COMAR 10.63 to provide community-based behavioral health services, and authorized to provide opioid treatment services.</text> </paragraph> <paragraph num="(21)"> <text>“Participating provider” means a provider on a carrier’s provider panel.</text> </paragraph> <paragraph num="(22)"> <text>“Preventive care” means health care provided for the prevention and early detection of disease, illness, injury or other health condition, and includes all of the services required by 42 U.S.C. §300gg-13.</text> </paragraph> <paragraph num="(23)"> <text>“Primary care provider” means:</text> <paragraph num="(a)"> <text>A provider who is responsible for:</text> <paragraph num="(i)"> <text>Providing initial and primary care to patients;</text> </paragraph> <paragraph num="(ii)"> <text>Maintaining the continuity of patient care; or</text> </paragraph> <paragraph num="(iii)"> <text>Initiating referrals for specialist care.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Primary care provider” includes:</text> <paragraph num="(i)"> <text>A physician whose practice of medicine is limited to general practice; and</text> </paragraph> <paragraph num="(ii)"> <text>A board-certified or board-eligible internist, pediatrician, obstetrician-gynecologist or family practitioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(24)"> <text>“Provider” means a person or group of persons licensed, certified, or otherwise authorized by law to provide health care services.</text> </paragraph> <paragraph num="(25)"> <text>“Provider panel” means the providers that contract either directly or through a subcontracting entity with a carrier to provide health care services to the carrier’s enrollees under the carrier’s health benefit plan. “Provider panel” does not include an arrangement in which any provider may participate solely by contracting with the carrier to provide health care services at a discounted fee-for-service rate.</text> </paragraph> <paragraph num="(26)"> <text>“Residential crisis services” has the meaning stated in Insurance Article, §15-840, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(27)"> <text>“Road travel distance” means:</text> <paragraph num="(a)"> <text>Actual driving distance measured between two geographic locations based on turn-by-turn directions along public roads; or</text> </paragraph> <paragraph num="(b)"> <text>Subject to approval by the Commissioner, driving distance between two geographic locations estimated using a methodology that, in the discretion of the Commissioner, sufficiently accounts for significant geographic barriers that are impassable by automobile, such as the Chesapeake Bay.</text> </paragraph> </paragraph> <paragraph num="(28)"> <text>“Rural area” means a zip code that, according to the Maryland Department of Planning, has a human population of less than 1,000 per square mile.</text> </paragraph> <paragraph num="(29)"> <text>“School-based health center” means a community health resource described in Health-General Article, §19-2101, Annotated Code of Maryland that is located within an elementary, middle, or high school and approved by the Maryland Department of Health.</text> </paragraph> <paragraph num="(30)"> <text>“Specialty provider” means a provider who:</text> <paragraph num="(a)"> <text>Focuses on a specific area of physical care or behavioral health care for a group of patients;</text> </paragraph> <paragraph num="(b)"> <text>Has successfully completed required professional training; and</text> </paragraph> <paragraph num="(c)"> <text>For a physician, has obtained Board certification or is Board eligible through the American Board of Medical Specialties.</text> </paragraph> </paragraph> <paragraph num="(31)"> <text>“Suburban area” means a zip code that, according to the Maryland Department of Planning, has a human population equal to or more than 1,000 per square mile, but less than 3,000 per square mile.</text> </paragraph> <paragraph num="(32)"> <text>“Telehealth” has the meaning stated in Insurance Article, §15-139, Annotated Code of Maryland.,</text> </paragraph> <paragraph num="(33)"> <text>“Urban area” means a zip code that, according to the Maryland Department of Planning, has a human population equal to or greater than 3,000 per square mile.</text> </paragraph> <paragraph num="(34)"> <text>“Urgent care” means the treatment for a condition of an enrollee that satisfies either of the following:</text> <paragraph num="(a)"> <text>A medical condition, including a physical condition or a behavioral health condition, that, in the absence of medical care or treatment within 72 hours, could reasonably be expected by an individual, acting on behalf of a carrier and applying the judgment of a prudent layperson who possesses an average knowledge of health and medicine, would result in:</text> <paragraph num="(i)"> <text>Placing the enrollee’s life or health in serious jeopardy;</text> </paragraph> <paragraph num="(ii)"> <text>The inability of the enrollee to regain maximum function;</text> </paragraph> <paragraph num="(iii)"> <text>Serious impairment to the enrollee’s bodily function;</text> </paragraph> <paragraph num="(iv)"> <text>Serious dysfunction of any bodily organ or part of the enrollee; or</text> </paragraph> <paragraph num="(v)"> <text>The enrollee remaining seriously ill with behavioral health symptoms that cause the enrollee to be a danger to self or others; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A medical condition of an enrollee, including a physical condition or a behavioral health condition, that, in the absence of medical care or treatment within 72 hours, would, in the opinion of a provider with knowledge of the enrollee’s medical condition, subject the enrollee to severe pain that cannot be adequately managed without the care or treatment.</text> </paragraph> </paragraph> <paragraph num="(35)"> <text>“Waiting time” means the time from the initial request for health care services by an enrollee or by the enrollee’s treating provider to the earliest date offered for the appointment for services with a provider possessing the appropriate skill and expertise to treat the condition.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Network Adequacy Standards."> <paragraph num="A."> <text>Sufficiency Standards.</text> <paragraph num="(1)"> <text>A carrier shall develop and maintain a network of providers in sufficient numbers, geographic locations, and practicing specialties to ensure enrollees have access to participating providers for the full scope of benefits and services covered under the carrier’s health benefit plan.</text> </paragraph> <paragraph num="(2)"> <text>A carrier shall establish written policies and procedures to implement a process for addressing network deficiencies that result in an enrollee lacking access to any providers with the professional training and expertise necessary to deliver a covered service without unreasonable travel or delay.</text> </paragraph> <paragraph num="(3)"> <text>A carrier shall clearly define and specify referral requirements, if any, to specialty and other providers.</text> </paragraph> <paragraph num="(4)"> <text>A carrier shall take reasonable steps to ensure that participating providers provide physical access, reasonable accommodations, and accessible equipment for enrollees with physical or mental disabilities.</text> </paragraph> <paragraph num="(5)"> <text>A carrier’s written policies and procedures to monitor availability of services shall include how the carrier will monitor the availability of services for:</text> <paragraph num="(a)"> <text>Continuing care patients;</text> </paragraph> <paragraph num="(b)"> <text>Individuals with physical or mental disabilities, including individuals who have disabilities that limit their physical ability to access services; and</text> </paragraph> <paragraph num="(c)"> <text>Individuals with limited English proficiency, including diverse cultural and ethnic backgrounds.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A carrier shall take reasonable steps to ensure services are delivered in a culturally competent manner to all enrollees, including enrollees:</text> <paragraph num="(a)"> <text>With limited English proficiency;</text> </paragraph> <paragraph num="(b)"> <text>With diverse cultural, racial, and ethnic backgrounds; and</text> </paragraph> <paragraph num="(c)"> <text>Of all genders, sexual orientations, and gender identities.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>A carrier must have the ability to identify, by county and for the City of Baltimore, the number of participating providers for each facility type listed in the charts in Regulation .05A(5) and B(5) of this chapter and each provider type code and specialty code listed on the uniform credentialing form described in Insurance Article, §15-112.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>The identification of the number of participating providers described in §A(7) of this regulation:</text> <paragraph num="(a)"> <text>Shall include either:</text> <paragraph num="(i)"> <text>All participating providers who were credentialed for a specific provider type or specialty code listed in the uniform credentialing form described in Insurance Article, §15-112.1, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(ii)"> <text>All participating providers who reported a specific provider type or specialty code when completing the uniform credentialing form described in Insurance Article, §15-112.1, Annotated Code of Maryland; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>May include additional participating providers identified by the carrier through other documented means.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>A carrier shall retain copies of its policies and procedures required by this chapter for a period of 3 years following the date the policies and procedures were last effective.</text> </paragraph> <paragraph num="(10)"> <text>At the request of the Commissioner, a carrier shall file with the Commissioner a copy of its current and retained past policies and procedures required by this chapter. A carrier may request a finding by the Commissioner that its policies and procedures are considered confidential commercial information.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Monitoring Sufficiency Standards.</text> <paragraph num="(1)"> <text>A carrier shall continuously monitor its provider network for compliance with this chapter and shall conduct internal compliance audits for the standards listed in Regulations .05, .06, and .07 of this chapter on at least a quarterly basis; and</text> </paragraph> <paragraph num="(2)"> <text>A carrier shall continuously verify and update its network directory consistent with Insurance Article, §15-112, Annotated Code of Maryland and §2799A-5of the Public Health Service Act, enacted by 116 of the federal No Surprises Act.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Filing and Content of Access Plan."> <paragraph num="A."> <text>Using the instructions on the Maryland Insurance Administration's website for submission method and to determine rural, suburban, and urban zip code areas, each carrier subject to this chapter shall file an annual access plan with the Commissioner on or before July 1 of each year for each provider panel used by the carrier, with the first access plan filing due on or before July 1, 2018.</text> </paragraph> <paragraph num="B."> <text>If a carrier makes a material change to an access plan, the carrier shall:</text> <paragraph num="(1)"> <text>Notify the Commissioner of the change in writing within 15 business days after the material change to the access plan occurs; and</text> </paragraph> <paragraph num="(2)"> <text>Include in the notice required under §B(1) of this regulation a reasonable timeframe within which the carrier will file with the Commissioner an update to the existing access plan for review by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each annual access plan filed with the Commissioner shall include the following information in the standardized format described on the Maryland Insurance Administration’s website:</text> <paragraph num="(1)"> <text>An executive summary in the form set forth in Regulation .11 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The information and process required by Insurance Article, §15-112(c)(4), Annotated Code of Maryland, and the methods used by the carrier to comply with the monitoring requirement under §15-112(c)(5);</text> </paragraph> <paragraph num="(3)"> <text>A description of out-of-network claims received by the carrier in the prior calendar year, which shall include:</text> <paragraph num="(a)"> <text>The percentage of total claims received that are out-of-network claims;</text> </paragraph> <paragraph num="(b)"> <text>The percentage of out-of-network claims received that are paid;</text> </paragraph> <paragraph num="(c)"> <text>The percentage of claims described in §C(3)(a) and (b) of this regulation that the carrier identifies as claims for emergency services, on-call physicians, or hospital-based physicians;</text> </paragraph> <paragraph num="(d)"> <text>The percentage of total claims received that are out-of-network claims for:</text> <paragraph num="(i)"> <text>Subject to §G of this regulation, all enrollees with a residence in a zip code where less than 100 percent of enrollees have access to a provider within the applicable travel distance standard in Regulation .05 of this chapter for the provider type in the claim, listed by provider type for each of the rural, suburban, and urban areas;</text> </paragraph> <paragraph num="(ii)"> <text>Subject to §G of this regulation, the ten provider types with the highest number of out-of-network claims for enrollees with a residence in each of the rural, suburban, and urban areas, listed by provider type and geographic area; and</text> </paragraph> <paragraph num="(iii)"> <text>Subject to §G of this regulation, the ten provider types with the highest percentage of total claims that are out-of-network claims for enrollees with a residence in each of the rural, suburban, and urban areas, listed by provider type and geographic area;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>For each provider type and geographic area described in §C(3)(d) of this regulation, the following information regarding requests to obtain a referral to an out-of-network provider in accordance with Insurance Article, §15-830, Annotated Code of Maryland:</text> <paragraph num="(i)"> <text>The number of referral requests received;</text> </paragraph> <paragraph num="(ii)"> <text>The number of referral requests granted;</text> </paragraph> <paragraph num="(iii)"> <text>The percentage of out-of-network claims received for which a referral was requested;</text> </paragraph> <paragraph num="(iv)"> <text>The percentage of out-of-network claims received for which a referral was granted;</text> </paragraph> <paragraph num="(v)"> <text>The number of single case agreements requested between the carrier and an out-of-network provider;</text> </paragraph> <paragraph num="(vi)"> <text>The number of single case agreements entered between the carrier and an out-of-network provider;</text> </paragraph> <paragraph num="(vii)"> <text>The percentage of out-of-network claims received for which a single case agreement was requested between the carrier and an out-of-network provider; and</text> </paragraph> <paragraph num="(viii)"> <text>The percentage of out-of-network claims received for which a single case agreement was entered between the carrier and an out-of-network provider; and</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Any additional information deemed necessary by the carrier to provide context for the information described in §C(3)(a)—(e) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A description of complaints received by the carrier in the prior calendar year relating to access to or availability of providers, which shall include:</text> <paragraph num="(a)"> <text>The total number of complaints made by enrollees relating to the waiting time or distance of participating providers;</text> </paragraph> <paragraph num="(b)"> <text>The total number of complaints made by providers, whether or not under contract, relating to the waiting time or distance of participating providers;</text> </paragraph> <paragraph num="(c)"> <text>The total number of complaints relating to the accuracy of the network directory;</text> </paragraph> <paragraph num="(d)"> <text>The total number of complaints relating to the dollar amount of reimbursement for out-of-network claims, including balance billing; and</text> </paragraph> <paragraph num="(e)"> <text>The percentage of complaints described in §C(4)(d) of this regulation that are for claims subject to the federal No Surprises Act;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A description of the carrier’s procedures, including training of customer service representatives, detailing how claims will be handled when participating providers are not available and an enrollee obtains health care services pursuant to Insurance Article, §15-830, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(6)"> <text>A description of the procedures that the carrier will utilize to assist enrollees in obtaining medically necessary services when no participating provider is available without unreasonable travel or delay, including procedures to coordinate care and to limit the likelihood of costs to the enrollee that exceed the amount that would have been incurred had the health care services been provided by a participating provider;</text> </paragraph> <paragraph num="(7)"> <text>A description of whether the carrier’s provider contracts require health care providers to engage in appointment management, including procedures related to:</text> <paragraph num="(a)"> <text>No show policies;</text> </paragraph> <paragraph num="(b)"> <text>Patient appointment confirmation;</text> </paragraph> <paragraph num="(c)"> <text>Same day appointment slotting;</text> </paragraph> <paragraph num="(d)"> <text>Patient portals;</text> </paragraph> <paragraph num="(e)"> <text>Access to a provider performance dashboard to monitor appointment lag time, no show rate, bump rate (health care provider initiated cancelation of a scheduled appointment), and new patient appointments; and</text> </paragraph> <paragraph num="(f)"> <text>Weekly polling programs of providers to check for appointment availability;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>An indication of whether the network directory is searchable by covered benefit, for example, hearing aid, knee surgery, or physical therapist;</text> </paragraph> <paragraph num="(9)"> <text>An indication of whether the carrier has a patient portal for enrollees to make health care appointments;</text> </paragraph> <paragraph num="(10)"> <text>A description of whether the carrier has a formal process for assisting enrollees who have been unsuccessful in using the network directory to locate an appropriate provider with the necessary skill and expertise to treat the enrollee’s condition;</text> </paragraph> <paragraph num="(11)"> <text>A description of whether and how the carrier considered the role of public transportation in addressing the needs of enrollees who do not own a personal automobile when evaluating enrollees’ access to care under the travel distance standards described in Regulation .05 of this chapter;</text> </paragraph> <paragraph num="(12)"> <text>A description of telehealth utilization as described in Regulation .08 of this chapter;</text> </paragraph> <paragraph num="(13)"> <text>Documentation justifying to the Commissioner how the access plan meets each network sufficiency standard set forth in Regulations .05 — .07 of this chapter; and</text> </paragraph> <paragraph num="(14)"> <text>A list of all changes made to the access plan filed the previous year.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The Commissioner may require a carrier to include in the annual access plan a report of the number of participating providers described in Regulation .03A(7) of this chapter for designated facility types, provider type codes, and specialty codes, if the Commissioner notifies the carrier in writing and identifies the particular facility types, provider type codes, and specialty codes that must be reported.</text> </paragraph> <paragraph num="E."> <text>The description required by Insurance Article, §15-112(c)(4)(iii), Annotated Code of Maryland shall identify whether the carrier has:</text> <paragraph num="(1)"> <text>Engaged in outreach to minority health care providers; and</text> </paragraph> <paragraph num="(2)"> <text>Offered financial incentives, such as payment towards loans previously incurred for health care provider education, to encourage health care providers to contract with the carrier.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The description required by Insurance Article, §15-112(c)(4)(iv), Annotated Code of Maryland shall include:</text> <paragraph num="(1)"> <text>The number of primary care providers who report to the carrier that they use any of the following languages in their practices:</text> <paragraph num="(a)"> <text>American Sign Language;</text> </paragraph> <paragraph num="(b)"> <text>Spanish;</text> </paragraph> <paragraph num="(c)"> <text>Korean;</text> </paragraph> <paragraph num="(d)"> <text>Chinese (Mandarin or Cantonese);</text> </paragraph> <paragraph num="(e)"> <text>Tagalog; or</text> </paragraph> <paragraph num="(f)"> <text>French;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A description of outreach efforts to recruit and retain providers from diverse cultural, racial, or ethnic backgrounds;</text> </paragraph> <paragraph num="(3)"> <text>A copy of the most recent enrollees’ language needs assessment made by or on behalf of the carrier, if one was made;</text> </paragraph> <paragraph num="(4)"> <text>A copy of the most recent demographic profile of the enrollee population made by or on behalf of the carrier, if one was made;</text> </paragraph> <paragraph num="(5)"> <text>A copy of any analysis or assessment made of provider network requirements based on an assessment of language needs or demographic profile of the enrollee population;</text> </paragraph> <paragraph num="(6)"> <text>A copy of any provider manual provisions that describe requirements for access to individuals with physical or mental disabilities; and</text> </paragraph> <paragraph num="(7)"> <text>Copies of policies and procedures designed to ensure that the provider network is sufficient to address the needs of both adult and child enrollees, including adults and children with:</text> <paragraph num="(a)"> <text>Limited English proficiency or illiteracy;</text> </paragraph> <paragraph num="(b)"> <text>Diverse cultural, racial, or ethnic backgrounds;</text> </paragraph> <paragraph num="(c)"> <text>Physical or mental disabilities; and</text> </paragraph> <paragraph num="(d)"> <text>Serious, chronic, or complex health conditions.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>For a group model HMO plan, when an enrollee’s place of employment is used instead of residence to calculate travel distance under Regulation .05B of this chapter, the data described in §C(3) of this regulation that is based on enrollee residence shall be reported based on the enrollee’s place of employment.</text> </paragraph> <paragraph num="H."> <text>The requirements found in §§C(3)—(12) and D— G of this regulation shall apply to annual access plans submitted on or after July 1, 2024.</text> </paragraph> <paragraph num="I."> <text>A carrier may file the information described in §C(3), (4), and (12) of this regulation separately from the other access plan materials described in §C of this regulation, provided the information described in §C(3), (4), and (12) of this regulation is submitted by a calendar day that shall be designated in a bulletin issued by the Commissioner at least 60 days prior to such filing date. The date by which the information described in §C(3), (4), and (12) of this regulation must be filed shall be set later in time than July 1 of the reporting year.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Travel Distance Standards."> <paragraph num="A."> <text>Sufficiency Standards.</text> <paragraph num="(1)"> <text>Standard and Methodology.</text> <paragraph num="(a)"> <text>Except as stated in §B of this regulation, each provider panel of a carrier shall have within the geographic area served by the carrier’s network or networks, sufficient primary care providers, specialty providers, mental health and substance use disorder providers, hospitals, and health care facilities to meet the maximum travel distance standards listed in the chart in §A(5) of this regulation for each type of geographic area.</text> </paragraph> <paragraph num="(b)"> <text>The distances listed in §A(5) of this regulation shall be:</text> <paragraph num="(i)"> <text>Measured from the enrollee’s place of residence to the practicing location of the provider or facility; and</text> </paragraph> <paragraph num="(ii)"> <text>Calculated based on road travel distance.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Except for those provider types excluded under §A(3) of this regulation, for each provider type and facility type included on the carrier’s provider panel, the carrier shall:</text> <paragraph num="(i)"> <text>Map the residences of all Maryland enrollees covered under health benefit plans that use the provider panel;</text> </paragraph> <paragraph num="(ii)"> <text>Calculate the road travel distance for each enrollee to the provider or facility with the closest practicing location;</text> </paragraph> <paragraph num="(iii)"> <text>For each zip code, identify the total number of enrollees residing in the zip code and the number of enrollees residing within an area where the applicable distance standard is not met;</text> </paragraph> <paragraph num="(iv)"> <text>For each zip code, calculate the percentage of enrollees residing within an area where the applicable distance standard is met;</text> </paragraph> <paragraph num="(v)"> <text>For each zip code that includes enrollees for whom the applicable travel distance standard is not met, calculate the average distance to the closest provider or facility for all enrollees residing in the zip code;</text> </paragraph> <paragraph num="(vi)"> <text>For each of the urban, rural, and suburban areas identify the total number of enrollees residing in the geographic area;</text> </paragraph> <paragraph num="(vii)"> <text>For each of the urban, rural, and suburban areas identify the total number of enrollees residing within an area where the applicable distance standard is not met; and</text> </paragraph> <paragraph num="(viii)"> <text>For each of the urban, rural, and suburban areas identify the percentage of enrollees residing within an area where the applicable distance standard is met.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Instead of independently calculating the road travel distance for each enrollee as described in §A(1)(c)(i) and (ii) of this regulation, a carrier may use a methodology that:</text> <paragraph num="(i)"> <text>Maps the practicing locations of every participating provider within the geographic area served by the carrier’s network or networks;</text> </paragraph> <paragraph num="(ii)"> <text>Identifies any geographic areas within each Maryland zip code that fall outside of the applicable distance standard based on road travel distance from the provider locations; and</text> </paragraph> <paragraph num="(iii)"> <text>Enables the carrier to accurately identify the information and perform the calculations described in §A(1)(c)(iii)-(viii) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>A carrier shall submit, as part of its documentation justifying to the Commissioner how the access plan meets the network sufficiency standards in this regulation:</text> <paragraph num="(i)"> <text>Geo-access maps for each provider type and facility type except for those excluded under §A(3) of this regulation showing the practicing locations of participating providers, and identifying either the geographic areas within each zip code where the applicable distance standard is not met, or the locations of enrollees with a residence outside the applicable distance standard;</text> </paragraph> <paragraph num="(ii)"> <text>For any facility types listed in §A(5) of this regulation that provide services for substance use disorders, the percentage of facilities on the carrier’s provider panel that provide adolescent services; and</text> </paragraph> <paragraph num="(iii)"> <text>For any facility types listed in §A(5) of this regulation that provide services for substance use disorders, the percentage of facilities on the carrier’s provider panel that provide services for alcohol treatment only, drug abuse treatment only, and alcohol and drug abuse treatment.</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>A carrier shall report each number and percentage described in §A(1)(c)(iii)—(viii) of this regulation as part of the annual access plan filing.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>When an enrollee elects to utilize a gynecologist, pediatrician, or certified registered nurse practitioner for primary care, a carrier may consider that utilization as a part of its meeting the primary care provider standards listed in §A(5) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The travel distance standards listed in §A(5) of this regulation do not apply to the following:</text> <paragraph num="(a)"> <text>Home health care;</text> </paragraph> <paragraph num="(b)"> <text>Durable medical equipment;</text> </paragraph> <paragraph num="(c)"> <text>Heart transplant programs;</text> </paragraph> <paragraph num="(d)"> <text>Heart or lung transplant programs;</text> </paragraph> <paragraph num="(e)"> <text>Kidney transplant programs;</text> </paragraph> <paragraph num="(f)"> <text>Liver transplant programs;</text> </paragraph> <paragraph num="(g)"> <text>Lung transplant programs; or</text> </paragraph> <paragraph num="(h)"> <text>Pancreas transplant programs.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>All other providers and facility types included on the carrier’s provider panel but not listed in the chart in §A(5) of this regulation, including physical therapists and licensed dietitian-nutritionist, shall individually be required to meet maximum distances standards of 15 miles for Urban Areas, 40 miles for Suburban Areas, and 90 miles for Rural Areas.</text> </paragraph> <paragraph num="(5)"> <text>Chart of Travel Distance Standards.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Group Model HMO Plans Sufficiency Standards.</text> <paragraph num="(1)"> <text>Standard and Methodology.</text> <paragraph num="(a)"> <text>Each group model HMO’s health benefit plan’s provider panel shall have within the geographic area served by the group model HMO’s network or networks, sufficient primary care providers, specialty providers, mental health and substance use disorder providers, hospitals, and health care facilities to meet the maximum travel distance standards listed in the chart in §B(5) of this regulation for each type geographic area.</text> </paragraph> <paragraph num="(b)"> <text>The distances listed in §B(5) of this regulation shall be:</text> <paragraph num="(i)"> <text>Measured from the enrollee’s place of residence or, at the option of the carrier, place of employment from which the enrollee gains eligibility for participation in the group model HMO’s health benefit plan to the practicing location of the provider or facility; and</text> </paragraph> <paragraph num="(ii)"> <text>Calculated based on road travel distance.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Except for those provider types excluded §B(3) of this regulation, for each provider type and facility type included on the group model HMO’s provider panel, the carrier shall:</text> <paragraph num="(i)"> <text>Map the residences or places of employment of all Maryland enrollees covered under health benefit plans that use the provider panel;</text> </paragraph> <paragraph num="(ii)"> <text>Calculate the road travel distance for each enrollee to the provider or facility with the closest practicing location;</text> </paragraph> <paragraph num="(iii)"> <text>For each zip code identify the total number of enrollees with a residence or place of employment in the zip code and the number of enrollees with a residence or a place of employment within an area where the applicable distance standard is not met;</text> </paragraph> <paragraph num="(iv)"> <text>For each zip code calculate the percentage of enrollees with a residence or place of employment within an area where the applicable distance standard is met;</text> </paragraph> <paragraph num="(v)"> <text>For each zip code that includes enrollees for whom the applicable travel distance standard is not met, calculate the average distance to the closest provider or facility for all enrollees with a residence or place of employment within the zip code;</text> </paragraph> <paragraph num="(vi)"> <text>For each of the urban, rural, and suburban areas identify the total number of enrollees with a residence or place of employment in the geographic area;</text> </paragraph> <paragraph num="(vii)"> <text>For each of the urban, rural, and suburban areas identify the number of enrollees with a residence or place of employment within an area where the applicable distance standard is not met; and</text> </paragraph> <paragraph num="(viii)"> <text>For each of the urban, rural, and suburban areas identify the percentage of enrollees with a residence or place of employment within an area where the applicable distance standard is met.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Instead of independently calculating the road travel distance for each enrollee as described in §B(1)(c)(i) and (ii) of this regulation, a carrier may use a methodology that:</text> <paragraph num="(i)"> <text>Maps the practicing locations of every participating provider within the geographic area served by the group model HMO’s network or networks;</text> </paragraph> <paragraph num="(ii)"> <text>Identifies any geographic areas within each Maryland zip code that fall outside of the applicable distance standard based on road travel distance from the provider locations; and</text> </paragraph> <paragraph num="(iii)"> <text>Enables the carrier to accurately identify the information and perform the calculations described in §B(1)(c)(iii)—(viii) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>When calculating the number or percentage of enrollees with a place of employment within an area or zip code under §B(1)(c)(iii)—(viii) of this regulation, the carrier shall include only those enrollees who gain eligibility for participation in the group model HMO’s health benefit plan from their place of employment.</text> </paragraph> <paragraph num="(f)"> <text>A carrier shall submit, as part of its documentation justifying to the Commissioner how the access plan meets the network sufficiency standards in this regulation:</text> <paragraph num="(i)"> <text>Geo-access maps for each provider type and facility type except for those excluded under §B(3) of this regulation showing the practicing locations of participating providers, and identifying either the geographic areas within each zip code where the applicable distance standard is not met, or the locations of enrollees with a residence or place of employment outside the applicable distance standard;</text> </paragraph> <paragraph num="(ii)"> <text>For any facility types listed in §B(5) of this regulation that provide services for substance use disorders, the percentage of facilities on the carrier’s provider panel that provide adolescent services; and</text> </paragraph> <paragraph num="(iii)"> <text>For any facility types listed in §B(5) of this regulation that provide services for substance use disorders, the percentage of facilities on the carrier’s provider panel that provide services for alcohol treatment only, drug abuse treatment only, and alcohol and drug abuse treatment.</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>A carrier shall report each number and percentage described in §B(1)(c)(iii)—(viii) of this regulation as part of the annual access plan filing.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>When an enrollee elects to utilize a gynecologist, pediatrician, or certified registered nurse practitioner for primary care, a carrier may consider that utilization as a part of its meeting the primary care provider standards listed in §B(5) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The travel distance standards listed in §B(5) of this regulation do not apply to the following:</text> <paragraph num="(a)"> <text>Home health care;</text> </paragraph> <paragraph num="(b)"> <text>Durable medical equipment;</text> </paragraph> <paragraph num="(c)"> <text>Heart transplant programs;</text> </paragraph> <paragraph num="(d)"> <text>Heart or lung transplant programs;</text> </paragraph> <paragraph num="(e)"> <text>Kidney transplant programs;</text> </paragraph> <paragraph num="(f)"> <text>Liver transplant programs;</text> </paragraph> <paragraph num="(g)"> <text>Lung transplant programs; or</text> </paragraph> <paragraph num="(h)"> <text>Pancreas transplant programs.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>All other provider and facility types included on the carrier’s provider panel, but not listed in the chart at §B(5) of this regulation, including physical therapists and licensed dietitian-nutritionist, shall individually be required to meet maximum distances standards of 20 miles for Urban Areas, 40 miles for Suburban Areas, and 90 miles for Rural Areas.</text> </paragraph> <paragraph num="(5)"> <text>Chart of Travel Distance Standards.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Essential Community Providers.</text> <paragraph num="(1)"> <text>Each provider panel of a carrier, that is not a group model HMO provider panel, shall include:</text> <paragraph num="(a)"> <text>At least 30 percent of the available essential community providers providing medical services in each of the urban, rural, and suburban areas;</text> </paragraph> <paragraph num="(b)"> <text>At least 30 percent of the available essential community providers providing mental health services in each of the urban, rural, and suburban areas; and</text> </paragraph> <paragraph num="(c)"> <text>At least 30 percent of the available essential community providers providing substance use disorder services in each of the urban, rural, and suburban areas.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Methodology for calculating essential community provider inclusion standard.</text> <paragraph num="(a)"> <text>Except as provided in §§C(2)(b) and (c) of this regulation, a carrier shall use the MHBE ECP Network Inclusion Calculation Methodology that is described in the Instructions on Meeting the Essential Community Provider Plan Certification Standard guidance provided by the Maryland Health Benefit Exchange, which is current as of the date 3 months prior to the due date of the annual access plan.</text> </paragraph> <paragraph num="(b)"> <text>The calculation described in §C(2)(a) of this regulation shall be performed separately for essential community providers providing medical services, mental health services, and substance use disorder services in each of the urban, rural, and suburban areas.</text> </paragraph> <paragraph num="(c)"> <text>If the Maryland Health Benefit Exchange changes the MHBE ECP Network Inclusion Calculation Methodology after the effective date of this regulation, a carrier may not use the revised methodology to calculate the essential community provider inclusion standard in §C(1) of this regulation unless the Commissioner has approved the revised methodology for this purpose.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Each group model HMO plan shall demonstrate that its own providers located in Health Professional Shortage Areas or low-income zip codes within its service area perform at or above the 50th percentile on the following two HEDIS measures:</text> <paragraph num="(a)"> <text>Initiation and Engagement of Alcohol and Other Drug Abuse or Dependence Treatment; and</text> </paragraph> <paragraph num="(b)"> <text>Utilization of the PHQ-9 to Monitor Depression Symptoms for Adolescents and Adults.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Each group model HMO plan shall demonstrate that it has alternative standards for addressing the needs of low income, medically underserved individuals. One manner in which a group model HMO may demonstrate this is by providing the Maryland Insurance Administration with its narrative or alternate standard justification to the essential community provider requirement, which was submitted to and accepted by the Maryland Health Benefit Exchange for certification as a qualified health planstandards of practice as determined by the treating provider acting within the scope of the provider’s license, certification, or other authorization.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Appointment Waiting Time Standards."> <paragraph num="A."> <text>Network Capacity.</text> <paragraph num="(1)"> <text>Each carrier shall create and utilize written policies and procedures to monitor the availability of services.</text> </paragraph> <paragraph num="(2)"> <text>On a semiannual basis, each carrier shall make available to its enrollees the median waiting times to obtain the following in-person appointments with a participating provider as measured from the date of the initial request to the date of the earliest available in-person appointment:</text> <paragraph num="(a)"> <text>Urgent care for medical services;</text> </paragraph> <paragraph num="(b)"> <text>Inpatient urgent care for mental health services;</text> </paragraph> <paragraph num="(c)"> <text>Inpatient urgent care for substance use disorder services;</text> </paragraph> <paragraph num="(d)"> <text>Outpatient urgent care for mental health services;</text> </paragraph> <paragraph num="(e)"> <text>Outpatient urgent care for substance use disorder services;</text> </paragraph> <paragraph num="(f)"> <text>Routine primary care;</text> </paragraph> <paragraph num="(g)"> <text>Preventive care/well visits;</text> </paragraph> <paragraph num="(h)"> <text>Non-urgent specialty care;</text> </paragraph> <paragraph num="(i)"> <text>Non-urgent mental health care; and</text> </paragraph> <paragraph num="(j)"> <text>Non-urgent substance use disorder care.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>To calculate the median waiting times for the appointments described in §A(2) of this regulation, a carrier shall:</text> <paragraph num="(a)"> <text>Make direct contact with a random selection of provider offices qualified to provide the services for each of the appointment types listed in §A(2) of this regulation to ask for next available in-person appointments; and</text> </paragraph> <paragraph num="(b)"> <text>Retain documentation of the efforts described in §A(3)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The minimum sample size for the random selection of provider offices described in §A(3)(a) of this regulation shall be equivalent to the lesser of:</text> <paragraph num="(a)"> <text>Fifty percent of the participating providers qualified to provide the services for each of the appointment types listed in §A(2) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>One hundred provider offices.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The Commissioner may conduct a centralized survey to measure waiting time, by carrier, for each appointment type listed in §A(2) of this regulation.</text> <paragraph num="(a)"> <text>The survey described in §A(5) of this regulation shall utilize a statistically reliable and valid methodology that includes making direct contact with a random selection of participating providers for each carrier who are qualified to provide the services for each of the appointment types listed in §A(2) of this regulation to ask for next available appointments.</text> </paragraph> <paragraph num="(b)"> <text>The Commissioner may:</text> <paragraph num="(i)"> <text>Contract with a vendor to conduct the survey; and</text> </paragraph> <paragraph num="(ii)"> <text>Charge a carrier a reasonable fee to cover the costs of the survey.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The Commissioner shall publish the methodology used to conduct the survey on the Maryland Insurance Administration’s website.</text> </paragraph> <paragraph num="(d)"> <text>For any semiannual period in which the Commissioner conducts the survey described in §A(5) of this regulation:</text> <paragraph num="(i)"> <text>The Commissioner shall provide notice to each carrier subject to this chapter of the intent to conduct the survey at least 3 months in advance;</text> </paragraph> <paragraph num="(ii)"> <text>The Commissioner may require each carrier to submit a current roster of network providers for each provider panel used by the carrier, and any additional information the Commissioner determines is necessary for the survey to be conducted; and</text> </paragraph> <paragraph num="(iii)"> <text>A carrier is exempt from the requirement to make direct contact with a random selection of provider offices to calculate the median waiting times as described in §A(3) of this regulation.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Sufficiency Standards.</text> <paragraph num="(1)"> <text>On a semiannual basis, a carrier shall determine whether the provider panel meets the waiting time standards listed in §E of this regulation based on the direct contacts with provider offices described in §A(3)(a) of this regulation or the survey described in §A(5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Subject to the exceptions in §§C and D of this regulation, if a carrier’s provider panel fails to meet the waiting time standards listed in §E of this regulation for at least 90 percent of appointments in each category, the carrier shall notify the Administration within 10 business days identifying the deficiency in the provider network and the efforts that have been taken or will be taken to correct the deficiency.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Preventive care services and periodic follow-up care, including but not limited to, standing referrals to specialty providers for chronic conditions, periodic office visits to monitor and treat pregnancy, cardiac or mental health or substance use disorder conditions, and laboratory and radiological monitoring for recurrence of disease, may be scheduled in advance consistent with professionally recognized standards of practice as determined by the treating provider acting within the scope of the provider’s license, certification, or other authorization.</text> </paragraph> <paragraph num="D."> <text>A visit scheduled in advance in accordance with §C of this regulation may be disregarded when determining compliance with the waiting time standards listed in §E of this regulation.</text> </paragraph> <paragraph num="E."> <text>Chart of Waiting Time Standards.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Provider-to-Enrollee Ratio Standards."> <paragraph num="A."> <text>Except for a Group Model HMOs health benefit plan, the provider panel for each carrier shall meet the provider-to-enrollee ratio standards listed in §B of this regulation.</text> </paragraph> <paragraph num="B."> <text>The provider-to-enrollee ratios shall be equivalent to at least 1 full-time physician, or as appropriate, another full-time provider for:</text> <paragraph num="(1)"> <text>1,200 enrollees for primary care;</text> </paragraph> <paragraph num="(2)"> <text>2,000 enrollees for pediatric care;</text> </paragraph> <paragraph num="(3)"> <text>2,000 enrollees for obstetrical/gynecological care;</text> </paragraph> <paragraph num="(4)"> <text>2,000 enrollees for mental health care or services; and</text> </paragraph> <paragraph num="(5)"> <text>2,000 enrollees for substance use disorder care or services.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The ratios described in §B of this regulation shall be calculated based on:</text> <paragraph num="(1)"> <text>The number of enrollees covered under all health benefit plans issued by the carrier in Maryland that use that provider panel; and</text> </paragraph> <paragraph num="(2)"> <text>The number of providers in that provider panel with practicing locations:</text> <paragraph num="(a)"> <text>In Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Within the applicable maximum travel distance standard specified in Regulation .05 of this chapter outside the geographic boundaries of Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Telehealth."> <paragraph num="A."> <text>Telehealth Utilization Data Reporting.</text> <paragraph num="(1)"> <text>For annual access plans submitted on or after July 1, 2024, a carrier shall report the following data on telehealth utilization for the calendar year prior to submission of the annual access plan:</text> <paragraph num="(a)"> <text>The total number of in-network telehealth claims for each provider type and facility type listed in Regulation .05 of this chapter in each of the urban, rural, and suburban areas and in each Maryland county and Baltimore City; and</text> </paragraph> <paragraph num="(b)"> <text>The percentage of total in-network claims for each provider type and facility type listed in Regulation .05 of this chapter in each of the urban, rural, and suburban areas and in each Maryland county and Baltimore City that are in-network telehealth claims.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The geographic area for claims data described in §A(1) of this regulation shall be based on:</text> <paragraph num="(a)"> <text>The enrollee’s place of residence; or</text> </paragraph> <paragraph num="(b)"> <text>When an enrollee’s place of employment is used instead of residence to calculate travel distance under Regulation .05B of this chapter for a group model HMO, place of employment from which the enrollee gains eligibility for participation in the health benefit plan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Travel Distance Credit.</text> <paragraph num="(1)"> <text>Subject to approval by the Commissioner as described in §B(5) of this regulation, when calculating the enrollee travel distance for each provider type under Regulation .05A and B of this chapter, a carrier may apply a per-enrollee telehealth mileage credit in a geographic area where the applicable maximum travel distance standard is not met as measured between the practicing location of the nearest provider and the enrollee’s place of residence or, at the option of a group model HMO, place of employment from which the enrollee gains eligibility for participation in the health benefit plan.</text> </paragraph> <paragraph num="(2)"> <text>The telehealth mileage credit described in §B(1) of this regulation shall be:</text> <paragraph num="(a)"> <text>Five miles for an enrollee with a residence or, for a group model HMO, place of employment from which the enrollee gains eligibility for participation in the health benefit plan, in an urban geographic area;</text> </paragraph> <paragraph num="(b)"> <text>Ten miles for an enrollee with a residence or, for a group model HMO, place of employment from which the enrollee gains eligibility for participation in the health benefit plan, in a suburban geographic area; and</text> </paragraph> <paragraph num="(c)"> <text>Fifteen miles for an enrollee with a residence or, for a group model HMO, place of employment from which the enrollee gains eligibility for participation in the health benefit plan, in a rural geographic area.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The telehealth mileage credit described in §B(1) of this regulation may be applied to a maximum of 10 percent of enrollees for each provider type in each of the urban, rural, or suburban geographic areas.</text> </paragraph> <paragraph num="(4)"> <text>A carrier seeking to apply the telehealth mileage credit described in §B(1) of this regulation shall identify:</text> <paragraph num="(a)"> <text>Each provider type and geographic area to which the credit is being applied;</text> </paragraph> <paragraph num="(b)"> <text>The percentage of enrollees for which the carrier met the travel distance standard for the provider type and geographic area before the credit was applied; and</text> </paragraph> <paragraph num="(c)"> <text>The percentage of enrollees for which the carrier met the travel distance standard for the provider type and geographic area after the credit was applied.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The Commissioner may approve the telehealth mileage credit described in §B(1) of this regulation if the carrier sufficiently demonstrates that it provides coverage for and access to clinically appropriate telehealth services from participating providers for the provider type and geographic area to which the credit is being applied, in accordance with the documentation requirements of §D of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Appointment Waiting Time Credit.</text> <paragraph num="(1)"> <text>Subject to approval by the Commissioner as described in §C(3) of this regulation, when determining whether the carrier’s provider panel meets the waiting time standards under Regulation .06E of this chapter for at least 90 percent of appointments in each category, a carrier may apply a telehealth credit of up to 10 percentage points for each appointment category where the standard is not met.</text> </paragraph> <paragraph num="(2)"> <text>A carrier seeking to apply the telehealth credit described in §C(1) of this regulation shall identify:</text> <paragraph num="(a)"> <text>Each appointment type to which the credit is being applied;</text> </paragraph> <paragraph num="(b)"> <text>The percentage of appointments for which the carrier met the waiting time standard before the credit was applied; and</text> </paragraph> <paragraph num="(c)"> <text>The percentage of appointments for which the carrier met the waiting time standard after the credit was applied.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Commissioner may approve the telehealth credit described in §C(1) of this regulation if a carrier sufficiently demonstrates, in accordance with the documentation requirements of §D of this regulation, that:</text> <paragraph num="(a)"> <text>The carrier provides coverage for and access to clinically appropriate telehealth services from participating providers for the appointment type to which the credit is being applied;</text> </paragraph> <paragraph num="(b)"> <text>The carrier provides coverage for a corresponding in-person service if the enrollee chooses not to elect utilization of a telehealth service; and</text> </paragraph> <paragraph num="(c)"> <text>The carrier establishes, maintains, and adheres to written policies and procedures to assist enrollees for whom a telehealth service is not clinically appropriate, not available, or not accessible with obtaining timely access to an in-person appointment within a reasonable travel distance with:</text> <paragraph num="(i)"> <text>A participating provider; or</text> </paragraph> <paragraph num="(ii)"> <text>A nonparticipating provider at no greater cost to the enrollee than if the service was obtained from a participating provider.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Required Documentation.</text> <paragraph num="(1)"> <text>A carrier seeking to apply the telehealth credit described in §B(1) or C(1) of the regulation shall submit the following documentation to demonstrate that it provides coverage for and access to clinically appropriate telehealth services as described in §§B(5) and C(3)(a) of this regulation:</text> <paragraph num="(a)"> <text>A description of any requirements imposed or incentives provided for participating providers to offer telehealth services;</text> </paragraph> <paragraph num="(b)"> <text>A detailed description of all telehealth services offered under the health benefit plans issued by the carrier in Maryland that use the provider panel including:</text> <paragraph num="(i)"> <text>Telehealth modalities covered;</text> </paragraph> <paragraph num="(ii)"> <text>Types of platforms through which participating providers may deliver telehealth;</text> </paragraph> <paragraph num="(iii)"> <text>Whether the carrier offers or provides services through a telehealth-only vendor or platform, and which types of services are provided on this basis;</text> </paragraph> <paragraph num="(iv)"> <text>Whether the carrier arranges for telehealth services to be available on a 24/7 basis, and which types of services are provided on this basis;</text> </paragraph> <paragraph num="(v)"> <text>Whether the carrier arranges for telehealth kiosks to be installed and maintained in convenient locations throughout Maryland; and</text> </paragraph> <paragraph num="(vi)"> <text>The specific services available through telehealth for each provider type and appointment type to which the telehealth credit is being applied;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Evidence that telehealth is clinically appropriate and available for the services performed by each provider type and for each appointment type to which the telehealth credit is being applied, which may include:</text> <paragraph num="(i)"> <text>Actual telehealth utilization data comparing telehealth claims for the specific provider type or appointment type to telehealth claims for all provider types or appointment types;</text> </paragraph> <paragraph num="(ii)"> <text>Actual telehealth utilization data comparing telehealth claims for the specific provider type or appointment type to all claims for the same provider type or appointment type;</text> </paragraph> <paragraph num="(iii)"> <text>Survey results or attestations from participating providers indicating that telehealth is offered for the services performed by the specific provider type or for the specific appointment type;</text> </paragraph> <paragraph num="(iv)"> <text>Enrollee survey results indicating that enrollees have the willingness and ability to use telehealth services for the specific provider type or appointment type; and</text> </paragraph> <paragraph num="(v)"> <text>Other documentation that, in the discretion of the Commissioner, demonstrates the clinical appropriateness and availability of telehealth services for the provider type or appointment type to which the credit is being applied; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>For the telehealth mileage credit described in §B(1) of this regulation, evidence that telehealth services in general are available and accessible in the zip codes where the telehealth mileage credit is being applied to enrollee’s residence or place of employment, which may include:</text> <paragraph num="(i)"> <text>Actual telehealth utilization data comparing the ratio of telehealth claims to in-person claims for all types of services on the aggregate in the geographic area of the zip codes where the credit is being applied to the ratio of telehealth claims to in-person claims for all types of services on the aggregate statewide;</text> </paragraph> <paragraph num="(ii)"> <text>Enrollee survey results indicating that enrollees have the willingness and ability to use telehealth services in general in the geographic area where the credit is being applied; and</text> </paragraph> <paragraph num="(iii)"> <text>Other documentation that, in the discretion of the Commissioner, demonstrates the availability and accessibility of telehealth services in the zip codes where the credit is being applied.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A carrier seeking to apply the telehealth credit described in §C(1) of the regulation shall submit the following documentation to demonstrate that it provides coverage for a corresponding in-person service and that it establishes, maintains, and adheres to written policies and procedures to assist enrollees with obtaining timely access to an in-person appointment as described in §C(3)(b)—(c) of this regulation:</text> <paragraph num="(a)"> <text>Excerpts from actual plan materials describing benefits for telehealth and in-person services;</text> </paragraph> <paragraph num="(b)"> <text>Copies of the actual written policies and procedures;</text> </paragraph> <paragraph num="(c)"> <text>A description of any information, outreach, and educational materials the carrier provides to enrollees informing them of the assistance available from the carrier to assist with obtaining a timely appointment;</text> </paragraph> <paragraph num="(d)"> <text>A description of whether the carrier provides assistance on a 24/7 basis to guide enrollees needing urgent care after normal business hours to an appropriate provider, including assistance provided through a customer service telephone option or a contracted telehealth triage service; and</text> </paragraph> <paragraph num="(e)"> <text>Evidence that the carrier ensures, in practice, that enrollees are able to obtain timely access to an in-person appointment as described in §C(3)(c) of this regulation, which may include:</text> <paragraph num="(i)"> <text>Documentation of the number of enrollees the carrier assisted with getting appointments within the applicable waiting time standard under Regulation .06E of this chapter;</text> </paragraph> <paragraph num="(ii)"> <text>Documentation of the number of appointments with a nonparticipating provider for the appointment type to which the credit is being applied where the enrollee received services at no greater cost than if the service was obtained from a participating provider;</text> </paragraph> <paragraph num="(iii)"> <text>Enrollee survey results indicating satisfaction with the carrier’s efforts to provide assistance with obtaining a timely in-person appointment; and</text> </paragraph> <paragraph num="(iv)"> <text>Other documentation that, in the discretion of the Commissioner, demonstrates that the carrier regularly assists enrollees in obtaining timely in-person appointments.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Waiver Request Standards."> <paragraph num="A."> <text>If a carrier’s provider panel fails to meet one or more of the standards specified in Regulations .05—.07 of this chapter, the carrier shall provide the following information to the Commissioner as part of the annual access plan:</text> <paragraph num="(1)"> <text>A description of any network adequacy waiver previously granted by the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>An explanation of how many providers in each specialty or health care facility type that the carrier reasonably estimates it would need to contract with or otherwise include in its network to satisfy each unmet standard;</text> </paragraph> <paragraph num="(3)"> <text>A description of the methodology used to calculate the estimated number of providers in §A(2) of this regulation;</text> </paragraph> <paragraph num="(4)"> <text>A list of physicians, other providers, or health care facilities related to each unmet standard and within the relevant service area that the carrier attempted to contract with, identified by name and specialty, if any, or health care facility type;</text> </paragraph> <paragraph num="(5)"> <text>A description of how and when the carrier last contacted the physicians, other providers, or health care facilities;</text> </paragraph> <paragraph num="(6)"> <text>A description of any reason each physician, other provider, or health care facility gave for refusing to contract with the carrier;</text> </paragraph> <paragraph num="(7)"> <text>An analysis of any trends in the reasons given by physicians, providers, or health care facilities for refusing to contract with the carrier, and a description of the carrier’s proposals or attempts to address those reasons and improve future contracting efforts;</text> </paragraph> <paragraph num="(8)"> <text>Identification of all incentives the carrier offers to providers to join the network;</text> </paragraph> <paragraph num="(9)"> <text>If applicable, a substantiated statement that there are insufficient numbers of physicians, other providers, or health care facilities available within the relevant service area for a covered service or services for which the carrier failed to meet a standard;</text> </paragraph> <paragraph num="(10)"> <text>A description of other efforts and initiatives undertaken by the carrier in the past year to enhance its network and address the deficiencies that contributed to each unmet standard;</text> </paragraph> <paragraph num="(11)"> <text>A description of steps the carrier will take to attempt to improve its network to avoid a future failure to meet a standard;</text> </paragraph> <paragraph num="(12)"> <text>An explanation of any other mitigating factors that the carrier requests the Commissioner to consider; and</text> </paragraph> <paragraph num="(13)"> <text>An attestation to the accuracy of the information provided in relation to each unmet standard.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner may find good cause to grant a network adequacy waiver of one or more of the standards specified in Regulations .05—.07 of this chapter, if the information provided by the carrier under §A of this regulation demonstrates that:</text> <paragraph num="(1)"> <text>The physicians, other providers, or health care facilities necessary for an adequate network:</text> <paragraph num="(a)"> <text>Are not available to contract with the carrier;</text> </paragraph> <paragraph num="(b)"> <text>Are not available in sufficient numbers;</text> </paragraph> <paragraph num="(c)"> <text>Have refused to contract with the carrier; or</text> </paragraph> <paragraph num="(d)"> <text>Are unable to reach agreement with the carrier.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The reported failure to meet a standard is a result of limitations or constraints with the measurement methodology rather than an actual deficiency in the network.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner shall post a list of all network adequacy waivers that are granted for each annual access plan on the Maryland Insurance Administration’s website.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Confidential Information in Access Plans."> <paragraph num="A."> <text>Subject to Insurance Article, §15-802, Annotated Code of Maryland, the following information that is included in a carrier’s access plan shall be considered confidential by the Commissioner:</text> <paragraph num="(1)"> <text>Proprietary methodology used to annually assess the carrier’s performance in meeting the standards established under this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Proprietary methodology used to annually measure timely access to health care services; and</text> </paragraph> <paragraph num="(3)"> <text>Factors used by the carrier to build its network.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A carrier submitting an access plan or supplemental information required for the network adequacy waiver standards may submit a written request to the Commissioner that specific information included in the plan not be disclosed under the Public Information Act and shall:</text> <paragraph num="(1)"> <text>Identify the particular information that the carrier requests not be disclosed; and</text> </paragraph> <paragraph num="(2)"> <text>Cite the statutory authority that permits denial of access to the information.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The Commissioner may review a request made under §B of this regulation upon receipt of a request for access pursuant to the Public Information Act.</text> </paragraph> <paragraph num="D."> <text>The Commissioner may notify the carrier that made a request under §B of this regulation before granting access to information that was the subject of the request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Network Adequacy Access Plan Executive Summary Form."> <paragraph num="A."> <text>For each provider panel used by a carrier for a health benefit plan, the carrier shall provide the following network sufficiency results for the health benefit plan service area in the standardized format described on the Maryland Insurance Administration’s website:</text> <paragraph num="(1)"> <text>Travel Distance Standards.</text> <paragraph num="(a)"> <text>For each provider type and facility type listed in Regulation .05 of this chapter, list the percentage of enrollees for which the carrier met the travel distance standards, in the following format, with provider types listed first in alphabetical order, followed by facility types in alphabetical order:</text> </paragraph> <paragraph num="(b)"> <text>All provider and facility types described in §§A(4) and B(4) of Regulation .05 of this chapter and included on the carrier’s provider panel shall be listed individually in the chart described in §A(1)(a) of this regulation with the corresponding data for that specific type of provider or facility.</text> </paragraph> <paragraph num="(c)"> <text>If the telehealth mileage credit described Regulation .08B of this chapter was applied when calculating the percentage of enrollees for which the carrier met the travel distance standards, the carrier shall:</text> <paragraph num="(i)"> <text>Note the particular provider types and geographic areas to which the credit was applied by including an asterisk in the chart; and</text> </paragraph> <paragraph num="(ii)"> <text>Include a corresponding footnote stating “As permitted by Maryland regulations, a telehealth mileage credit was applied to up to 10 percent of enrollees for each provider type noted with an asterisk in each of the urban, rural, or suburban geographic areas. The mileage credit is 5 miles for urban areas, 10 miles for suburban areas, and 15 miles for rural areas.”</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>List the total number of certified registered nurse practitioners counted as a primary care provider.</text> </paragraph> <paragraph num="(e)"> <text>List the total percentage of primary care providers who are certified registered nurse practitioners.</text> </paragraph> <paragraph num="(f)"> <text>List the total number of essential community providers in the carrier’s network in each of the urban, rural, and suburban areas providing:</text> <paragraph num="(i)"> <text>Medical services;</text> </paragraph> <paragraph num="(ii)"> <text>Mental health services; and</text> </paragraph> <paragraph num="(iii)"> <text>Substance use disorder services.</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>List the total percentage of essential community providers available in the health benefit plan’s service area that are participating providers for each of the nine categories described in §A(1)(f) of this regulation.</text> </paragraph> <paragraph num="(h)"> <text>List the total number and percentage of local health departments in the carrier’s network providing:</text> <paragraph num="(i)"> <text>Medical services;</text> </paragraph> <paragraph num="(ii)"> <text>Mental health services; and</text> </paragraph> <paragraph num="(iii)"> <text>Substance use disorder services.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Appointment Waiting Time Standards.</text> <paragraph num="(a)"> <text>For each appointment type listed in Regulation .06 of this chapter, list the calculated median waiting time to obtain an in-person appointment with a participating provider, in the following format:</text> </paragraph> <paragraph num="(b)"> <text>If the telehealth credit described Regulation .08C of this chapter was applied when determining whether the carrier’s provider panel met the waiting time standards under Regulation .06E of this chapter for at least 90 percent of appointments in any category, the carrier may include a statement on the executive summary disclosing the availability of telehealth appointments to supplement the in-person appointments for that category.</text> </paragraph> <paragraph num="(c)"> <text>If the carrier arranges for telehealth services to be provided from participating providers beyond traditional office hours for an appointment type listed in Regulation .06 of this chapter, the carrier may include a statement on the executive summary disclosing the availability of those services.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Provider-to-Enrollee Ratio Standards.</text> <paragraph num="(a)"> <text>This subsection does not apply to Group Model HMO health benefit plans.</text> </paragraph> <paragraph num="(b)"> <text>For all other carriers, summarize the network performance for each provider-to-enrollee ratio standard listed in Regulation .07 of this chapter by listing the calculated number of providers in the provider panel, rounded to the nearest whole number, for each of the following categories of enrollees:</text> <paragraph num="(i)"> <text>1,200 enrollees for primary care;</text> </paragraph> <paragraph num="(ii)"> <text>2,000 enrollees for pediatric care;</text> </paragraph> <paragraph num="(iii)"> <text>2,000 enrollees for obstetrical/gynecological care;</text> </paragraph> <paragraph num="(iv)"> <text>2,000 enrollees for mental health care or service; and</text> </paragraph> <paragraph num="(v)"> <text>2,000 enrollees for substance use disorder care and services.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The network adequacy access plan executive summary form filed by a carrier pursuant to §A of this regulation is not confidential information.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-112(a)—(d), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 31, 2017 (44:25 Md. R. 1180)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective May 15, 2023 (50:9 Md. R. 379)</annotation> </annotations> </chapter> <chapter num="45" heading="Dental Network Adequacy"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to carriers that issue or renew dental plans in Maryland and use a provider panel for a dental plan offered in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer authorized to sell dental insurance;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan that provides coverage for dental services; or</text> </paragraph> <paragraph num="(c)"> <text>A dental plan organization as defined in Insurance Article, §14-401, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Dental plan” means a contractual arrangement for dental services.</text> </paragraph> <paragraph num="(3)"> <text>“Dental network adequacy waiver request” means a written request from a carrier to the Commissioner in which the carrier seeks the Commissioner’s approval to be relieved of certain dental network adequacy standards in this chapter for 1 year.</text> </paragraph> <paragraph num="(4)"> <text>“Dental service” has the meaning stated in Insurance Article, §14-401, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Dentist” has the meaning stated in Health Occupations Article §4-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Enrollee” means a person entitled to dental benefits from a carrier.</text> </paragraph> <paragraph num="(7)"> <text>Essential Community Provider.</text> <paragraph num="(a)"> <text>“Essential community provider” means a provider that serves predominantly low-income or dentally underserved individuals.</text> </paragraph> <paragraph num="(b)"> <text>“Essential community provider” includes local health departments.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Network.</text> <paragraph num="(a)"> <text>“Network” means a carrier’s participating providers with which a carrier contracts to provide dental services to the carrier’s enrollees under the carrier’s dental plan.</text> </paragraph> <paragraph num="(b)"> <text>“Network” includes, if a carrier uses a provider panel developed by a subcontracting entity, providers that contract with the subcontracting entity to provide dental services to the carrier’s enrollees under the carrier’s dental plan.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Participating provider” means a provider on a carrier’s provider panel.</text> </paragraph> <paragraph num="(10)"> <text>“Provider” means:</text> <paragraph num="(a)"> <text>A dentist;</text> </paragraph> <paragraph num="(b)"> <text>A group of dentists; or</text> </paragraph> <paragraph num="(c)"> <text>A facility where dentists provide dental services.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>Provider Panel.</text> <paragraph num="(a)"> <text>“Provider panel” means the providers who participate in a carrier’s network.</text> </paragraph> <paragraph num="(b)"> <text>“Provider panel” does not include an arrangement in which any provider may participate solely by contracting with the carrier to provide dental services at a discounted fee-for-service rate.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Rural area” means a list of zip codes provided on the Maryland Insurance Administration’s website, with a human population of less than 1,000 per square mile according to the Maryland Department of Planning.</text> </paragraph> <paragraph num="(13)"> <text>“Specialty provider” means a dentist who focuses on a specific area of dental care for a group of patients and is identified as a specialist by the Maryland State Board of Dental Examiners.</text> </paragraph> <paragraph num="(14)"> <text>“Suburban area” means a list of zip codes provided on the Maryland Insurance Administration’s website, with a human population equal to or more than 1,000 per square mile, but less than 3,000 per square mile according to the Maryland Department of Planning.</text> </paragraph> <paragraph num="(15)"> <text>Telehealth.</text> <paragraph num="(a)"> <text>“Telehealth” means, as it relates to the delivery of dental services, the use of interactive audio, video, or other telecommunications or electronic technology by a provider to deliver a dental service within the scope of practice of the provider at a location other than the location of the patient.</text> </paragraph> <paragraph num="(b)"> <text>“Telehealth” does not include:</text> <paragraph num="(i)"> <text>An audio-only telephone conversation between a provider and a patient;</text> </paragraph> <paragraph num="(ii)"> <text>An electronic mail message between a provider and a patient; or</text> </paragraph> <paragraph num="(iii)"> <text>A facsimile transmission between a provider and a patient.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Urban area” means a list of zip codes provided on the Maryland Insurance Administration’s website, with a human population equal to or greater than 3,000 per square mile according to the Maryland Department of Planning.</text> </paragraph> <paragraph num="(17)"> <text>“Urgent care” means the treatment for a condition of an enrollee that satisfies either of the following:</text> <paragraph num="(a)"> <text>A dental condition that, in the absence of dental services within 72 hours, could reasonably be expected by an individual, acting on behalf of a carrier and applying the judgment of a prudent layperson who possesses an average knowledge of health and medicine, would result in:</text> <paragraph num="(i)"> <text>Placing the enrollee’s life or dental health in serious jeopardy;</text> </paragraph> <paragraph num="(ii)"> <text>The inability of the enrollee to regain maximum dental function;</text> </paragraph> <paragraph num="(iii)"> <text>Serious impairment to the enrollee’s dental function; or</text> </paragraph> <paragraph num="(iv)"> <text>Serious dysfunction of any bodily organ or part of the enrollee; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A dental condition of an enrollee that, in the absence of dental services or treatment within 72 hours, would, in the opinion of a provider with knowledge of the enrollee’s condition, subject the enrollee to severe pain that cannot be adequately managed without the care or treatment.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Waiting time” means the time from the initial request for dental services by an enrollee or by the enrollee’s treating provider to the earliest date offered for the appointment for services.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Travel Distance Standards."> <paragraph num="A."> <text>Sufficiency Standards.</text> <paragraph num="(1)"> <text>Using the zip code list on the Maryland Insurance Administration’s website, each provider panel of a carrier shall have within the geographic area served by the carrier’s network or networks, sufficient dentists, including specialty providers, and facilities to meet the maximum travel distance standards listed in the chart under §A(2) of this regulation for each type of geographic area measured from the enrollee’s place of residence.</text> </paragraph> <paragraph num="(2)"> <text>Chart of Travel Distance Standards.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Each provider panel of a carrier shall include at least 20 percent of the available essential community providers who provide dental services in each of the urban, rural, and suburban areas.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Appointment Waiting Time Standards."> <paragraph num="A."> <text>Sufficiency Standards.</text> <paragraph num="(1)"> <text>Subject to §B of this regulation, each carrier’s provider panel shall meet the waiting time standards listed in §C of this regulation for at least 95 percent of the enrollees covered under dental plans that use that provider panel.</text> </paragraph> <paragraph num="(2)"> <text>When it is clinically appropriate and an enrollee elects to utilize a telehealth appointment, a carrier may consider that utilization as a part of its meeting the standards listed in §C of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Preventive care services and periodic follow-up care may be scheduled in advance consistent with professionally recognized dental standards of practice as determined by the treating provider acting within the scope of the provider’s license.</text> </paragraph> <paragraph num="C."> <text>Chart of Waiting Time Standards.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Waiver Request Standards."> <paragraph num="A."> <text>A carrier may apply for a dental network adequacy waiver, for up to 1 year, of a dental network adequacy requirement listed in this chapter.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may find good cause to grant the dental network adequacy waiver request only if the carrier demonstrates that the providers necessary for an adequate network:</text> <paragraph num="(1)"> <text>Are not available to contract with the carrier;</text> </paragraph> <paragraph num="(2)"> <text>Are not available in sufficient numbers;</text> </paragraph> <paragraph num="(3)"> <text>Have refused to contract with the carrier; or</text> </paragraph> <paragraph num="(4)"> <text>Are unable to reach agreement with the carrier.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier seeking a dental network adequacy waiver shall submit a written request to the Commissioner that includes the following information:</text> <paragraph num="(1)"> <text>A description of any waiver previously granted by the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>A list of providers within the relevant service area that the carrier attempted to contract with, identified by name and specialty, if any, or facility type;</text> </paragraph> <paragraph num="(3)"> <text>A description of how and when the carrier last contacted the providers;</text> </paragraph> <paragraph num="(4)"> <text>A description of any reason each provider gave for refusing to contract with the carrier;</text> </paragraph> <paragraph num="(5)"> <text>Steps the carrier will take to attempt to improve its network to avoid future dental network adequacy waiver requests;</text> </paragraph> <paragraph num="(6)"> <text>If applicable, a statement that there are no providers available within the relevant service area for a covered service or services for which the carrier requests the waiver; and</text> </paragraph> <paragraph num="(7)"> <text>An attestation to the accuracy of the information contained in the dental network adequacy waiver request.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A carrier submitting a dental network adequacy waiver request may submit a written request to the Commissioner that specific information included in the plan or request not be disclosed under the Public Information Act and shall:</text> <paragraph num="(1)"> <text>Identify the particular information that the carrier requests not be disclosed; and</text> </paragraph> <paragraph num="(2)"> <text>Cite the statutory authority that permits denial of access to the information.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Commissioner may review a request made under §D of this regulation upon receipt of a request for access pursuant to the Public Information Act.</text> </paragraph> <paragraph num="F."> <text>The Commissioner may notify the carrier that made a request under §D of this regulation before granting access to information that was the subject of the request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Dental Network Adequacy Executive Summary Form."> <paragraph num="A."> <text>For each provider panel used by a carrier for a dental plan, the carrier shall provide the network sufficiency results for the dental plan service area as follows:</text> <paragraph num="(1)"> <text>Travel Distance Standards.</text> <paragraph num="(a)"> <text>For each provider type listed in Regulation .03 of this chapter, list the percentage of enrollees for which the carrier met the travel distance standards, in the following format:</text> </paragraph> <paragraph num="(b)"> <text>List the total number of essential community providers in the carrier’s network.</text> </paragraph> <paragraph num="(c)"> <text>List the total percentage of essential community providers available in the dental benefit plan’s service area that are participating providers.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Appointment Waiting Time Standards.</text> <paragraph num="(a)"> <text>For each appointment type listed in Regulation .04 of this chapter, list the percentage of enrollees in which the carrier met the appointment waiting time standards, in the following format:</text> </paragraph> <paragraph num="(b)"> <text>List the total percentage of telehealth appointments counted as part of the appointment waiting time standard results.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Each carrier shall provide a description of how it will monitor, on an ongoing basis, the ability of participating providers to provide covered services to the carrier’s enrollees.</text> </paragraph> <paragraph num="C."> <text>The dental network adequacy access plan executive summary form filed by a carrier pursuant to §A of this regulation is not confidential information.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-112(e), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: Effective December 31, 2017 (44:25 Md. R. 1184)</annotation> </annotations> </chapter> <chapter num="46" heading="Pharmacy Benefits Managers — Maximum Allowable Cost"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all maximum allowable cost pricing claims made to a pharmacy benefits manager for a multisource generic prescription drug, medical product, or device, provided to a beneficiary of a purchaser.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Appeal decision” means a written or electronic notice issued by a PBM in response to an appeal filed by a contracted pharmacy of the maximum allowable cost used to adjudicate a claim.</text> </paragraph> <paragraph num="(2)"> <text>“Beneficiary” means an individual who receives prescription drug coverage or benefits from a purchaser.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” has the meaning stated in Insurance Article §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Compensation program” has the meaning stated in Insurance Article §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Contracted pharmacy” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“MAC complaint” means a communication by a contracted pharmacy that disputes the appeal decision, and is submitted on a MAC complaint form to the Commissioner, after the pharmacy benefits manager’s internal appeal process has been exhausted as required by Insurance Article, §15-1628.1(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“MAC complaint form” means the form adopted by the Commissioner under Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(8)"> <text>“MAC list” means a list of multisource generic drugs, medical products, and devices for which a MAC has been established by a pharmacy benefits manager or a purchaser.</text> </paragraph> <paragraph num="(9)"> <text>“Maximum allowable cost” or “MAC” has the meaning stated in Insurance Article, §15-1628.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Multisource generic drug” means a generic drug as defined in Health-General Article, §21-2C-01(f), Annotated Code of Maryland, for which there is at least one other drug and does not include a brand name drug as that term is defined in Health Occupations, §12-504, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Participating pharmacy contract” means a contract filed with the Commissioner that is:</text> <paragraph num="(a)"> <text>Between a pharmacy and a:</text> <paragraph num="(i)"> <text>Pharmacy benefits manager;</text> </paragraph> <paragraph num="(ii)"> <text>Pharmacy services administrative organization; or</text> </paragraph> <paragraph num="(iii)"> <text>Group purchasing organization;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Filed as required by the Commissioner;</text> </paragraph> <paragraph num="(c)"> <text>Not disapproved by the Commissioner; and</text> </paragraph> <paragraph num="(d)"> <text>In compliance with the requirements stated in this chapter.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Pharmacist” has the meaning stated in Health Occupations Article, §12–101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Pharmacy” has the meaning stated in Health Occupations Article, §12–101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Pharmacy benefits management services” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Pharmacy benefits manager” or “PBM” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(16)"> <text>“Pharmacy services administration organization” or “PSAO” means an entity that provides a contracted pharmacy with contracting administrative services relating to prescription drug benefits.</text> </paragraph> <paragraph num="(17)"> <text>“Pricing information” means anything used in the mathematical calculation to determine the payment to a contracted pharmacy.</text> </paragraph> <paragraph num="(18)"> <text>“Purchaser” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(19)"> <text>“Source” means the publisher or publishers stated in the participating pharmacy contract, used by the PBM, in any manner, to establish the basis of the PBM’s MAC reimbursement amount to a contracted pharmacy, under a participating pharmacy contract compensation program.</text> </paragraph> <paragraph num="(20)"> <text>“Working day” means any day that the Maryland Insurance Administration is open for business.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Disclosures to a Contracted Pharmacy."> <paragraph num="A."> <text>A PBM, whether its contract is directly with a pharmacy or indirectly with a pharmacy through a PSAO or group purchasing organization, shall disclose to a contracted pharmacy at the time of entering into a contract with a pharmacy and at least 30 working days before any contract change for a contracted pharmacy:</text> <paragraph num="(1)"> <text>The applicable terms, conditions, and reimbursement rates, including:</text> <paragraph num="(a)"> <text>The sources; and</text> </paragraph> <paragraph num="(b)"> <text>The terms of the compensation program;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The process and procedures for verifying pharmacy benefits and beneficiary eligibility;</text> </paragraph> <paragraph num="(3)"> <text>The dispute resolution, internal appeal process under Regulation .04 of this chapter, and audit appeals process; and</text> </paragraph> <paragraph num="(4)"> <text>The process and procedures for verifying the prescription drugs included on the formularies used by the PBM.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A PBM, whether its contract is directly with a pharmacy or indirectly with a pharmacy through a PSAO or group purchasing organization, shall:</text> <paragraph num="(1)"> <text>Update its pricing information at least every 7 days;</text> </paragraph> <paragraph num="(2)"> <text>Establish a reasonable process by which a contracted pharmacy has access to the current and applicable MAC lists and price list in an electronic format as updated in accordance with the requirements of this section; and</text> </paragraph> <paragraph num="(3)"> <text>Immediately after a pricing information update occurs pursuant to this regulation, use the updated pricing information in calculating the payments made to all contracted pharmacies.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A claim paid on behalf of a carrier to a contracted pharmacy under a participating pharmacy contract is subject to the requirements of Insurance Article, §§15-1005, 15-1008, 15-1009, and 15-1631, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Internal Appeal Procedures."> <paragraph num="A."> <text>Each PBM subject to this chapter shall establish written procedures to investigate and resolve disputes filed by a contracted pharmacy.</text> </paragraph> <paragraph num="B."> <text>The internal appeal procedures established by the PBM shall:</text> <paragraph num="(1)"> <text>Be in writing; and</text> </paragraph> <paragraph num="(2)"> <text>Contain administrative processes and safeguards designed to ensure and verify that the MAC pricing was determined in accordance with the participating pharmacy contract and Maryland law, and that the contract provisions have not been applied in an arbitrary or capricious manner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The procedures established by the PBM may not require:</text> <paragraph num="(1)"> <text>More than one appeal before filing a complaint with the Commissioner; or</text> </paragraph> <paragraph num="(2)"> <text>The payment of a fee to file an appeal.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The internal appeal procedures established by the PBM shall be provided to the Commissioner on request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="MAC Complaint Process."> <paragraph num="A."> <text>Prior to filing a MAC complaint with the Commissioner, a contracted pharmacy or its designee shall exhaust the internal appeal process established in the participating pharmacy contract and used by the PBM to appeal, investigate, and resolve a dispute regarding the MAC claim amount.</text> </paragraph> <paragraph num="B."> <text>A contracted pharmacy or its designee may file a MAC complaint with the Commissioner to dispute a PBM’s appeal decision for the following reasons:</text> <paragraph num="(1)"> <text>The PBM’s MAC pricing did not meet the requirements of Insurance Article, Title 15, Subtitle 16, Annotated Code of Maryland, related to MAC pricing; or</text> </paragraph> <paragraph num="(2)"> <text>The PBM’s MAC pricing did not meet the applicable terms of the applicable participating pharmacy contract.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A MAC complaint is properly completed and may be filed if a contracted pharmacy or designee:</text> <paragraph num="(1)"> <text>Completes all applicable portions of the Commissioner’s MAC complaint form;</text> </paragraph> <paragraph num="(2)"> <text>Provides a copy of the relevant contract or the provisions that are related to the MAC appeal, including but not limited to:</text> <paragraph num="(a)"> <text>MAC;</text> </paragraph> <paragraph num="(b)"> <text>MAC pricing;</text> </paragraph> <paragraph num="(c)"> <text>Sources;</text> </paragraph> <paragraph num="(d)"> <text>Pricing information; and</text> </paragraph> <paragraph num="(e)"> <text>The compensation program of the applicable participating pharmacy contract; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Provides a copy of the appeal decision.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A MAC complaint may not include more than ten appeal decisions using a single MAC complaint form.</text> </paragraph> <paragraph num="E."> <text>Notification of the MAC Complaint to the PBM.</text> <paragraph num="(1)"> <text>Upon receipt of a completed MAC complaint form, the Commissioner shall provide a copy of the submitted MAC complaint form to the PBM.</text> </paragraph> <paragraph num="(2)"> <text>Within 5 working days of receiving the Commissioner’s notice, the PBM shall provide the Commissioner:</text> <paragraph num="(a)"> <text>A complete, unredacted copy of the applicable portion of the participating pharmacy contract relating to the compensation program and the complaint filed with the Commissioner, including any other contract under which the pricing information is determined;</text> </paragraph> <paragraph num="(b)"> <text>A copy of the applicable source and pricing information used to calculate the MAC;</text> </paragraph> <paragraph num="(c)"> <text>The MAC calculated on a per unit basis based on the same generic product identifier or national drug code number;</text> </paragraph> <paragraph num="(d)"> <text>A mathematical calculation that demonstrates how the reimbursement amount was determined;</text> </paragraph> <paragraph num="(e)"> <text>All information required to complete the response portion of the MAC complaint form; and</text> </paragraph> <paragraph num="(f)"> <text>Any other information the Commissioner may require for the purposes of determining a PBM’s compliance with:</text> <paragraph num="(i)"> <text>Insurance Article, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>This chapter;</text> </paragraph> <paragraph num="(iii)"> <text>The compensation program; or</text> </paragraph> <paragraph num="(iv)"> <text>The applicable terms of the applicable participating pharmacy contract.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§15-1601, 15-1604, 15-1605, 15-1607, 15-1609, 15-1628, 15-1628.1, and 15-1642, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: Effective March 23, 2020 (47:6 Md. R. 343)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> </annotations> </chapter> <chapter num="47" heading="Cost Pricing and Reimbursement Other than MAC"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all cost pricing and reimbursement disputes or a request to review the failure to pay the contractual reimbursement amount of a submitted claim made to a pharmacy benefits manager by a pharmacist or pharmacy for a prescription drug, medical product, or device, provided to a beneficiary of a purchaser.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Appeal decision” means a written or electronic notice in response to an appeal under this chapter provided to a contracted pharmacy that includes a reason for the appeal denial.</text> </paragraph> <paragraph num="(2)"> <text>“Beneficiary” means an individual who receives prescription drug coverage or benefits from a purchaser.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Compensation program” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Complaint” means a communication by a contracted pharmacy that disputes the appeal decision, and is submitted on a complaint form to the Commissioner, after the pharmacy benefits manager’s internal appeal process has been exhausted as required by Insurance Article, §15-1628.2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Complaint form” means the form developed by the Commissioner under Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(7)"> <text>“Contracted pharmacy” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Direct or indirect remuneration fee” means an adjustment in total compensation received directly or indirectly by a contracted pharmacy from a PBM that is determined after the sale of the product or service, including an adjustment of an adjudicated claim based on the use of a generic effective rate or fee or performance-based reimbursement.</text> </paragraph> <paragraph num="(9)"> <text>“Participating pharmacy contract” means a contract filed with the Commissioner that is:</text> <paragraph num="(a)"> <text>Between a pharmacy and a:</text> <paragraph num="(i)"> <text>Pharmacy benefits manager;</text> </paragraph> <paragraph num="(ii)"> <text>Pharmacy services administrative organization; or</text> </paragraph> <paragraph num="(iii)"> <text>Group purchasing organization;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Filed as required by the Commissioner;</text> </paragraph> <paragraph num="(c)"> <text>Not disapproved by the Commissioner; and</text> </paragraph> <paragraph num="(d)"> <text>In compliance with the requirements stated in this chapter.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Pharmacist” has the meaning stated in Health Occupations Article, §12–101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Pharmacy” has the meaning stated in Health Occupations Article, §12–101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Pharmacy benefits management services” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Pharmacy benefits manager” or “PBM” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(14)"> <text>“Pharmacy services administration organization” or “PSAO” means an entity that provides a contracted pharmacy with contracting administrative services relating to prescription drug benefits.</text> </paragraph> <paragraph num="(15)"> <text>“Pricing information” means anything used in the mathematical calculation to determine the payment to a contracted pharmacy.</text> </paragraph> <paragraph num="(16)"> <text>“Purchaser” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>Review Decision.</text> <paragraph num="(a)"> <text>“Review decision” means a written or electronic notice in response to a request from a contracted pharmacy for a review of a failure to pay the contractual reimbursement amount of a submitted claim.</text> </paragraph> <paragraph num="(b)"> <text>“Review decision” does not include an appeal decision.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Source” means the publisher or publishers stated in the participating pharmacy contract, used by the PBM, in any manner, to establish the basis of the PBM’s pricing or the reimbursement amount to a contracted pharmacy, under a participating pharmacy contract’s stated compensation program.</text> </paragraph> <paragraph num="(19)"> <text>“Working day” means any day that the Maryland Insurance Administration is open for business.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Disclosures to a Contracted Pharmacy."> <paragraph num="A."> <text>A PBM, whether its contract is directly with a pharmacy or indirectly with a pharmacy through a PSAO or group purchasing organization, shall disclose to a contracted pharmacy at the time of entering into a contract with a pharmacy and at least 30 working days before any contract change for a contracted pharmacy:</text> <paragraph num="(1)"> <text>The applicable terms, conditions, and reimbursement rates, including:</text> <paragraph num="(a)"> <text>The sources; and</text> </paragraph> <paragraph num="(b)"> <text>The terms of the compensation program;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The process and procedures for verifying pharmacy benefits and beneficiary eligibility;</text> </paragraph> <paragraph num="(3)"> <text>The dispute resolution, internal appeal process under Regulation .04 of this chapter, and audit appeals process; and</text> </paragraph> <paragraph num="(4)"> <text>The process and procedures for verifying the prescription drugs included on the formularies used by the PBM.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A claim paid on behalf of a carrier to a contracted pharmacy under a participating pharmacy contract is subject to the requirements of Insurance Article, §§15-1005, 15-1008, 15-1009, and 15-1631, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Internal Appeal Procedures."> <paragraph num="A."> <text>Each PBM subject to this chapter shall establish written procedures to investigate and resolve disputes filed by a contracted pharmacy.</text> </paragraph> <paragraph num="B."> <text>The internal appeal procedures established by the PBM shall:</text> <paragraph num="(1)"> <text>Be in writing; and</text> </paragraph> <paragraph num="(2)"> <text>Contain administrative processes and safeguards designed to ensure and verify that the pricing was determined in accordance with the participating pharmacy contract and Maryland law, and that the contract provisions have not been applied in an arbitrary or capricious manner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The procedures established by the PBM may not require:</text> <paragraph num="(1)"> <text>More than one appeal before filing a complaint with the Commissioner; or</text> </paragraph> <paragraph num="(2)"> <text>The payment of a fee to file an appeal.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The internal appeal procedures established by the PBM shall be provided to the Commissioner on request.</text> </paragraph> <paragraph num="E."> <text>The internal procedures established by the PBM shall:</text> <paragraph num="(1)"> <text>Provide written notice of the PBM’s decision no later than 90 days after receipt of the appeal or review;</text> </paragraph> <paragraph num="(2)"> <text>Pay any money due within 30 days after the internal review is complete; and</text> </paragraph> <paragraph num="(3)"> <text>Provide a contracted pharmacy:</text> <paragraph num="(a)"> <text>21 days to file an appeal after the contracted pharmacy is charged a direct or indirect remuneration fee; or</text> </paragraph> <paragraph num="(b)"> <text>A minimum of 180 days to request review of the reimbursement amount of a submitted claim.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Complaint Process."> <paragraph num="A."> <text>Prior to filing a complaint with the Commissioner, a contracted pharmacy or its designee shall exhaust the internal appeal process established in the participating pharmacy contract.</text> </paragraph> <paragraph num="B."> <text>A contracted pharmacy or its designee may file a complaint with the Commissioner to dispute a PBM’s appeal decision for the following reasons:</text> <paragraph num="(1)"> <text>The PBM’s cost pricing did not comply with Insurance Article, Title 15, Subtitle 16, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(2)"> <text>The PBM’s cost pricing or reimbursement amount determination did not meet the terms of the applicable participating pharmacy contract.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A complaint is properly completed and may be filed if a contracted pharmacy or its designee:</text> <paragraph num="(1)"> <text>Completes all applicable portions of the Commissioner’s complaint form;</text> </paragraph> <paragraph num="(2)"> <text>Provides a copy of the relevant contract or the provisions that are related to the appeal, including but not limited to establishing a drug pricing or pharmacy reimbursement amount, sources, pricing information, and the compensation program of the applicable participating pharmacy contract; and</text> </paragraph> <paragraph num="(3)"> <text>Provides a copy of the appeal decision.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A complaint may not include more than ten appeal decisions using a single complaint form.</text> </paragraph> <paragraph num="E."> <text>Notification of the Complaint to the PBM.</text> <paragraph num="(1)"> <text>Upon receipt of a completed complaint form, the Commissioner shall provide a copy of the submitted complaint form to the PBM.</text> </paragraph> <paragraph num="(2)"> <text>Within 5 working days of receiving the Commissioner’s notice, the PBM shall provide the Commissioner:</text> <paragraph num="(a)"> <text>A complete, unredacted copy of the applicable portion of the participating pharmacy contract relating to the compensation program and the complaint filed with the Commissioner, including any other contract under which the pricing or reimbursement amount is determined;</text> </paragraph> <paragraph num="(b)"> <text>A copy of the applicable source and pricing information used to calculate the pharmacy reimbursement amount;</text> </paragraph> <paragraph num="(c)"> <text>A mathematical calculation that demonstrates how the reimbursement amount was determined;</text> </paragraph> <paragraph num="(d)"> <text>All information required to complete the response portion of the complaint form; and</text> </paragraph> <paragraph num="(e)"> <text>Any other information the Commissioner may require for the purposes of determining a PBM’s compliance with:</text> <paragraph num="(i)"> <text>Insurance Article, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>This chapter;</text> </paragraph> <paragraph num="(iii)"> <text>The compensation program; or</text> </paragraph> <paragraph num="(iv)"> <text>The applicable terms of the participating pharmacy contract.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§15-1601, 15-1604, 15-1605, 15-1607, 15-1609, 15-1628, 15-1628.2, 15-1630, and 15-1642, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: Effective March 23, 2020 (47:6 Md. R. 343)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> </annotations> </chapter> <chapter num="48" heading="Pharmacy Benefits Managers — Informational Filing of Contracts and Amendments"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <text>This chapter applies to the submission of any participating pharmacy contract or amendment required to be filed under Insurance Article, Title 15, Subtitle 16, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>“Noncompliant” means a contract or amendment that is not in compliance with Maryland statutes and regulations.</text> </paragraph> <paragraph num="(4)"> <text>“Participating pharmacy contract” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Working day” means any day that the Maryland Insurance Administration is open for business.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Submission Requirements."> <paragraph num="A."> <text>Pursuant to the requirements of Insurance Article, §15-1628(b), Annotated Code of Maryland, a PBM shall submit to the Commissioner as an informational filing each participating pharmacy contract form and each amendment to a contract form at least 30 days before the contract form or amendment to the contract form is to become effective.</text> </paragraph> <paragraph num="B."> <text>The Commissioner is not required to review the informational filing to evaluate whether a contract form or amendment to a contract form is in violation of Maryland law at the time the informational filing is made.</text> </paragraph> <paragraph num="C."> <text>Unless it is disapproved by the Commissioner, a PBM may use a contract form or amendment to a contract form after it has been filed with the Commissioner and 30 days have passed since the filing was acknowledged by the Commissioner in writing as having been received.</text> </paragraph> <paragraph num="D."> <text>A PBM may not file a contract form or amendment form that has been previously disapproved by the Commissioner.</text> </paragraph> <paragraph num="E."> <text>Nothing in this regulation shortens the time period for notice under Insurance Article, §15-1628(a), Annotated Code of Maryland, which requires a PBM to provide at least 30 working days’ notice before any contract change.</text> </paragraph> <paragraph num="F."> <text>The filing shall include a cover letter which includes the following:</text> <paragraph num="(1)"> <text>A list of the contract forms and amendment forms included in the submission; and</text> </paragraph> <paragraph num="(2)"> <text>A brief description of the purpose of each contract form and amendment form included in the submission.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Each page of a contract or amendment shall be identified by a form number which is unique to that form. This number shall be printed in the lower left-hand corner of the first page, and no other number shall appear in close proximity to the form number.</text> </paragraph> <paragraph num="H."> <text>A filing made under this chapter shall include a signed certification from a responsible officer of the PBM that, to the best of the officer’s knowledge and belief, the contract forms and amendment forms comply with applicable statutes and regulations.</text> </paragraph> <paragraph num="I."> <text>A PBM may not file a contract form or amendment form before the PBM has successfully registered as a PBM with the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Noncompliant Contract Terms."> <paragraph num="A."> <text>A PBM may have a contract form or amendment to a contract form disapproved at any time after the contract form or amendment to a contract form has been submitted as part of an informational filing if the contract form or amendment form contains or uses any language that:</text> <paragraph num="(1)"> <text>Violates Insurance Article, Title 15, Subtitle 16, Annotated Code of Maryland, or any applicable statutory provisions, including but not limited to Insurance Article, §§15-112, 15-112.2(a)—(e), 15-123(d), 15-1004, 15-1005, 15-1008(c), 15-1009, 15-1628—15-1628.3, 15-1629, 15-1631, and 15-1633—15-1639, and Health-General Article, §§19-710(s) and (t) and 19-712.2, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Does not disclose the components of the compensation program through which a reimbursement rate is set;</text> </paragraph> <paragraph num="(3)"> <text>Includes a definition of “multisource generic drug” that is inconsistent with COMAR 31.10.46, or “generic” or “brand name drug” that is inconsistent with Health Occupations Article, §12-504, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(4)"> <text>Allows the PBM to reimburse a covered drug in an amount that differs, including zero, based on the identity of the wholesale distributor used by a contracting pharmacy for acquisition of the covered drug;</text> </paragraph> <paragraph num="(5)"> <text>Except for instances of error or fraud, allows the PBM to reclassify, recategorize, or recharacterize an adjudicated claim;</text> </paragraph> <paragraph num="(6)"> <text>In any way prohibits or restricts a pharmacist or pharmacy from filing a complaint with the Commissioner; or</text> </paragraph> <paragraph num="(7)"> <text>Fails to include the internal appeal provisions in the contract.</text> </paragraph> </paragraph> <paragraph num="B."> <text>No provisions in Insurance Article, Annotated Code of Maryland, or this chapter may be waived or modified by contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Use of Noncompliant Contract or Amendment."> <paragraph num="A."> <text>If a PBM uses a contract form or amendment form which becomes effective and the contract form or amendment form is subsequently found by the Commissioner to be noncompliant, the Commissioner may:</text> <paragraph num="(1)"> <text>Issue an order that:</text> <paragraph num="(a)"> <text>Gives notice of the disapproval;</text> </paragraph> <paragraph num="(b)"> <text>States a reason for the disapproval; and</text> </paragraph> <paragraph num="(c)"> <text>States the effective date of the disapproval in the notice; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Impose a penalty as provided under Insurance Article, §15-1642, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An order under this regulation is subject to a hearing under Insurance Article, §2-210, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>A request for a hearing under this regulation does not stay that portion of the order that requires a PBM to cease and desist from the conduct identified in the order.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 12-203(d)(2), 15-1628, and 15-1642, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: Effective March 23, 2020 (47:6 Md. R. 343)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective February 7, 2022 (49:3 Md. R. 141)</annotation> </annotations> </chapter> <chapter num="49" heading="Pharmacy Services Administrative Organizations"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all contractual agreements between a pharmacy services administrative organization and an independent pharmacy in which a pharmacy services administrative organization negotiates on behalf of an independent pharmacy with purchasers or pharmacy benefit managers for prescription drug coverage or benefits, medical devices, or biologics provided to a beneficiary of a purchaser.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Appeal decision” means a written or electronic notice in response to an appeal under this chapter provided to a contracted pharmacy that includes a reason for the appeal denial.</text> </paragraph> <paragraph num="(2)"> <text>“Contracted pharmacy” means an independent pharmacy in a pharmacy services administrative contract.</text> </paragraph> <paragraph num="(3)"> <text>“Delivered by electronic means” includes:</text> <paragraph num="(a)"> <text>Delivery to an electronic mail address at which an independent pharmacy or contracted pharmacy has consented to receive notice; and</text> </paragraph> <paragraph num="(b)"> <text>Posting on an electronic network, together with separate notice to an independent pharmacy or contracted pharmacy directed to the electronic mail address at which the independent pharmacy or contracted pharmacy has consented to receive notice of the posting.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Independent pharmacy” has the meaning stated in Insurance Article, §15-2001(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Material change” means a change in control or business operations of a pharmacy services administrative organization after a purchase, merger, or acquisition of a parent company, subsidiary, or other organization.</text> </paragraph> <paragraph num="(6)"> <text>Medical Device.</text> <paragraph num="(a)"> <text>“Medical device” means a device used in the diagnosis, treatment, or prevention of disease.</text> </paragraph> <paragraph num="(b)"> <text>“Medical device” does not include:</text> <paragraph num="(i)"> <text>Any surgical or dental instrument;</text> </paragraph> <paragraph num="(ii)"> <text>Physical therapy equipment;</text> </paragraph> <paragraph num="(iii)"> <text>Any x-ray apparatus; or</text> </paragraph> <paragraph num="(iv)"> <text>Any component or accessory of any of these items.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Pharmacy benefits manager (PBM)” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Pharmacy services administrative contract” has the meaning stated in Insurance Article, §15-2001(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Pharmacy services administrative organization” or “PSAO” has the meaning stated in Insurance Article, §15-2001(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Purchaser” has the meaning stated in Insurance Article, §15-2001(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Working days” means any day that the Maryland Insurance Administration is open for business.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Disclosures to an Independent Pharmacy."> <paragraph num="A."> <text>A PSAO shall provide to a contracted pharmacy an electronic or paper copy of any contracts, amendments, payment schedules, or reimbursement rates within 5 working days after the execution of a contract, or an amendment to a contract, signed on behalf of the contracted pharmacy by the PSAO.</text> </paragraph> <paragraph num="B."> <text>A PSAO shall provide written notice to an independent pharmacy of any ownership interest or control by a parent company, subsidiary, or other organization before entering into a pharmacy services administrative contract with the independent pharmacy.</text> </paragraph> <paragraph num="C."> <text>A PSAO shall disclose to a contracted pharmacy in writing within 5 working days of any material change of ownership or control or a parent company, subsidiary, or other organization.</text> </paragraph> <paragraph num="D."> <text>The written disclosures required in §§B and C of this regulation shall identify the extent of any ownership interest or control, to include the percent of shares owned, by a parent company, subsidiary, or other organization that:</text> <paragraph num="(1)"> <text>Provides pharmacy services, prescription drug, or device services; or</text> </paragraph> <paragraph num="(2)"> <text>Manufactures, sells, or distributes prescription drugs, biologics, or medical devices.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The written disclosures required in §§B and C of this regulation may be delivered by electronic means provided:</text> <paragraph num="(1)"> <text>The independent pharmacy or contracted pharmacy has affirmatively consented to that method of delivery and has not withdrawn the consent;</text> </paragraph> <paragraph num="(2)"> <text>The independent pharmacy or contracted pharmacy, before giving consent, is provided with a clear and conspicuous statement informing the pharmacy of:</text> <paragraph num="(a)"> <text>Any right or option of the pharmacy to have the notice provided or made available in paper or another nonelectronic form;</text> </paragraph> <paragraph num="(b)"> <text>The right of the pharmacy to withdraw consent to have notice delivered by electronic means and any fees, conditions, or consequences imposed in the event consent is withdrawn;</text> </paragraph> <paragraph num="(c)"> <text>Whether the consent applies:</text> <paragraph num="(i)"> <text>Only to notices or communications related to a particular transaction; or</text> </paragraph> <paragraph num="(ii)"> <text>To identified categories of notices that may be delivered by electronic means during the course of the parties’ relationship; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The procedures the pharmacy must use to withdraw consent to have notice delivered by electronic means and to update information needed to contact the party electronically;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The independent pharmacy or contracted pharmacy, before giving consent, is provided with a statement of the hardware and software requirements for access to and retention of a notice delivered by electronic means; and</text> </paragraph> <paragraph num="(4)"> <text>The process used to obtain consent of the independent pharmacy or contracted pharmacy to have notice delivered by electronic means meets the requirements of Commercial Law Article, Title 21, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Internal Appeal Procedures."> <paragraph num="A."> <text>Each PSAO subject to this chapter shall establish written procedures to investigate and resolve disputes filed against the PSAO by a contracted pharmacy.</text> </paragraph> <paragraph num="B."> <text>The internal appeal procedures shall:</text> <paragraph num="(1)"> <text>Be in writing; and</text> </paragraph> <paragraph num="(2)"> <text>Contain administrative processes and safeguards designed to ensure and verify that a PSAO remits payment to a contracted pharmacy in accordance with the pharmacy services administrative contract and Maryland law, and that the contract provisions have not been applied in an arbitrary or capricious manner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The procedures established by the PSAO may not require:</text> <paragraph num="(1)"> <text>More than one appeal before filing a complaint with the Commissioner; or</text> </paragraph> <paragraph num="(2)"> <text>The payment of a fee to file an appeal.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The internal appeal procedures established by the PSAO shall be provided to the Commissioner on request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Compliant Process."> <paragraph num="A."> <text>Prior to filing a complaint with the Commissioner, a contracted pharmacy or its designee shall exhaust the internal appeal process established by the PSAO.</text> </paragraph> <paragraph num="B."> <text>A complaint is properly completed and may be filed if a contracted pharmacy or designee for the pharmacy:</text> <paragraph num="(1)"> <text>Completes all applicable portions of the Commissioner’s complaint form; and</text> </paragraph> <paragraph num="(2)"> <text>Provides a copy of the relevant contract or the provisions that are related to the internal dispute, including but not limited to any applicable remittance and copy of any appeal decision.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Notification of the complaint to the PSAO.</text> <paragraph num="(1)"> <text>Upon receipt of a completed complaint form, the Commissioner shall provide a copy to the PSAO.</text> </paragraph> <paragraph num="(2)"> <text>Within 15 working days of receiving the Commissioner’s notice, the PSAO shall provide the Commissioner with:</text> <paragraph num="(a)"> <text>A complete, unredacted copy of the applicable portion of the pharmacy services administrative contract relating to the complaint filed with the Commissioner, including any other contract applicable to the complaint; and</text> </paragraph> <paragraph num="(b)"> <text>Any other information the Commissioner may require for the purposes of determining a PSAO’s compliance with:</text> <paragraph num="(i)"> <text>The Insurance Article, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>This chapter; or</text> </paragraph> <paragraph num="(iii)"> <text>The applicable terms of the applicable pharmacy services administrative contract, PBM contract, or applicable purchaser’s contract.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§15-2001—15-2019, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 26, 2022 (49:26 Md. R. 1081)</annotation> </annotations> </chapter> <chapter num="50" heading="Filing of PSAO Contracts and Amendments"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <text>This chapter applies to the submission of a pharmacy services administrative contract or an amendment to a pharmacy services administrative contract required to be filed under Insurance Article, Title 15, Subtitle 20, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>“Contracted pharmacy” means an independent pharmacy in a contract with a pharmacy services administrative organization.</text> </paragraph> <paragraph num="(3)"> <text>“Independent pharmacy” has the meaning stated in Insurance Article, §15-2001(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Noncompliant” means a contract or amendment that is not in compliance with Maryland statutes and regulations.</text> </paragraph> <paragraph num="(5)"> <text>“Pharmacy benefits manager (PBM)” has the meaning stated in Insurance Article, §15-1601, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Pharmacy services administrative contract” has the meaning stated in Insurance Article, §15-2001(d), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Pharmacy services administrative organization” or “PSAO” has the meaning stated in Insurance Article, §15-2001(e), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Submission Requirements."> <paragraph num="A."> <text>Pursuant to the requirements of Insurance Article, §15-2010, Annotated Code of Maryland, and except as provided in §E of this regulation, a PSAO shall submit to the Commissioner all pharmacy services administrative contract forms and amendments to pharmacy services administrative contract forms.</text> </paragraph> <paragraph num="B."> <text>Unless it is disapproved by the Commissioner, and except as provided in §E of this regulation, a PSAO may not use a contract form or amendment to a contract form unless it has been filed with the Commissioner and:</text> <paragraph num="(1)"> <text>60 days have passed since the filing was acknowledged by the Commissioner in writing as having been received; or</text> </paragraph> <paragraph num="(2)"> <text>Subject to the filing corrections under §C of this regulation, a PSAO receives written notice from the Commissioner that the contract form or amendment to a contract form may be used in Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A PSAO that receives written notice from the Commissioner that its contract form or amendment to a contract form contains defects and is disapproved, may re-submit the disapproved forms indicating the corrections made.</text> </paragraph> <paragraph num="D."> <text>Except for the circumstances in §C of this regulation, a PSAO may not file a contract form or amendment form that has been previously disapproved by the Commissioner.</text> </paragraph> <paragraph num="E."> <text>Amendments to Contracts.</text> <paragraph num="(1)"> <text>A PSAO that amends any of the following provisions of a previously filed contract shall file the amendment form with the Commissioner:</text> <paragraph num="(a)"> <text>Any provision dealing with prohibitions on certain communications between a pharmacy or pharmacist and a beneficiary, as described in Insurance Article, §15-1611, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Any provision dealing with the responsibility of a PBM to disclose specified information to a pharmacy, as described in Insurance Article, §15-1628, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>Any provision dealing with fees for credentialing a pharmacy or pharmacist to participate in the network of a PBM or purchaser or the frequency of credentialing renewals, as described in Insurance Article, §15-1628, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Any provision describing the sources used to determine maximum allowable cost pricing, the process for updating pricing information, or the process to appeal, investigate, and resolve disputes regarding maximum allowable cost pricing, as described in Insurance Article, §15-1628.1, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Any provision describing the process to appeal, investigate, and resolve disputes regarding cost pricing and reimbursement, as described in Insurance Article, §15-1628.2, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(f)"> <text>Any provision dealing with a pharmacy being charged or held responsible for a fee or performance-based reimbursement related to the adjudication of a claim or an incentive program or being subject to a reduction in payment due to a reconciliation process, as described in Insurance Article, §15-1628.3, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(g)"> <text>Any provision describing the process to audit pharmacies, as described in Insurance Article, §15-1629, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(h)"> <text>Any provision dealing with retroactive denials or modifications of reimbursement to a pharmacy or pharmacist, as described in Insurance Article, §15-1631, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(i)"> <text>Any provision dealing with therapeutic interchanges, as described in Insurance Article, §§15-1633, 15-1634, 15-1635, 15-1636, and 15-1637, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(j)"> <text>Any provision dealing with the PSAO providing copies of contracts, amendments, payment schedules, or reimbursement rates to a pharmacy, as described in Insurance Article, §15-2011, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(k)"> <text>Any provision dealing with notification to a pharmacy of a material change in ownership or control of certain organizations affiliated with the PSAO, as described in Insurance Article, §15-2013, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(l)"> <text>Any provision dealing with the PSAO passing claims remittances from a PBM or purchaser to a pharmacy, as described in Insurance Article, §15-2015, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(m)"> <text>Any provision describing an arrangement for a pharmacy to purchase drugs, biologics, or medical devices from an entity under common ownership with the PSAO, as described in Insurance Article, §15-2016, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(n)"> <text>Any provision dealing with the applicability of Maryland law; or</text> </paragraph> <paragraph num="(o)"> <text>Any provision of the contract that is revised to comply with Maryland law.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An amendment to a previously filed contract form that does not amend a provision described in §E(1) of this regulation is not required to be filed with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A filing made under this chapter shall include a cover letter which includes the following:</text> <paragraph num="(1)"> <text>A list of the contract forms and amendment forms included in the submission; and</text> </paragraph> <paragraph num="(2)"> <text>A brief description of the purpose of each contract form and amendment form included in the submission.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Each page of a contract or amendment shall be identified by a form number which is unique to that form. This number shall be printed in the lower left-hand corner of each page, and no other number shall appear in close proximity to the form number.</text> </paragraph> <paragraph num="H."> <text>A filing made under this chapter shall include a signed certification from a responsible officer of the PSAO that, to the best of the officer’s knowledge and belief, the contract forms and amendment forms comply with applicable statutes and regulations.</text> </paragraph> <paragraph num="I."> <text>A PSAO may not file a contract form or amendment form before the PSAO has successfully registered as a PSAO with the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Noncompliant Contract Terms."> <paragraph num="A."> <text>A PSAO may have a contract form or amendment to a contract form disapproved if the contract or amendment contains or uses any language that:</text> <paragraph num="(1)"> <text>Violates Title 15, Subtitle 16 or Subtitle 20 of the Insurance Article, Annotated Code of Maryland or any applicable statutory provisions, including but not limited to Insurance Article, §§15-1611, 15-1628, 15-1628.1, 15-1628.2, 15-1628.3, 15-1629, 15-1631, 15-1633, 15-1634—15-1639, 15-2011, 15-2013(c), 15-2015, and 15-2016, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Includes a definition of “multisource generic drug” that is inconsistent with COMAR 31.46, or “generic” or “brand name drug” that is inconsistent with Health Occupations Article, §12-504, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Allows the PBM to reimburse a covered drug in an amount that differs, including zero, based on the identity of the wholesale distributor used by a contracting pharmacy for acquisition of the covered drug;</text> </paragraph> <paragraph num="(4)"> <text>Except for instances of error or fraud, allows a PBM or PSAO to re-classify, re-categorize, or re-characterize an adjudicated claim;</text> </paragraph> <paragraph num="(5)"> <text>In any way prohibits or restricts a pharmacist or pharmacy from filing a complaint with the Commissioner; and</text> </paragraph> <paragraph num="(6)"> <text>Fails to include the internal appeal provisions in the contract.</text> </paragraph> </paragraph> <paragraph num="B."> <text>No provisions</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Use of Noncompliant Contract or Amendment."> <paragraph num="A."> <text>If a PSAO uses a contract or amendment that becomes effective and the contract or amendment is subsequently found by the Commissioner to be noncompliant, the Commissioner may:</text> <paragraph num="(1)"> <text>Issue an order that:</text> <paragraph num="(a)"> <text>Gives notice of the disapproval;</text> </paragraph> <paragraph num="(b)"> <text>States a reason for the disapproval; and</text> </paragraph> <paragraph num="(c)"> <text>States the effective date of the disapproval in the notice; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Impose a civil penalty as provided under Insurance Article, §15-2019, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An order under this regulation is subject to a hearing under Insurance Article, §2-210, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>A request for a hearing under this regulation does not stay that portion of the order that requires a PSAO to cease and desist from the conduct identified in the order</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 15-2010, 15-2011, 15-2013, 15-2015, and 15-2016, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 26, 2022 (49:26 Md. R. 1081)</annotation> </annotations> </chapter> <chapter num="51" heading="Mental Health Benefits and Substance Use Disorder Benefits — Reports on Nonquantitative Treatment Limitations and Data"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to adopt regulations to implement Insurance Article, §15-144, Annotated Code of Maryland, to ensure uniform definitions and methodology for the reporting requirements established under this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <text>This chapter applies to carriers that deliver or issue for delivery a health benefit plan in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meaning indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Analysis report” means the report required by Insurance Article, §15-144(c)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“As written” means the written policies, procedures, and related documents, including medical necessity criteria or guidelines, used in the development and description of a NQTL and the decision whether to apply a NQTL to a particular benefit by the carrier or any entity delegated by the carrier to manage mental health, substance use disorder, or medical/surgical benefits on behalf of the carrier.</text> </paragraph> <paragraph num="(3)"> <text>“Evidentiary standards” has the meaning stated in 45 C.F.R. §146.136(a).</text> </paragraph> <paragraph num="(4)"> <text>“Factor” has the meaning stated in 45 C.F.R. §146.136(a).</text> </paragraph> <paragraph num="(5)"> <text>“In operation” means as used in the implementation and application of NQTLs, including the administration of benefits.</text> </paragraph> <paragraph num="(6)"> <text>“Medical/surgical benefits” has the meaning stated in Insurance Article, §15-144(a)(4), Annotated Code of Maryland, and may be abbreviated as “med/surg benefits” or “M/S benefits”.</text> </paragraph> <paragraph num="(7)"> <text>“Medical Necessity” means medical necessity as determined by the definition, criteria, or guidelines used by the carrier or its private review agent to determine what is necessary, efficient, or appropriate for purposes of coverage of a service or benefit. Insurance Article, §15-802, Annotated Code of Maryland, requires use of the criteria published by the American Society of Addiction Medicine for the evaluation of the medical necessity, efficiency, or appropriateness of services to treat a substance use disorder.</text> </paragraph> <paragraph num="(8)"> <text>“Mental health benefits” has the meaning stated in Insurance Article, §15-144(a)(5), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“MH/SUD” means mental health benefits and substance use disorder benefits as a combined category.</text> </paragraph> <paragraph num="(10)"> <text>“NQTL” means a nonquantitative treatment limitation as defined in Insurance Article, §15-144(a)(6), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Parity Act” has the meaning stated in Insurance Article, §15-144(a)(7), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Parity Act classification” has the meaning stated in Insurance Article, §15-144(a)(8), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Process” has the meaning stated in 45 C.F.R. §146.136(a).</text> </paragraph> <paragraph num="(14)"> <text>“Product” has the meaning stated in Insurance Article, §15-1309(a)(3), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Provider” means:</text> <paragraph num="(a)"> <text>A physician;</text> </paragraph> <paragraph num="(b)"> <text>Hospital;</text> </paragraph> <paragraph num="(c)"> <text>Facility;</text> </paragraph> <paragraph num="(d)"> <text>Practitioner; or</text> </paragraph> <paragraph num="(e)"> <text>Other person who is licensed or otherwise authorized to provide healthcare services.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Source” means the data, analyses, recommendation, requirement, meeting, or other information upon which a factor is based or from which a factor is derived or arises.</text> </paragraph> <paragraph num="(17)"> <text>“Strategy” has the meaning stated in 45 C.F.R. §146.136(a).</text> </paragraph> <paragraph num="(18)"> <text>“Substance use disorder benefits” has the meaning stated in Insurance Article, §15-144(a)(9), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(19)"> <text>“Summary form” means the form required by Insurance Article, §15-144(g)(5), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Filing of Nonquantitative Treatment Limitation Comparative Analysis Report."> <paragraph num="A."> <text>For each product offered by the carrier in the individual, small, and large group markets, a carrier that delivers or issues for delivery a health benefit plan in the State shall file a comparative analysis for each nonquantitative treatment limitation selected by the Commissioner in accordance with Insurance Article, §15-144 (c)(5), Annotated Code of Maryland, in the form required by the Commissioner, to demonstrate the carrier’s compliance with the Parity Act, in accordance with Insurance Article, §15-144(c)—(e), and (g), Annotated Code of Maryland. An analysis report shall be filed with the Commissioner using only the form developed by the Commissioner and posted on the Administration’s website.</text> </paragraph> <paragraph num="B."> <text>If, for any plan within a product described in §A of this regulation, the processes, strategies, evidentiary standards, or other factors used in designing and applying the selected NQTLs to MH/SUD benefits and M/S benefits are different, as written or in operation, from the other plans within the product, the carrier shall submit a separate comparative analysis for the selected NQTLs for the plan, and the statement required by Insurance Article, §15-144(c)(3)(iii) shall note the exception and identify the plan.</text> </paragraph> <paragraph num="C."> <text>A carrier shall submit the data templates described in Insurance Article, §15-144(f), Annotated Code of Maryland, in the form required by the Commissioner.</text> </paragraph> <paragraph num="D."> <text>The analysis reports described in §§A—C of this regulation shall be submitted on or before July 1, 2024, and every 2 years thereafter.</text> </paragraph> <paragraph num="E."> <text>Carriers shall prepare the analysis report in coordination with any entity the carrier contracts with to provide, manage, or administer MH/SUD benefits.</text> </paragraph> <paragraph num="F."> <text>Carriers shall follow the instructions posted on the Administration's website to complete the analysis report.</text> </paragraph> <paragraph num="G."> <text>A complete analysis report shall include responses to each section of the standardized form, as described in the instructions posted on the Administration's website.</text> </paragraph> <paragraph num="H."> <text>Each analysis report shall contain the statements required by Insurance Article, §15-144(c)(3)(iii) and (g)(4), Annotated Code of Maryland.</text> </paragraph> <paragraph num="I."> <text>Failure to file a complete analysis report shall constitute noncompliance with the Parity Act and the Commissioner will have authority to act in accordance with the provisions of Insurance Article, §15-144 (j), Annotated Code of Maryland.</text> </paragraph> <paragraph num="J."> <text>Complete Analysis Report.</text> <paragraph num="(1)"> <text>The analysis required by Insurance Article, §15-144(d), Annotated Code of Maryland, shall have been performed for NQTLs in place during the calendar year preceding the analysis report.</text> </paragraph> <paragraph num="(2)"> <text>A carrier shall analyze each NQTL separately for each classification and sub-classification, as applicable, of benefits.</text> </paragraph> <paragraph num="(3)"> <text>If the carrier delegates administration or management of mental health, substance use disorder, or medical/surgical benefits to another entity (for example, a private review agent specializing in mental health and substance use disorder benefits or a pharmacy benefits manager), the analyses shall be conducted with close and coordinated involvement of both the carrier and the entity delegated by the carrier to manage mental health, substance use disorder, or medical/surgical benefits on behalf of the carrier. The carrier is responsible for providing all required information for the analyses, regardless of any delegation arrangement with a subcontracted entity.</text> </paragraph> <paragraph num="(4)"> <text>The analysis reports shall include the following information to be considered complete:</text> <paragraph num="(a)"> <text>All of the information identified in Insurance Article, §15-144(d)-(f), Annotated Code of Maryland, in the manner and format specified in the standard reporting form and associated instructions provided on the Administration’s website;</text> </paragraph> <paragraph num="(b)"> <text>A response to each step listed in the reporting form, for each NQTL selected in accordance with Insurance Article, §15-144 (c)(5), Annotated Code of Maryland in each classification and sub-classification, as applicable. If a particular item in a step is not applicable (for example, if none of the factors used to determine that the NQTL will apply to a benefit was given more weight than another), an explanation shall be provided as to why the item is not applicable;</text> </paragraph> <paragraph num="(c)"> <text>A statement as to whether there is any variation in the design or application of a guideline or standard used by the carrier between MH/SUD and medical/surgical benefits, and, if so, a description of the factors and process used for establishing that variation. Specific definitions of factors, processes, or criteria used to establish or support any variation is required. Any practice guidelines that may be associated with the NQTL shall also be provided;</text> </paragraph> <paragraph num="(d)"> <text>If the design or application of the NQTL turns on specific decisions in the administration of the benefits, identification of the basis of the decisions, the decision maker or makers, the timing of the decisions, and the qualifications of the decision maker or makers, including expertise and specialty;</text> </paragraph> <paragraph num="(e)"> <text>If the analyses rely upon any experts, an assessment of each expert's qualifications, expertise and specialty, and a description of the extent to which the carrier relied upon each expert's evaluations in setting recommendations regarding both MH/SUD and medical/surgical benefits. Any variation in the use of experts (for example, specialty matching, licensure levels, etc.) for MH/SUD compared to M/S shall be defined and justified;</text> </paragraph> <paragraph num="(f)"> <text>A description of all exception processes available for each NQTL and when the exception may be applied;</text> </paragraph> <paragraph num="(g)"> <text>An explanation of how much discretion is allowed in applying the NQTL and whether such discretion is afforded comparably for processing MH/SUD benefit claims and medical/surgical benefits claims;</text> </paragraph> <paragraph num="(h)"> <text>Documentation of audits, reviews, and analyses to check sample claims or other administrative data to assess how each NQTL operates in practice, and whether written processes are correctly carried out, including the results of the audits and reviews performed on the NQTLs selected in accordance with Insurance Article, §15-144(c)(5), Annotated Code of Maryland, to conduct the comparative analysis required under Insurance Article, §15-144 (d)(2), Annotated Code of Maryland, as written, and in operation;</text> </paragraph> <paragraph num="(i)"> <text>Citations to any documents, studies, testing, claims data, or reports that include factors, sources, evidentiary standards, or other evidence relied upon in developing or applying the NQTL (for example, meeting minutes or reports showing how those considerations were applied), with copies of those items available on request; and</text> </paragraph> <paragraph num="(j)"> <text>A description of the consequences or penalties that apply when the NQTL requirement is not met.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Summary Form."> <paragraph num="A."> <text>A carrier subject to Insurance Article, §15-144, Annotated Code of Maryland, shall prepare a summary form using only the template form posted on the Administration’s website.</text> </paragraph> <paragraph num="B."> <text>The summary form shall be made available to plan members and accessible to the public on the carrier’s website no later than 30 days following the due date of each analysis report. In addition to the requirement under Insurance Article, § 15-144(c)(1)(iv), Annotated Code of Maryland that a carrier must provide the full comparative analysis to a member within 30 days of a written request, the carrier shall make the summary form available to plan members in response to a written request within 30 days of the request.</text> </paragraph> <paragraph num="C."> <text>Carriers shall follow the instructions for completing the summary form using the instructions posted on the Administration’s website.</text> </paragraph> <paragraph num="D."> <text>A complete summary form shall include responses to each applicable section of the standardized form, as described in the instructions posted on the Administration’s website.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Compliance Plan."> <paragraph num="A."> <text>If, as a result of the review of the reports described in Regulation .04 of this chapter, the Commissioner finds that a carrier subject to Insurance Article, §15-144, Annotated Code of Maryland, failed to comply with provisions of the Parity Act, the Commissioner shall notify the carrier and require the carrier to submit a compliance plan pursuant to Insurance Article, §15-144(i), Annotated Code of Maryland, to correct the noncompliance. The notice shall be in writing, but may be transmitted electronically.</text> </paragraph> <paragraph num="B."> <text>The carrier shall have 90 days to file a compliance plan following the date a notice of noncompliance is issued by the Commissioner.</text> </paragraph> <paragraph num="C."> <text>The compliance plan shall include:</text> <paragraph num="(1)"> <text>An acknowledgement of the Commissioner’s finding of noncompliance;</text> </paragraph> <paragraph num="(2)"> <text>A summary of action or actions taken by the carrier to correct the noncompliance prior to the notice from the Commissioner;</text> </paragraph> <paragraph num="(3)"> <text>A summary of future action or actions to correct the noncompliance and the time frame when the actions will be taken; and</text> </paragraph> <paragraph num="(4)"> <text>A summary of amounts owed to members or providers due to violations of the Parity Act, including:</text> <paragraph num="(a)"> <text>Any amounts owed to members and the payment date or dates;</text> </paragraph> <paragraph num="(b)"> <text>Draft correspondence to members;</text> </paragraph> <paragraph num="(c)"> <text>Any amounts owed to providers and the payment date or dates;</text> </paragraph> <paragraph num="(d)"> <text>Draft correspondence to providers; and</text> </paragraph> <paragraph num="(e)"> <text>Confirmation of amounts paid to members and providers.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Effective Date."> <text>This chapter is applicable to all reports filed after January 1, 2022.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 15-144, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: Effective December 27, 2021 (48:26 Md. R. 1113)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 13, 2025 (52:20 Md. R. 1003)</annotation> </annotations> </chapter> </subtitle> <subtitle num="11" heading="Health Insurance — Group"> <chapter num="01" heading="Conversion of Group Health Insurance"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide appropriate standards and requirements for implementing the conversion privilege and notification requirements under group health insurance policies.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer as defined in Insurance Article, §1-101, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan that is licensed to operate in Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Converted policy” means an individual policy or certificate issued to an individual in accordance with the requirements of this chapter upon termination of the individual's coverage under a group policy.</text> </paragraph> <paragraph num="(3)"> <text>Expense Incurred.</text> <paragraph num="(a)"> <text>“Expense incurred” means that the benefits payable under the contract are based on the medical expenses that the covered person incurs.</text> </paragraph> <paragraph num="(b)"> <text>For the purposes of this chapter, a contract that includes both expense-incurred benefits and indemnity benefits shall be considered to be written on an “expense-incurred” basis.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Group health insurance policy” or “group policy” means either:</text> <paragraph num="(a)"> <text>An insurance contract issued by an insurer under Insurance Article, §15-302, Annotated Code of Maryland, that insures employees or members, with or without their dependents, for hospital, surgical, medical, or major medical insurance on an expense-incurred basis; or</text> </paragraph> <paragraph num="(b)"> <text>A contract issued by a nonprofit health service plan to a group that insures employees or members, with or without their dependents, for hospital, medical, major medical, or surgical insurance on an expense-incurred basis.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Indemnity” means that the benefits payable under the contract are set amounts that are not related to the expenses the covered person incurs, such as a hospital indemnity policy that pays a flat fee for each day the covered person is confined in a hospital, regardless of the actual expenses the covered person incurs during the hospital confinement.</text> </paragraph> <paragraph num="(6)"> <text>“Insured person” means:</text> <paragraph num="(a)"> <text>An employee, a member, or another certificate holder covered under the group policy; or</text> </paragraph> <paragraph num="(b)"> <text>Any eligible dependent of the employee, member, or certificate holder covered under the group policy.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Medicare” means Title XVIII of the United States Social Security Act as added by the Social Security Amendments of 1965 or as later amended or superseded.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <paragraph num="A."> <text>This chapter is applicable to group health insurance policies issued or renewed in Maryland on or after October 1, 1983 and prior to January 1, 2014, except as provided in §§B—C of this regulation.</text> </paragraph> <paragraph num="B."> <text>This chapter is not applicable to:</text> <paragraph num="(1)"> <text>Group policies providing coverage only for:</text> <paragraph num="(a)"> <text>Specified diseases;</text> </paragraph> <paragraph num="(b)"> <text>Accidental injuries;</text> </paragraph> <paragraph num="(c)"> <text>Accidental death;</text> </paragraph> <paragraph num="(d)"> <text>Dental benefits;</text> </paragraph> <paragraph num="(e)"> <text>Vision care or any other supplemental benefit; or</text> </paragraph> <paragraph num="(f)"> <text>Any combination of the benefits described in §B(1)(a)—(e) of this regulation; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The following types of group policies:</text> <paragraph num="(a)"> <text>Hospital indemnity or other fixed indemnity coverage;</text> </paragraph> <paragraph num="(b)"> <text>Credit insurance;</text> </paragraph> <paragraph num="(c)"> <text>Disability income insurance;</text> </paragraph> <paragraph num="(d)"> <text>Long term care insurance as defined in Insurance Article, §18-101, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Medicare supplement contracts;</text> </paragraph> <paragraph num="(f)"> <text>Any coverage issued under Chapter 55 of Title 10, U.S. Code, and any coverage issued as supplemental to coverage issued under Chapter 55 of Title 10, U.S. Code;</text> </paragraph> <paragraph num="(g)"> <text>Any coverage issued as supplemental to liability insurance, Workers' Compensation, or similar insurance;</text> </paragraph> <paragraph num="(h)"> <text>Automobile medical-payment insurance, or any insurance under which benefits are payable with or without regard to fault, whether written on a group, blanket or individual basis; or</text> </paragraph> <paragraph num="(i)"> <text>Any combination of the insurance benefits described in §B(2)(a)—(h) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The requirements of Regulations .09 and .10 of this chapter apply to all converted policies issued or renewed on or after April 7, 2008.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Conversion Privilege."> <paragraph num="A."> <text>All group policies, as defined in this chapter, shall contain a provision stating that an insured person who has been continuously covered under the group policy and under any group policy providing similar benefits which it replaces for at least 3 months and whose coverage is terminated for any reason other than the reasons described in §D of this regulation, shall have issued to him without evidence of insurability a converted policy providing benefits not less than the minimum benefits required by this chapter.</text> </paragraph> <paragraph num="B."> <text>A carrier shall include a notice of the right of conversion in each certificate of coverage provided to individuals covered under group policies.</text> </paragraph> <paragraph num="C."> <text>Termination.</text> <paragraph num="(1)"> <text>Termination of coverage shall include, but not be limited to, termination by reason of discontinuance of the group policy in its entirety or with respect to an insured class, or termination by reason of the individual's no longer meeting the definition of a dependent contained in the group policy, or by reason of no longer meeting the definition in the policy of an employee or member, or by reason of the individual's retirement.</text> </paragraph> <paragraph num="(2)"> <text>The following are intended as illustrations of terminations by reason of no longer meeting the definition of dependent:</text> <paragraph num="(a)"> <text>A surviving spouse, whose coverage under the group policy terminates at the death of the employee or member;</text> </paragraph> <paragraph num="(b)"> <text>A spouse whose coverage under the group policy terminates by reason of divorce or legal separation;</text> </paragraph> <paragraph num="(c)"> <text>A child whose coverage under the group policy terminates at the death of an employee or member;</text> </paragraph> <paragraph num="(d)"> <text>A child whose coverage under the group policy terminates by reason of his reaching a limiting age specified in the group policy.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If a group policy provides that a retired employee may continue to be covered under the group policy, the employee shall be given the option of electing the same conversion rights that would apply if the employee's insurance under the group policy had terminated at retirement.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Exceptions.</text> <paragraph num="(1)"> <text>The carrier is not required to issue a converted policy if the insured person is enrolled in a health maintenance organization, or is covered or eligible for coverage under another group policy which provides benefits substantially equal to the minimum benefits required by these regulations, or if the provisions of Regulation .06H(1) of this chapter would be applicable.</text> </paragraph> <paragraph num="(2)"> <text>The carrier is not required to issue a converted policy to a person eligible for Medicare.</text> </paragraph> <paragraph num="(3)"> <text>The carrier is not required to issue a converted policy if termination under the group policy occurred because:</text> <paragraph num="(a)"> <text>The employee, member, or dependent performed an act or practice that constitutes fraud in connection with the coverage;</text> </paragraph> <paragraph num="(b)"> <text>The employee, member, or dependent made an intentional misrepresentation of a material fact under the terms of coverage; or</text> </paragraph> <paragraph num="(c)"> <text>The terminated coverage under the group policy was replaced by similar coverage within 31 days after the date of termination of the group policy.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The carrier is not required to issue a converted policy if the individual's coverage under the group policy terminated due to the insured person's failure to pay a required premium.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Insurer's Option."> <paragraph num="A."> <text>Instead of issuing an individual converted policy, the carrier may elect to provide the coverage required by this chapter by means of a group policy issued to a trustee and covering persons eligible for the conversion rights of these regulations.</text> </paragraph> <paragraph num="B."> <text>The policy issued under §A of this regulation may provide that the entire premium be payable by the insured persons.</text> </paragraph> <paragraph num="C."> <text>The group policy issued under §A of this regulation shall provide benefits not less than those stated in Regulations .06 and .10 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Standards for Converted Policies."> <paragraph num="A."> <text>The converted policy shall become effective on the day following the date of termination of insurance coverage under the group policy.</text> </paragraph> <paragraph num="B."> <text>The converted policy shall cover the employee or member or dependents of the employee or member, or both, who are covered by the group policy on the date of termination of insurance. At the option of the insurer, a separate converted policy may be issued to cover any dependent.</text> </paragraph> <paragraph num="C."> <text>If a converted policy issued to an employee or member also covers a dependent child whose coverage under the group policy would have terminated at a specified date, the converted policy may provide for termination on or after that date, subject, however, to the requirements of Insurance Article, §15-402, Annotated Code of Maryland, whichever is applicable.</text> </paragraph> <paragraph num="D."> <text>With respect to a person who was covered by the group policy, the period specified in the Time Limit on Certain Defenses provision of the converted policy shall begin with the date that person's insurance became effective under the group policy.</text> </paragraph> <paragraph num="E."> <text>Preexisting Conditions.</text> <paragraph num="(1)"> <text>The converted policy may not contain exclusions for preexisting conditions, except to the extent that a condition was excluded from the group policy from which conversion was made.</text> </paragraph> <paragraph num="(2)"> <text>Benefits for pregnancy and childbirth may not be excluded from the converted policy if benefits for these conditions were provided under the group policy.</text> </paragraph> <paragraph num="(3)"> <text>The converted policy may provide that:</text> <paragraph num="(a)"> <text>Any hospital, surgical, or medical benefits payable under the converted policy may be reduced by the amount of any hospital, surgical, or medical benefits payable under the group policy after the termination of the individual's group coverage; and</text> </paragraph> <paragraph num="(b)"> <text>During the first policy year, the benefits payable under the converted policy, together with the benefits payable under the group policy, will not exceed the benefits that would have been payable had the individual's coverage under the group policy remained in force and effect.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Any and all probationary and waiting periods set forth in the converted policy shall be considered as being met to the extent coverage was in force under the group policy.</text> </paragraph> <paragraph num="G."> <text>A converted policy may include a provision under which the carrier may request the following information in advance of any premium due date of the policy of any person covered under the policy whether:</text> <paragraph num="(1)"> <text>The person is covered for similar benefits by another hospital, surgical, medical or major medical expense insurance policy, or hospital or medical service subscriber contract, or medical practice, health maintenance organization, or other prepayment plan, or by any other plan or program;</text> </paragraph> <paragraph num="(2)"> <text>The person is covered for similar benefits under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis, or whether the person is in the military service; or</text> </paragraph> <paragraph num="(3)"> <text>Similar benefits are provided for or available to this person, pursuant to or in accordance with the requirements of any state or federal law.</text> </paragraph> </paragraph> <paragraph num="H."> <text>The converted policy may provide that the carrier may refuse to renew the policy or the coverage of any person insured under the policy if:</text> <paragraph num="(1)"> <text>Benefits provided or available to the person under the sources referred to in §G of this regulation together with the benefits provided by the converted policy would result in overinsurance according to the insurer's standards on file with the Commissioner;</text> </paragraph> <paragraph num="(2)"> <text>The information requested in accordance with §G of this regulation is not provided in timely fashion;</text> </paragraph> <paragraph num="(3)"> <text>The information provided in response to the requirement of §G of this regulation is fraudulent or contains material misstatements;</text> </paragraph> <paragraph num="(4)"> <text>The individual failed to pay premiums or contributions in accordance with the terms of the converted policy, including timeliness requirements;</text> </paragraph> <paragraph num="(5)"> <text>The individual performed an act or practice that constitutes fraud in connection with coverage; or</text> </paragraph> <paragraph num="(6)"> <text>The individual made an intentional misrepresentation of a material fact under the terms of coverage.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Converted policies shall comply with the requirements of and contain the benefit provisions mandated under Insurance Article, Titles 14 and 15, Annotated Code of Maryland, to the extent applicable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Evidence of Insurability."> <paragraph num="A."> <text>The converted policy shall be issued without evidence of insurability.</text> </paragraph> <paragraph num="B."> <text>If the insured person was individually rated less favorably than standard under the group policy, or if all persons in the group policy were rated less favorably than standard, the converted policy may be issued with a corresponding rating.</text> </paragraph> <paragraph num="C."> <text>If, by reason of a specific waiver or endorsement in the group policy, the insured person was specifically excluded from coverage for a specific named condition or conditions, a corresponding waiver or endorsement may be attached to the converted policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Application for Converted Policy."> <paragraph num="A."> <text>The conversion provision in the group policy may require that the insured person, or a person acting on behalf of the insured person, make written application for the converted policy and may not require that the first premium due to the carrier be paid sooner than 31 days following the termination of the insured person's coverage under the group policy, or sooner than any extended time provided in these regulations.</text> </paragraph> <paragraph num="B."> <text>The application for the converted policy may not contain questions relating to the health, occupation, avocation, or lifestyle of the insured person, or other questions relating to insurability, except information required to determine eligibility for the converted policy.</text> </paragraph> <paragraph num="C."> <text>The carrier may refuse to issue a converted policy or may issue a converted policy for a reduced amount if the application shows the insured person is covered under a group policy providing benefits substantially similar to the maximum benefits which the insured person could elect under the converted policy, or if the insured person has other health benefits available at least equal to the level of benefits which would permit the carrier to refuse to renew a converted policy in accordance with the standards of Regulation .06G and H of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Premiums for Converted Policies."> <paragraph num="A."> <text>Except as provided in §C of this regulation, the initial premium for the converted policy for the first 12 months and subsequent renewal premium shall be determined in accordance with the carrier's premium rates applicable to:</text> <paragraph num="(1)"> <text>Individually underwritten standard risks;</text> </paragraph> <paragraph num="(2)"> <text>The age and class of risk of each individual to be covered under the converted policy; and</text> </paragraph> <paragraph num="(3)"> <text>The type and amount of coverage provided.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The experience under converted policies may not be an acceptable basis for establishing rates for converted policies.</text> </paragraph> <paragraph num="C."> <text>A carrier may amend renewal premium rates for the subsequent year if:</text> <paragraph num="(1)"> <text>The carrier experiences incurred losses for a period of 2 years, on converted policies that have been in force for at least 1 year, which exceed earned premiums by more than 20 percent; and</text> </paragraph> <paragraph num="(2)"> <text>The amended premium rates are anticipated to produce a loss ratio of at least 120 percent.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Conditions pertaining to health status may not be an acceptable basis for classification for the purposes of this regulation.</text> </paragraph> <paragraph num="E."> <text>The frequency of premium payment shall be the frequency customarily required by the carrier for the policy form and plan selected, provided that the carrier may not require premium payments less frequently than quarterly without the consent of the policyholder.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Minimum Benefits under Converted Policies."> <paragraph num="A."> <text>Except as provided in §B of this regulation, if the group policy from which conversion is made provided coverage for basic hospital, medical, or surgical expense insurance, the insured person at the insured person's option shall be entitled to obtain a converted policy under any one of Plans A, B, or C, which are described in §C of this regulation.</text> </paragraph> <paragraph num="B."> <text>If the group policy provided hospital benefits based on the full cost of a semiprivate room, the carrier, at its option, may offer the insured person only Plan A, and if the group policy provided hospital benefits on a basis other than the full cost of a semiprivate room, the carrier, at its option, may offer the insured person only Plans B and C.</text> </paragraph> <paragraph num="C."> <text>Plans A—C provide the following minimum benefits:</text> <paragraph num="(1)"> <text>A Plan A policy shall provide as minimum the following benefits or similar benefits which are substantially actuarially equivalent:</text> <paragraph num="(a)"> <text>All semiprivate room and board and miscellaneous hospital charges for a 70-day maximum duration, and</text> </paragraph> <paragraph num="(b)"> <text>Surgical-medical expense benefits according to a schedule consistent with those customarily offered by the carrier under group insurance policies and providing a maximum benefit of $7,000;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A Plan B policy shall provide as minimum the following benefits or similar benefits which are substantially actuarially equivalent:</text> <paragraph num="(a)"> <text>Hospital room and board benefits in a maximum amount of $700 daily for a 70-day maximum duration;</text> </paragraph> <paragraph num="(b)"> <text>Miscellaneous hospital expense benefits in a maximum amount of $7,000; and</text> </paragraph> <paragraph num="(c)"> <text>Surgical-medical expense benefits according to a schedule consistent with those customarily offered by the carrier under group policies and providing a maximum benefit of $7,000;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A Plan C policy shall provide as minimum the following benefits or similar benefits which are substantially actuarially equivalent:</text> <paragraph num="(a)"> <text>Hospital room and board benefits in a maximum amount of $350 daily for a 70-day maximum duration;</text> </paragraph> <paragraph num="(b)"> <text>Miscellaneous hospital expense benefits in a maximum amount of $3,500; and</text> </paragraph> <paragraph num="(c)"> <text>Surgical-medical expense benefits according to a schedule consistent with those customarily offered by the carrier under group policies and providing a maximum benefit of $3,500.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>If the group policy from which conversion is made provided coverage for major medical or catastrophe expense benefits, the insured person shall be entitled to obtain a converted policy meeting the following minimum specifications subject to the deductible and the limitation of §§E and F of this regulation, or similar benefits which are substantially actuarially equivalent:</text> <paragraph num="(1)"> <text>Hospital room and board benefits in an amount not less than 75 percent of the charges for semiprivate room accommodations;</text> </paragraph> <paragraph num="(2)"> <text>Miscellaneous hospital expense benefits for the charges made by the hospital for services and supplies which are customarily furnished by the hospital and provided for use during a period of hospital confinement, in an amount not less than 75 percent of the charges incurred subject to a maximum of $7,000;</text> </paragraph> <paragraph num="(3)"> <text>Surgical expense benefits not less than 75 percent of the scheduled benefits customarily offered by the carrier under its group policy with a maximum of $7,000;</text> </paragraph> <paragraph num="(4)"> <text>Anesthesia services, consisting of administration of necessary general anesthesia and related procedures in connection with covered surgical services rendered by a physician other than the physician, or the physician's assistant, performing the surgical services, in an amount not less than 75 percent of the reasonable charges;</text> </paragraph> <paragraph num="(5)"> <text>Medical expense benefits for the diagnosis and treatment of sickness or injury, in an amount not less than 75 percent of the reasonable charges; and</text> </paragraph> <paragraph num="(6)"> <text>Seventy-five percent of reasonable charges for diagnostic X-ray, laboratory services, radiation therapy, prosthetic appliances, and rental of durable medical equipment required for therapeutic use.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Major medical or catastrophe coverage benefits may be subject to a deductible equal to the benefits provided under any basic hospital-medical-surgical policy or other plan of health benefits covering the insured person plus a cash deductible of $800.</text> </paragraph> <paragraph num="F."> <text>A major medical or catastrophe converted policy may be subject to an aggregate maximum benefit limit per person of $350,000.</text> </paragraph> <paragraph num="G."> <text>Benefit Periods and Benefit Limits.</text> <paragraph num="(1)"> <text>The converted policy may use a definition of benefit period similar to that contained in the group policy from which conversion is made or may use a calendar year benefit period.</text> </paragraph> <paragraph num="(2)"> <text>The converted policy may contain a benefit limit for each benefit period.</text> </paragraph> <paragraph num="(3)"> <text>The benefit limit need not be greater than the limit for each benefit period which was available under the group policy, or $87,500, if less.</text> </paragraph> </paragraph> <paragraph num="H."> <text>The benefits required under §§C and D of this regulation may be combined in a comprehensive policy which affords benefits at least as favorable as those required under §§C and D of this regulation, when both are applicable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Benefit Levels."> <text>If the coverage under the group policy from which conversion is being made provided benefits less than those which would be required in Regulation .10 of this chapter, the carrier, at its option, may provide a converted policy with benefits which are substantially similar to those provided under the group policy instead of offering the plans required in Regulation .10 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Out-of-State Conversions."> <paragraph num="A."> <text>A converted policy which is delivered outside of Maryland as a conversion from a group policy issued in Maryland shall be on a form which is permitted to be delivered in the other jurisdiction.</text> </paragraph> <paragraph num="B."> <text>If the carrier is prohibited by the law of the other jurisdiction from issuing a converted policy by reason of not being licensed in that jurisdiction, the carrier shall provide coverage in accordance with the requirements of these regulations under a group policy issued in Maryland or in another jurisdiction in which the carrier is licensed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Modified Requirements."> <text>Upon request of a carrier, the Commissioner may grant approval for modification of any of the minimum specifications or other requirements of these regulations upon a showing by the carrier that modification is equitably warranted.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Notification."> <paragraph num="A."> <text>The insured person whose coverage under a group policy terminates and who is entitled to make application for a converted policy shall be notified of this right, on or before the date of termination of coverage, but not more than 61 days before.</text> </paragraph> <paragraph num="B."> <text>An insured person who receives the timely notice of the conversion privilege, as described in §A of this regulation, shall be given the right to apply for the converted policy until at least 45 days after the date the individual's coverage under the group policy terminates.</text> </paragraph> <paragraph num="C."> <text>If the insured person is not provided the notification described in §A of this regulation, then the insured person shall have the right to apply for a converted policy within the time stated in the notice which shall be at least 31 days after the date of the notice, except that the late notice may not extend the period for making application beyond 90 days after the termination of coverage in the group policy.</text> </paragraph> <paragraph num="D."> <text>Except as provided in §E of this regulation, written notice presented to the insured person or mailed by the group policyholder to the last known address of the insured person or mailed by the carrier to the last known address of the insured person as furnished by the policyholder shall constitute notice for the purpose of this regulation.</text> </paragraph> <paragraph num="E."> <text>Notice given by the policyholder or the carrier by mail which is returned undelivered does not constitute notice for the purpose of this regulation.</text> </paragraph> <paragraph num="F."> <text>Unless the written notice is to be provided by the carrier, the group policy shall contain a provision to the effect that notice of the conversion privilege shall be given by the group policyholder to the affected certificate holder upon termination of coverage of the insured person.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Amendment of Group Policy."> <text>Any group policy issued in Maryland before the effective date of these regulations and not in conformity with these regulations, shall be amended on the annual renewal date of the group policy to conform to the regulations in this chapter.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 1, 1983 (10:14 Md. R. 1261)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C adopted effective May 6, 1996 (23:9 Md. R. 670)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective May 6, 1996 (23:9 Md. R. 670)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended effective May 6, 1996 (23:9 Md. R. 670)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.61 to COMAR 31.11.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 7, 2008 (35:7 Md. R. 752)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective June 22, 2015 (42:12 Md. R. 764)</annotation> </annotations> </chapter> <chapter num="02" heading="Group Health Insurance — Continuation of Coverage of Divorced Spouses"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide standards for implementing requirements of the Insurance Article and of Health-General Article, Annotated Code of Maryland, with respect to providing or continuing coverage for certain divorced spouses and dependent children.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Applicable change in status” means the divorce of the insured and the insured's spouse.</text> </paragraph> <paragraph num="(2)"> <text>“Dependent child” means an individual who:</text> <paragraph num="(a)"> <text>Is a child of the insured; and</text> </paragraph> <paragraph num="(b)"> <text>Either was covered under the group contract as a qualified or eligible dependent of the insured immediately preceding the applicable change in status, or was born to a qualified secondary beneficiary after the applicable change in status.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Employer” means an employer, an association of employers, or a trust sponsored by an employer or an association of employers to whom a group contract has been issued.</text> </paragraph> <paragraph num="(4)"> <text>Expense-Incurred Basis.</text> <paragraph num="(a)"> <text>“Expense-incurred Basis” means that the:</text> <paragraph num="(i)"> <text>Payment of benefits is based in whole or in part on the charge made by the provider; or</text> </paragraph> <paragraph num="(ii)"> <text>Services are directly provided without additional charge except for any deductible or copayment specified in the policy.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Policies or contracts issued on an expense-incurred basis include, but are not limited to:</text> <paragraph num="(i)"> <text>Health maintenance organization coverage;</text> </paragraph> <paragraph num="(ii)"> <text>A policy which provides for the cost of a semiprivate hospital room;</text> </paragraph> <paragraph num="(iii)"> <text>A policy which provides coverage for a semiprivate hospital room subject to a daily deductible;</text> </paragraph> <paragraph num="(iv)"> <text>A policy which provides coverage for a semiprivate hospital room but which is subject to a copayment;</text> </paragraph> <paragraph num="(v)"> <text>A policy which provides a daily hospital benefit of more than $100;</text> </paragraph> <paragraph num="(vi)"> <text>A policy which pays medical-surgical benefits on a usual and customary basis.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The following policies or contracts are not to be regarded as being on an expense-incurred basis:</text> <paragraph num="(i)"> <text>A policy which provides a daily hospital benefit of a fixed dollar amount not in excess of $100 per day;</text> </paragraph> <paragraph num="(ii)"> <text>A policy which provides only medical-surgical benefits in accordance with a fixed schedule of fees.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Group policy” or “group contract” means an insurance contract issued or delivered in this State which provides hospital, surgical, medical, or major medical coverage issued to an employer for the benefit of its employees by:</text> <paragraph num="(a)"> <text>An authorized insurer in accordance with Insurance Article, §15-302, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan authorized under Insurance Article, §§14-108—14-111, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization authorized under Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Insured” means an employee who is a resident of this State and is covered under a group policy.</text> </paragraph> <paragraph num="(7)"> <text>“Qualified secondary beneficiary” means, with respect to the insured, an individual other than the insured who is a:</text> <paragraph num="(a)"> <text>Beneficiary under the group contract as the spouse of the insured for at least the 30-day period immediately preceding an applicable change in status; or</text> </paragraph> <paragraph num="(b)"> <text>Dependent child.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Self-insured group health benefit program or plan” means a program or plan furnished by an employer for the benefit if its employees providing hospital, medical, surgical, or major medical benefits on an expense-incurred basis similar to benefits which could be provided under a group health insurance policy.</text> </paragraph> <paragraph num="(9)"> <text>“Termination statement” means a written notice of an event specified in Regulation .07 of this chapter provided to an employer on a form containing language prescribed by the Commissioner, or in substantially similar language, which is signed by the insured and:</text> <paragraph num="(a)"> <text>A qualified secondary beneficiary; or</text> </paragraph> <paragraph num="(b)"> <text>Accompanied by a signed and sworn affidavit of the insured verifying the factual content of the statement.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <paragraph num="A."> <text>These regulations shall be applicable to all group health insurance policies or contracts issued or delivered in this State to the employer of the insured which provide hospital, surgical, medical, or major medical benefits on an expense-incurred basis whether issued by a nonprofit health service plan or by any other insurer and to all group policies or contracts issued or delivered in this State to an employer of an insured by a health maintenance organization certified under Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>These regulations shall be applicable to any policy or contract issued on or after the effective date of these regulations, beginning with the date of issue of the policy or contract.</text> </paragraph> <paragraph num="C."> <text>These regulations shall be applicable to any policy or contract issued before the effective date of these regulations, beginning on the first annual renewal date or the first anniversary of the date of issue of the policy or contract occurring on or next following the effective date of these regulations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligibility."> <paragraph num="A."> <text>Beginning with an applicable change in status and until the occurrence of an event described in Regulation .07 of this chapter, the qualified secondary beneficiary shall be entitled to the benefits provided under the group contract.</text> </paragraph> <paragraph num="B."> <text>Section A of this regulation may not be applicable to any period during which the insured is not covered by a group contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Coverage Provided."> <paragraph num="A."> <text>The coverage provided to a qualified secondary beneficiary shall be identical to the coverage which would have been provided under the group contract for the benefit of the qualified secondary beneficiary if the individual had remained an eligible dependent of the insured employee and there had been no applicable change in status.</text> </paragraph> <paragraph num="B."> <text>If modifications are made in the employer's group contract, the coverage provided to the qualified secondary beneficiary shall be correspondingly modified.</text> </paragraph> <paragraph num="C."> <text>If the employer transfers from one group contract to another, the coverage provided the qualified secondary beneficiary shall be transferred to that provided under the new group contract.</text> </paragraph> <paragraph num="D."> <text>If the employer provides various hospital, surgical, medical, or major medical coverages under one or more group contracts, a qualified secondary beneficiary may not choose less than all of the benefits provided unless the insured employee would have had the option of making such a choice for an eligible dependent if there had been no applicable change in status.</text> </paragraph> <paragraph num="E."> <text>The benefits to be provided under the group contract shall be in no respect less favorable than those required by these regulations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Conditions of Coverage."> <paragraph num="A."> <text>In order to receive the benefits provided under the group contract, an insured employee, or the divorced spouse of the insured employee, shall notify the employer of the applicable change in status not later than:</text> <paragraph num="(1)"> <text>60 days after the applicable change in status if on the date of the applicable change in status the employee is covered under the employer's group contract or under another group contract issued to the same employer replacing that contract. The coverage shall be retroactive to the applicable change in status.</text> </paragraph> <paragraph num="(2)"> <text>30 days after the date the insured employee becomes eligible for coverage under a group contract issued to another employer, if the insured employee becomes covered under the new employer's group contract after the applicable change in status. The coverage shall be retroactive to the date of eligibility.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The request to the employer under §A of this regulation shall be in writing and signed by the insured.</text> </paragraph> <paragraph num="C."> <text>Costs Paid to Employer.</text> <paragraph num="(1)"> <text>The insured employee or the qualified secondary beneficiary shall pay to the employer the employer's entire cost for the coverage to be provided.</text> </paragraph> <paragraph num="(2)"> <text>The entire cost to the employer includes the employer's customary contribution as well as the contribution customarily required of an employee if there were no applicable changes in status.</text> </paragraph> <paragraph num="(3)"> <text>If the insurer quotes rates to the employer separately for individual coverage and for dependent coverage, the payment to be made on behalf of the qualified secondary beneficiary shall be the rate quoted for dependents.</text> </paragraph> <paragraph num="(4)"> <text>If the insurer quotes a family rate which would normally include an employee and eligible dependents, the amount payable on behalf of the qualified secondary beneficiary shall be the difference between the family rate and the rate payable for an individual employee who is not covered for dependents.</text> </paragraph> <paragraph num="(5)"> <text>If, in connection with a divorce, there is a court order or an agreement between the insured and the insured's spouse as to the allocation of the cost of the insurance coverage between the insured employee and the spouse, payment to the employer shall be made in accordance with the terms of the court order or the agreement.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Payment to the employer for the cost of the coverage is due and shall be paid on or before the first day of each month for which coverage is to be provided unless the employer agrees in writing to payment at a later date. The following apply:</text> <paragraph num="(1)"> <text>If the employer customarily collects employee contributions under the group contract on a quarterly basis, the required payment is due and shall be paid on or before the first day of each quarter for which coverage is to be provided.</text> </paragraph> <paragraph num="(2)"> <text>At the time of the notice referred to in §A of this regulation, payment will be due on the date notice is given. On that date the amount of payment due shall be the accumulated charges to cover the period beginning with the effective date of the coverage to be provided to the end of the month in which the notice is given.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Termination."> <paragraph num="A."> <text>Coverage for a qualified secondary beneficiary will terminate when the coverage under the group contract terminates with respect to the insured employee.</text> </paragraph> <paragraph num="B."> <text>Even though the insured employee continues to be covered under the group contract, coverage with respect to any individual qualified secondary beneficiary shall terminate on the date of occurrence of any of the following:</text> <paragraph num="(1)"> <text>The date on which the qualified secondary beneficiary becomes eligible for hospital, surgical, medical, or major medical benefits under any insured group contract or any health maintenance organization group contract or any self-insured group health benefit program or plan provided the:</text> <paragraph num="(a)"> <text>Group contract or the self-insured program or plan is on an expense-incurred basis, and</text> </paragraph> <paragraph num="(b)"> <text>Eligibility does not result from the provisions of these regulations;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The date on which the insured becomes entitled to benefits under Title XVIII of the Social Security Act;</text> </paragraph> <paragraph num="(3)"> <text>The date on which a qualified secondary beneficiary who is a dependent child would no longer have been covered under the group contract if there had been no applicable change in status;</text> </paragraph> <paragraph num="(4)"> <text>The date of remarriage of an individual who is a qualified secondary beneficiary by reason of having been the divorced spouse of the insured employee;</text> </paragraph> <paragraph num="(5)"> <text>The date on which the qualified secondary beneficiary becomes insured under a non-group policy or contract or under a non-group health maintenance organization contract which provides coverage for hospital, surgical, medical, or major medical benefits on an expense-incurred basis;</text> </paragraph> <paragraph num="(6)"> <text>The effective date of an election by a qualified secondary beneficiary to no longer be covered under the group contract;</text> </paragraph> <paragraph num="(7)"> <text>The date the employer receives a duly executed notice of termination, or the effective date of the notice if later;</text> </paragraph> <paragraph num="(8)"> <text>The premium due date on which the premium payable to the employer by or on behalf of the qualified secondary beneficiary is not timely made.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Conversion and Continuation — Repealed." /> <regulation prefix="Regulation" num=".09" heading="Notification Requirements."> <paragraph num="A."> <text>Each group contract to which these regulations are applicable shall include a statement as provided in §B of this regulation.</text> </paragraph> <paragraph num="B."> <text>The statement shall disclose the availability of the benefits provided under these regulations and shall provide a summary of the eligibility requirements, the duration and general description of the benefits.</text> </paragraph> <paragraph num="C."> <text>Each group contract issued before the effective date of these regulations, to which these regulations are applicable, shall be amended in accordance with these regulations not later than the date of applicability stated in Regulation .03B of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Termination Statement."> <paragraph num="A."> <text>The termination statement shall be in language substantially as indicated in this regulation.</text> </paragraph> <paragraph num="B."> <text>If the termination statement is signed by the insured and a qualified secondary beneficiary:</text> </paragraph> <paragraph num="C."> <text>If the termination statement is to be signed only by the insured:</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 15-407—15-409, and 15-412; Health-General Article, §19-703; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 19, 1988 (15:19 Md. R. 2247)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.77 to COMAR 31.11.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 repealed effective June 22, 2015 (42:12 Md. R. 764)</annotation> </annotations> </chapter> <chapter num="03" heading="Group Health Insurance — Continuation of Coverage of Surviving Spouses"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide standards for implementing requirements of the Insurance Article and of Health-General Article, Annotated Code of Maryland, with respect to providing or continuing coverage for certain surviving spouses and dependent children.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Applicable change in status” means the death of the insured.</text> </paragraph> <paragraph num="(2)"> <text>“Dependent child” means an individual who:</text> <paragraph num="(a)"> <text>Is a child of the insured; and</text> </paragraph> <paragraph num="(b)"> <text>Either was covered under the group contract as a qualified or eligible dependent of the insured immediately preceding the applicable change in status, or was born to a qualified secondary beneficiary after the applicable change in status.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Employer” means an employer, an association of employers, or a trust sponsored by an employer or an association of employers to whom a group contract has been issued.</text> </paragraph> <paragraph num="(4)"> <text>“Expense-incurred basis” means that the:</text> <paragraph num="(a)"> <text>Payment of benefits is based in whole or in part on the charge made by the provider; or</text> </paragraph> <paragraph num="(b)"> <text>Services are directly provided without additional charge except for any deductible or copayment specified in the policy;</text> </paragraph> <paragraph num="(c)"> <text>Policies or contracts issued on an expense-incurred basis include but are not limited to:</text> <paragraph num="(i)"> <text>Health maintenance organization coverage,</text> </paragraph> <paragraph num="(ii)"> <text>A policy which provides for the cost of a semiprivate hospital room,</text> </paragraph> <paragraph num="(iii)"> <text>A policy which provides coverage for a semiprivate hospital room subject to a daily deductible,</text> </paragraph> <paragraph num="(iv)"> <text>A policy which provides coverage for a semiprivate hospital room but which is subject to a copayment,</text> </paragraph> <paragraph num="(v)"> <text>A policy which provides a daily hospital benefit of more than $100,</text> </paragraph> <paragraph num="(vi)"> <text>A policy which pays medical-surgical benefits on a usual and customary basis;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Following policies or contracts are not to be regarded as being on an expense-incurred basis:</text> <paragraph num="(i)"> <text>A policy which provides a daily hospital benefit of a fixed dollar amount not in excess of $100 per day,</text> </paragraph> <paragraph num="(ii)"> <text>A policy which provides only medical-surgical benefits in accordance with a fixed schedule of fees.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Group policy” or “group contract” means an insurance contract issued or delivered in this State which provides hospital, surgical, medical, or major medical coverage issued to an employer for the benefit of its employees by:</text> <paragraph num="(a)"> <text>An authorized insurer in accordance with Insurance Article, §15-302, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan authorized under Insurance Article, §§14-108—14-111, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization authorized under Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Insured” means an employee who is a resident of this State and covered under a group policy for a period of not less than 3 months.</text> </paragraph> <paragraph num="(7)"> <text>“Qualified secondary beneficiary” means, with respect to an insured, an individual other than the insured who is:</text> <paragraph num="(a)"> <text>A beneficiary under the group contract as the spouse of the insured for at least the 30-day period immediately preceding an applicable change in status; or</text> </paragraph> <paragraph num="(b)"> <text>A dependent child.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Self-insured group health benefit program or plan” means a program or plan furnished by an employer for the benefit of its employees providing hospital, surgical, medical, or major medical benefits on an expense-incurred basis similar to benefits which could be provided under a group health insurance policy.</text> </paragraph> <paragraph num="(9)"> <text>“Termination statement” means a written notice of an event specified in Regulation .07 of this chapter provided to an employer on a form containing language prescribed by the Commissioner, or in substantially similar language, which is signed by the insured.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <paragraph num="A."> <text>This chapter is applicable to all group health insurance policies or contracts issued or delivered in this State to the employer of the insured which provide hospital, surgical, medical, or major medical benefits on an expense-incurred basis whether issued by a nonprofit health service plan or by any other insurer, and to all group policies or contracts issued or delivered in this State to an employer by a health maintenance organization certified under Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>This chapter is applicable to any policy or contract issued on or after the effective date of this chapter, beginning with the date of issue of the policy or contract.</text> </paragraph> <paragraph num="C."> <text>This chapter is applicable to any policy or contract issued before the effective date of this chapter, beginning on the first annual renewal date or the first anniversary of the date of issue of the policy or contract occurring on or next following the effective date of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligibility."> <text>Beginning with an applicable change in status and until the occurrence of an event described in Regulation .07 of this chapter, the qualified secondary beneficiary shall be entitled to the benefits provided under the group contract.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Coverage Provided."> <paragraph num="A."> <text>The coverage provided to a qualified secondary beneficiary shall be identical to the coverage which would have been provided under the group contract for the benefit of the qualified secondary beneficiary if the qualified secondary beneficiary had remained an eligible dependent of the insured employee and there had been no applicable change in status.</text> </paragraph> <paragraph num="B."> <text>If modifications are made in the employer's group contract, the coverage provided to the qualified secondary beneficiary shall be correspondingly modified.</text> </paragraph> <paragraph num="C."> <text>If the employer transfers from one group contract to another, the coverage provided the qualified secondary beneficiary will be transferred to that provided under the new group contract.</text> </paragraph> <paragraph num="D."> <text>If the employer provides various hospital, surgical, medical, or major medical coverages under one or more group contracts, a qualified secondary beneficiary may not elect to choose less than all of the benefits provided unless the insured employee would have had the option of making such a choice for an eligible dependent if there had been no applicable change in status.</text> </paragraph> <paragraph num="E."> <text>The benefits to be provided under the group contract shall be in no respect less favorable than those required by this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Conditions of Coverage."> <paragraph num="A."> <text>In order to receive the benefits provided under the group contract, a surviving spouse of the insured employee shall elect coverage not later than 45 days after the applicable change in status if a request is made for coverage under the group contract under which the insured employee is covered on the date of the applicable change in status. The coverage shall be retroactive to the applicable change in status.</text> </paragraph> <paragraph num="B."> <text>The request to the employer under §A of this regulation shall be in writing and signed by the qualified secondary beneficiary.</text> </paragraph> <paragraph num="C."> <text>Costs to Secondary Beneficiary.</text> <paragraph num="(1)"> <text>The qualified secondary beneficiary shall pay to the employer the employer's entire cost for the coverage to be provided.</text> </paragraph> <paragraph num="(2)"> <text>The entire cost to the employer includes the employer's customary contribution as well as the contribution customarily required of an employee if there were no applicable change in status.</text> </paragraph> <paragraph num="(3)"> <text>The entire cost to the employer may include a reasonable administrative fee not to exceed 2 percent of the amount permitted under §C(2) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>If the insurer quotes rates to the employer separately for individual coverage and for dependent coverage, the payment to be made on behalf of the qualified secondary beneficiary shall be the rate quoted for dependents.</text> </paragraph> <paragraph num="(5)"> <text>If the insurer quotes a family rate which would normally include an employee and eligible dependents, the amount payable on behalf of the qualified secondary beneficiary shall be the difference between the family rate and the rate payable for an individual employee who is not covered for dependents.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Due Date of Premium.</text> <paragraph num="(1)"> <text>Payment to the employer for the cost of the coverage is due and shall be paid on or before the first day of each month for which coverage is to be provided unless the employer agrees in writing to payment at a later date.</text> </paragraph> <paragraph num="(2)"> <text>At the time of the request referred to in §A of this regulation, payment will be due on the date of request. At the date of the request, the amount of payment due shall be the accumulated charges to cover the period beginning with the effective date of the coverage to be provided to the end of the month in which the request is made.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Termination."> <text>Coverage for a qualified secondary beneficiary will terminate on the earliest of any of the following:</text> <paragraph num="A."> <text>18 months after the date of the applicable change in status;</text> </paragraph> <paragraph num="B."> <text>The date on which the qualified secondary beneficiary becomes eligible for hospital, surgical, medical, or major medical benefits under any insured group contract or any health maintenance organization group contract or any self-insured group health benefit program or plan provided:</text> <paragraph num="(1)"> <text>The group contract or the self-insured program or plan is on an expense-incurred basis; and</text> </paragraph> <paragraph num="(2)"> <text>The eligibility does not result from the provisions of these regulations;</text> </paragraph> </paragraph> <paragraph num="C."> <text>The date on which the qualified secondary beneficiary becomes entitled to benefits under Title XVIII of the Social Security Act;</text> </paragraph> <paragraph num="D."> <text>The date on which a qualified secondary beneficiary who is a dependent child would no longer have been covered under the group contract if there had been no applicable change in status;</text> </paragraph> <paragraph num="E."> <text>The date on which the qualified secondary beneficiary becomes insured under a non-group policy or contract or under a non-group health maintenance organization contract which provides coverage for hospital, surgical, medical, or major medical benefits on an expense-incurred basis;</text> </paragraph> <paragraph num="F."> <text>The effective date of an election by a qualified secondary beneficiary to no longer be covered under the group contract; or</text> </paragraph> <paragraph num="G."> <text>The premium due date on which the qualified secondary beneficiary fails to make timely payment of any amount required under Regulation .06C of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Conversion and Continuation — Repealed." /> <regulation prefix="Regulation" num=".09" heading="Notification Requirements."> <paragraph num="A."> <text>Each group contract to which these regulations are applicable shall include a statement as provided in §B of this regulation.</text> </paragraph> <paragraph num="B."> <text>The statement shall disclose the availability of the benefits provided under these regulations and shall provide a summary of the eligibility requirements, the duration, and general description of the benefits.</text> </paragraph> <paragraph num="C."> <text>Each group contract issued before the effective date of this chapter, to which this chapter is applicable, shall be amended in accordance with this chapter not later than the date of applicability stated in Regulation .03C of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Election Statement."> <text>The form which a qualified secondary beneficiary shall use to elect coverage under these regulations shall be in language substantially as indicated in this regulation:</text> <text>To _____________________________________________________________________________________________</text> <text>(name of employer)</text> <text>The employee ____________________________________________________________________________________</text> <text>(name of employee)</text> <text>Whose Social Security number was ____________________________ died on ____________________________________</text> <text>(date od death)</text> <text>This is to advise that _______________________________________________________________________________</text> <text>____________________________________________________________________________________________</text> <text>(name or names of qualified secondary beneficiaries)</text> <text>who were covered as qualified dependents of the employee under the employer's group health insurance contract elect(s) to continue to be covered under that contract beginning with the date of death.</text> <text>Date of Application: ________________________________</text> <text>Signature of Qualified</text> <text>Secondary Beneficiary: _____________________________________________________________________________</text> <text>Mailing Address of</text> <text>Secondary Beneficiary: _______________________________________________________________________________</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Termination Statement."> <text>The termination statement shall be in language substantially as indicated in this regulation:</text> <text>To _____________________________________________________________________________________________</text> <text>(name of employer)</text> <text>This is to advise that _______________________________________________________________________________</text> <text>_______________________________________________________________________________________________</text> <text>(name or names of qualified secondary beneficiaries)</text> <text>is/are no longer to be covered under our group health insurance contract effective ________________________________</text> <text>(date)</text> <text>The reason for this termination is ______________________________________________________________________</text> <text>_________________________________________________________________________________________________</text> <text>(reason)</text> <text>Date: ___________________________</text> <text>____________________________________________________________________________________________</text> <text>(signature of qualified secondary beneficiary)</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 14-124(b), 15-407—15-409, and 15-412; Health-General Article, §19-703; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 14, 1987 (14:25 Md. R. 2659)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.83 to COMAR 31.11.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 repealed effective June 22, 2015 (42:12 Md. R. 764)</annotation> </annotations> </chapter> <chapter num="04" heading="Group Health Insurance — Continuation of Coverage for Terminated Employees"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide standards for implementing requirements of the Insurance Article, Health-General Article, and Unemployment Insurance Law, Annotated Code of Maryland, with respect to continuation of coverage for certain terminated employees.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Applicable Change in Status.</text> <paragraph num="(a)"> <text>“Applicable change in status” means the termination of the insured's employment other than for cause.</text> </paragraph> <paragraph num="(b)"> <text>“Applicable change in status” includes:</text> <paragraph num="(i)"> <text>Involuntary termination of the insured's employment other than for cause; and</text> </paragraph> <paragraph num="(ii)"> <text>Voluntary termination of the insured's employment by the insured.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Employer” means an employer, an association of employers, or a trust sponsored by an employer or an association of employers to whom a group contract has been issued.</text> </paragraph> <paragraph num="(3)"> <text>“Expense-incurred basis” means that the:</text> <paragraph num="(a)"> <text>Payment of benefits is based in whole or in part on the charge made by the provider; or</text> </paragraph> <paragraph num="(b)"> <text>Services are directly provided without additional charge except for any deductible or copayment specified in the policy;</text> </paragraph> <paragraph num="(c)"> <text>Policies or contracts issued on an expense-incurred basis include but are not limited to:</text> <paragraph num="(i)"> <text>Health maintenance organization coverage;</text> </paragraph> <paragraph num="(ii)"> <text>A policy which provides for the cost of a semiprivate hospital room;</text> </paragraph> <paragraph num="(iii)"> <text>A policy which provides coverage for a semiprivate hospital room subject to a daily deductible;</text> </paragraph> <paragraph num="(iv)"> <text>A policy which provides coverage for a semiprivate hospital room but which is subject to a copayment;</text> </paragraph> <paragraph num="(v)"> <text>A policy which provides a daily hospital benefit of more than $100;</text> </paragraph> <paragraph num="(vi)"> <text>A policy which pays medical-surgical benefits on a usual and customary basis;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Following policies or contracts are not to be regarded as being on an expense-incurred basis:</text> <paragraph num="(i)"> <text>A policy which provides a daily hospital benefit of a fixed dollar amount not in excess of $100 per day;</text> </paragraph> <paragraph num="(ii)"> <text>A policy which provides medical-surgical benefits in accordance with a fixed schedule of fees.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Group policy” or “group contract” means an insurance contract issued or delivered in this State which provides hospital, surgical, medical, or major medical coverage issued to an employer for the benefit of its employees by:</text> <paragraph num="(a)"> <text>An authorized insurer in accordance with Insurance Article, §15-302, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan authorized under Insurance Article, §§14-108—14-111, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization authorized under Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Insured” means an employee who is a resident of this State and covered under a group policy for a period of not less than 3 months.</text> </paragraph> <paragraph num="(6)"> <text>“Self-insured group health benefit program or plan” means a program or plan furnished by an employer for the benefit of its employees providing hospital, surgical, medical, or major medical benefits on an expense-incurred basis similar to benefits which could be provided under a group health insurance policy.</text> </paragraph> <paragraph num="(7)"> <text>“Termination statement” means a written notice of an event specified in Regulation .07 of this chapter provided to an employer on a form containing language prescribed by the Commissioner, or in substantially similar language, which is signed by the insured.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <paragraph num="A."> <text>These regulations shall be applicable to all group health insurance policies or contracts issued or delivered in this State to the employer of the insured which provide hospital, surgical, medical, or major medical benefits on an expense-incurred basis whether issued by a nonprofit health service plan or by any other insurer and to all group policies or contracts issued or delivered in this State to an employer by a health maintenance organization certified under Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>These regulations shall be applicable to any policy or contract issued on or after the effective date of these regulations, beginning with the date of issue of the policy or contract.</text> </paragraph> <paragraph num="C."> <text>These regulations shall be applicable to any policy or contract issued before the effective date of these regulations, beginning on the first annual renewal date or the first anniversary of the date of issue of the policy or contract occurring on or next following the effective date of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Eligibility."> <text>Entitlement to continuation benefits shall begin with an applicable change in status and last until the occurrence of an event described in Regulation .06 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Coverage Provided."> <paragraph num="A."> <text>The coverage provided shall be identical to the coverage offered under the group contract to similarly situated individuals for whom there has been no applicable change in status.</text> </paragraph> <paragraph num="B."> <text>If the group policy provides benefits for spouses and dependent children, the coverage provided shall be available to the insured's:</text> <paragraph num="(1)"> <text>Spouse if the spouse was covered under the group policy before the applicable change in status; and</text> </paragraph> <paragraph num="(2)"> <text>Dependent children if the insured had coverage for dependent children before the applicable change in status.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the employer transfers from one group contract to another, the coverage provided the insured will be transferred to that coverage provided under the new group contract.</text> </paragraph> <paragraph num="D."> <text>If the employer provides various hospital, surgical, medical, or major medical coverages under one or more group contracts, an insured may not elect to choose less than all of the benefits provided unless the insured would have had the option of making such a choice if there had been no applicable change in status.</text> </paragraph> <paragraph num="E."> <text>The benefits to be provided under the group contract shall be in no respect less favorable than those required by these regulations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Conditions of Coverage."> <paragraph num="A."> <text>In order to receive the benefits provided under the group contract, an insured shall elect coverage not later than 45 days after the applicable change in status.</text> </paragraph> <paragraph num="B."> <text>The coverage shall be retroactive to the applicable change in status.</text> </paragraph> <paragraph num="C."> <text>The request to the employer under §A of this regulation shall be in writing and signed by the insured.</text> </paragraph> <paragraph num="D."> <text>Continuation coverage shall be provided without evidence of insurability or additional waiting periods.</text> </paragraph> <paragraph num="E."> <text>Costs to Insured.</text> <paragraph num="(1)"> <text>The insured shall pay to the employer the employer's entire cost for the coverage to be provided.</text> </paragraph> <paragraph num="(2)"> <text>The entire cost to the employer includes the employer's customary contribution as well as the contribution customarily required of an employee if there were no applicable change in status.</text> </paragraph> <paragraph num="(3)"> <text>The entire cost to the employer may include a reasonable administrative fee not to exceed 2 percent of the amount permitted under §E(2) of this regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The insured may elect to pay the employer the amount due for the cost of the coverage in monthly installments.</text> </paragraph> <paragraph num="G."> <text>In addition to the allowable cost provided for under §E of this regulation, the first payment to the employer by the insured shall include the cost for the coverage provided after the change in status and until the end of the month in which the insured makes an election.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Termination."> <text>Coverage for the insured shall terminate on the earliest of any of the following:</text> <paragraph num="A."> <text>18 months after the date of the applicable change in status;</text> </paragraph> <paragraph num="B."> <text>The date on which the insured becomes eligible for hospital, surgical, medical, or major medical benefits under any insured group contract or any health maintenance organization group contract or any self-insured group health benefit program or plan provided:</text> <paragraph num="(1)"> <text>The group contract or the self-insured program or plan is on an expense-incurred basis; and</text> </paragraph> <paragraph num="(2)"> <text>The eligibility does not result from the provisions of this chapter;</text> </paragraph> </paragraph> <paragraph num="C."> <text>The date on which the insured becomes entitled to benefits under Title XVIII of the Social Security Act;</text> </paragraph> <paragraph num="D."> <text>The date on which the insured becomes covered under a non-group policy or under a non-group health maintenance organization contract which provides coverage for hospital, surgical, medical, or major medical benefits on an expense-incurred basis;</text> </paragraph> <paragraph num="E."> <text>The premium due date on which the insured does not make timely payment in the amount required for the provided coverage;</text> </paragraph> <paragraph num="F."> <text>The date on which the insured elects not to be covered under the group contract;</text> </paragraph> <paragraph num="G."> <text>The date on which the employer ceases to provide hospital, surgical, medical, or major medical benefits to its employees under a group contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Conversion and Continuation — Repealed." /> <regulation prefix="Regulation" num=".09" heading="Notification Requirements."> <paragraph num="A."> <text>Every group contract to which this chapter is applicable shall include a statement as provided in §B of this regulation.</text> </paragraph> <paragraph num="B."> <text>The statement shall disclose the availability of the benefits provided under this chapter and shall provide a summary of the eligibility requirements, the duration, and general description of the benefits.</text> </paragraph> <paragraph num="C."> <text>Every group contract issued before the effective date of this chapter, to which this chapter is applicable, shall be amended in accordance with this chapter not later than the date of applicability stated in Regulation .03C of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Election Statement."> <text>The form which the insured shall use to elect coverage under these regulations shall be in language substantially as indicated in this regulation:</text> <text>To _____________________________________________________________________________________________</text> <text>(name of employer)</text> <text>I _____________________________________________________________________________ whose Social Security</text> <text>(name of employee)</text> <text>number is __________________________________have been terminated as an employee on _______________________.</text> <text>(date of termination)</text> <text>Before termination I was covered under the employer's group health insurance contract (check one)</text> <text>____ for myself.</text> <text>____ for myself and dependents.</text> <text>I elect to have this coverage continue in force and I agree to pay the required premium.</text> <text>Date of Application: __________________________________</text> <text>Signature of Insured: _________________________________</text> <text>Mailing Address: ___________________________________________________________________________________</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Termination Statement."> <text>The termination statement shall be in language substantially as indicated in this regulation.</text> <text>To _____________________________________________________________________________________________</text> <text>(name of employer)</text> <text>This is to advise that ____________________________________________________________and covered dependents,</text> <text>(name of insured)</text> <text>if any, are no longer to be covered under our group health insurance contract effective ______________________________</text> <text>(date)</text> <text>The reason for this termination is ______________________________________________________________________</text> <text>_________________________________________________________________________________________________</text> <text>(reason)</text> <text>Date: ___________________________</text> <text>Signature of Insured: _______________________________________________________________________________</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 14-124(b), and 15-409; Health-General Article, §19-703; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 14, 1987 (14:25 Md. R. 2659)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective April 27, 1992 (19:8 Md. R. 804)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.84 to COMAR 31.11.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective September 27, 2004 (31:19 Md. R. 1434)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective September 27, 2004 (31:19 Md. R. 1434)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 repealed effective June 22, 2015 (42:12 Md. R. 764)</annotation> </annotations> </chapter> <chapter num="05" heading="Group Health Insurance Options for Alzheimer's Disease and for Diseases of the Elderly"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter is applicable to all group health insurance policies issued or renewed in Maryland on or after July 1, 1987, except as noted below.</text> </paragraph> <paragraph num="B."> <text>Any group health insurance policy issued before the effective date of this chapter shall be subject to this chapter on the annual renewal date of the policy falling on or next following the effective date.</text> </paragraph> <paragraph num="C."> <text>This chapter is not applicable to group health insurance policies which:</text> <paragraph num="(1)"> <text>Do not provide benefits for the cost of medical care on an expense-incurred basis; or</text> </paragraph> <paragraph num="(2)"> <text>Provide benefits for accidents only.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Alzheimer's disease” means a progressive brain disease diagnosed as Alzheimer's disease by the insured's licensed attending physician and confirmed by a second opinion of a licensed physician.</text> </paragraph> <paragraph num="(2)"> <text>“Diseases of the elderly” means any disease, illness, injury, or medical condition which has caused the elderly insured to become functionally impaired or disabled so as to require nursing home care or intermediate or custodial nursing care and which has been confirmed by a second opinion of a licensed physician.</text> </paragraph> <paragraph num="(3)"> <text>“Elderly” means an insured who is 65 years old or older.</text> </paragraph> <paragraph num="(4)"> <text>“Group health insurance policy” means an insurance policy issued in Maryland either:</text> <paragraph num="(a)"> <text>Providing benefits for hospital, surgical, medical, major medical, or all of the above, in accordance with Insurance Article, §15-302, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>Providing benefits for health, surgical, medical, major medical, or all of the above to a group of persons by a nonprofit health service plan, pursuant to Insurance Article, Title 14, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Group of persons” means the types of groups as defined in Insurance Article, §15-302, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Insured” means a person covered under a group health insurance policy.</text> </paragraph> <paragraph num="(7)"> <text>“Intermediate or custodial nursing care” means any form of health or health-related service, whether provided in a custodial or noncustodial setting, which is designed to provide therapeutic, rehabilitative, supportive, or maintenance care to a person who has chronic or deteriorating medical conditions which impair the person's ability to function at his or her own optimum level, but not including treatment of the conditions during the initial, acute stage of the condition or conditions.</text> </paragraph> <paragraph num="(8)"> <text>“Nursing home” means a facility or institution or part of it that:</text> <paragraph num="(a)"> <text>Provides nursing care for chronically ill or convalescent patients; or</text> </paragraph> <paragraph num="(b)"> <text>Offers to provide 24-hour a day nursing care of patients in a home-type facility such as a:</text> <paragraph num="(i)"> <text>Convalescent home,</text> </paragraph> <paragraph num="(ii)"> <text>Nursing unit of a home for the aged,</text> </paragraph> <paragraph num="(iii)"> <text>Psychiatric nursing home,</text> </paragraph> <paragraph num="(iv)"> <text>Nursing facility for the handicapped,</text> </paragraph> <paragraph num="(v)"> <text>Home for alcoholics, or</text> </paragraph> <paragraph num="(vi)"> <text>Halfway house.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Health Insurance Options."> <text>Each insurer shall offer the following options for its group health insurance policies:</text> <paragraph num="A."> <text>One option to cover Alzheimer's disease; and</text> </paragraph> <paragraph num="B."> <text>One option to cover Alzheimer's disease as well as diseases of the elderly.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Required Coverage."> <paragraph num="A."> <text>The coverages provided by the required health insurance options shall include, but are not limited to:</text> <paragraph num="(1)"> <text>The institutional and professional care expenses for nursing home care alone, or in addition to intermediate or custodial nursing care, while confined in a nursing home or other custodial care facility or institution; and</text> </paragraph> <paragraph num="(2)"> <text>Expenses for the type of care described in §A(1) of this regulation for an insured who is not confined to a facility or institution.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The insurer may establish reasonable limits on the benefits offered for the above coverages including, but not limited to, copayments, deductibles, and maximum annual and lifetime limits.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 14-124(b), and 15-801, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 28, 1987 (14:26 Md. R. 2745)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.80 to COMAR 31.11.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="06" heading="Comprehensive Standard Health Benefit Plan"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to all carriers that offer the comprehensive standard health benefit plan to the small employer market.</text> </paragraph> <paragraph num="B."> <text>This chapter identifies the uniform benefits which must be offered in a comprehensive standard health benefit plan which a carrier offers to a Maryland small employer if the policy is issued or renewed after June 30, 1994. A carrier participating in the small employer market shall market this plan to all employers with as few as two eligible employees and as many as 50 eligible employees.</text> </paragraph> <paragraph num="C."> <text>With the exception set forth in §D of this regulation, a carrier may offer the plan through one or more of the following delivery systems:</text> <paragraph num="(1)"> <text>Indemnity;</text> </paragraph> <paragraph num="(2)"> <text>Preferred provider;</text> </paragraph> <paragraph num="(3)"> <text>Point-of-service delivered in conjunction with an indemnity or preferred provider delivery system;</text> </paragraph> <paragraph num="(4)"> <text>A health maintenance organization;</text> </paragraph> <paragraph num="(5)"> <text>A high deductible health maintenance organization;</text> </paragraph> <paragraph num="(6)"> <text>A triple option point-of-service;</text> </paragraph> <paragraph num="(7)"> <text>An HSA-compatible delivery system; or</text> </paragraph> <paragraph num="(8)"> <text>An exclusive provider.</text> </paragraph> </paragraph> <paragraph num="D."> <text>This chapter also specifies the uniform cost-sharing arrangements of the plan applicable to each delivery system. This chapter permits carriers to offer additional benefits or lower cost-sharing arrangements by marketing one or more riders to the plan at an additional cost.</text> </paragraph> <paragraph num="E."> <text>A carrier that offers the comprehensive standard health benefit plan to an eligible employer shall offer the plan to all eligible employees. An eligible employer may, at the employer's election, direct the carrier to offer the comprehensive standard health benefit plan to the employer's part-time employees and those employees covered by other public or private health benefit plans or health benefit arrangements, and to all dependents.</text> </paragraph> <paragraph num="F."> <text>This chapter includes case management for medically complex and costly services to assure adequate cost containment and appropriate utilization to maximize the affordability of the comprehensive standard health benefit plan to the small employer market.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Anniversary date” means the date that is the same date, excluding year, as the effective date of the health benefit plan.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-1201(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Case management” means a form of utilization review used with high cost cases to monitor and manage treatment and suggest appropriate medical services.</text> </paragraph> <paragraph num="(4)"> <text>“Chlamydia screening test” has the meaning stated in Insurance Article, §15-829, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Coinsurance percentage” or “coinsure” means the percentage of allowable charges allocated to the carrier and to the covered person.</text> </paragraph> <paragraph num="(6)"> <text>“Congenital or genetic birth defect” means a defect existing at or from birth, including a hereditary defect, which includes, but is not limited to, autism or an autism spectrum disorder and cerebral palsy.</text> </paragraph> <paragraph num="(7)"> <text>“Controlled clinical trial” means a treatment that is:</text> <paragraph num="(a)"> <text>Approved by an institutional review board;</text> </paragraph> <paragraph num="(b)"> <text>Conducted for the primary purpose of determining whether or not a particular treatment is safe and efficacious; and</text> </paragraph> <paragraph num="(c)"> <text>Approved by:</text> <paragraph num="(i)"> <text>An institute or center of the National Institutes of Health,</text> </paragraph> <paragraph num="(ii)"> <text>The Food and Drug Administration,</text> </paragraph> <paragraph num="(iii)"> <text>The Department of Veterans' Affairs, or</text> </paragraph> <paragraph num="(iv)"> <text>The Department of Defense.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Covered person” means an employee or a dependent of an employee covered by a carrier under the comprehensive standard health benefit plan.</text> </paragraph> <paragraph num="(9)"> <text>“Copayment” means a specified charge that a covered person must pay each time services of a particular type or in a designated setting are received.</text> </paragraph> <paragraph num="(10)"> <text>“Deductible” means the amount of allowable charges that must be incurred by an individual or a family per year before a carrier begins payment.</text> </paragraph> <paragraph num="(11)"> <text>“Delivery system” means the method that a carrier uses to provide the comprehensive standard health benefit plan to covered persons.</text> </paragraph> <paragraph num="(12)"> <text>“Dependent” means a covered person's lawful spouse or dependent child.</text> </paragraph> <paragraph num="(13)"> <text>Dependent Child.</text> <paragraph num="(a)"> <text>For plan years beginning before September 23, 2010, “dependent child” means an individual who is unmarried, younger than 25 years old, a dependent of the covered employee as that term is used in 26 U.S.C §§104, 105, and 106, and any regulations adopted under those sections, and is a:</text> <paragraph num="(i)"> <text>Biological child, stepchild, grandchild, or foster child of the covered employee;</text> </paragraph> <paragraph num="(ii)"> <text>Lawfully adopted child of the covered employee, or, from the date of placement, a child in the process of being adopted by the covered employee;</text> </paragraph> <paragraph num="(iii)"> <text>Child for whom the covered employee has been granted legal custody, including custody as a result of a guardianship, other than a temporary guardianship of less than 12 months duration, by a court or testamentary appointment; or</text> </paragraph> <paragraph num="(iv)"> <text>Child for whom the covered person has the legal obligation to provide coverage pursuant to court order, court-approved agreement, or testamentary appointment.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For plan years beginning on or after September 23, 2010, “dependent child” means an individual who is younger than 26 years old and is a:</text> <paragraph num="(i)"> <text>Biological child, stepchild, grandchild, or foster child of the covered employee;</text> </paragraph> <paragraph num="(ii)"> <text>Lawfully adopted child of the covered employee or, from the date of placement, a child in the process of being adopted by the covered employee;</text> </paragraph> <paragraph num="(iii)"> <text>Child for whom the covered employee has been granted legal custody, including custody as a result of a guardianship, other than a temporary guardianship of less than 12 months duration, by a court or testamentary appointment; or</text> </paragraph> <paragraph num="(iv)"> <text>Child for whom the covered person has the legal obligation to provide coverage pursuant to a court-ordered, court-approved agreement, or testamentary appointment.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Notwithstanding the age limitation stated in §B(13)(a) and (b) of this regulation, “dependent child” includes an unmarried child who is dependent upon the covered employee for more than 50 percent of the child’s support and who, at the time of reaching the age limitation set forth in §B(13)(a) or (b) of this regulation, is incapable of self-support because of mental or physical incapacity that began before the dependent child’s attaining the limiting age.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Domiciliary care” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Durable medical equipment” means equipment furnished by a supplier or a home health agency that:</text> <paragraph num="(a)"> <text>Can withstand repeated use;</text> </paragraph> <paragraph num="(b)"> <text>Is primarily and customarily used to serve a medical purpose;</text> </paragraph> <paragraph num="(c)"> <text>Generally is not useful to an individual in the absence of a disability, illness, or injury; and</text> </paragraph> <paragraph num="(d)"> <text>Is appropriate for use in the home.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Eligible employee” has the meaning stated in Insurance Article, §15-1201(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Emergency medical condition” means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) so that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in:</text> <paragraph num="(a)"> <text>Placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy;</text> </paragraph> <paragraph num="(b)"> <text>Serious impairment to bodily functions; or</text> </paragraph> <paragraph num="(c)"> <text>Serious dysfunction of any bodily organ or part.</text> </paragraph> </paragraph> <paragraph num="(18)"> <text>“Emergency services” means, with respect to an emergency medical condition:</text> <paragraph num="(a)"> <text>A medical screening examination (as required under section 1867 of the Social Security Act, 42 U.S.C. 1395dd) that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate the emergency medical condition; and</text> </paragraph> <paragraph num="(b)"> <text>Such further medical examination and treatment, to the extent they are within the capabilities of the staff and facilities available at the hospital, as are required under section 1867 of the Social Security Act (42 U.S.C. 1395dd(e)(3)).</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Exclusive provider” means a delivery system offered by an insurer or nonprofit health service plan that provides services to a covered person through preferred providers in accordance with Insurance Article, §14-205.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>Experimental Services.</text> <paragraph num="(a)"> <text>“Experimental services” means services that are not recognized as efficacious as that term is defined in the edition of the Institute of Medicine Report on Assessing Medical Technologies that is current when the care is rendered.</text> </paragraph> <paragraph num="(b)"> <text>“Experimental services” do not include controlled clinical trials as defined in §B(7) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Family” means:</text> <paragraph num="(a)"> <text>An individual and spouse;</text> </paragraph> <paragraph num="(b)"> <text>An individual and dependent minor or minors; or</text> </paragraph> <paragraph num="(c)"> <text>An individual, spouse, and dependent minor or minors.</text> </paragraph> </paragraph> <paragraph num="(22)"> <text>“Family planning services” means counseling, implanting or fitting birth control devices, and follow-up visits after a covered person selects a birth control method.</text> </paragraph> <paragraph num="(23)"> <text>“Federally qualified health maintenance organization” means a health maintenance organization which meets the requirements of Title XIII of the Public Health Service Act, 42 U.S.C. §3000e et seq.</text> </paragraph> <paragraph num="(24)"> <text>“Habilitative services” means services, including occupational therapy, physical therapy, and speech therapy, for the treatment of children with congenital and genetic birth defects to enhance the child's ability to function.</text> </paragraph> <paragraph num="(25)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1201(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(26)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(27)"> <text>“Health care facility” has the meaning stated in Health-General Article, §19-114, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(28)"> <text>“Home health care” means the continued care and treatment of a covered person in the home if:</text> <paragraph num="(a)"> <text>The institutionalization of the covered person in a hospital or related institution or skilled nursing facility would otherwise have been required if home health care were not provided; and</text> </paragraph> <paragraph num="(b)"> <text>The plan of treatment covering the home health care service is established and approved in writing by the health care practitioner.</text> </paragraph> </paragraph> <paragraph num="(29)"> <text>“Hospice care” has the meaning stated in 42 U.S.C. §1395x(dd).</text> </paragraph> <paragraph num="(30)"> <text>“Health care practitioner” has the meaning stated in Health-General Article, §19-132, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(31)"> <text>“Health savings account” means a health savings account as defined in the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Title 12, §1201(a) as codified at Part VII, subchapter B, chapter 1, §223(d) of the Internal Revenue Code of 1986.</text> </paragraph> <paragraph num="(32)"> <text>“Health savings account compatible delivery system” or “HSA-compatible delivery system” means a health benefit plan which:</text> <paragraph num="(a)"> <text>To be used with a health savings account, meets the requirements of a high deductible health plan as defined in the Medicare Prescription Drug, Improvement and Modernization Act of 2003, codified at §223(c)(2) of the Internal Revenue Code of 1986; and</text> </paragraph> <paragraph num="(b)"> <text>May be:</text> <paragraph num="(i)"> <text>A preferred provider organization delivery system to be used with a health savings account (PPO-HSA);</text> </paragraph> <paragraph num="(ii)"> <text>A health maintenance organization delivery system to be used with a health savings account (HMO-HSA); or</text> </paragraph> <paragraph num="(iii)"> <text>An exclusive provider delivery system to be used with a health savings account (EPO-HSA).</text> </paragraph> </paragraph> </paragraph> <paragraph num="(33)"> <text>“Indemnity” means a delivery system in which:</text> <paragraph num="(a)"> <text>Payment is made on an expense-incurred basis; and</text> </paragraph> <paragraph num="(b)"> <text>The covered person's choice of health care practitioner is not limited to a network of providers.</text> </paragraph> </paragraph> <paragraph num="(34)"> <text>“Insulin-using beneficiary” means a beneficiary who uses insulin as part of a treatment plan prescribed by the beneficiary's medical care provider.</text> </paragraph> <paragraph num="(35)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101(v), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(36)"> <text>“Late enrollee” has the meaning stated in Insurance Article, §15-1201(h), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(37)"> <text>“Lifetime maximum” means the maximum amount the carrier is obligated to pay for all services in the lifetime of a covered person.</text> </paragraph> <paragraph num="(38)"> <text>“Limited out-of-network additional benefit” means an additional benefit offered by an insurer or nonprofit health service plan that:</text> <paragraph num="(a)"> <text>Permits a covered person enrolled in an exclusive provider delivery system to receive certain health care services out-of-network that would be covered in network; and</text> </paragraph> <paragraph num="(b)"> <text>Conditions the payment of benefits as required under Insurance Article, §14-205.1, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(39)"> <text>“Maintenance drug” has the meaning set forth in Insurance Article, §15-824(a)(3), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(40)"> <text>“Managed care system” means a method that a carrier uses to review and preauthorize a treatment plan that a health care practitioner develops for a covered person using a variety of cost containment methods to control utilization, quality, and claims.</text> </paragraph> <paragraph num="(41)"> <text>“Mandated benefit” means:</text> <paragraph num="(a)"> <text>A health care service, benefit, coverage, or reimbursement for covered health care services that is required under the Insurance Article or the Health-General Article, Annotated Code of Maryland, to be provided or offered in a health benefit plan that is issued or delivered in the State by a carrier; or</text> </paragraph> <paragraph num="(b)"> <text>Reimbursement, required by statute, by a health benefit plan for a service when that service is performed by a care provider who is licensed under the Health Occupations Article and whose scope of practice includes that service.</text> </paragraph> </paragraph> <paragraph num="(42)"> <text>“Multiple risk factors” has the meaning stated in Insurance Article, §15-829, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(43)"> <text>“Network” means providers who have entered into a provider service contract with a carrier to provide services on a preferential basis.</text> </paragraph> <paragraph num="(44)"> <text>“Out-of-network option” means an additional benefit offered by an insurer or nonprofit health service plan that:</text> <paragraph num="(a)"> <text>Permits a covered person enrolled in an exclusive provider delivery system to receive any healthcare service that would be covered from network providers also to be covered when received from non-network providers; and</text> </paragraph> <paragraph num="(b)"> <text>Conditions the payment of benefits as required under Insurance Article, §14-205.1, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(45)"> <text>“Out-of-pocket limit” means the maximum amount of copayments, deductibles, and coinsurance that an individual or family is obligated to pay for covered services per contract year.</text> </paragraph> <paragraph num="(46)"> <text>“Outpatient rehabilitative services” means occupational therapy, speech therapy, and physical therapy, provided to covered persons not admitted to a hospital or related institution.</text> </paragraph> <paragraph num="(47)"> <text>“Partial hospitalization” means the provision of medically directed intensive or intermediate short-term psychiatric treatment for a period of less than 24 hours but more than 4 hours in a day for an individual patient in a hospital, psychiatric day-care treatment center, or community mental health facility.</text> </paragraph> <paragraph num="(48)"> <text>“Personal care” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(49)"> <text>“Plan” means the comprehensive standard health benefit plan described in this chapter.</text> </paragraph> <paragraph num="(50)"> <text>“Plan year” means a 12-month period that begins:</text> <paragraph num="(a)"> <text>For the first year of the plan, on the effective date of the plan; and</text> </paragraph> <paragraph num="(b)"> <text>For plans that have been in effect for 1 year or longer, on the anniversary date of the plan.</text> </paragraph> </paragraph> <paragraph num="(51)"> <text>“Point-of-service (POS)” means a delivery system that permits a covered person to receive services outside the network in accordance with the recommendations of the primary care physician within a managed care system.</text> </paragraph> <paragraph num="(52)"> <text>“Point-of-service option” means an additional benefit offered by a health maintenance organization that permits a covered person enrolled in a health maintenance organization to receive any health care service outside the provider panel of the health maintenance organization that is covered under the covered person's contract with the health maintenance organization.</text> </paragraph> <paragraph num="(53)"> <text>“Preferred provider organization” means a delivery system offered by an insurer or nonprofit health service plan that provides services to a covered person through a network and permits the covered person to select services outside the network.</text> </paragraph> <paragraph num="(54)"> <text>“Preexisting condition” has the meaning stated in Insurance Article, §15-1201(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(55)"> <text>“Primary care” means services rendered by a health care practitioner in the following disciplines:</text> <paragraph num="(a)"> <text>General internal medicine;</text> </paragraph> <paragraph num="(b)"> <text>Family practice medicine;</text> </paragraph> <paragraph num="(c)"> <text>Pediatrics; or</text> </paragraph> <paragraph num="(d)"> <text>Obstetrics/gynecology.</text> </paragraph> </paragraph> <paragraph num="(56)"> <text>“Provider” means a health care practitioner or a health care facility licensed or otherwise authorized by law to provide health care services.</text> </paragraph> <paragraph num="(57)"> <text>“Related institution” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(58)"> <text>“Religious organization” means an entity that is organized and operated exclusively for religious purposes and has obtained a tax exemption under §501(c)(3) of the U.S. Internal Revenue Code.</text> </paragraph> <paragraph num="(59)"> <text>“Residential crisis services” means intensive mental health and support services that are:</text> <paragraph num="(a)"> <text>Provided to a child or an adult with a mental illness who is experiencing or is at risk of a psychiatric crisis that would impair the individual's ability to function in the community;</text> </paragraph> <paragraph num="(b)"> <text>Designed to prevent a psychiatric inpatient admission, provide an alternative to psychiatric inpatient admission, or shorten the length of inpatient stay;</text> </paragraph> <paragraph num="(c)"> <text>Provided out of the individual's residence on a short-term basis in a community-based residential setting; and</text> </paragraph> <paragraph num="(d)"> <text>Provided by entities that are licensed by the Maryland Department of Health to provide residential crisis services.</text> </paragraph> </paragraph> <paragraph num="(60)"> <text>“Service” means a health care diagnosis, procedure, treatment, or item.</text> </paragraph> <paragraph num="(61)"> <text>“Skilled nursing facility” means an institution, or a distinct part of an institution, licensed by the Maryland Department of Health, which is:</text> <paragraph num="(a)"> <text>Primarily engaged in providing:</text> <paragraph num="(i)"> <text>Skilled nursing care, and related services, for residents who require medical or nursing care, or</text> </paragraph> <paragraph num="(ii)"> <text>Rehabilitation services for the rehabilitation of injured, disabled, or sick persons; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Certified by the Medicare Program as a skilled nursing facility.</text> </paragraph> </paragraph> <paragraph num="(62)"> <text>“Small employer” has the meaning stated in Insurance Article, §15-1201(o), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(63)"> <text>“Specialty services” means care provided by a health care practitioner who is not providing primary care services.</text> </paragraph> <paragraph num="(64)"> <text>“Triple option point-of-service (triple option POS)” means a delivery system that permits a covered person to select an indemnity, preferred provider, or health maintenance organization delivery system at the time of medical need.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Covered Services."> <paragraph num="A."> <text>The comprehensive standard health benefit plan includes the following:</text> <paragraph num="(1)"> <text>Care in medical offices for treatment of illness or injury;</text> </paragraph> <paragraph num="(2)"> <text>Inpatient hospital services;</text> </paragraph> <paragraph num="(3)"> <text>Outpatient hospital services;</text> </paragraph> <paragraph num="(4)"> <text>Inpatient mental health and substance abuse services provided through a carrier's managed care system, including residential crisis services, up to a maximum of 60 days per covered person per year in a hospital, related institution, or entity licensed by the Maryland Department of Health to provide residential crisis services;</text> </paragraph> <paragraph num="(5)"> <text>Outpatient mental health and substance abuse services provided through a carrier's managed care system;</text> </paragraph> <paragraph num="(6)"> <text>Emergency services;</text> </paragraph> <paragraph num="(7)"> <text>Detoxification in a hospital or related institution;</text> </paragraph> <paragraph num="(8)"> <text>Ambulance services to or from the nearest hospital where needed medical services can appropriately be provided;</text> </paragraph> <paragraph num="(9)"> <text>Except for prostate cancer screening for men between 40 and 75 years old, and colorectal screening for men and women 50 years old or older, preventive services recommended in the report of the United States Preventive Services Task Force, Guide to Clinical Preventive Services, which is current when the services are rendered, and any other preventive service required to be offered by a federally qualified health maintenance organization;</text> </paragraph> <paragraph num="(9-1)"> <text>Prostate cancer screening shall be covered as set forth in the current recommendations of the American Cancer Society, which recommends an annual:</text> <paragraph num="(a)"> <text>Digital rectal examination for both prostate and colorectal cancer, beginning at age 40;</text> </paragraph> <paragraph num="(b)"> <text>PSA screening for African-American men and all men 40 years old and older with a family history of prostate cancer; and</text> </paragraph> <paragraph num="(c)"> <text>PSA screening for all other men 50 years old and older;</text> </paragraph> </paragraph> <paragraph num="(9-2)"> <text>Colorectal screening shall be covered for men and women 50 years old or older as follows:</text> <paragraph num="(a)"> <text>A yearly fecal occult blood test, accompanied by digital rectal examination, plus flexible sigmoidoscopy every 5 years;</text> </paragraph> <paragraph num="(b)"> <text>A colonoscopy, accompanied by digital rectal examination, every 10 years; or</text> </paragraph> <paragraph num="(c)"> <text>A double contrast barium enema, accompanied by digital rectal examination, every 5 years;</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Mammography services for persons ages 40 to 49 once every other calendar year, and for ages 50 and above once per calendar year;</text> </paragraph> <paragraph num="(11)"> <text>Home health care services:</text> <paragraph num="(a)"> <text>As an alternative to otherwise covered services in a hospital or related institution; and</text> </paragraph> <paragraph num="(b)"> <text>For contracts issued or renewed on or after November 1, 1999, for covered persons who receive less than 48 hours of inpatient hospitalization following a mastectomy or removal of a testicle or who undergo a mastectomy or removal of a testicle on an outpatient basis:</text> <paragraph num="(i)"> <text>One home visit scheduled to occur within 24 hours after discharge from the hospital or outpatient health care facility; and</text> </paragraph> <paragraph num="(ii)"> <text>An additional home visit if prescribed by the covered person's attending physician;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(12)"> <text>Hospice care services;</text> </paragraph> <paragraph num="(13)"> <text>Durable medical equipment, including nebulizers, peak flow meters, prosthetic devices such as leg, arm, back, or neck braces, artificial legs, arms, or eyes, and the training necessary to use these prostheses;</text> </paragraph> <paragraph num="(14)"> <text>Outpatient laboratory and diagnostic services;</text> </paragraph> <paragraph num="(15)"> <text>Outpatient rehabilitative services provided through a carrier's managed care system for a maximum of:</text> <paragraph num="(a)"> <text>30 physical therapy visits per condition per year;</text> </paragraph> <paragraph num="(b)"> <text>30 speech therapy visits per condition per year;</text> </paragraph> <paragraph num="(c)"> <text>30 occupational therapy visits per condition per year; or</text> </paragraph> <paragraph num="(d)"> <text>When provided by a federally qualified health maintenance organization, the outpatient rehabilitation service coverage specified in 42 CFR §417.101(a)(2)(iii).</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>Chiropractic services up to 20 visits per condition per year;</text> </paragraph> <paragraph num="(17)"> <text>Skilled nursing facility services as an alternative to medically necessary inpatient hospital services up to a maximum of 100 days per year;</text> </paragraph> <paragraph num="(18)"> <text>Infertility services, except for those services excluded in this chapter;</text> </paragraph> <paragraph num="(19)"> <text>Nutritional services for the treatment of cardiovascular disease, diabetes, malnutrition, cancer, cerebral vascular disease, or kidney disease up to a maximum of six visits per year per condition;</text> </paragraph> <paragraph num="(20)"> <text>Autologous and nonautologous bone marrow, cornea, kidney, liver, heart, lung, heart/lung, pancreas, and pancreas/kidney transplants;</text> </paragraph> <paragraph num="(21)"> <text>Medical food for persons with metabolic disorders when ordered by a health care practitioner qualified to provide diagnosis and treatment in the field of metabolic disorders;</text> </paragraph> <paragraph num="(22)"> <text>Family planning services, including:</text> <paragraph num="(a)"> <text>Prescription contraceptive drugs or devices;</text> </paragraph> <paragraph num="(b)"> <text>Coverage for the insertion or removal of contraceptive devices;</text> </paragraph> <paragraph num="(c)"> <text>Medically necessary examination associated with the use of contraceptive drugs or devices; and</text> </paragraph> <paragraph num="(d)"> <text>Voluntary sterilization;</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>Except for habilitative services provided in early intervention and school services, habilitative services for children 0—19 years old for the treatment of congenital or genetic birth defects;</text> </paragraph> <paragraph num="(24)"> <text>All cost recovery expenses for blood, blood products, derivatives, components, biologics, and serums to include autologous services, whole blood, red blood cells, platelets, plasma, immunoglobulin, and albumin;</text> </paragraph> <paragraph num="(25)"> <text>Pregnancy and maternity services, including abortion;</text> </paragraph> <paragraph num="(26)"> <text>Prescription drugs;</text> </paragraph> <paragraph num="(27)"> <text>Controlled clinical trials;</text> </paragraph> <paragraph num="(28)"> <text>Any other service approved by a carrier's case management program;</text> </paragraph> <paragraph num="(29)"> <text>Diabetes treatment, equipment, and supplies; and</text> </paragraph> <paragraph num="(30)"> <text>Breast reconstructive surgery as specified in Insurance Article, §15-815, Annotated Code of Maryland, and breast prosthesis;</text> </paragraph> <paragraph num="(31)"> <text>Audiology screening for newborns, limited to one screen and one confirming screen; and</text> </paragraph> <paragraph num="(32)"> <text>General anesthesia and associated hospital or ambulatory facility charges in conjunction with dental care provided to the following:</text> <paragraph num="(a)"> <text>Individuals who are 7 years old or younger or developmentally disabled and for whom a:</text> <paragraph num="(i)"> <text>Successful result cannot be expected from dental care provided under local anesthesia because of a physical, intellectual, or other medically compromising condition of the enrollee or insured; and</text> </paragraph> <paragraph num="(ii)"> <text>Superior result can be expected from dental care provided under general anesthesia;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Individuals 17 years old or younger who:</text> <paragraph num="(i)"> <text>Are extremely uncooperative, fearful, or uncommunicative;</text> </paragraph> <paragraph num="(ii)"> <text>Have dental needs of such magnitude that treatment should not be delayed or deferred; and</text> </paragraph> <paragraph num="(iii)"> <text>Are individuals for whom lack of treatment can be expected to result in oral pain, infection, loss of teeth, or other increased oral or dental morbidity;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(33)"> <text>An annual chlamydia screening test for:</text> <paragraph num="(a)"> <text>Women who are:</text> <paragraph num="(i)"> <text>Younger than 20 years old who are sexually active; or</text> </paragraph> <paragraph num="(ii)"> <text>At least 20 years old who have multiple risk factors; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Men who have multiple risk factors;</text> </paragraph> </paragraph> <paragraph num="(34)"> <text>The cost to beneficiaries of hearing aids for persons 0 to 18 years of age, up to $1,400 per hearing aid for each hearing-impaired ear every 36 months; and</text> </paragraph> <paragraph num="(35)"> <text>The surgical treatment of morbid obesity as specified in Insurance Article, §15-839, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="A-1."> <text>Morbid Obesity.</text> <paragraph num="(1)"> <text>When establishing utilization review criteria for the surgical treatment of morbid obesity, a carrier or a private review agent acting on behalf of a carrier shall adhere to the requirements of COMAR 31.10.33.03.</text> </paragraph> <paragraph num="(2)"> <text>Surgical treatment of morbid obesity shall occur in a facility that is:</text> <paragraph num="(a)"> <text>Designated by the American Society for Metabolic and Bariatric Surgery as a Bariatric Surgery Center of Excellence; and</text> </paragraph> <paragraph num="(b)"> <text>Designated by the carrier.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If a carrier does not make a designation under §A-1(2) of this regulation, the carrier shall provide benefits under the health benefit plan for the surgical treatment of morbid obesity at any facility that is designated by the American Society for Metabolic and Bariatric Surgery as a Bariatric Surgery Center of Excellence.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The services described in §A(23) of this regulation shall be delivered through a carrier's managed care system and shall include services for cleft lip and cleft palate, orthodontics, oral surgery, otologic, audiological, and speech therapy, physical therapy, and occupational therapy for children 0—19 years old for treatment of congenital or genetic birth defects.</text> </paragraph> <paragraph num="C."> <text>All mental health and substance abuse services described in §A(4) and (5) of this regulation shall be delivered through a carrier's managed care system.</text> </paragraph> <paragraph num="D."> <text>Rehabilitative services and habilitative services required to be offered in the plan shall be provided through the carrier's managed care system.</text> </paragraph> <paragraph num="E."> <text>Prescription Drugs.</text> <paragraph num="(1)"> <text>Carriers shall cover prescription drugs and may, for brand name drugs, use a formulary which complies with the requirements of Insurance Article, §15-831, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Carriers shall cover insulin and birth control drugs.</text> </paragraph> <paragraph num="(3)"> <text>Except as provided in §E(4) of this regulation, coverage under §A(26) of this regulation of prescription drugs includes up to a 90-day supply of maintenance drugs dispensed in a single dispensing of a prescription.</text> </paragraph> <paragraph num="(4)"> <text>Coverage of up to a 90-day supply of maintenance drugs in a single dispensing is not required for the first prescription of a maintenance drug or a change in a prescription of a maintenance drug.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The carrier shall provide benefits for the covered services in accordance with the terms of the contract, if:</text> <paragraph num="(1)"> <text>The service is rendered by a health care practitioner who is licensed under the laws of the state in which the practitioner is practicing; and</text> </paragraph> <paragraph num="(2)"> <text>The health care practitioner is practicing within the scope of the license.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Under §A(4) of this regulation, two partial hospitalization days may be substituted for one inpatient day in a hospital or related institution.</text> </paragraph> <paragraph num="H."> <text>Under §A(29) of this regulation, diabetes equipment includes glucose monitoring equipment under the durable medical equipment coverage for insulin-using beneficiaries. Insulin pumps are not included. Diabetes supplies include coverage for insulin syringes and needles and testing strips for glucose monitoring equipment under the prescription coverage for insulin-using beneficiaries.</text> </paragraph> <paragraph num="I."> <text>Under §A(30) of this regulation, breast prosthesis and breast reconstruction on the nondiseased breast to achieve symmetry is covered regardless of the patient's insurance status at the time of the mastectomy or the time lag between the mastectomy and reconstruction.</text> </paragraph> <paragraph num="J."> <text>Under §A(32) of this regulation:</text> <paragraph num="(1)"> <text>Carriers may require prior authorization for covered services and associated charges in the same manner that prior authorization is required for these benefits in connection with other covered medical care;</text> </paragraph> <paragraph num="(2)"> <text>Carriers may restrict coverage to dental care that is provided by a:</text> <paragraph num="(a)"> <text>Fully accredited specialist in pediatric dentistry;</text> </paragraph> <paragraph num="(b)"> <text>Fully accredited specialist in oral and maxillofacial surgery; and</text> </paragraph> <paragraph num="(c)"> <text>Dentist to whom hospital privileges have been granted; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Dental care for which general anesthesia is required is not covered.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03-1" heading="Covered Services — Preventive Care Services."> <paragraph num="A."> <text>This regulation applies to plans with plan years that begin on or after September 23, 2010.</text> </paragraph> <paragraph num="B."> <text>The benefits required by Regulation .03A(9), (9-1), (9-2), (10), (31) and (33), Regulation .04F(5)(e) and (6)(e), and Regulation .05I of this chapter do not apply to plans with plan years that begin on or after September 23, 2010.</text> </paragraph> <paragraph num="C."> <text>Plans that are subject to this regulation shall provide benefits for the following preventive care services:</text> <paragraph num="(1)"> <text>Except as provided in §D of this regulation, evidence–based items or services that have in effect a rating of A or B in the current recommendations of the United States Preventive Services Task Force;</text> </paragraph> <paragraph num="(2)"> <text>Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved;</text> </paragraph> <paragraph num="(3)"> <text>With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration; and</text> </paragraph> <paragraph num="(4)"> <text>With respect to women, to the extent not described in §C(1) of this regulation, evidence-informed preventive care and screenings as provided for in comprehensive guidelines supported by the Health Resources and Services Administration.</text> </paragraph> </paragraph> <paragraph num="D."> <text>For the purposes of §C(1) of this regulation, recommendations of the United States Preventive Services Task Force regarding breast cancer screening, mammography, and prevention issued in or around November 2009 are not considered to be current.</text> </paragraph> <paragraph num="E."> <text>For the purposes of §C(2) of this regulation, a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention is considered to be:</text> <paragraph num="(1)"> <text>In effect after it has been adopted by the director of the Centers for Disease Control and Prevention; and</text> </paragraph> <paragraph num="(2)"> <text>For routine use if it is listed on the immunization schedules of the Centers for Disease Control and Prevention.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Cost Sharing Requirements.</text> <paragraph num="(1)"> <text>Except as described §F(2) and (3) of this regulation, a carrier may not impose any cost sharing requirements, such as copayment amounts, coinsurance amounts, or deductible amounts, on the preventive care services required under §C of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>If a carrier’s plan permits individuals covered under the plan to receive services from nonparticipating providers, the carrier may impose a carrier’s coinsurance percentage of 60 percent of allowable charges.</text> </paragraph> <paragraph num="(3)"> <text>If a new recommendation or guideline described in §C of this regulation is issued after the effective date of the plan, the new recommendation or guideline shall apply the first plan year that begins on the date that is 1 year after the date the recommendation or guideline is issued.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Uniform Cost-Sharing Arrangements — In General."> <paragraph num="A."> <text>For each delivery system identified in §F of this regulation, a carrier shall apply the uniform cost-sharing arrangements specified.</text> </paragraph> <paragraph num="B."> <text>Copayments.</text> <paragraph num="(1)"> <text>Except for copayments for emergency services, which a carrier shall apply to the deductible and the out-of-pocket limit, a carrier may not apply the copayments set forth in this chapter to reduce the amount of a deductible or out-of-pocket limit.</text> </paragraph> <paragraph num="(2)"> <text>Notwithstanding §B(1) of this regulation, a carrier shall apply all copayments set forth in this chapter to reduce the amount of a deductible or out-of-pocket limit for a HSA-compatible delivery system.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier shall apply the covered person's coinsurance amount and emergency services copayments to the deductible and out-of-pocket limit.</text> </paragraph> <paragraph num="D."> <text>A carrier shall apply the deductible to the out-of-pocket limit.</text> </paragraph> <paragraph num="E."> <text>A carrier may increase deductibles, copayments, coinsurance, or out-of-pocket limits up to 1.5 times the amounts specified in §F of this regulation in accordance with Insurance Article, §15-1208, Annotated Code of Maryland.</text> </paragraph> <paragraph num="F."> <text>For each of the delivery systems identified, the following general cost-sharing requirements apply:</text> <paragraph num="(1)"> <text>Indemnity:</text> <paragraph num="(a)"> <text>For an employee enrolled under individual coverage, a deductible of $2,500 per year; for an employee enrolled under other than individual coverage, a deductible of $5,000 in aggregate per year;</text> </paragraph> <paragraph num="(b)"> <text>For an employee enrolled under individual coverage, out-of-pocket limit of $4,900 per year; for an employee enrolled under other than individual coverage, out-of-pocket limit of $9,800 in aggregate per year;</text> </paragraph> <paragraph num="(c)"> <text>Lifetime maximum of:</text> <paragraph num="(i)"> <text>For plan years beginning before September 23, 2010, $2 million per covered person; and</text> </paragraph> <paragraph num="(ii)"> <text>For plan years beginning on or after September 23, 2010, unlimited;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Carrier's coinsurance percentage of 80 percent of allowable charges;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Preferred provider organizations:</text> <paragraph num="(a)"> <text>Non-health savings account-compatible preferred provider organizations (PPO):</text> <paragraph num="(i)"> <text>For an employee enrolled under individual coverage, combined in-network and out-of-network deductible of $2,500 per year; for an employee enrolled under other than individual coverage, combined in-network and out-of-network deductible of $5,000 in aggregate per year;</text> </paragraph> <paragraph num="(ii)"> <text>For an employee enrolled under individual coverage, combined in-network and out-of-network out-of-pocket limit of $4,900 per year; for an employee enrolled under other than individual coverage, combined in-network and out-of-network out-of-pocket limit of $9,800 in aggregate per year;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>PPO-HSA:</text> <paragraph num="(i)"> <text>For an employee enrolled under individual coverage, combined in-network, out-of-network, and prescription drug deductible of $2,700 per year; for an employee enrolled under other than individual coverage, combined in-network, out-of-network, and prescription drug deductible of $5,450 in aggregate per year;</text> </paragraph> <paragraph num="(ii)"> <text>For an employee enrolled under individual coverage, combined in-network and out-of-network out-of-pocket limit of $5,250 per year; for an employee enrolled under other than individual coverage, combined in-network and out-of-network out-of-pocket limit of $10,500 in aggregate per year;</text> </paragraph> <paragraph num="(iii)"> <text>For the health savings account-compatible preferred provider, carriers may not offer additional benefits to reduce deductibles below the minimum deductibles required by federal law or raise out-of-pocket limits above the maximum out-of-pocket limits required by federal law;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A carrier may offer either a PPO-HSA or a non PPO-HSA, or both;</text> </paragraph> <paragraph num="(d)"> <text>Lifetime maximum of:</text> <paragraph num="(i)"> <text>For plan years beginning before September 23, 2010, $2 million per covered person; and</text> </paragraph> <paragraph num="(ii)"> <text>For plan years beginning on or after September 23, 2010, unlimited;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Carrier's coinsurance percentage of 80 percent of allowable charges for in-network services;</text> </paragraph> <paragraph num="(f)"> <text>Carrier's coinsurance percentage of 60 percent of allowable charges for out-of-network services;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Point-of-service when delivered in conjunction with preferred provider:</text> <paragraph num="(a)"> <text>For an employee enrolled under individual coverage, a deductible of $2,500 per year; for an employee enrolled under other than individual coverage, a deductible of $5,000 in aggregate per year;</text> </paragraph> <paragraph num="(b)"> <text>For an employee enrolled under individual coverage, combined in-network and out-of-network out-of-pocket limit of $4,900 per year; for an employee enrolled under other than individual coverage, combined in-network and out-of-network out-of-pocket limit of $9,800 in aggregate per year;</text> </paragraph> <paragraph num="(c)"> <text>Lifetime maximum of:</text> <paragraph num="(i)"> <text>For plan years beginning before September 23, 2010, $2 million per covered person; and</text> </paragraph> <paragraph num="(ii)"> <text>For plan years beginning on or after September 23, 2010, unlimited;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Carrier's coinsurance percentage of 80 percent of allowable charges for in-network services;</text> </paragraph> <paragraph num="(e)"> <text>Carrier's coinsurance percentage of 60 percent of allowable charges for out-of-network services;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Health maintenance organization-non-health savings account compatible delivery system:</text> <paragraph num="(a)"> <text>A covered person shall be responsible for copayments for the following services at the payment level indicated:</text> <paragraph num="(i)"> <text>Primary care services—$30;</text> </paragraph> <paragraph num="(ii)"> <text>Specialty care services—$40;</text> </paragraph> <paragraph num="(iii)"> <text>Physician inpatient hospital visits—$30;</text> </paragraph> <paragraph num="(iv)"> <text>Outpatient laboratory services—$40 or 50 percent of the cost of the service, whichever is less;</text> </paragraph> <paragraph num="(v)"> <text>Outpatient diagnostic services—$40 or 50 percent of the cost of the service, whichever is less; and</text> </paragraph> <paragraph num="(vi)"> <text>Inpatient hospital copayment—$1,000 per admission;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For an employee enrolled under individual coverage, the out-of-pocket limit is 200 percent of the total annual premium as specified by a fixed dollar amount in the employee's certificate;</text> </paragraph> <paragraph num="(c)"> <text>For an employee enrolled under other than individual coverage, the out-of-pocket limit is 200 percent of the total annual premium in aggregate as specified by a fixed dollar amount in the employee's certificate;</text> </paragraph> <paragraph num="(d)"> <text>Under the mandatory POS option, carrier's coinsurance percentage of at least 60 percent of allowable charges for out-of-network services;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>High deductible health maintenance organization—non-health savings account compatible delivery system:</text> <paragraph num="(a)"> <text>Except as described in §F(5)(e) of this regulation, for an employee enrolled under individual coverage, combined in-network and out-of-network deductible of $2,500 per year; for an employee enrolled under other than individual coverage, combined in-network and out-of-network deductible of $5,000 in aggregate per year;</text> </paragraph> <paragraph num="(b)"> <text>For an employee enrolled under individual coverage, combined in-network and out-of-network out-of-pocket limit of $4,900 per year; for an employee enrolled under other than individual coverage, combined in-network and out-of-network out-of-pocket limit of $9,800 in aggregate per year;</text> </paragraph> <paragraph num="(c)"> <text>After the deductible described in §F(5)(a) of this regulation is satisfied, the covered person shall be responsible for copayments for the following services at the payment level indicated:</text> <paragraph num="(i)"> <text>Primary care services—$30;</text> </paragraph> <paragraph num="(ii)"> <text>Specialty care services—$40;</text> </paragraph> <paragraph num="(iii)"> <text>Physician inpatient hospital visits—$30;</text> </paragraph> <paragraph num="(iv)"> <text>Outpatient laboratory services—$40 or 50 percent of the cost of the service, whichever is less;</text> </paragraph> <paragraph num="(v)"> <text>Outpatient diagnostic services—$40 or 50 percent of the cost of the service, whichever is less; and</text> </paragraph> <paragraph num="(vi)"> <text>Inpatient hospital copayment—$1,000 per admission;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Under the mandatory POS option, the carrier's coinsurance percentage shall be at least 60 percent of allowable charges for out-of-network services; and</text> </paragraph> <paragraph num="(e)"> <text>Well-child care and immunization benefits provided in conjunction with the high deductible health maintenance organization—non-health savings account compatible delivery system shall be subject to a $10 copayment and not subject to the overall deductible;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>HMO-HSA:</text> <paragraph num="(a)"> <text>Except as described in §F(6)(e) of this regulation, combined annual deductible for all covered services, including prescription drugs, of $2,700 for an employee enrolled in individual coverage and $5,450 in aggregate for an employee enrolled in other than individual coverage;</text> </paragraph> <paragraph num="(b)"> <text>The out-of-pocket limit for all covered services, including prescription drugs, child wellness, and immunization services, shall be subject to the annual out-of-pocket maximum for HSA-compatible delivery systems of $5,250 for employees enrolled as individuals and $10,500 in aggregate for employees enrolled as other than individuals;</text> </paragraph> <paragraph num="(c)"> <text>After the deductible described in §F(6)(a) of this regulation is satisfied, the covered person shall be responsible for copayments at the payment level indicated:</text> <paragraph num="(i)"> <text>Primary care services—$30;</text> </paragraph> <paragraph num="(ii)"> <text>Specialty care services—$40;</text> </paragraph> <paragraph num="(iii)"> <text>Physician inpatient hospital visits—$30;</text> </paragraph> <paragraph num="(iv)"> <text>Outpatient laboratory services—$40 or 50 percent of the cost of the service, whichever is less;</text> </paragraph> <paragraph num="(v)"> <text>Outpatient diagnostic services—$40 or 50 percent of the cost of the service, whichever is less; and</text> </paragraph> <paragraph num="(vi)"> <text>Inpatient hospital copayment—$1,000 per admission;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Under the mandatory POS option, the carrier's coinsurance percentage shall be at least 60 percent of allowable charges for out-of-network services;</text> </paragraph> <paragraph num="(e)"> <text>Well-child care and immunization benefits provided in conjunction with the HMO-HSA shall be subject to a $10 copayment and not subject to the overall deductible;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Triple option point-of-service:</text> <paragraph num="(a)"> <text>For the indemnity portion of the triple option, the general cost-sharing requirements set forth in §F(1) of this regulation shall apply;</text> </paragraph> <paragraph num="(b)"> <text>For the preferred provider portion of the triple option, the general cost-sharing requirements set forth in §F(2)(a), (e)—(g) of this regulation shall apply;</text> </paragraph> <paragraph num="(c)"> <text>For the health maintenance organization portion of the triple option, the general cost-sharing requirements set forth in §F(4) of this regulation shall apply;</text> </paragraph> <paragraph num="(d)"> <text>For plan years beginning before September 23, 2010, a $2 million lifetime maximum per covered person is applicable to the indemnity and preferred provider portions of the triple option;</text> </paragraph> <paragraph num="(e)"> <text>For plan years beginning on or after September 23, 2010, a lifetime maximum may not apply to the indemnity and preferred portions of the triple option;</text> </paragraph> <paragraph num="(f)"> <text>A lifetime maximum may not apply to the health maintenance organization portion of the triple option;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Exclusive provider:</text> <paragraph num="(a)"> <text>Non-health savings account-compatible exclusive provider organization (EPO):</text> <paragraph num="(i)"> <text>For an employee enrolled under individual coverage, a deductible of $2,500 per year; for an employee enrolled under other than individual coverage, a deductible of $5,000 in aggregate per year;</text> </paragraph> <paragraph num="(ii)"> <text>For an employee enrolled under individual coverage, an out-of-pocket limit of $4,900 per year; for an employee enrolled under other than individual coverage, an out-of-pocket limit of $9,800 in aggregate per year;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>EPO-HSA:</text> <paragraph num="(i)"> <text>For an employee enrolled under individual coverage, a deductible of $2,700 per year; for an employee enrolled under other than individual coverage, a deductible of $5,450 in aggregate per year;</text> </paragraph> <paragraph num="(ii)"> <text>For an employee enrolled under individual coverage, an out-of-pocket limit of $5,250 per year; for an employee enrolled under other than individual coverage, an out-of-pocket limit of $10,500 in aggregate per year;</text> </paragraph> <paragraph num="(iii)"> <text>For the health savings account-compatible exclusive provider organization, carriers may not offer additional benefits to reduce deductibles below the minimum deductibles required by federal law or raise out-of-pocket limits above the maximum out-of-pocket limits required by federal law;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>A carrier may offer an EPO or an EPO-HSA, or both;</text> </paragraph> <paragraph num="(d)"> <text>There shall be a lifetime maximum of:</text> <paragraph num="(i)"> <text>For plan years beginning before September 23, 2010, $2 million per covered person; and</text> </paragraph> <paragraph num="(ii)"> <text>For plan years beginning on or after September 23, 2010, unlimited;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>There shall be a carrier's coinsurance percentage of 80 percent of allowable charges for covered services;</text> </paragraph> <paragraph num="(f)"> <text>Under the mandatory out-of-network option described in Regulation .08 of this chapter, there shall be a carrier's coinsurance percentage of at least 60 percent of allowable charges for out-of-network services.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Uniform Cost-Sharing Arrangements — Specific Services."> <paragraph num="A."> <text>General Cost-Sharing Arrangement for Outpatient Mental Health and Substance Abuse Services.</text> <paragraph num="(1)"> <text>Except as provided in §B of this regulation, for outpatient mental health and substance abuse, the carrier shall pay for each service 70 percent of allowable charges.</text> </paragraph> <paragraph num="(2)"> <text>A carrier may substitute a copayment for these services at an actuarially equivalent amount to the coinsurance percentages described in this regulation subject to the approval of the Insurance Commissioner and the Maryland Health Care Commission.</text> </paragraph> <paragraph num="(3)"> <text>For purposes of the cost-sharing arrangement set forth in §A(1) of this regulation, a carrier shall treat a visit made solely for medication management purposes for mental health or substance abuse treatment as a covered service under Regulation .03A(1) of this chapter and may not count the visit as a mental health or substance abuse service described in Regulation .03A(5) of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Out-of-Network Cost-Sharing Arrangements for Outpatient Mental Health and Substance Abuse Services.</text> <paragraph num="(1)"> <text>For outpatient services for mental health and substance abuse received out-of-network in a preferred provider organization delivery system or point-of-service delivery system, triple option delivery system, or HSA-compatible delivery system, the carrier shall pay for each service 50 percent of allowable charges.</text> </paragraph> <paragraph num="(2)"> <text>A carrier may substitute a copayment for these services at an actuarially equivalent amount to the coinsurance percentages described in this regulation subject to the approval of the Insurance Commissioner and the Maryland Health Care Commission.</text> </paragraph> <paragraph num="(3)"> <text>For purposes of the uniform cost-sharing arrangements set forth in §B(1) of this regulation, a carrier shall treat a visit made solely for medication management purposes for mental health or substance abuse treatment as a covered service under Regulation .03A(1) and may not count the visit as a mental health or substance abuse service described in Regulation .03A(5) of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For outpatient services or surgery, the covered person shall pay a $40 copayment or the coinsurance percentage applicable under Regulation .04F of this chapter, whichever is greater, but not greater than the charges.</text> </paragraph> <paragraph num="D."> <text>Except for health maintenance organizations, for outpatient laboratory or diagnostic services, the covered person shall pay a $40 copayment or the coinsurance percentage applicable under Regulation .04F of this chapter, whichever is greater, but not greater than the charges.</text> </paragraph> <paragraph num="E."> <text>For emergency services, the covered person shall pay:</text> <paragraph num="(1)"> <text>A $100 copayment, which the carrier shall waive if the covered person is admitted to the hospital; and</text> </paragraph> <paragraph num="(2)"> <text>For coinsurance the:</text> <paragraph num="(a)"> <text>Amount applicable for indemnity or exclusive provider under Regulation .04F of this chapter; or</text> </paragraph> <paragraph num="(b)"> <text>In-network amount for preferred provider, point-of-service and triple option point-of-service under Regulation .04F of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>For infertility services obtained after the diagnosis of infertility has been confirmed, a carrier shall coinsure 50 percent of allowable charges.</text> </paragraph> <paragraph num="G."> <text>For skilled nursing facility services, a covered person shall pay a $40 per day copayment or the coinsurance percentage applicable under Regulation .04F of this chapter, whichever is greater.</text> </paragraph> <paragraph num="H."> <text>For prescription drugs:</text> <paragraph num="(1)"> <text>Persons in a non-HSA-compatible delivery system with individual coverage shall pay a $2,500 deductible, and persons with non-individual coverage a $5,000 in aggregate deductible separate from the deductibles set forth in Regulation .04F of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>Persons enrolled under a HSA-compatible delivery system shall satisfy the deductible set forth in Regulation .04F(2)(b) or (6) of this chapter as a prerequisite to receiving prescription drug benefits;</text> </paragraph> <paragraph num="(3)"> <text>After paying the applicable deductible, each covered person shall pay a 75% coinsurance percentage.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Well-Child Visits Cost-Sharing.</text> <paragraph num="(1)"> <text>For well-child visits, a covered person shall pay:</text> <paragraph num="(a)"> <text>Only a $10 copayment for all visits for children 0—24 months of age in a health maintenance organization or indemnity delivery system and for in-network services in a preferred provider delivery system, point-of-service delivery system, triple-option delivery system, HSA-compatible delivery system, or an exclusive provider delivery system;</text> </paragraph> <paragraph num="(b)"> <text>Only a $10 copayment for visits that include immunization for children older than 24 months through 13 years of age in a health maintenance organization or indemnity delivery system and for in-network services in a preferred provider delivery system, point-of-service delivery system, triple-option point-of-service delivery system, HSA-compatible delivery system, or an exclusive provider delivery system;</text> </paragraph> <paragraph num="(c)"> <text>For out-of-network services in a preferred provider delivery system, point-of-service delivery system, triple-option point-of-service delivery system, or HSA-compatible delivery system, in accordance with the uniform cost-sharing arrangements described in Regulation .04F(2), (3), and (7) of this chapter; and</text> </paragraph> <paragraph num="(d)"> <text>For all other visits in accordance with uniform cost-sharing arrangements described in Regulation .04 of this chapter for each delivery system.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A carrier may substitute a copayment that is the actuarial equivalent to the amount specified in §I(1)(b) of this regulation for all well-child visits for children 2—13 years old.</text> </paragraph> </paragraph> <paragraph num="J."> <text>General Cost-Sharing Arrangements for Outpatient Rehabilitation and Chiropractic Services. Except as provided in §K of this regulation, for outpatient rehabilitation services and chiropractic services, the carrier shall pay 70 percent of the allowable charges, or may substitute a $40 copayment for these services.</text> </paragraph> <paragraph num="K."> <text>Out-of-Network Cost-Sharing Arrangements for Outpatient Rehabilitation Services and Chiropractic Services. For outpatient rehabilitation services and chiropractic services received out-of-network in a preferred provider delivery system, point-of-service delivery system, triple option delivery system, or PPO-HSA, the carrier shall pay 50 percent of allowable charges.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Limitations and Exclusions."> <paragraph num="A."> <text>A carrier shall apply the limitations and exclusions specified in §B of this regulation to the covered services specified in Regulation .03 of this chapter.</text> </paragraph> <paragraph num="B."> <text>The following are exclusions and limitations to the covered services:</text> <paragraph num="(1)"> <text>Services that are not medically necessary;</text> </paragraph> <paragraph num="(2)"> <text>Services performed or prescribed under the direction of a person who is not a health care practitioner;</text> </paragraph> <paragraph num="(3)"> <text>Services that are beyond the scope of practice of the health care practitioner performing the service;</text> </paragraph> <paragraph num="(4)"> <text>Services to the extent they are covered by any government unit, except for veterans in Veterans' Administration or armed forces facilities for services received for which the recipient is liable;</text> </paragraph> <paragraph num="(5)"> <text>Services for which a covered person is not legally, or as a customary practice, required to pay in the absence of a health benefit plan;</text> </paragraph> <paragraph num="(6)"> <text>The purchase, examination, or fitting of eyeglasses or contact lenses, except for aphakic patients and soft or rigid gas permeable lenses or sclera shells intended for use in the treatment of a disease or injury;</text> </paragraph> <paragraph num="(7)"> <text>Personal care services and domiciliary care services;</text> </paragraph> <paragraph num="(8)"> <text>Services rendered by a health care practitioner who is a covered person's spouse, mother, father, daughter, son, brother, or sister;</text> </paragraph> <paragraph num="(9)"> <text>Experimental services;</text> </paragraph> <paragraph num="(10)"> <text>Practitioner, hospital, or clinical services related to radial keratotomy, myopic keratomileusis, and surgery which involves corneal tissue for the purpose of altering, modifying, or correcting myopia, hyperopia, or stigmatic error;</text> </paragraph> <paragraph num="(11)"> <text>In vitro fertilization, ovum transplants and gamete intrafallopian tube transfer, zygote intrafallopian transfer, or cryogenic or other preservation techniques used in these or similar procedures;</text> </paragraph> <paragraph num="(12)"> <text>Services to reverse a voluntary sterilization procedure;</text> </paragraph> <paragraph num="(13)"> <text>Services for sterilization or reverse sterilization for a dependent minor;</text> </paragraph> <paragraph num="(14)"> <text>Medical or surgical treatment or regimen for reducing or controlling weight, unless otherwise specified in the covered services;</text> </paragraph> <paragraph num="(15)"> <text>Services incurred before the effective date of coverage for a covered person;</text> </paragraph> <paragraph num="(16)"> <text>Services incurred after a covered person's termination of coverage, including any extension of benefits;</text> </paragraph> <paragraph num="(17)"> <text>Surgery or related services for cosmetic purposes to improve appearance, but not to restore bodily function or correct deformity resulting from disease, trauma, or congenital or developmental anomalies;</text> </paragraph> <paragraph num="(18)"> <text>Services for injuries or diseases related to a covered person's job to the extent the covered person is required to be covered by a workers' compensation law;</text> </paragraph> <paragraph num="(19)"> <text>Services rendered from a dental or medical department maintained by or on behalf of an employer, mutual benefit association, labor union, trust, or similar persons or groups;</text> </paragraph> <paragraph num="(20)"> <text>Personal hygiene and convenience items, including, but not limited to, air conditioners, humidifiers, or physical fitness equipment;</text> </paragraph> <paragraph num="(21)"> <text>Charges for telephone consultations, failure to keep a scheduled visit, or completion of any form;</text> </paragraph> <paragraph num="(22)"> <text>Inpatient admissions primarily for diagnostic studies, unless authorized by the carrier;</text> </paragraph> <paragraph num="(23)"> <text>The purchase, examination, or fitting of hearing aids and supplies, and tinnitus maskers, except as provided in Regulation .03A(34) of this chapter;</text> </paragraph> <paragraph num="(24)"> <text>Except for covered ambulance services, travel, whether or not recommended by a health care practitioner;</text> </paragraph> <paragraph num="(25)"> <text>Except for emergency services, services received while the covered person is outside the United States;</text> </paragraph> <paragraph num="(26)"> <text>Immunizations related to foreign travel;</text> </paragraph> <paragraph num="(27)"> <text>Unless otherwise specified in covered services, dental work or treatment which includes hospital or professional care in connection with:</text> <paragraph num="(a)"> <text>The operation or treatment for the fitting or wearing of dentures,</text> </paragraph> <paragraph num="(b)"> <text>Orthodontic care or malocclusion,</text> </paragraph> <paragraph num="(c)"> <text>Operations on or for treatment of or to the teeth or supporting tissues of the teeth, except for removal of tumors and cysts or treatment of injury to natural teeth due to an accident if the treatment is received within 6 months of the accident; and</text> </paragraph> <paragraph num="(d)"> <text>Dental implants;</text> </paragraph> </paragraph> <paragraph num="(28)"> <text>Accidents occurring while and as a result of chewing;</text> </paragraph> <paragraph num="(29)"> <text>Routine foot care, including the paring or removing of corns and calluses, or trimming of nails, unless these services are determined to be medically necessary;</text> </paragraph> <paragraph num="(30)"> <text>Arch support, orthotic devices, in-shoe supports, orthopedic shoes, elastic supports, or exams for their prescription or fitting, unless these services are determined to be medically necessary;</text> </paragraph> <paragraph num="(31)"> <text>Inpatient admissions primarily for physical therapy, unless authorized by the carrier;</text> </paragraph> <paragraph num="(32)"> <text>Treatment leading to or in connection with transsexualism, or sex changes or modifications, including but not limited to surgery;</text> </paragraph> <paragraph num="(33)"> <text>Treatment of sexual dysfunction not related to organic disease;</text> </paragraph> <paragraph num="(34)"> <text>Services that duplicate benefits provided under federal, State, or local laws, regulations, or programs;</text> </paragraph> <paragraph num="(35)"> <text>Organ transplants except those included under Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(36)"> <text>Nonhuman organs and their implantation;</text> </paragraph> <paragraph num="(37)"> <text>Nonreplacement fees for blood and blood products;</text> </paragraph> <paragraph num="(38)"> <text>Lifestyle improvements, including nutrition counseling, or physical fitness programs, unless included as a covered service;</text> </paragraph> <paragraph num="(39)"> <text>Wigs or cranial prosthesis;</text> </paragraph> <paragraph num="(40)"> <text>Weekend admission charges, except for emergencies and maternity, unless authorized by the carrier;</text> </paragraph> <paragraph num="(41)"> <text>Out-patient orthomolecular therapy, including nutrients, vitamins, and food supplements;</text> </paragraph> <paragraph num="(42)"> <text>Temporomandibular joint syndrome (TMJ) treatment and treatment for craniomandibular pain syndrome (CPS), except for surgical services for TMJ and CPS, if medically necessary and if there is a clearly demonstrable radiographic evidence of joint abnormality due to disease or injury;</text> </paragraph> <paragraph num="(43)"> <text>Services resulting from accidental bodily injuries arising out of a motor vehicle accident to the extent the services are payable under a medical expense payment provision of an automobile insurance policy;</text> </paragraph> <paragraph num="(44)"> <text>Services for conditions that State or local laws, regulations, ordinances, or similar provisions require to be provided in a public institution;</text> </paragraph> <paragraph num="(45)"> <text>Services for, or related to, the removal of an organ from a covered person for purposes of transplantation into another person, unless the:</text> <paragraph num="(a)"> <text>Transplant recipient is covered under the plan and is undergoing a covered transplant, and</text> </paragraph> <paragraph num="(b)"> <text>Services are not payable by another carrier;</text> </paragraph> </paragraph> <paragraph num="(46)"> <text>Physical examinations required for obtaining or continuing employment, insurance, or government licensing;</text> </paragraph> <paragraph num="(47)"> <text>Nonmedical ancillary services such as vocational rehabilitation, employment counseling, or educational therapy;</text> </paragraph> <paragraph num="(48)"> <text>Private hospital room, unless authorized by the carrier;</text> </paragraph> <paragraph num="(49)"> <text>Private duty nursing, unless authorized by the carrier;</text> </paragraph> <paragraph num="(50)"> <text>Treatment for mental health or substance abuse not authorized by the carrier through its managed care system, or a mental health or substance abuse condition determined by the carrier through its managed care system to be untreatable; and</text> </paragraph> <paragraph num="(51)"> <text>Services related to smoking cessation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A religious organization may request and a carrier shall grant the request for an exclusion from coverage for a service mandated under the plan if the service is in conflict with the religious organization's bona fide religious beliefs and practices.</text> </paragraph> <paragraph num="D."> <text>A religious organization that obtains an exclusion from coverage for a service mandated under the plan shall provide its employees reasonable and timely notice of this exclusion.</text> </paragraph> <paragraph num="E."> <text>The carrier's premium rate for the plan may not be affected by the religious organization's exclusions from coverage for a service mandated under the plan.</text> </paragraph> <paragraph num="F."> <text>An insurer or non-profit health service plan may impose a preexisting condition exclusion as specified in Regulation .11 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Additional Benefits."> <paragraph num="A."> <text>A carrier may offer benefits in addition to the plan only if:</text> <paragraph num="(1)"> <text>The benefits are offered separately from the plan;</text> </paragraph> <paragraph num="(2)"> <text>The benefits are priced separately from the plan;</text> </paragraph> <paragraph num="(3)"> <text>Subject to the provisions of Insurance Article, §15-1213, Annotated Code of Maryland, the benefits are guarantee issued;</text> </paragraph> <paragraph num="(4)"> <text>Subject to the provisions of Insurance Article, §15-1212, Annotated Code of Maryland, the benefits are guarantee renewed;</text> </paragraph> <paragraph num="(5)"> <text>Subject to the provisions of Insurance Article, §15-1205, Annotated Code of Maryland, the benefits are community rated; and</text> </paragraph> <paragraph num="(6)"> <text>The benefits do not duplicate any of the benefits in the plan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An additional benefit that a carrier offers shall meet at least one of the following requirements:</text> <paragraph num="(1)"> <text>The benefit increases access to care choices available under the plan;</text> </paragraph> <paragraph num="(2)"> <text>The benefit increases the number of services available to covered persons under the plan;</text> </paragraph> <paragraph num="(3)"> <text>The benefit increases the frequency that covered persons can obtain specified services under the plan; or</text> </paragraph> <paragraph num="(4)"> <text>The benefit lowers the uniform cost-sharing arrangements described in Regulations .04 and .05 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A health maintenance organization may offer, or may contract with another carrier to offer, a point-of-service option as an additional benefit to the health maintenance organization delivery system or the HMO-HSA delivery system subject to the following requirements:</text> <paragraph num="(1)"> <text>The point-of-service benefit allows a covered person to obtain services outside the network;</text> </paragraph> <paragraph num="(2)"> <text>For out-of-network services, the health maintenance organization's coinsurance percentage shall be no less than the percentage of allowable charges specified in Regulations .04F and .05B of this chapter; and</text> </paragraph> <paragraph num="(3)"> <text>The health maintenance organization may limit the benefits a covered person may obtain outside the network.</text> </paragraph> </paragraph> <paragraph num="D."> <text>An insurer or nonprofit health service plan offering an exclusive provider delivery system or an EPO-HSA delivery system specified under this chapter may offer a limited out-of-network additional benefit as defined under Regulation .02 of this chapter as an additional benefit subject to the following requirements:</text> <paragraph num="(1)"> <text>The limited out-of-network additional benefit allows a covered person to obtain services outside the network;</text> </paragraph> <paragraph num="(2)"> <text>Except as specified in §D(4) of this regulation, for out-of-network services, the insurer's or nonprofit health service plan's coinsurance may not be less than 60 percent of allowable charges;</text> </paragraph> <paragraph num="(3)"> <text>The insurer or nonprofit health service plan may limit the benefits a covered person may obtain outside the network; and</text> </paragraph> <paragraph num="(4)"> <text>For outpatient services for mental health and substance abuse, rehabilitation, and chiropractic services received out-of-network, the insurer's or nonprofit health service plans' coinsurance may not be less than 50 percent of allowable charges.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A carrier may offer a rider to cover the services of Christian Science practitioners and Christian Science facilities.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Mandatory Point-of-Service Option or Out-of-Network Option."> <paragraph num="A."> <text>When a health maintenance organization is the sole delivery system offered to employees by an eligible employer, the health maintenance organization:</text> <paragraph num="(1)"> <text>Shall offer the employer a mandatory point-of-service option for the individual employee to accept or reject;</text> </paragraph> <paragraph num="(2)"> <text>May not impose a minimum participation level on the mandatory point-of-service option;</text> </paragraph> <paragraph num="(3)"> <text>May not limit the benefits a covered person can receive out of network;</text> </paragraph> <paragraph num="(4)"> <text>As part of the application, shall provide to each eligible employer the following disclosure statement for each point-of-service option offered:</text> </paragraph> </paragraph> <paragraph num="B."> <text>By July 1, 1996, when a carrier's provider panel is the sole delivery system offered to employees by an eligible employer for dental services, the carrier:</text> <paragraph num="(1)"> <text>Shall offer the employer a mandatory dental point-of-service option for the individual employee to accept or reject;</text> </paragraph> <paragraph num="(2)"> <text>May not impose a minimum participation level on the mandatory dental point-of-service option;</text> </paragraph> <paragraph num="(3)"> <text>As part of the application, shall provide to each eligible employer the following disclosure statement for each dental point-of-service option offered:</text> </paragraph> </paragraph> <paragraph num="C."> <text>When an exclusive provider delivery system is the sole delivery system offered to employees by an eligible employer, the insurer or nonprofit health service plan:</text> <paragraph num="(1)"> <text>Shall offer the employer a mandatory out-of-network option for the individual employee to accept or reject;</text> </paragraph> <paragraph num="(2)"> <text>May not impose a minimum participation level on the mandatory out-of-network option;</text> </paragraph> <paragraph num="(3)"> <text>May not limit the benefits a covered person can receive from non-preferred providers;</text> </paragraph> <paragraph num="(4)"> <text>As part of the application, shall provide to each eligible employer the following disclosure statement for each out-of-network option offered:</text> </paragraph> <aftertext>"Under Maryland law, your employees may purchase an out-of-network option as an additional benefit. An out-of-network option allows your employees to obtain health care services from non-preferred providers under certain circumstances that are described in Attachment A.</aftertext> </paragraph> <paragraph num="D."> <text>This regulation does not apply to self-employed individuals.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Mandated Benefits."> <paragraph num="A."> <text>The plan excludes mandated benefits, except for Insurance Article, §§15-123(d), 15-401, 15-407, 15-408, 15-409, 15-412(a)—(h), 15-414, 15-604, 15-701, 15-811, 15-812, 15-815, 15-816, 15-823, 15-839, and 15-10B-09, Annotated Code of Maryland, and Health-General Article, §§19-703(d) and (g), 19-706(h), 19-710.1(b)(1)(ii), and 19-712.5, Annotated Code of Maryland, to the extent those sections are considered mandated benefits.</text> </paragraph> <paragraph num="B."> <text>Notwithstanding the mandated benefits included in Regulation .09A of this chapter, the requirements of Insurance Article, §15-812(g), Annotated Code of Maryland, relating to imposition of copayment, coinsurance, or deductibles, are inapplicable to a HSA-compatible delivery system.</text> </paragraph> <paragraph num="C."> <text>These regulations do not exclude any requirement contained in statute or regulation that a carrier shall pay hospitals for hospital services rendered in accordance with rates approved by the Health Services Cost Review Commission.</text> </paragraph> <paragraph num="D."> <text>A health maintenance organization shall include the conversion benefit required under COMAR 31.12.02.11.</text> </paragraph> <paragraph num="E."> <text>Referrals to Specialists. Each carrier:</text> <paragraph num="(1)"> <text>That does not allow direct access to specialists shall provide for a standing referral to a specialist under the requirements of Insurance Article, §15-830, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Shall provide for a referral to a specialist who is not part of the carrier's panel under the requirements of Insurance Article, §15-830, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>[Shall] For plan years beginning before September 23, 2010, shall provide direct access to obstetric and gynecological care as specified in Insurance Article, §15-816, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(4)"> <text>For plan years beginning on or after September 23, 2010, shall provide direct access to obstetric and gynecological care as specified in 45 CFR 147.138(a)(3).</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Rates."> <paragraph num="A."> <text>A carrier shall market the plan in the following compositions:</text> <paragraph num="(1)"> <text>Individual; and</text> </paragraph> <paragraph num="(2)"> <text>Individual, spouse, and dependents.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In addition to §A of this regulation, a carrier may market the plan in one or more of the following compositions:</text> <paragraph num="(1)"> <text>Individual and spouse; or</text> </paragraph> <paragraph num="(2)"> <text>Individual and dependent.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For each composition in §§A and B of this regulation, the carrier shall calculate a separate community rate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Pre-existing Conditions."> <paragraph num="A."> <text>A carrier may not apply a preexisting condition provision to health care services for pregnancy or newborns, or to individuals younger than 19 years old.</text> </paragraph> <paragraph num="B."> <text>Except as provided in §A of this regulation, for contracts issued or renewed on or after October 1, 2009, an insurer or non-profit health service plan may impose a preexisting condition provision in accordance with Insurance Article, §15-508, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>A carrier may impose a waiting period from the date of application, in accordance with Insurance Article, §15-1208, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Review."> <text>In addition to the requirement set forth in Insurance Article, §15-1207, Annotated Code of Maryland, the Maryland Health Care Commission shall review the plan from time to time. Unless otherwise stated, all changes in the plan made pursuant to this review are effective for contracts issued or renewed after July 1 of the calendar year in which the changes are promulgated.</text> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-103(c)(6), 19-108, and 19-1510; Insurance Article, §§2-108, 2-109, and 15-1207; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 25, 1994 (21:8 Md. R. 672)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective July 1, 1994 (21:13 Md. R. 1151); amended permanently effective November 7, 1994 (21:22 Md. R. 1876)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective February 12, 1996 (23:3 Md. R. 167)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective May 18, 1998 (25:10 Md. R. 746)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective February 2, 1996 (23:4 Md. R. 270); emergency status expired August 2, 1996; amended permanently effective October 21, 1996 (23:21 Md. R. 1467)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective April 1, 1997 (24:9 Md. R. 653); emergency status extended at 24:21 Md. R. 1444; amended permanently effective September 22, 1997 (24:19 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective May 18, 1998 (25:10 Md. R. 746)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended and H, I adopted as an emergency provision effective April 1, 1997 (24:9 Md. R. 653); emergency status extended at 24:21 Md. R. 1444; amended permanently effective September 22, 1997 (24:19 Md. R. 1340)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A, D amended effective May 18, 1998 (25:10 Md. R. 746)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04F amended effective May 18, 1998 (25:10 Md. R. 746)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective May 18, 1998 (25:10 Md. R. 746)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05H amended as an emergency provision effective October 1, 1997 (24:21 Md. R. 1444); amended permanently effective January 12, 1998 (25:1 Md. R. 15)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05I amended as an emergency provision effective June 1, 1996 (23:13 Md. R. 937); emergency status extended at 23:18 Md. R. 1313; emergency status expired January 16, 1997</annotation> <annotation type="History" subtype="Administrative History">Regulation .05I amended effective March 10, 1997 (24:5 Md. R. 407)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended as an emergency provision effective September 30, 1996 (23:21 Md. R. 1464); amended permanently effective March 10, 1997 (24:5 Md. R. 407)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A amended as an emergency provision effective April 25, 1996 (23:10 Md. R. 729); emergency status extended at 23:18 Md. R. 1314; emergency status expired January 16, 1997</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended as an emergency provision effective June 1, 1996 (23:13 Md. R. 937); emergency status extended at 23:18 Md. R. 1313; emergency status expired January 16, 1997</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective March 10, 1997 (24:5 Md. R. 407)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended as an emergency provision effective October 1, 1997 (24:21 Md. R. 1441); amended permanently effective January 12, 1998 (25:1 Md. R. 15)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended as an emergency provision effective December 31, 1997 (25:2 Md. R. 73); amended permanently effective April 6, 1998 (25:7 Md. R. 527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective May 18, 1998 (25:10 Md. R. 746)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended effective May 18, 1998 (25:10 Md. R. 746)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.05 to COMAR 31.11.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective April 10, 2006 (33:7 Md. R. 675)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01C amended effective April 9, 2007 (34:7 Md. R. 700); March 24, 2008 (35:6 Md. R. 702)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 7, 2000 (27:2 Md. R. 148); February 5, 2001 (28:2 Md. R. 106); March 18, 2002 (29:5 Md. R. 506); April 14, 2003 (30:7 Md. R. 489)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective May 21, 2004 (31:12 Md. R. 909); amended permanently effective August 16, 2004 (31:16 Md. R. 1257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 28, 2005 (32:4 Md. R. 412); April 10, 2006 (33:7 Md. R. 676); March 24, 2008 (35:6 Md. R. 702); April 20, 2009 (36:8 Md. R. 598)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective September 23, 2010 (37:23 Md. R. 1608); amended permanently effective January 13, 2011 (38:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulations .03—.08 amended effective May 3, 1999 (26:9 Md. R. 731)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective April 10, 2006 (33:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended as an emergency provision effective October 1, 1999 (26:22 Md. R. 1689); emergency status expired February 1, 2000</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective February 7, 2000 (27:2 Md. R. 148); February 5, 2001 (28:2 Md. R. 106); March 18, 2002 (29:5 Md. R. 506); April 14, 2003 (30:7 Md. R. 489); April 20, 2009 (36:8 Md. R. 598)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A-1 adopted effective April 20, 2009 (36:8 Md. R. 598)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03E amended effective February 7, 2000 (27:2 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03-1 adopted as an emergency provision effective September 23, 2010 (37:23 Md. R. 1608); adopted permanently effective January 13, 2011 (38:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective April 10, 2006 (33:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B, F amended as an emergency provision effective May 21, 2004 (31:12 Md. R. 909); amended permanently effective August 16, 2004 (31:16 Md. R. 1257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04F amended effective February 7, 2000 (27:2 Md. R. 148); February 5, 2001 (28:2 Md. R. 106); March 15, 2004 (31:5 Md. R. 452); April 9, 2007 (34:7 Md. R. 700); March 24, 2008 (35:6 Md. R. 702)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04F amended as an emergency provision effective September 23, 2010 (37:23 Md. R. 1608); amended permanently effective January 13, 2011 (38:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective February 5, 2001 (28:2 Md. R. 106); March 15, 2004 (31:5 Md. R. 452); April 10, 2006 (33:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05E, I amended effective March 24, 2008 (35:6 Md. R. 702)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05H amended effective February 7, 2000 (27:2 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05H amended as an emergency provision effective May 21, 2004 (31:12 Md. R. 909); amended permanently effective August 16, 2004 (31:16 Md. R. 1257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05H amended as an emergency provision effective September 23, 2010 (37:23 Md. R. 1608); amended permanently effective January 13, 2011 (38:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05I amended effective May 3, 1999 (26:9 Md. R. 731)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective February 7, 2000 (27:2 Md. R. 148); February 5, 2001 (28:2 Md. R. 106); March 18, 2002 (29:5 Md. R. 506); April 14, 2003 (30:7 Md. R. 489); April 20, 2009 (36:8 Md. R. 598)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06F adopted effective November 16, 2009 (36:23 Md. R. 1819)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective March 24, 2008 (35:6 Md. R. 702)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07A amended effective February 7, 2000 (27:2 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C amended effective April 10, 2006 (33:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective March 24, 2008 (35:6 Md. R. 702)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended as an emergency provision effective May 21, 2004 (31:12 Md. R. 909); amended permanently effective August 16, 2004 (31:16 Md. R. 1257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective March 18, 2002 (29:5 Md. R. 506); April 20, 2009 (36:8 Md. R. 598)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09B amended effective April 10, 2006 (33:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D adopted as an emergency provision effective October 1, 1999 (26:22 Md. R. 1689); emergency status expired February 1, 2000</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D adopted effective February 7, 2000 (27:2 Md. R. 148)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09D amended effective February 5, 2001 (28:2 Md. R. 106); April 10, 2006 (33:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09E amended as an emergency provision effective September 23, 2010 (37:23 Md. R. 1608); amended permanently effective January 13, 2011 (38:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10D adopted as an emergency provision effective May 21, 2004 (31:12 Md. R. 909); adopted permanently effective August 16, 2004 (31:16 Md. R. 1257)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10D repealed effective April 10, 2006 (33:7 Md. R. 676)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11A, B amended as an emergency provision effective September 23, 2010 (37:23 Md. R. 1608); amended permanently effective January 13, 2011 (38:1 Md. R. 13)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective November 16, 2009 (36:23 Md. R. 1819)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11C amended effective February 28, 2005 (32:4 Md. R. 412); November 16, 2009 (36:23 Md. R. 1819)</annotation> </annotations> </chapter> <chapter num="07" heading="Small Employer Group Health Insurance — Self-Employed Individuals" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 adopted as an emergency provision effective April 1, 1996 (23:8 Md. R. 602); adopted permanently effective June 17, 1996 (23:12 Md. R. 870)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended as an emergency provision effective June 6, 1997 (24:13 Md. R. 928); amended permanently effective September 8, 1997 (24:18 Md. R. 1295)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended as an emergency provision effective October 1, 1996 (23:21 Md. R. 1464); amended permanently effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended as an emergency provision effective October 1, 1996 (23:21 Md. R. 1464); amended permanently effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 adopted as an emergency provision effective October 1, 1996 (23:21 Md. R. 1464); adopted permanently effective December 30, 1996 (23:26 Md. R. 1859)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.12 to COMAR 31.11.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective November 11, 2002 (29:22 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective November 11, 2002 (29:22 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.06 repealed effective June 23, 2014 (41:12 Md. R. 669)</annotation> </annotations> </chapter> <chapter num="08" heading="Small Group Market Health Insurance Geographic Areas"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter applies to all carriers which offer health benefits plans to small employers in the State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Baltimore Metropolitan Area” means Baltimore City, Baltimore County, Harford County, Howard County, and Anne Arundel County.</text> </paragraph> <paragraph num="(2)"> <text>“Eastern and Southern Maryland” means St. Mary's County, Charles County, Calvert County, Cecil County, Kent County, Queen Anne's County, Talbot County, Caroline County, Dorchester County, Wicomico County, Somerset County, and Worcester County.</text> </paragraph> <paragraph num="(3)"> <text>“Washington, D.C. Metropolitan area” means Montgomery County and Prince George's County.</text> </paragraph> <paragraph num="(4)"> <text>“Western Maryland” means Garrett County, Allegany County, Washington County, Carroll County, and Frederick County.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Geographic Areas."> <text>If carriers subject to this chapter adjust their community rates based on geography, they may only use the geographic areas defined in Regulation .02 of this chapter.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-1205, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 23, 1994 (21:10 Md. R. 843)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 1, 1995 (22:16 Md. R. 1221)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.04 to COMAR 31.11.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="09" heading="Solicitation of Coverage under Group Health or Blanket Health Insurance Policy Issued in Another Jurisdiction"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all insurers seeking to solicit coverage in this State under a group health or blanket health insurance policy issued in another jurisdiction.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Standards for Approval to Solicit."> <paragraph num="A."> <text>An insurer seeking the Commissioner's approval to solicit coverage in this State under a group health or blanket health insurance policy issued in another jurisdiction shall submit to the Commissioner documentation sufficient to enable the Commissioner to determine whether the type of group to be covered conforms substantially to one of the types of groups described in Insurance Article, §15-302 or 15-305, Annotated Code of Maryland. An insurer may not solicit this coverage in Maryland until the Commissioner has made that determination.</text> </paragraph> <paragraph num="B."> <text>If the Commissioner determines that the type of group to be covered conforms substantially to one of the types of groups described in Insurance Article, §15-302 or 15-305, Annotated Code of Maryland, the insurer shall file with the Commissioner all forms and endorsements necessary to demonstrate that the insurer provides all of the applicable benefits which are required by Insurance Article, Annotated Code of Maryland, to be included in a group health or blanket health insurance policy issued in another jurisdiction.</text> </paragraph> <paragraph num="C."> <text>If the Commissioner determines that the type of group to be covered does not conform substantially to one of the types of groups described in Insurance Article, §15-302 or 15-305, Annotated Code of Maryland, the insurer shall submit to the Commissioner each policy form, certificate form, application form, rider, and endorsement which it proposes to use in connection with insurance coverage provided to Maryland residents.</text> </paragraph> <paragraph num="D."> <text>Each filing made pursuant to these regulations shall be made not less than 60 days in advance of the form's use. At the expiration of the 60-day period, unless extended by the Commissioner an additional 30 days, the right to solicit the filed coverage is considered approved unless the Commissioner has previously approved or disapproved the right to solicit the filed coverage.</text> </paragraph> <paragraph num="E."> <text>The Commissioner may at any time withdraw approval previously given by sending to the insurer, not less than 30 days in advance of the effective date of the Commissioner's action, a notice of withdrawal setting forth the grounds for withdrawal in sufficient detail as to reasonably apprise the insurer of the basis for withdrawal.</text> </paragraph> <paragraph num="F."> <text>Approval to solicit coverage in this State may not be given if any of the forms fail to contain those applicable benefits which are required by Insurance Article, Annotated Code of Maryland, to be included in a group or blanket health insurance policy issued in another jurisdiction.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Notice to Insured Concerning Mandated Benefits."> <text>An insurer who seeks to solicit coverage for Maryland residents under a group health or blanket health insurance policy issued in another jurisdiction shall include in the certificate form used in connection with the coverage, a notice on the first page in 12-point bold type that the policy may omit some of the benefits required for a policy issued and delivered in Maryland.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-205, and 15-310, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 1, 1966</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter, Excess of Loss and Catastrophe Coverage—Suspension of General Filing Requirements, repealed effective March 6, 1989 (16:4 Md. R. 497)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03, Solicitation of Coverage Under Group Health or Blanket Health Insurance Policy Issued in Another Jurisdiction, adopted effective April 27, 1992 (19:8 Md. R. 804)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 amended effective November 9, 1992 (19:22 Md. R. 1988)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.35 to COMAR 31.11.09 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="10" heading="Required Standard Provisions"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to each group health insurance contract, each blanket health insurance contract, and each group nonprofit health service plan contract issued or delivered in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Blanket health insurance” has the meaning stated in Insurance Article, §15-305, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” means an insurer or nonprofit health service plan.</text> </paragraph> <paragraph num="(2-1)"> <text>“Coverage period” means the interval of time the blanket health insurance contract or group health insurance contract provides protection, in exchange for the payment of a particular premium.</text> </paragraph> <paragraph num="(3)"> <text>Group Health Insurance.</text> <paragraph num="(a)"> <text>“Group health insurance” has the meaning stated in Insurance Article, §15-302, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Group health insurance” includes:</text> <paragraph num="(i)"> <text>A small employer health benefit plan as defined in Insurance Article, §15-1201, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(ii)"> <text>A contract issued to a group policyholder by a nonprofit health service plan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Group policyholder” means the entity to whom the group health insurance contract or blanket health insurance contract is issued.</text> </paragraph> <paragraph num="(5)"> <text>“Insured” means an individual covered under a group health insurance contract or blanket health insurance contract.</text> </paragraph> <paragraph num="(6)"> <text>“Preferred provider” means a provider that has entered into a provider service contract.</text> </paragraph> <paragraph num="(7)"> <text>“Preferred provider benefit” means a benefit that appears in a group health insurance contract or blanket health insurance contract under which health care services are to be provided to the insured by a preferred provider.</text> </paragraph> <paragraph num="(8)"> <text>“Provider service contract” means a contract between a provider and a carrier or other entity, under which the provider agrees to provide health care services on a preferential basis under contracts containing preferred provider benefits.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Standard Provisions."> <paragraph num="A."> <text>A group health insurance contract may not be delivered in Maryland unless it contains in substance the provisions:</text> <paragraph num="(1)"> <text>Listed in Regulation .04 of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Which in the opinion of the Commissioner, as compared to the provisions in Regulation .04 of this chapter, are:</text> <paragraph num="(a)"> <text>More favorable to the individuals insured, or</text> </paragraph> <paragraph num="(b)"> <text>At least as favorable to the individuals insured and more favorable to the policyholder.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A blanket health insurance contract may not be delivered in Maryland unless it contains in substance the provisions:</text> <paragraph num="(1)"> <text>Listed in Regulation .05 of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Which in the opinion of the Commissioner, as compared to the provisions in Regulation .05 of this chapter, are:</text> <paragraph num="(a)"> <text>More favorable to the individuals insured, or</text> </paragraph> <paragraph num="(b)"> <text>At least as favorable to the individuals insured and more favorable to the policyholder.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Inapplicable and Inconsistent Provisions. If a provision required by Regulation .04 or .05 of this chapter is wholly or partly inapplicable to or inconsistent with the coverage provided by a particular contract, the carrier shall:</text> <paragraph num="(1)"> <text>Omit from the contract the inapplicable provision or part of the provision; or</text> </paragraph> <paragraph num="(2)"> <text>Modify the inconsistent provision or part of the provision to make it consistent with the coverage provided by the contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Group Health Insurance Standard Provisions."> <paragraph num="A."> <text>Entire Contract; Changes. Each group health insurance contract shall contain a provision that specifies:</text> <paragraph num="(1)"> <text>Which documents constitute the entire contract of insurance; and</text> </paragraph> <paragraph num="(2)"> <text>That a change in the policy may not be valid:</text> <paragraph num="(a)"> <text>Until approved by an executive officer of the carrier, and</text> </paragraph> <paragraph num="(b)"> <text>Unless the approval is endorsed on the policy or attached to the policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Contestability of Coverage.</text> <paragraph num="(1)"> <text>Each group health insurance contract shall contain a provision that:</text> <paragraph num="(a)"> <text>The contract may not be contested, except for nonpayment of premiums, after it has been in force for 2 years from its date of issue;</text> </paragraph> <paragraph num="(b)"> <text>A statement made by any person covered under the policy relating to insurability may not be used in contesting the validity of the insurance with respect to which the statement was made after the insurance has been in force before the contest for a period of 2 years during the person's lifetime;</text> </paragraph> <paragraph num="(c)"> <text>Absent fraud, each statement made by an applicant, group policyholder, or insured is considered to be a representation and not a warranty; and</text> </paragraph> <paragraph num="(d)"> <text>A statement made to effectuate insurance may not be used to avoid the insurance or reduce benefits under the policy unless:</text> <paragraph num="(i)"> <text>The statement is contained in a written instrument signed by the group policyholder or insured, and</text> </paragraph> <paragraph num="(ii)"> <text>A copy of the statement is given to the group policyholder, insured, or beneficiary of the insured.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>The provision required by §B(1) of this regulation does not preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the contract or upon other provisions in the contract.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Notice of Claim.</text> <paragraph num="(1)"> <text>Each group contract shall contain a provision describing how and when a claim form can be requested from a carrier.</text> </paragraph> <paragraph num="(2)"> <text>If the carrier requires written notice of claim for the carrier to send a claim form to the claimant, the provision shall indicate that:</text> <paragraph num="(a)"> <text>The written notice of claim is not required before 20 days after the occurrence or commencement of the loss covered by the policy; and</text> </paragraph> <paragraph num="(b)"> <text>The carrier may not invalidate or reduce a claim if it is shown that:</text> <paragraph num="(i)"> <text>It was not reasonably possible to give notice within 20 days, and</text> </paragraph> <paragraph num="(ii)"> <text>Notice was given as soon as was reasonably possible.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Claim Forms. Each group health insurance contract shall contain a provision that:</text> <paragraph num="(1)"> <text>The carrier shall provide claim forms for filing proof of loss to each claimant or to the group policyholder for delivery to the claimant; and</text> </paragraph> <paragraph num="(2)"> <text>If the carrier does not provide the claim forms within 15 days after notice of claim is received, the claimant is considered to have complied with the requirements of the policy as to proof of loss if the claimant submits, within the time fixed in the policy for filing proof of loss, written proof of the occurrence, character, and extent of the loss for which the claim is made.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Proofs of Loss. Each group health insurance contract shall contain a provision that:</text> <paragraph num="(1)"> <text>Written proof of loss shall be furnished to the carrier:</text> <paragraph num="(a)"> <text>In case of claim for loss of time because of disability, within 90 days after the commencement of the period for which the carrier is liable, and that subsequent written proofs that the disability continues shall be furnished to the carrier at the intervals that the carrier reasonably requires; or</text> </paragraph> <paragraph num="(b)"> <text>In case of claim for any loss other than loss of time because of disability, within 90 days after the date of the loss; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Failure to furnish the proof of loss within the time required does not invalidate or reduce a claim if it was not reasonably possible to submit the proof within the required time, if the proof is furnished as soon as reasonably possible and, except in the absence of legal capacity of the claimant, not later than 1 year from the time proof is otherwise required.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Time of Payment of Claims.</text> <paragraph num="(1)"> <text>Each group health insurance contract shall contain a provision that:</text> <paragraph num="(a)"> <text>Benefits payable under the policy for any loss other than benefits for the loss of time will be paid not more than 30 days after receipt of written proof of loss; and</text> </paragraph> <paragraph num="(b)"> <text>Subject to written proof of loss, all accrued indemnities for loss of time will be paid not less frequently than monthly during the continuance of the period for which the carrier is liable, and any balance remaining unpaid at the termination of the period will be paid as soon as reasonably possible after receipt of proof.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A policy is considered to provide for periodic payment for loss under §F(1)(b) of this regulation only if the policy contains a specific statement to that effect.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Payment of Claims.</text> <paragraph num="(1)"> <text>Each group health insurance contract shall contain a provision that all benefits, other than those described in §G(2) and (3) of this regulation, will be payable to the insured.</text> </paragraph> <paragraph num="(2)"> <text>Loss of Life Benefits.</text> <paragraph num="(a)"> <text>Benefits for loss of life of the insured shall be payable to the beneficiary designated by the insured.</text> </paragraph> <paragraph num="(b)"> <text>If the contract contains conditions pertaining to family status, the beneficiary may be the family member specified by the policy terms.</text> </paragraph> <paragraph num="(c)"> <text>The payment of the loss of life benefits are subject to the provisions of the policy if no designated or specified beneficiary is living at the time of death of the insured.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If a group health insurance policy contains a preferred provider benefit, the policy may indicate that benefits for services rendered by a preferred provider will be paid directly to the preferred provider rendering the services.</text> </paragraph> <paragraph num="(4)"> <text>At the option of the carrier, the contract may provide that if any benefit of the contract is payable to the estate of an individual, or to an individual who is a minor or otherwise not competent to give a valid release, the carrier may pay the benefit, up to an amount not exceeding $5,000, to any relative by blood or connection by marriage of the individual who is considered by the carrier to be equitably entitled to the benefit.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Legal Action. Each group health insurance contract shall contain a provision that an action at law or in equity may not be brought:</text> <paragraph num="(1)"> <text>To recover on the policy before the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of the policy; and</text> </paragraph> <paragraph num="(2)"> <text>After the expiration of 3 years after the written proof of loss is required to be furnished.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Grace Period.</text> <paragraph num="(1)"> <text>Each group health insurance contract shall contain in substance the following provision: “Grace Period: A grace period of 30 days will be granted for payment of each premium due after the first premium, unless the carrier does not intend to renew the policy beyond the period for which premium has been accepted and notice of the intention not to renew is delivered to the group policyholder at least 45 days before the premium is due. During the grace period the policy shall continue in force.”</text> </paragraph> <paragraph num="(2)"> <text>Any additional provisions related to the grace period shall be expressly stated in the policy subject to the following limitations:</text> <paragraph num="(a)"> <text>Unless a carrier receives a notice of the group policyholder's intention to terminate the policy before the end of the grace period, the carrier may collect premium for the 30-day grace period;</text> </paragraph> <paragraph num="(b)"> <text>If a carrier receives a notice of intention to terminate the policy during the grace period, the carrier may collect premium for the period beginning on the first day of the grace period until the date on which notice is received or the date of termination stated in the notice, whichever is later; and</text> </paragraph> <paragraph num="(c)"> <text>If premium for the 30-day grace period is paid after the grace period ends, a carrier may charge interest for the premium, but:</text> <paragraph num="(i)"> <text>Interest may not begin to accrue during the 30-day grace period, and</text> </paragraph> <paragraph num="(ii)"> <text>The interest rate charged may not exceed an effective rate of 6 percent per year.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="J."> <text>Certificates. Each group health insurance contract shall contain a provision that:</text> <paragraph num="(1)"> <text>Unless the carrier makes delivery directly to the employee or member, the carrier will provide to the group policyholder, for delivery to each employee or member of the insured group, a statement that summarizes the essential features of the insurance coverage of the employee or member and that indicates to whom benefits under the policy are payable; and</text> </paragraph> <paragraph num="(2)"> <text>If dependents are included in the coverage, only one statement need be issued for each family unit.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Addition of Employees/Members. Each group health insurance contract shall contain a provision that eligible new employees, members, or dependents may be added periodically to the group originally insured in accordance with the terms of the policy.</text> </paragraph> <paragraph num="L."> <text>Misstatement of Age. If the premiums or benefits vary by age, each group health insurance contract shall contain:</text> <paragraph num="(1)"> <text>A provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event the age of an insured has been misstated; and</text> </paragraph> <paragraph num="(2)"> <text>A clear statement of the method of adjustment to be used.</text> </paragraph> </paragraph> <paragraph num="M."> <text>Group Policyholder Liable for Premium Until Notice of Termination is Received. Each group health insurance contract shall contain a provision that requires the employer, labor union, association, or other entity to which a contract of group health insurance has been issued to continue to pay the premium for an employee, member, or dependent under the policy until notice of termination of coverage has been received by the carrier.</text> </paragraph> <paragraph num="N."> <text>Premium Due Date.</text> <paragraph num="(1)"> <text>Each group health insurance contract shall specify the premium due date.</text> </paragraph> <paragraph num="(2)"> <text>The premium due date shall be the date the coverage period begins.</text> </paragraph> <paragraph num="(3)"> <text>A carrier may offer each group policyholder the option to pay the premium through an electronic payment.</text> </paragraph> <paragraph num="(4)"> <text>If the group policyholder elects an electronic payment, the carrier may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the group policyholder.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Blanket Health Insurance Standard Provisions."> <paragraph num="A."> <text>Each blanket health insurance contract shall contain in substance the provisions set forth in Regulation .04A, C, D, G, H, I, and L of this chapter.</text> </paragraph> <paragraph num="B."> <text>Statements in Applications. Each blanket health insurance contract shall contain a provision that:</text> <paragraph num="(1)"> <text>Absent fraud, each statement made by the group policyholder is considered to be a representation and not a warranty; and</text> </paragraph> <paragraph num="(2)"> <text>A statement made by the group policyholder may not be used in defense to a claim under the policy unless the statement is contained in a written application.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Proofs of Loss. Each blanket health insurance contract shall contain a provision that:</text> <paragraph num="(1)"> <text>If a claim is for loss of time because of disability, written proof of loss shall be submitted to the insurer within 30 days after the beginning of the period for which the insurer is liable, and subsequent written proofs that the disability continues shall be submitted to the insurer at the intervals that the insurer reasonably requires;</text> </paragraph> <paragraph num="(2)"> <text>If a claim is for a loss other than loss of time because of disability, written proof of loss shall be submitted to the insurer within 90 days after the date of the loss; and</text> </paragraph> <paragraph num="(3)"> <text>Failure to submit proof of loss within the time required does not invalidate or reduce a claim if it is shown that it was not reasonably possible to submit the proof of loss within the time required, and that proof of loss was submitted as soon as was reasonably possible.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Time of Payment of Claims. Each blanket health insurance contract shall contain a provision that:</text> <paragraph num="(1)"> <text>Benefits payable under the policy, other than benefits for loss of time, are payable immediately on the insurer's receipt of written proof of loss; and</text> </paragraph> <paragraph num="(2)"> <text>Subject to proof of loss:</text> <paragraph num="(a)"> <text>Accrued benefits payable under the policy for loss of time are payable not later than at the end of each period of 30 days during the period for which the insurer is liable, and</text> </paragraph> <paragraph num="(b)"> <text>Any balance remaining unpaid at the end of the period set forth in §D(2)(a) of this regulation is payable immediately on the insurer's receipt of proof of loss.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Limitations and Exclusions."> <paragraph num="A."> <text>Crime.</text> <paragraph num="(1)"> <text>Except as described in §A(3) of this regulation, a group health insurance contract or blanket health insurance contract may not include a limitation or exclusion for loss to which a contributing cause was the insured's commission of or attempt to commit a crime.</text> </paragraph> <paragraph num="(2)"> <text>A group health insurance contract or blanket health insurance contract may not include a limitation or exclusion for loss for which a contributing cause was the commission of or the attempt to commit a crime by an individual other than the insured.</text> </paragraph> <paragraph num="(3)"> <text>A group disability benefit or a group accidental death and dismemberment benefit:</text> <paragraph num="(a)"> <text>May include an exclusion or limitation for loss to which a contributing cause was the insured's commission of or attempt to commit a felony; and</text> </paragraph> <paragraph num="(b)"> <text>May not contain an exclusion or limitation which is more restrictive to the insured than the exclusion or limitation set forth in §A(3)(a) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Illegal Occupation.</text> <paragraph num="(1)"> <text>Except as described in §B(2) of this regulation, a group health insurance contract or blanket health insurance contract may not include a limitation or exclusion for loss to which a contributing cause was the insured's being engaged in an illegal occupation.</text> </paragraph> <paragraph num="(2)"> <text>A group disability benefit or a group accidental death and dismemberment benefit:</text> <paragraph num="(a)"> <text>May include an exclusion or limitation for loss to which a contributing cause was the insured being engaged in an illegal occupation; and</text> </paragraph> <paragraph num="(b)"> <text>May not contain an exclusion or limitation which is more restrictive to the insured than the exclusion or limitation set forth in §B(2)(a) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Intoxicants and Narcotics.</text> <paragraph num="(1)"> <text>Except as described in §C(2) of this regulation, a group health insurance contract or blanket health insurance contract may not include a limitation or exclusion for loss:</text> <paragraph num="(a)"> <text>Sustained or contracted in consequence of the insured being intoxicated or under the influence of any drug;</text> </paragraph> <paragraph num="(b)"> <text>Due to the use of alcohol;</text> </paragraph> <paragraph num="(c)"> <text>Due to the use of drugs or narcotics; or</text> </paragraph> <paragraph num="(d)"> <text>Due to alcoholism or drug addiction.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A group disability benefit or a group accidental death and dismemberment benefit:</text> <paragraph num="(a)"> <text>May include an exclusion or limitation for loss sustained or contracted in consequence of the insured's being intoxicated or under the influence of any narcotic; and</text> </paragraph> <paragraph num="(b)"> <text>May not contain an exclusion or limitation regarding the use of alcohol or drugs which is more restrictive to the insured than the exclusion or limitation set forth in §C(2)(a) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Preexisting Conditions.</text> <paragraph num="(1)"> <text>Each group health insurance contract or blanket health insurance contract shall contain a provision specifying the additional exclusions or limitations, if any, applicable under the contract with respect to a disease or physical condition of an individual, not otherwise excluded from the individual's coverage by name or specific description effective on the date of the individual's loss, that existed before the effective date of the individual's coverage under the contract.</text> </paragraph> <paragraph num="(2)"> <text>The exclusion described in §D(1) of this regulation may apply only to a disease or physical condition for which medical advice or treatment was received by the individual during the 12 months before the effective date of the individual's coverage.</text> </paragraph> <paragraph num="(3)"> <text>The exclusion described in §D(1) of this regulation does not apply to loss incurred or disability beginning after the earlier of:</text> <paragraph num="(a)"> <text>The end of a continuous period of 12 months beginning on or after the effective date of the individual's coverage during all of which the individual has received no medical advice or treatment in connection with the disease or physical condition;</text> </paragraph> <paragraph num="(b)"> <text>The end of the 1-year period beginning on the effective date of the individual's coverage, if the individual's application or enrollment form does not include health questions; and</text> </paragraph> <paragraph num="(c)"> <text>The end of the 2-year period beginning on the effective date of the individual's coverage, if the individual's application or enrollment form includes health questions.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If a group health insurance contract or blanket health insurance contract contains a preexisting condition limitation or exclusion, the limitation or exclusion may not apply to a condition that the applicant revealed in the application for the contract, unless the condition is excluded by means of a signed waiver rider attached to the contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Optional Provisions."> <paragraph num="A."> <text>Physical Examination.</text> <paragraph num="(1)"> <text>A carrier may include a provision in a group health insurance contract or blanket health insurance contract giving the carrier the right to examine the person of the insured when and as often as it may reasonably require during the pendency of a claim under the contract.</text> </paragraph> <paragraph num="(2)"> <text>If the carrier includes the provision described in §A(1) of this regulation, the provision shall indicate that any physical examination required by the carrier will be performed at the expense of the carrier.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Autopsy.</text> <paragraph num="(1)"> <text>A carrier may include a provision in a group health insurance contract or blanket health insurance contract giving the carrier the right to make an autopsy in case of death when an autopsy is not forbidden by law.</text> </paragraph> <paragraph num="(2)"> <text>A carrier may include a provision in a group health insurance contract or blanket health insurance contract that any autopsy required by the carrier will be performed at the expense of the carrier.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Arbitration.</text> <paragraph num="(1)"> <text>A carrier may include a provision in a group health insurance contract or blanket health insurance contract giving the insured or the group policyholder the option of entering binding arbitration to settle a dispute with the carrier.</text> </paragraph> <paragraph num="(2)"> <text>If the carrier includes the provision described in §C(1) of this regulation, the provision may not require the insured or the group policyholder to enter binding arbitration.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §12-203(g), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 30, 2000 (27:21 Md. R. 1978)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 18, 2010 (37:21 Md. R. 1438)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04N adopted effective October 18, 2010 (37:21 Md. R. 1438)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended as an emergency provision effective May 9, 2003 (30:11 Md. R. 733); amended permanently effective October 27, 2003 (30:21 Md. R. 1531)</annotation> </annotations> </chapter> <chapter num="11" heading="Small Employer Group Health Insurance — Disclosure Statement"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all carriers that offer the Comprehensive Standard Health Benefit Plan to the small employer market.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Additional benefits” means benefits offered in addition to the Comprehensive Standard Health Benefit Plan that:</text> <paragraph num="(a)"> <text>Are offered separately from the plan;</text> </paragraph> <paragraph num="(b)"> <text>Are priced separately from the plan;</text> </paragraph> <paragraph num="(c)"> <text>Are guarantee issued subject to the provisions of Insurance Article, §15-1213, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Are guarantee renewed subject to the provisions of Insurance Article, §15-1212, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Are community rated subject to the provisions of Insurance Article, §15-1205, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(f)"> <text>Do not duplicate any of the benefits in the Comprehensive Standard Health Benefit Plan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Comprehensive Standard Health Benefit Plan” means the health benefit plan adopted by the Maryland Health Care Commission in accordance with Insurance Article, §15-1207, and Health-General Article, Title 19, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Small employer” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Notice — Initial Purchase of Coverage."> <paragraph num="A."> <text>At the time of the initial purchase of coverage, a carrier who offers benefits additional to the benefits offered in the Comprehensive Standard Health Benefit Plan shall obtain a signed disclosure statement certifying that:</text> <paragraph num="(1)"> <text>The small employer was offered the Standard Comprehensive Health Benefit Plan; and</text> </paragraph> <paragraph num="(2)"> <text>Additional benefits were offered and priced separately.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The disclosure statement required in §A of this regulation shall be in at least 12-point type and shall read as follows:</text> </paragraph> <paragraph num="C."> <text>The disclosure statement required by §A of this regulation may be included on the carrier's sales proposal sheet.</text> </paragraph> <paragraph num="D."> <text>The carrier or insurance producer shall maintain the signed disclosure statement for not less than 5 years.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Required Notice — Renewal of Coverage."> <paragraph num="A."> <text>At the time of renewal of coverage, a carrier who offers benefits additional to the benefits offered in the Comprehensive Standard Health Benefit Plan shall provide a disclosure statement that:</text> <paragraph num="(1)"> <text>Indicates that, except as described in §A(4) of this regulation, the Comprehensive Standard Health Benefit Plan is the only plan required by State law;</text> </paragraph> <paragraph num="(2)"> <text>Identifies any additional benefits offered by the carrier at renewal;</text> </paragraph> <paragraph num="(3)"> <text>Identifies the cost of any additional benefits offered by the carrier at renewal; and</text> </paragraph> <paragraph num="(4)"> <text>Specifies that all additional benefits to the Comprehensive Standard Health Benefit Plan are not required by State law, with the exception of the additional benefit for compliance with the federal Mental Health Parity and Addiction Equity Act of 2008 for small employers subject to the federal Mental Health Parity and Addiction Equity Act of 2008.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The disclosure statement required by §A of this regulation may be included on the renewal notice or another document.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-1204, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 10, 2004 (31:9 Md. R. 713)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 21, 2011 (38:6 Md. R. 397)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective March 21, 2011 (38:6 Md. R. 397)</annotation> </annotations> </chapter> <chapter num="12" heading="Limited Benefit Plan"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to all carriers that offer the Limited Benefit Plan to the small employer market.</text> </paragraph> <paragraph num="B."> <text>This chapter identifies the uniform benefits which shall be offered in a Limited Benefit Plan which a carrier offers to a Maryland small employer.</text> </paragraph> <paragraph num="C."> <text>A carrier may offer the Limited Benefit Plan through one or both of the preferred provider delivery systems, as defined in Regulation .02B(46) of this chapter and as described in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="D."> <text>Except as provided in Regulation .11 of this chapter, a prominent carrier, as that term is defined in Regulation .02B(49) of this chapter, shall offer, and any other carrier that participates in the small group market may offer, the Limited Benefit Plan only to a small employer:</text> <paragraph num="(1)"> <text>That has not provided the Standard Plan during the 12-month period preceding the date of application or, if the small employer has existed for less than 12 months, from the date the small employer commenced its business; and</text> </paragraph> <paragraph num="(2)"> <text>For which the average annual wage of the employees of the small employer does not exceed 75 percent of the average annual wage in the State.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A small employer that qualifies for and chooses the Limited Benefit Plan:</text> <paragraph num="(1)"> <text>May renew the Limited Benefit Plan even if the average annual wage of the employees of the small employer exceeds 75 percent of the average annual wage in the State at the time of renewal;</text> </paragraph> <paragraph num="(2)"> <text>Shall offer coverage for all eligible employees and dependents under the Limited Benefit Plan;</text> </paragraph> <paragraph num="(3)"> <text>May not offer the Standard Plan for any employee of the small employer;</text> </paragraph> <paragraph num="(4)"> <text>Need not contribute to the premium payments for an eligible employee or a dependent of an eligible employee.</text> </paragraph> </paragraph> <paragraph num="F."> <text>This chapter also specifies the uniform cost-sharing arrangements of the Limited Benefit Plan applicable to each delivery system. This chapter permits carriers to offer additional benefits to those of the Limited Benefit Plan only if the additional benefits lower the cost-sharing arrangements in the Plan. The additional benefits may be offered by marketing one or more riders to the Limited Benefit Plan at an additional cost.</text> </paragraph> <paragraph num="G."> <text>A carrier that offers the Limited Benefit Plan to an eligible employer shall offer the Plan to all eligible employees. An eligible employer may, at the employer's election, direct the carrier to offer the Limited Benefit Plan to the employer's part-time employees, as that term is defined in Regulation .02B(42) of this chapter, and those employees covered by other public or private health benefit plans or health benefit arrangements.</text> </paragraph> <paragraph num="H."> <text>This chapter includes case management for medically complex and costly services to assure adequate cost containment and appropriate utilization to maximize the affordability of the Limited Benefit Plan to the small employer market.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Annual maximum” means the maximum amount the carrier is obligated to pay for all services of a covered person during the contract year.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-1201(c), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Case management” means a form of utilization review used with high cost cases to monitor and manage treatment and suggest appropriate medical services.</text> </paragraph> <paragraph num="(4)"> <text>“Chlamydia screening test” has the meaning stated in Insurance Article, §15-829, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Coinsurance percentage” or “coinsure” means the percentage of allowable charges allocated to the carrier and to the covered person.</text> </paragraph> <paragraph num="(6)"> <text>“Congenital or genetic birth defect” means a defect existing at or from birth, including a hereditary defect, which includes, but is not limited to, autism or an autism spectrum disorder and cerebral palsy.</text> </paragraph> <paragraph num="(7)"> <text>“Controlled clinical trial” means a treatment that is:</text> <paragraph num="(a)"> <text>Approved by an institutional review board;</text> </paragraph> <paragraph num="(b)"> <text>Conducted for the primary purpose of determining whether or not a particular treatment is safe and efficacious; and</text> </paragraph> <paragraph num="(c)"> <text>Approved by:</text> <paragraph num="(i)"> <text>An institute or center of the National Institutes of Health;</text> </paragraph> <paragraph num="(ii)"> <text>The Food and Drug Administration;</text> </paragraph> <paragraph num="(iii)"> <text>The Department of Veterans' Affairs; or</text> </paragraph> <paragraph num="(iv)"> <text>The Department of Defense.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Covered person” means an employee or a dependent of an employee covered by a carrier under the Limited Benefit Plan.</text> </paragraph> <paragraph num="(9)"> <text>“Copayment” means a specified charge that a covered person shall pay each time services of a particular type or in a designated setting are received.</text> </paragraph> <paragraph num="(10)"> <text>“Deductible” means the amount of allowable charges that must be incurred by an individual or a family per contract year before a carrier begins payment.</text> </paragraph> <paragraph num="(11)"> <text>“Delivery system” means the method that a carrier uses to provide the Limited Benefit Plan to covered persons.</text> </paragraph> <paragraph num="(12)"> <text>“Dependent” means a covered person's lawful spouse or dependent child.</text> </paragraph> <paragraph num="(13)"> <text>Dependent Child.</text> <paragraph num="(a)"> <text>“Dependent child” means an individual who is younger than 19 years old, or a full-time student younger than 23 years old, and is a:</text> <paragraph num="(i)"> <text>Biological child;</text> </paragraph> <paragraph num="(ii)"> <text>Stepchild;</text> </paragraph> <paragraph num="(iii)"> <text>Foster child;</text> </paragraph> <paragraph num="(iv)"> <text>Lawfully adopted child, or child in the process of being adopted from the date of placement;</text> </paragraph> <paragraph num="(v)"> <text>Child for whom the covered employee has been granted legal custody, including custody as a result of a guardianship, other than a temporary guardianship of less than 12 months duration, granted by a court or testamentary appointment; or</text> </paragraph> <paragraph num="(vi)"> <text>Child for whom the covered employee has the legal obligation to provide coverage pursuant to court order, court-approved agreement, or testamentary appointment.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Notwithstanding the age limitation stated in §B(13)(a) of this regulation, “dependent child” includes an unmarried child who:</text> <paragraph num="(i)"> <text>Is chiefly dependent for support upon the covered employee; and</text> </paragraph> <paragraph num="(ii)"> <text>At the time of reaching the age limitation set forth in §B(13)(a) of this regulation, is incapable of self-support because of mental or physical incapacity that began before the dependent child's attaining the limiting age.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Domiciliary care” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Durable medical equipment” means equipment furnished by a supplier or a home health agency that:</text> <paragraph num="(a)"> <text>Can withstand repeated use;</text> </paragraph> <paragraph num="(b)"> <text>Is primarily and customarily used to serve a medical purpose;</text> </paragraph> <paragraph num="(c)"> <text>Generally is not useful to an individual in the absence of a disability, illness, or injury; and</text> </paragraph> <paragraph num="(d)"> <text>Is appropriate for use in the home.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Emergency services” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(17)"> <text>“Eligible employee” has the meaning stated in Insurance Article, §15-1201(e), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(18)"> <text>Experimental Services.</text> <paragraph num="(a)"> <text>“Experimental services” means services that are not recognized as efficacious as that term is defined in the edition of the Institute of Medicine Report on Assessing Medical Technologies that is current when the care is rendered.</text> </paragraph> <paragraph num="(b)"> <text>“Experimental services” does not include controlled clinical trials as defined in §B(7) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Family” means:</text> <paragraph num="(a)"> <text>An individual and spouse;</text> </paragraph> <paragraph num="(b)"> <text>An individual and dependent minor or minors; or</text> </paragraph> <paragraph num="(c)"> <text>An individual, spouse, and dependent minor or minors.</text> </paragraph> </paragraph> <paragraph num="(20)"> <text>“Family planning services” means counseling, implanting or fitting birth control devices, and follow-up visits after a covered person selects a birth control method.</text> </paragraph> <paragraph num="(21)"> <text>“Federally qualified health maintenance organization” means a health maintenance organization which meets the requirements of Title XIII of the Public Health Service Act, 42 U.S.C. §3000e et seq.</text> </paragraph> <paragraph num="(22)"> <text>“Habilitative services” means services, including occupational therapy, physical therapy, and speech therapy, for the treatment of children with congenital and genetic birth defects to enhance the child's ability to function.</text> </paragraph> <paragraph num="(23)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1201(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(24)"> <text>“Health care facility” has the meaning stated in Health-General Article, §19-114, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(25)"> <text>“Health care practitioner” has the meaning stated in Health-General Article, §19-132, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(26)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(27)"> <text>“Home health care” means the continued care and treatment of a covered person in the home if:</text> <paragraph num="(a)"> <text>The institutionalization of the covered person in a hospital or related institution or skilled nursing facility would otherwise have been required if home health care were not provided; and</text> </paragraph> <paragraph num="(b)"> <text>The plan of treatment covering the home health care service is established and approved in writing by the health care practitioner.</text> </paragraph> </paragraph> <paragraph num="(28)"> <text>“Hospice care” has the meaning stated in 42 U.S.C. §1395x(dd).</text> </paragraph> <paragraph num="(29)"> <text>“Insulin-using beneficiary” means a beneficiary who uses insulin as part of a treatment plan prescribed by the beneficiary's medical care provider.</text> </paragraph> <paragraph num="(30)"> <text>“Late enrollee” has the meaning stated in Insurance Article, §15-1201(h), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(31)"> <text>“Limited Benefit Plan” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(32)"> <text>“Maintenance drug” has the meaning set forth in Insurance Article, §15-824(a)(3), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(33)"> <text>“Managed care system” means a method that a carrier uses to review and preauthorize a treatment plan that a health care practitioner develops for a covered person using a variety of cost containment methods to control utilization, quality, and claims.</text> </paragraph> <paragraph num="(34)"> <text>“Mandated benefit” means:</text> <paragraph num="(a)"> <text>A health care service, benefit, coverage, or reimbursement for covered health care services that is required under the Insurance Article or the Health-General Article, Annotated Code of Maryland, to be provided or offered in a health benefit plan that is issued or delivered in the State by a carrier; or</text> </paragraph> <paragraph num="(b)"> <text>Reimbursement, required by statute, by a health benefit plan for a service if that service is performed by a care provider who is licensed under the Health Occupations Article and whose scope of practice includes that service.</text> </paragraph> </paragraph> <paragraph num="(35)"> <text>“Multiple risk factors” has the meaning stated in Insurance Article, §15-829, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(36)"> <text>“Network” means providers who have entered into a provider service contract with a carrier to provide services on a preferential basis.</text> </paragraph> <paragraph num="(37)"> <text>“Nonpreferred brand name drug” means a drug that a carrier has not designated as a preferred drug.</text> </paragraph> <paragraph num="(38)"> <text>“Open formulary” means that prescription drugs to treat a covered service (brand and generic) are available to the insured or enrollee at specified levels of copayment.</text> </paragraph> <paragraph num="(39)"> <text>“Other nonfacility services” means services provided by non-physician health care practitioners and includes diagnostic and laboratory services.</text> </paragraph> <paragraph num="(40)"> <text>“Out-of-pocket limit” means the maximum amount of copayments, deductibles, and coinsurance that an individual or family is obligated to pay for covered services per contract year.</text> </paragraph> <paragraph num="(41)"> <text>“Outpatient rehabilitative services” means occupational therapy, speech therapy, and physical therapy, provided to covered persons not admitted to a hospital or related institution.</text> </paragraph> <paragraph num="(42)"> <text>“Part-time employee” has the meaning stated in Insurance Article, §15-1210, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(43)"> <text>“Partial hospitalization” means the provision of medically directed intensive or intermediate short-term psychiatric treatment for a period of less than 24 hours but more than 4 hours in a day for an individual patient in a hospital, psychiatric day-care treatment center, or community mental health facility.</text> </paragraph> <paragraph num="(44)"> <text>“Personal care” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(45)"> <text>“Preferred brand name drug” means a drug that a carrier has designated on its preferred drug list.</text> </paragraph> <paragraph num="(46)"> <text>“Preferred provider delivery system” means a delivery system that:</text> <paragraph num="(a)"> <text>Provides services to a covered person through a network; and</text> </paragraph> <paragraph num="(b)"> <text>Permits the covered person to select services outside the network.</text> </paragraph> </paragraph> <paragraph num="(47)"> <text>“Preexisting condition” has the meaning stated in Insurance Article, §15-1201(l), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(48)"> <text>“Primary care” means services rendered by a health care practitioner in the following disciplines:</text> <paragraph num="(a)"> <text>General internal medicine;</text> </paragraph> <paragraph num="(b)"> <text>Family practice medicine;</text> </paragraph> <paragraph num="(c)"> <text>Pediatrics; or</text> </paragraph> <paragraph num="(d)"> <text>Obstetrics/gynecology.</text> </paragraph> </paragraph> <paragraph num="(49)"> <text>“Prominent carrier” has the meaning stated in Insurance Article, §15-1209, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(50)"> <text>“Provider” means a health care practitioner or a health care facility licensed or otherwise authorized by law to provide health care services.</text> </paragraph> <paragraph num="(51)"> <text>“Related institution” has the meaning stated in Health-General Article, §19-301, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(52)"> <text>“Religious organization” means an entity that:</text> <paragraph num="(a)"> <text>Is organized and operated exclusively for religious purposes; and</text> </paragraph> <paragraph num="(b)"> <text>Has obtained a tax exemption under 26 U.S.C. §501(c)(3) of the U.S. Internal Revenue Code.</text> </paragraph> </paragraph> <paragraph num="(53)"> <text>“Residential crisis services” means intensive mental health and support services that are:</text> <paragraph num="(a)"> <text>Provided to a child or an adult with a mental illness who is experiencing or is at risk of a psychiatric crisis that would impair the individual's ability to function in the community;</text> </paragraph> <paragraph num="(b)"> <text>Designed to prevent a psychiatric inpatient admission, provide an alternative to psychiatric inpatient admission, or shorten the length of inpatient stay;</text> </paragraph> <paragraph num="(c)"> <text>Provided out of the individual's residence on a short-term basis in a community-based residential setting; and</text> </paragraph> <paragraph num="(d)"> <text>Provided by entities that are licensed by the Maryland Department of Health to provide residential crisis services.</text> </paragraph> </paragraph> <paragraph num="(54)"> <text>“Service” means a health care diagnosis, procedure, treatment, or item.</text> </paragraph> <paragraph num="(55)"> <text>“Skilled nursing facility” means an institution, or a distinct part of an institution, licensed by the Maryland Department of Health, which is:</text> <paragraph num="(a)"> <text>Primarily engaged in providing:</text> <paragraph num="(i)"> <text>Skilled nursing care, and related services, for residents who require medical or nursing care; or</text> </paragraph> <paragraph num="(ii)"> <text>Rehabilitation services for injured, disabled, or sick persons; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Certified by the Medicare Program as a skilled nursing facility.</text> </paragraph> </paragraph> <paragraph num="(56)"> <text>“Small employer” has the meaning stated in Insurance Article, §15-1201(o), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(57)"> <text>“Standard Plan” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Covered Services."> <paragraph num="A."> <text>The Limited Benefit Plan includes the following:</text> <paragraph num="(1)"> <text>Care in medical offices for treatment of illness or injury;</text> </paragraph> <paragraph num="(2)"> <text>Inpatient hospital services as follows:</text> <paragraph num="(a)"> <text>Inpatient hospital physician and other nonfacility services; and</text> </paragraph> <paragraph num="(b)"> <text>Inpatient hospital facility services;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Outpatient services as follows:</text> <paragraph num="(a)"> <text>Outpatient hospital physician and other health care practitioner services;</text> </paragraph> <paragraph num="(b)"> <text>Outpatient facility surgical services; and</text> </paragraph> <paragraph num="(c)"> <text>Outpatient facility nonsurgical services;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Inpatient mental health and substance abuse services provided through a carrier's managed care system, including residential crisis services, in a hospital, related institution, or entity licensed by the Maryland Department of Health to provide residential crisis services, including:</text> <paragraph num="(a)"> <text>Physician and other nonfacility services;</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Outpatient mental health and substance abuse services provided through a carrier's managed care system, including:</text> <paragraph num="(a)"> <text>Physician and other health care practitioner services; and</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Emergency services;</text> </paragraph> <paragraph num="(7)"> <text>Detoxification in a hospital or related institution, including:</text> <paragraph num="(a)"> <text>Physician and other nonfacility services; and</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Ambulance services to or from the nearest hospital where needed medical services can appropriately be provided;</text> </paragraph> <paragraph num="(9)"> <text>Except for prostate cancer screening for men 40 years old through 75 years old, and colorectal screening for men and women 50 years old or older:</text> <paragraph num="(a)"> <text>Preventive services recommended in the report of the United States Preventive Services Task Force, Guide to Clinical Preventive Services, which is current when the services are rendered; and</text> </paragraph> <paragraph num="(b)"> <text>Any other preventive service required to be offered by a federally qualified health maintenance organization;</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>Prostate cancer screening as set forth in the current recommendations of the American Cancer Society, which recommends an annual:</text> <paragraph num="(a)"> <text>Digital rectal examination for both prostate and colorectal cancer, at 40 years old or older; and</text> </paragraph> <paragraph num="(b)"> <text>Prostate-Specific Antigen (PSA) screening for:</text> <paragraph num="(i)"> <text>African-American men 40 years old or older;</text> </paragraph> <paragraph num="(ii)"> <text>All men 40 years old or older with a family history of prostate cancer; and</text> </paragraph> <paragraph num="(iii)"> <text>All other men 50 years old or older;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(11)"> <text>Colorectal screening for men and women 50 years old or older as follows:</text> <paragraph num="(a)"> <text>A yearly fecal occult blood test, accompanied by digital rectal examination, plus flexible sigmoidoscopy every 5 years;</text> </paragraph> <paragraph num="(b)"> <text>A colonoscopy, accompanied by digital rectal examination, every 10 years; or</text> </paragraph> <paragraph num="(c)"> <text>A double contrast barium enema, accompanied by digital rectal examination, every 5 years;</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Mammography services for women:</text> <paragraph num="(a)"> <text>40 years old through 49 years old once every other calendar year; and</text> </paragraph> <paragraph num="(b)"> <text>50 years old or older once per calendar year;</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>Home health care services provided:</text> <paragraph num="(a)"> <text>As an alternative to otherwise covered services in a hospital or related institution; and</text> </paragraph> <paragraph num="(b)"> <text>For covered persons:</text> <paragraph num="(i)"> <text>Who receive less than 48 hours of inpatient hospitalization following a mastectomy or removal of a testicle; or</text> </paragraph> <paragraph num="(ii)"> <text>Who undergo a mastectomy or removal of a testicle on an outpatient basis, one home visit scheduled to occur within 24 hours after discharge from the hospital or outpatient health care facility, and an additional home visit if prescribed by the covered person's attending physician;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(14)"> <text>Hospice care services, including:</text> <paragraph num="(a)"> <text>Physician and other health care practitioner services; and</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>Durable medical equipment, including:</text> <paragraph num="(a)"> <text>Nebulizers;</text> </paragraph> <paragraph num="(b)"> <text>Peak flow meters;</text> </paragraph> <paragraph num="(c)"> <text>Prosthetic devices such as:</text> <paragraph num="(i)"> <text>Leg, arm, back, or neck braces; and</text> </paragraph> <paragraph num="(ii)"> <text>Artificial legs, arms, or eyes; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The training necessary to use these prostheses;</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>Outpatient laboratory and diagnostic services;</text> </paragraph> <paragraph num="(17)"> <text>Outpatient rehabilitative services provided through a carrier's managed care system including physical therapy, occupational therapy, and speech therapy services;</text> </paragraph> <paragraph num="(18)"> <text>Chiropractic services;</text> </paragraph> <paragraph num="(19)"> <text>Skilled nursing facility services as an alternative to medically necessary inpatient hospital services, including:</text> <paragraph num="(a)"> <text>Physician and other nonfacility services;</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(20)"> <text>Nutritional services up to a maximum of six visits per contract year per condition, for the treatment of:</text> <paragraph num="(a)"> <text>Cardiovascular disease;</text> </paragraph> <paragraph num="(b)"> <text>Diabetes;</text> </paragraph> <paragraph num="(c)"> <text>Malnutrition;</text> </paragraph> <paragraph num="(d)"> <text>Cancer;</text> </paragraph> <paragraph num="(e)"> <text>Cerebral vascular disease; or</text> </paragraph> <paragraph num="(f)"> <text>Kidney disease;</text> </paragraph> </paragraph> <paragraph num="(21)"> <text>Autologous and nonautologous bone marrow, cornea, kidney, liver, heart, lung, heart/lung, pancreas, and pancreas/kidney transplants, including:</text> <paragraph num="(a)"> <text>Physician and other nonfacility services; and</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(22)"> <text>Medical food for persons with metabolic disorders if ordered by a health care practitioner qualified to provide diagnosis and treatment in the field of metabolic disorders;</text> </paragraph> <paragraph num="(23)"> <text>Family planning services, including:</text> <paragraph num="(a)"> <text>Coverage for the insertion or removal of contraceptive devices;</text> </paragraph> <paragraph num="(b)"> <text>Medically necessary examination associated with the use of contraceptive drugs or devices; and</text> </paragraph> <paragraph num="(c)"> <text>Voluntary sterilization;</text> </paragraph> </paragraph> <paragraph num="(24)"> <text>Except for habilitative services provided in early intervention and school services, habilitative services for children 19 years old or younger for the treatment of congenital or genetic birth defects;</text> </paragraph> <paragraph num="(25)"> <text>All cost recovery expenses for blood, blood products, derivatives, components, biologics, and serums to include autologous services, whole blood, red blood cells, platelets, plasma, immunoglobulin, and albumin;</text> </paragraph> <paragraph num="(26)"> <text>Pregnancy and maternity services, including abortion, including:</text> <paragraph num="(a)"> <text>Physician and other nonfacility services; and</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(27)"> <text>Prescription drugs;</text> </paragraph> <paragraph num="(28)"> <text>Controlled clinical trials, including:</text> <paragraph num="(a)"> <text>Physician and other nonfacility services; and</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(29)"> <text>Diabetes treatment, equipment, and supplies;</text> </paragraph> <paragraph num="(30)"> <text>Breast reconstructive surgery as specified in Insurance Article, §15-815, Annotated Code of Maryland, and breast prosthesis, including:</text> <paragraph num="(a)"> <text>Physician and other nonfacility services; and</text> </paragraph> <paragraph num="(b)"> <text>Facility services;</text> </paragraph> </paragraph> <paragraph num="(31)"> <text>Audiology screening for newborns, limited to one screening and one confirming screening;</text> </paragraph> <paragraph num="(32)"> <text>General anesthesia and associated hospital or ambulatory facility charges in conjunction with dental care provided to the following:</text> <paragraph num="(a)"> <text>Individuals who are 7 years old or younger or developmentally disabled and for whom a:</text> <paragraph num="(i)"> <text>Successful result cannot be expected from dental care provided under local anesthesia because of a physical, intellectual, or other medically compromising condition of the enrollee or insured; and</text> </paragraph> <paragraph num="(ii)"> <text>Superior result can be expected from dental care provided under general anesthesia; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Individuals 17 years old or younger who:</text> <paragraph num="(i)"> <text>Are extremely uncooperative, fearful, or uncommunicative;</text> </paragraph> <paragraph num="(ii)"> <text>Have dental needs of such magnitude that treatment should not be delayed or deferred; and</text> </paragraph> <paragraph num="(iii)"> <text>Are individuals for whom lack of treatment can be expected to result in oral pain, infection, loss of teeth, or other increased oral or dental morbidity;</text> </paragraph> </paragraph> </paragraph> <paragraph num="(33)"> <text>An annual chlamydia screening test for:</text> <paragraph num="(a)"> <text>Women who are:</text> <paragraph num="(i)"> <text>Younger than 20 years old who are sexually active; or</text> </paragraph> <paragraph num="(ii)"> <text>20 years old or older who have multiple risk factors; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Men who have multiple risk factors;</text> </paragraph> </paragraph> <paragraph num="(34)"> <text>The cost to beneficiaries of hearing aids for persons ages 18 years old or younger, every 36 months; and</text> </paragraph> <paragraph num="(35)"> <text>Osteoporosis screening as specified in Insurance Article, §15-823, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The services described in §A(24) of this regulation shall be delivered through a carrier's managed care system and shall include services for cleft lip and cleft palate, orthodontics, oral surgery, otologic, audiological, and speech therapy, physical therapy, and occupational therapy for children 19 years old or younger for treatment of congenital or genetic birth defects.</text> </paragraph> <paragraph num="C."> <text>All mental health and substance abuse services described in §A(4) and (5) of this regulation shall be delivered through a carrier's managed care system.</text> </paragraph> <paragraph num="D."> <text>Rehabilitative services and habilitative services required to be offered in the Plan shall be provided through the carrier's managed care system.</text> </paragraph> <paragraph num="E."> <text>Prescription Drugs.</text> <paragraph num="(1)"> <text>Prescription drugs are covered only as provided in the specific services in Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Birth control pills, Norplant, Depo Provera, and insulin, or their generic equivalents, are also covered only as provided in the specific services in Regulation .05 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>Except as provided in §E(4) of this regulation, coverage under §A(27) of this regulation includes up to a 90-day supply of maintenance drugs dispensed in a single dispensing of a prescription.</text> </paragraph> <paragraph num="(4)"> <text>Coverage of up to a 90-day supply of maintenance drugs in a single dispensing is not required for:</text> <paragraph num="(a)"> <text>The first prescription of a maintenance drug; or</text> </paragraph> <paragraph num="(b)"> <text>A change in a prescription of a maintenance drug.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>The carrier shall provide benefits for the covered services in accordance with the terms of the contract, if:</text> <paragraph num="(1)"> <text>The service is rendered by a health care practitioner who is licensed under the laws of the state in which the practitioner is practicing; and</text> </paragraph> <paragraph num="(2)"> <text>The health care practitioner is practicing within the scope of the license.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Under §A(4) of this regulation, 2 partial hospitalization days may be substituted for 1 inpatient day in a hospital or related institution.</text> </paragraph> <paragraph num="H."> <text>Diabetes Equipment and Supplies.</text> <paragraph num="(1)"> <text>Under §A(29) of this regulation, diabetes equipment includes glucose monitoring equipment under the durable medical equipment coverage for insulin-using beneficiaries.</text> </paragraph> <paragraph num="(2)"> <text>Insulin pumps are not included.</text> </paragraph> <paragraph num="(3)"> <text>Under the prescription coverage for insulin-using beneficiaries, diabetes supplies include coverage for:</text> <paragraph num="(a)"> <text>Insulin syringes and needles; and</text> </paragraph> <paragraph num="(b)"> <text>Testing strips for glucose monitoring equipment</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Under §A(30) of this regulation, breast prosthesis and breast reconstruction on the nondiseased breast to achieve symmetry are covered regardless of:</text> <paragraph num="(1)"> <text>The patient's insurance status at the time of the mastectomy; or</text> </paragraph> <paragraph num="(2)"> <text>The time lag between the mastectomy and reconstruction.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Under §A(32) of this regulation:</text> <paragraph num="(1)"> <text>Carriers may require prior authorization for covered services and associated charges in the same manner that prior authorization is required for these benefits in connection with other covered medical care;</text> </paragraph> <paragraph num="(2)"> <text>Carriers may restrict coverage to dental care that is provided by a:</text> <paragraph num="(a)"> <text>Fully accredited specialist in pediatric dentistry;</text> </paragraph> <paragraph num="(b)"> <text>Fully accredited specialist in oral and maxillofacial surgery; and</text> </paragraph> <paragraph num="(c)"> <text>Dentist to whom hospital privileges have been granted; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Dental care for which general anesthesia is required is not covered.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Uniform Cost-Sharing Arrangements In General."> <paragraph num="A."> <text>For each delivery system identified in §§B and C of this regulation, a carrier shall apply the uniform cost-sharing arrangements specified.</text> </paragraph> <paragraph num="B."> <text>Preferred Provider—Credit Fund Delivery System.</text> <paragraph num="(1)"> <text>Covered services are divided into three categories, designated as Categories I, II, and III, based on the type of service to be provided, as follows:</text> <paragraph num="(a)"> <text>Category I includes the services listed in Regulation .03A(1), (9)—(12), (15)—(18), (20), (22), (23), (25), (26), (29), (31), and (33)—(35) of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Category II includes the services listed in Regulation .03A(2)—(8), (13), (14), (19), (21), (24), (28), (30), and (32) of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>Category III includes the services listed in Regulation .03A(27) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Credit Fund.</text> <paragraph num="(a)"> <text>The carrier shall provide a fund which shall cover:</text> <paragraph num="(i)"> <text>For a person enrolled under individual coverage, $250 of Category I services; and</text> </paragraph> <paragraph num="(ii)"> <text>For a person enrolled under other than individual coverage, $500 of Category I services.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The fund in §B(2)(a) of this regulation shall be renewed each contract year.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Required Deductibles.</text> <paragraph num="(a)"> <text>Except as provided in §B(3)(b) of this regulation, services covered under Categories I and II shall be subject to a contract year deductible of:</text> <paragraph num="(i)"> <text>$1,000 for a person enrolled under individual coverage; and</text> </paragraph> <paragraph num="(ii)"> <text>$2,000 for a person enrolled under other than individual coverage.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>A carrier may not apply the deductible for Category I services until the fund in §B(2)(a) of this regulation has been exhausted.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Services covered under Categories I and II for which coinsurance is applicable shall require coinsurance by the covered person of 30 percent for in-network services and 50 percent for out-of-network services.</text> </paragraph> <paragraph num="(5)"> <text>All Categories I and II covered services combined are subject to an annual maximum of $10,000 per covered person without regard to whether the person is enrolled under individual coverage or other than individual coverage.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Preferred Provider—Capped Benefit Delivery System.</text> <paragraph num="(1)"> <text>Covered services shall be divided into six groups, designated as Groups A, B, C, D, E, and F, based on the type of services to be provided, as follows:</text> <paragraph num="(a)"> <text>Group A includes the services listed in Regulation .03A(1), (2)(a), (3)(a), (4)(a), (5)(a), (7)(a), (9)—(12), (13), (14)(a), (15), (17), (18), (19)(a), (20), (21)(a), (22), (23)—(25), (26)(a), (28)(a), (29), (30)(a), (31), and (33)—(35) of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Group B includes the services listed in Regulation .03A(6), (8), and (16) of this chapter;</text> </paragraph> <paragraph num="(c)"> <text>Group C includes the services listed in Regulation .03A(2)(b), (4)(b), (7)(b), (14)(b), (19)(b), (21)(b), (26)(b), (28)(b), (30)(b), and (32) of this chapter;</text> </paragraph> <paragraph num="(d)"> <text>Group D includes the services listed in Regulation .03A(3)(b) of this chapter;</text> </paragraph> <paragraph num="(e)"> <text>Group E includes the services listed in Regulation .03A(3)(c) and (5)(b)of this chapter; and</text> </paragraph> <paragraph num="(f)"> <text>Group F includes the services listed in Regulation .03A(27) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Services covered under Group A shall require coinsurance by the covered person of 0 percent for in-network services and 50 percent for out-of-network services up to the specific annual maximum set out in Regulation .05 of this chapter for the specific type of Group A service.</text> </paragraph> <paragraph num="(3)"> <text>Services covered under Group B shall require 0 percent coinsurance by the covered person up to the specific annual maximum set out in Regulation .05 of this chapter for the specific type of Group B service.</text> </paragraph> <paragraph num="(4)"> <text>Services covered under Group C shall require payment by the covered person of all charges less up to $1,000 per day for an in-network provider and less $700 per day for an out-of-network provider for a period of up to 30 days per covered person per contract year.</text> </paragraph> <paragraph num="(5)"> <text>Services covered under Group D shall require coinsurance by the covered person of 30 percent for in-network services and 50 percent for out-of-network services up to a maximum of $10,000 per covered person per contract year.</text> </paragraph> <paragraph num="(6)"> <text>Services covered under Group E shall require the covered person to pay, for in-network services, 100 percent of the rate negotiated between the carrier and the provider. Out-of-network services are not covered.</text> </paragraph> <paragraph num="(7)"> <text>Services covered under Group F shall be covered as set out in Regulation .05 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Uniform Cost-Sharing Arrangements Specific Services."> <paragraph num="A."> <text>Preferred Provider—Credit Fund Delivery System.</text> <paragraph num="(1)"> <text>Coverage of Category I Services.</text> <paragraph num="(a)"> <text>Except for services listed in Regulation .03A(15), (17), (18), (22), (25), and (34) of this chapter, Category I services shall be covered as follows:</text> <paragraph num="(i)"> <text>Payment for covered services by the fund;</text> </paragraph> <paragraph num="(ii)"> <text>After exhaustion of the fund and after meeting the deductible requirement as described in Regulation .04B(3) of this chapter, coinsurance requirements as described in Regulation .04B(4) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>In addition to the deductible and coinsurance requirements specified in §A(1)(a)(ii) of this regulation, services listed in Regulation .03A(17) and (18) of this chapter are subject to a combined benefit maximum of $1,000 per person per contract year.</text> </paragraph> <paragraph num="(c)"> <text>In addition to the deductible and coinsurance requirements specified in §A(1)(a)(ii) of this regulation, services listed in Regulation .03A(15), (22), (25), and (34) of this chapter are subject to a benefit maximum of $1,000 per person per contract year.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Coverage of Category II Services.</text> <paragraph num="(a)"> <text>Except for emergency services, Category II services shall be covered by meeting the deductible requirement as described in Regulation .04B(3) of this chapter and coinsurance requirements as described in Regulation .04B(4) of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>After meeting the deductible requirement as described in Regulation .04B(3) of this chapter, emergency services shall be subject to a $100 copay in addition to the coinsurance requirements as described in Regulation .04B(4) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Coverage of Category III Services.</text> <paragraph num="(a)"> <text>Except as required in §A(3)(d) of this regulation, each covered person shall pay the lesser of the cost of the prescription or a copayment of $15.</text> </paragraph> <paragraph num="(b)"> <text>Coverage for brand name drugs covered through a pharmacy discount card shall require coinsurance by the covered person of 100 percent of the discounted rate.</text> </paragraph> <paragraph num="(c)"> <text>Category III services for generic drugs shall be subject to a $500 benefit maximum per contract year for each covered person.</text> </paragraph> <paragraph num="(d)"> <text>Each covered person shall pay the lesser of the cost of the prescription or a $30 copayment for a 90-day supply of generic maintenance drugs dispensed in a single dispensing of a prescription.</text> </paragraph> <paragraph num="(e)"> <text>Coverage of up to a 90-day supply of maintenance drugs in a single dispensing is not required for the first prescription of a maintenance drug or a change in a prescription of a maintenance drug.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Preferred Provider—Capped Benefit Delivery System.</text> <paragraph num="(1)"> <text>Group A services are divided into the following services categories:</text> <paragraph num="(a)"> <text>Physician and other health care practitioner office visits (non-preventive services);</text> </paragraph> <paragraph num="(b)"> <text>Physician and other health care practitioner office visits (preventive services);</text> </paragraph> <paragraph num="(c)"> <text>Equipment and supplies;</text> </paragraph> <paragraph num="(d)"> <text>Inpatient physician and other non-facility services; and</text> </paragraph> <paragraph num="(e)"> <text>Outpatient physician and other health care practitioner services.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The following benefit maximums apply to the Group A service category indicated:</text> <paragraph num="(a)"> <text>$200 per covered person per contract year for physician and other health care practitioner office visits (nonpreventive services), as listed in Regulation .03A(1), (17), (18), (20), (23), (24), and (29) of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>$150 per covered person per contract year for physician and other health care practitioner office visits (preventive services), as listed in Regulation .03A(9)—(12), (31), (33), and (35) of this chapter;</text> </paragraph> <paragraph num="(c)"> <text>$250 per covered person per contract year for equipment and supplies, as listed in Regulation .03A(15), (22), (25), and (34) of this chapter;</text> </paragraph> <paragraph num="(d)"> <text>$700 per covered person per contract year for inpatient physician and other nonfacility services, as listed in Regulation .03A(2)(a), (4)(a), (7)(a), (13), (14)(a), (19)(a), (21)(a), (26)(a), (28)(a), and (30)(a) of this chapter; and</text> </paragraph> <paragraph num="(e)"> <text>$500 per covered person per contract year for outpatient physician and other health care practitioner services, as listed in Regulation .03A(3)(a) and (5)(a) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The following benefit maximums apply to the Group B service category indicated:</text> <paragraph num="(a)"> <text>$200 per covered person per contract year for emergency and ambulance services, as listed in Regulations .03A(6) and (8) of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>$150 per covered person per contract year for outpatient laboratory and diagnostic services, as listed in Regulation .03A(16) of this chapter.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Services covered under Group F shall be covered as follows:</text> <paragraph num="(a)"> <text>Except as required in §B(4)(b) of this regulation, each covered person shall pay the lesser of the cost of the prescription or a copayment of:</text> <paragraph num="(i)"> <text>$10 for generic drugs;</text> </paragraph> <paragraph num="(ii)"> <text>$30 for preferred brand-name drugs; or</text> </paragraph> <paragraph num="(iii)"> <text>$50 for nonpreferred brand-name drugs;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Each covered person shall pay the lesser of the cost of the prescription or a copayment for a 90-day supply of maintenance drugs dispensed in a single dispensing of a prescription as follows:</text> <paragraph num="(i)"> <text>For generic maintenance drugs, one $20 copayment;</text> </paragraph> <paragraph num="(ii)"> <text>For preferred brand-name maintenance drugs, one $60 copayment; or</text> </paragraph> <paragraph num="(iii)"> <text>For nonpreferred brand-name maintenance drugs, one $100 copayment;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Coverage of up to a 90-day supply of maintenance drugs in a single dispensing is not required for the first prescription of a maintenance drug or a change in a prescription of a maintenance drug; and</text> </paragraph> <paragraph num="(d)"> <text>Services covered in Group F shall be subject to a maximum benefit per contract year of:</text> <paragraph num="(i)"> <text>$250 for a person enrolled under individual coverage; and</text> </paragraph> <paragraph num="(ii)"> <text>$750 for a person enrolled under other than individual coverage.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Limitations and Exclusions."> <paragraph num="A."> <text>A carrier shall apply the limitations and exclusions specified in §B of this regulation to the covered services specified in Regulation .03 of this chapter.</text> </paragraph> <paragraph num="B."> <text>The following are exclusions and limitations to the covered services:</text> <paragraph num="(1)"> <text>Services that are not medically necessary;</text> </paragraph> <paragraph num="(2)"> <text>Services performed or prescribed under the direction of a person who is not a health care practitioner;</text> </paragraph> <paragraph num="(3)"> <text>Services that are beyond the scope of practice of the health care practitioner performing the service;</text> </paragraph> <paragraph num="(4)"> <text>Services to the extent they are covered by any government unit, except for veterans in Veterans' Administration or armed forces facilities for services received for which the recipient is liable;</text> </paragraph> <paragraph num="(5)"> <text>Services for which a covered person is not legally, or as a customary practice, required to pay in the absence of a health benefit plan;</text> </paragraph> <paragraph num="(6)"> <text>The purchase, examination, or fitting of eyeglasses or contact lenses, except for:</text> <paragraph num="(a)"> <text>Aphakic patients and soft or rigid gas permeable lenses; or</text> </paragraph> <paragraph num="(b)"> <text>Sclera shells intended for use in the treatment of a disease or injury;</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Personal care services and domiciliary care services;</text> </paragraph> <paragraph num="(8)"> <text>Services rendered by a health care practitioner who is a covered person's spouse, mother, father, daughter, son, brother, or sister;</text> </paragraph> <paragraph num="(9)"> <text>Experimental services;</text> </paragraph> <paragraph num="(10)"> <text>Practitioner, hospital, or clinical services related to radial keratotomy, myopic keratomileusis, and surgery which involves corneal tissue for the purpose of altering, modifying, or correcting myopia, hyperopia, or stigmatic error;</text> </paragraph> <paragraph num="(11)"> <text>Infertility services, including:</text> <paragraph num="(a)"> <text>Testing;</text> </paragraph> <paragraph num="(b)"> <text>In vitro fertilization;</text> </paragraph> <paragraph num="(c)"> <text>Ovum transplants and gamete intrafallopian tube transfer;</text> </paragraph> <paragraph num="(d)"> <text>Zygote intrafallopian transfer; or</text> </paragraph> <paragraph num="(e)"> <text>Cryogenic or other preservation techniques used in these or similar procedures.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Services to reverse a voluntary sterilization procedure;</text> </paragraph> <paragraph num="(13)"> <text>Services for sterilization or reverse sterilization for a dependent minor;</text> </paragraph> <paragraph num="(14)"> <text>Medical or surgical treatment for obesity, unless otherwise specified in the covered services;</text> </paragraph> <paragraph num="(15)"> <text>Medical or surgical treatment or regimen for reducing or controlling weight, unless otherwise specified in the covered services;</text> </paragraph> <paragraph num="(16)"> <text>Services incurred before the effective date of coverage for a covered person;</text> </paragraph> <paragraph num="(17)"> <text>Services incurred after a covered person's termination of coverage, including any extension of benefits;</text> </paragraph> <paragraph num="(18)"> <text>Surgery or related services for cosmetic purposes to improve appearance, but not to restore bodily function or correct deformity resulting from disease, trauma, or congenital or developmental anomalies;</text> </paragraph> <paragraph num="(19)"> <text>Services for injuries or diseases related to a covered person's job to the extent the covered person is required to be covered by a workers' compensation law;</text> </paragraph> <paragraph num="(20)"> <text>Services rendered from a dental or medical department maintained by or on behalf of an employer, mutual benefit association, labor union, trust, or similar persons or groups;</text> </paragraph> <paragraph num="(21)"> <text>Personal hygiene and convenience items, including, but not limited to, air conditioners, humidifiers, or physical fitness equipment;</text> </paragraph> <paragraph num="(22)"> <text>Charges for telephone consultations, failure to keep a scheduled visit, or completion of any form;</text> </paragraph> <paragraph num="(23)"> <text>Inpatient admissions primarily for diagnostic studies, unless authorized by the carrier;</text> </paragraph> <paragraph num="(24)"> <text>Except as provided in Regulation .03A(34) of this chapter, the purchase, of examination for, or fitting of:</text> <paragraph num="(a)"> <text>Hearing aids and supplies; and</text> </paragraph> <paragraph num="(b)"> <text>Tinnitus maskers;</text> </paragraph> </paragraph> <paragraph num="(25)"> <text>Travel, whether or not recommended by a health care practitioner;</text> </paragraph> <paragraph num="(26)"> <text>Except for emergency services, services received while the covered person is outside the United States;</text> </paragraph> <paragraph num="(27)"> <text>Immunizations related to foreign travel;</text> </paragraph> <paragraph num="(28)"> <text>Unless otherwise specified in covered services, dental work or treatment which includes hospital or professional care in connection with:</text> <paragraph num="(a)"> <text>The operation or treatment for the fitting or wearing of dentures;</text> </paragraph> <paragraph num="(b)"> <text>Orthodontic care or malocclusion;</text> </paragraph> <paragraph num="(c)"> <text>Operations on or for treatment of or to the teeth or supporting tissues of the teeth, except for:</text> <paragraph num="(i)"> <text>Removal of tumors and cysts; or</text> </paragraph> <paragraph num="(ii)"> <text>Treatment of injury to natural teeth due to an accident, if the treatment is received within 6 months of the accident; and</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Dental implants;</text> </paragraph> </paragraph> <paragraph num="(29)"> <text>Accidents occurring while and as a result of chewing;</text> </paragraph> <paragraph num="(30)"> <text>Routine foot care, including the paring or removing of corns and calluses, or trimming of nails, unless these services are determined to be medically necessary;</text> </paragraph> <paragraph num="(31)"> <text>Arch support, orthotic devices, in-shoe supports, orthopedic shoes, elastic supports, or exams for their prescription or fitting, unless these services are determined to be medically necessary;</text> </paragraph> <paragraph num="(32)"> <text>Inpatient admissions primarily for physical therapy, unless authorized by the carrier;</text> </paragraph> <paragraph num="(33)"> <text>Treatment leading to or in connection with transsexualism, or sex changes or modifications, including but not limited to surgery;</text> </paragraph> <paragraph num="(34)"> <text>Treatment of sexual dysfunction not related to organic disease;</text> </paragraph> <paragraph num="(35)"> <text>Services that duplicate benefits provided under federal, State, or local laws, regulations, or programs;</text> </paragraph> <paragraph num="(36)"> <text>Organ transplants except those included under Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(37)"> <text>Nonhuman organs and their implantation;</text> </paragraph> <paragraph num="(38)"> <text>Nonreplacement fees for blood and blood products;</text> </paragraph> <paragraph num="(39)"> <text>Lifestyle improvements, including nutrition counseling, or physical fitness programs, unless included as a covered service;</text> </paragraph> <paragraph num="(40)"> <text>Wigs or cranial prosthesis;</text> </paragraph> <paragraph num="(41)"> <text>Weekend admission charges, except for emergencies and maternity, unless authorized by the carrier;</text> </paragraph> <paragraph num="(42)"> <text>Outpatient orthomolecular therapy, including nutrients, vitamins, and food supplements;</text> </paragraph> <paragraph num="(43)"> <text>Temporomandibular joint syndrome (TMJ) treatment and treatment for craniomandibular pain syndrome (CPS), except for surgical services for TMJ and CPS, if medically necessary and if there is a clearly demonstrable radiographic evidence of joint abnormality due to disease or injury;</text> </paragraph> <paragraph num="(44)"> <text>Services resulting from accidental bodily injuries arising out of a motor vehicle accident to the extent the services are payable under a medical expense payment provision of an automobile insurance policy;</text> </paragraph> <paragraph num="(45)"> <text>Services for conditions that State or local laws, regulations, ordinances, or similar provisions require to be provided in a public institution;</text> </paragraph> <paragraph num="(46)"> <text>Services for, or related to, the removal of an organ from a covered person for purposes of transplantation into another person, unless the:</text> <paragraph num="(a)"> <text>Transplant recipient is covered under the plan and is undergoing a covered transplant; and</text> </paragraph> <paragraph num="(b)"> <text>Services are not payable by another carrier;</text> </paragraph> </paragraph> <paragraph num="(47)"> <text>Physical examinations required for obtaining or continuing employment, insurance, or government licensing;</text> </paragraph> <paragraph num="(48)"> <text>Nonmedical ancillary services such as vocational rehabilitation, employment counseling, or educational therapy;</text> </paragraph> <paragraph num="(49)"> <text>Private hospital room, unless authorized by the carrier;</text> </paragraph> <paragraph num="(50)"> <text>Private duty nursing, unless authorized by the carrier;</text> </paragraph> <paragraph num="(51)"> <text>Treatment for:</text> <paragraph num="(a)"> <text>Mental health or substance abuse not authorized by the carrier through its managed care system; or</text> </paragraph> <paragraph num="(b)"> <text>A mental health or substance abuse condition determined by the carrier through its managed care system to be untreatable; and</text> </paragraph> </paragraph> <paragraph num="(52)"> <text>Services related to smoking cessation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A religious organization may request and a carrier shall grant the request for an exclusion from coverage for a service mandated under the Plan if the service is in conflict with the religious organization's bona fide religious beliefs and practices.</text> </paragraph> <paragraph num="D."> <text>A religious organization that obtains an exclusion from coverage for a service mandated under the Plan shall provide its employees reasonable and timely notice of this exclusion.</text> </paragraph> <paragraph num="E."> <text>The carrier's premium rate for the Plan may not be affected by the religious organization's exclusions from coverage for a service mandated under the plan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Additional Benefits."> <text>A carrier may offer benefits in addition to the Limited Benefit Plan only if:</text> <paragraph num="A."> <text>The benefits are offered separately from the plan;</text> </paragraph> <paragraph num="B."> <text>The benefits are priced separately from the plan;</text> </paragraph> <paragraph num="C."> <text>Subject to the provisions of Insurance Article, §15-1213, Annotated Code of Maryland, the benefits are guaranteed issue;</text> </paragraph> <paragraph num="D."> <text>Subject to the provisions of Insurance Article, §15-1213, Annotated Code of Maryland, the benefits are guaranteed renewable;</text> </paragraph> <paragraph num="E."> <text>Subject to the provisions of Insurance Article, §15-1205, Annotated Code of Maryland, the benefits are subject to adjusted community rating;</text> </paragraph> <paragraph num="F."> <text>The benefits do not duplicate any of the benefits in the plan; and</text> </paragraph> <paragraph num="G."> <text>The benefit lowers the cost-sharing arrangements in the Limited Benefit Plan described in Regulations .04 and .05 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Mandated Benefits."> <paragraph num="A."> <text>The plan excludes mandated benefits, except for Insurance Article, §§15-123(d), 15-401, 15-407, 15-408, 15-409, 15-412(a) and (h), 15-414, 15-604, 15-701, 15-811, 15-812, 15-815, 15-816, and 15-10B-09, Annotated Code of Maryland, and Health-General Article, §§19-703(d) and (g), and 19-706(h), Annotated Code of Maryland, to the extent those sections are considered mandated benefits.</text> </paragraph> <paragraph num="B."> <text>This chapter does not exclude any requirement contained in statute or regulation that a carrier shall pay hospitals for hospital services rendered in accordance with rates approved by the Health Services Cost Review Commission.</text> </paragraph> <paragraph num="C."> <text>Referrals to Specialists. Each carrier:</text> <paragraph num="(1)"> <text>That does not allow direct access to specialists shall provide for a standing referral to a specialist under the requirements of Insurance Article, §15-830, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>Shall provide for a referral to a specialist who is not part of the carrier's panel under the requirements of Insurance Article, §15-830, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(3)"> <text>Shall provide direct access to obstetric and gynecological care as specified in Insurance Article, §15-816, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Rates."> <paragraph num="A."> <text>A carrier shall market the Plan in the following compositions:</text> <paragraph num="(1)"> <text>Individual; and</text> </paragraph> <paragraph num="(2)"> <text>Individual, spouse, and dependents.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In addition to §A of this regulation, a carrier may market the Plan in one or more of the following compositions:</text> <paragraph num="(1)"> <text>Individual and spouse; or</text> </paragraph> <paragraph num="(2)"> <text>Individual and dependent.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For each composition in §§A and B of this regulation, the carrier shall calculate a separate community rate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Preexisting Conditions."> <paragraph num="A."> <text>A carrier may not apply a preexisting condition provision to health care services for pregnancy or newborns.</text> </paragraph> <paragraph num="B."> <text>A carrier may impose a preexisting condition provision of up to 12 months for a late enrollee.</text> </paragraph> <paragraph num="C."> <text>A carrier may impose a waiting period from the date of application, in accordance with Insurance Article, §15-1208(b)(2), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Exemption for Certain Prominent Carriers."> <paragraph num="A."> <text>Except as provided in §B of this regulation, a prominent carrier that offers insurance in the small group market shall offer the Limited Benefit Plan to a small employer as required under Regulation .01D of this chapter.</text> </paragraph> <paragraph num="B."> <text>A prominent carrier that is controlled by an insurance holding company is exempt from the requirement to offer the Limited Benefit Plan to a small employer if another prominent carrier which is controlled by the same insurance holding company as the carrier seeking exemption offers the Limited Benefit Plan to small employers in the State.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Review."> <text>In addition to the requirements set forth in Insurance Article, §15-1207, Annotated Code of Maryland, the Maryland Health Care Commission shall review the Plan from time to time. Unless otherwise stated, all changes in the Plan made pursuant to this review are effective for contracts issued or renewed after July 1 of the calendar year in which the changes are promulgated.</text> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-103(c)(6) and 19-108; Insurance Article, §§2-108, 2-109, and 15-1207; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 11, 2005 (32:7 Md. R. 686)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended as an emergency provision effective June 17, 2005 (32:14 Md. R. 1274); amended permanently effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04C amended as an emergency provision effective June 17, 2005 (32:14 Md. R. 1274); amended permanently effective October 10, 2005 (32:20 Md. R. 1657)</annotation> </annotations> </chapter> <chapter num="13" heading="Limited Benefit Plan — Disclosure Statement"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all carriers that offer the Limited Benefit Plan to the small employer market.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Comprehensive Standard Health Benefit Plan” means the health benefit plan adopted by the Maryland Health Care Commission in accordance with Insurance Article, §15-1207, and Health-General Article, Title 19, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Limited Benefit Plan” means the Limited Health Benefit Plan adopted by the Maryland Health Care Commission in accordance with Insurance Article, §15-1207, and Health-General Article, Title 19, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Small employer” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Notice — Limited Benefit Plan."> <paragraph num="A."> <text>When a carrier offers the Limited Benefit Plan to a small employer qualified under Insurance Article, §15-1209, Annotated Code of Maryland, and the small employer chooses the Limited Benefit Plan, the carrier shall obtain a signed disclosure statement certifying that:</text> <paragraph num="(1)"> <text>The small employer was offered the Limited Benefit Plan; and</text> </paragraph> <paragraph num="(2)"> <text>The small employer received notice that more comprehensive coverage is available under the Comprehensive Standard Health Benefit Plan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The disclosure statement required in §A of this regulation shall be in at least 12-point type and shall read as follows:</text> </paragraph> <paragraph num="C."> <text>The carrier shall maintain the signed disclosure statement for not less than 5 years.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-207, Annotated Code of Maryland; Ch. 287, Acts of 2004</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted as an emergency provision effective July 1, 2005 (32:15 Md. R. 1315); emergency status extended at 33:4 Md. R. 350; adopted permanently effective January 16, 2006 (33:1 Md. R. 40)</annotation> </annotations> </chapter> <chapter num="14" heading="Wellness Benefits Under Small Employer Health Benefit Plans"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>This chapter specifies the requirements for:</text> <paragraph num="A."> <text>A wellness benefit offered by a carrier to a small employer under Insurance Article, Title 15, Subtitle 12, Annotated Code of Maryland;</text> </paragraph> <paragraph num="B."> <text>Determining if a carrier is considered a prominent carrier; and</text> </paragraph> <paragraph num="C."> <text>Carriers offering wellness benefits to small employers.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Case management program” means a program that involves a collaborative process of assessment, planning, implementation, coordination, monitoring, and evaluation of the options and services required to meet an individual's health needs through communication and available resources to promote quality cost effective outcomes.</text> </paragraph> <paragraph num="(3)"> <text>“Disease management program” means a program of preventive, diagnostic, and therapeutic services for certain patients that are considered to be at risk.</text> </paragraph> <paragraph num="(4)"> <text>“Eligible employee” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Health risk assessment” means a self-reported health questionnaire that:</text> <paragraph num="(a)"> <text>Asks a variety of personal questions about lifestyle and behavioral habits, such as physical activity level, eating habits, and stress; and</text> </paragraph> <paragraph num="(b)"> <text>Includes, but is not limited to, biometric measures and other health status information.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Preventive services” means the services required to be covered under the small employer standard plan, as described in COMAR 31.11.06.03A(9).</text> </paragraph> <paragraph num="(8)"> <text>“Prominent carrier” means a carrier that insures at least 10 percent of the total lives insured in the Maryland small group market.</text> </paragraph> <paragraph num="(9)"> <text>“Small employer” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Standard plan” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Wellness benefit”:</text> <paragraph num="(a)"> <text>Has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Complies with the requirements set forth in Regulations .03 and .04 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Wellness program” has the meaning stated in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Components of a Wellness Benefit."> <paragraph num="A."> <text>Each wellness benefit shall include:</text> <paragraph num="(1)"> <text>A health risk assessment that is:</text> <paragraph num="(a)"> <text>Available at no cost to all employees covered under the small employer's wellness benefit; and</text> </paragraph> <paragraph num="(b)"> <text>Completed by each employee on a voluntary basis;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Written feedback to each employee who completes the health risk assessment, with recommendations for lowering risks identified in the completed health risk assessment; and</text> </paragraph> <paragraph num="(3)"> <text>A financial incentive to promote:</text> <paragraph num="(a)"> <text>Preventive care;</text> </paragraph> <paragraph num="(b)"> <text>Healthy behavior and lifestyle choices; or</text> </paragraph> <paragraph num="(c)"> <text>Participation in a disease management program or case management program.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The financial incentive described in §A(3) of this regulation may be in the form of:</text> <paragraph num="(1)"> <text>A direct reward of financial value given to the employee, such as a monetary reward or a gift card; or</text> </paragraph> <paragraph num="(2)"> <text>A reduction in the employee's copayments, coinsurance, or deductible that would otherwise be payable under the small employer's health benefit plan.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier shall be considered to have satisfied the requirement of §A(3) of this regulation, if the wellness benefit offered by the carrier eliminates the deductible for preventive services only.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="General Requirements for Wellness Benefits Offered to Small Employers."> <paragraph num="A."> <text>A wellness benefit offered to a small employer:</text> <paragraph num="(1)"> <text>Shall satisfy the requirements of an additional benefit found in COMAR 31.11.06.07; and</text> </paragraph> <paragraph num="(2)"> <text>May not violate any requirement regarding wellness programs as described in 45 CFR §146.121.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A wellness benefit may appear in an additional benefit rider as the only benefit in the rider, or it may be bundled with other benefits in an additional benefit rider.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Requirement for Carriers to Offer a Wellness Benefit."> <paragraph num="A."> <text>A prominent carrier shall offer a wellness benefit to a small employer for a health benefit plan offered in Maryland.</text> </paragraph> <paragraph num="B."> <text>A carrier that is not a prominent carrier may offer a wellness benefit to a small employer for a health benefit plan offered in Maryland.</text> </paragraph> <paragraph num="C."> <text>The determination of which carriers are prominent carriers shall be determined each calendar year, based on the market share that each carrier had of the Maryland small group market for the prior calendar year.</text> </paragraph> <paragraph num="D."> <text>A carrier may not condition the sale of a wellness benefit to a small employer on participation of the eligible employees of the small employer in wellness programs or activities.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health General Article, §19-108; Insurance Article, §§2-109, 15-1201, 15-1204(g), and 15-1207(a); Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.05 adopted as an emergency provision effective April 1, 2008 (35:9 Md. R. 896); adopted permanently effective July 17, 2008 (35:14 Md. R. 1248)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 19, 2009 (36:21 Md. R. 1594)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective October 19, 2009 (36:21 Md. R. 1594)</annotation> </annotations> </chapter> </subtitle> <subtitle num="12" heading="Health Maintenance Organizations; Entities That Act as Health Insurers"> <chapter num="01" heading="Health Maintenance Organizations — Certificate of Authority and Fiscal Requirements"> <regulation prefix="Regulation" num=".01" heading="Authority and Purpose."> <text>The Insurance Commissioner adopts and promulgates this chapter according to Health-General Article, §19-705, Annotated Code of Maryland, for the purpose of governing and regulating various phases of the operations of health maintenance organizations.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>All terms defined in the Health Maintenance Organization Act of 1975 which are used in this chapter have the same meaning as in the Act unless the terms are defined differently in this chapter.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“HMO” means a health maintenance organization.</text> </paragraph> <paragraph num="(2)"> <text>“Individual contract” means a contractual agreement for the provision of health care services on a prepaid basis entered into between an HMO and a subscriber, provided the contract covers only the following persons:</text> <paragraph num="(a)"> <text>The subscriber;</text> </paragraph> <paragraph num="(b)"> <text>The subscriber and the subscriber's dependents; or</text> </paragraph> <paragraph num="(c)"> <text>The subscriber's dependents.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Leasehold estate improvements” means improvements made to property which is leased by the HMO and used by it to provide health care directly.</text> </paragraph> <paragraph num="(4)"> <text>“Member” means the subscriber and any of the subscriber's dependents who are enrolled in the HMO.</text> </paragraph> <paragraph num="(5)"> <text>“Subscriber” means, for:</text> <paragraph num="(a)"> <text>Group HMO contracts, the person who is eligible to be covered under the contract, other than as a dependent, due to satisfaction of the eligibility requirements of the group; and</text> </paragraph> <paragraph num="(b)"> <text>Individual HMO contracts, the person who completes the application for coverage with the HMO.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Scope."> <text>The scope of this chapter is the scope of Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland, as it relates to the Insurance Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Application for Certificate of Authority."> <paragraph num="A."> <text>The Act provides that an HMO may not engage in business as an HMO unless so authorized under a certificate of authority issued by the Insurance Commissioner.</text> </paragraph> <paragraph num="B."> <text>Application for a certificate of authority shall be submitted by the HMO not less than 90 days before the date it proposes to engage in business in this State.</text> </paragraph> <paragraph num="C."> <text>An application form will be furnished by the Commissioner on the request of the HMO.</text> </paragraph> <paragraph num="D."> <text>Each health maintenance organization, as defined in Health-General Article, §19-701(e), Annotated Code of Maryland, seeking a certificate of authority to transact business in Maryland shall file the following items:</text> <paragraph num="(1)"> <text>A copy of the basic organizational document of the HMO and any amendments to it, certified if applicable, by the Department of Assessments and Taxation.</text> </paragraph> <paragraph num="(2)"> <text>A copy of the HMO's current bylaws, if any, certified by the appropriate officer of the HMO.</text> </paragraph> <paragraph num="(3)"> <text>A list of the names, addresses, and official capacity with the HMO of the persons who are to be responsible for the conduct of its affairs, including all members of the governing body, the officers and directors in the case of a corporation, and the partners or associates in the case of a partnership or association. These persons shall disclose fully to the Commissioner and the governing body of the HMO the extent and nature of any contracts or arrangements between them and the HMO, including any possible conflicts of interest.</text> </paragraph> <paragraph num="(4)"> <text>A resume of the qualifications of the administrator, the medical director, the enrollment director, and of other persons associated with the HMO as requested by the Commissioner and the Maryland Department of Health.</text> </paragraph> <paragraph num="(5)"> <text>A statement generally describing the:</text> <paragraph num="(a)"> <text>HMO;</text> </paragraph> <paragraph num="(b)"> <text>HMO's operations;</text> </paragraph> <paragraph num="(c)"> <text>HMO's enrollment process;</text> </paragraph> <paragraph num="(d)"> <text>HMO's quality assurance mechanism;</text> </paragraph> <paragraph num="(e)"> <text>HMO's internal grievance procedures;</text> </paragraph> <paragraph num="(f)"> <text>Methods the HMO proposes to use to offer its members or public representatives an opportunity to participate in matters of policy and operation;</text> </paragraph> <paragraph num="(g)"> <text>Location of the facilities at which health care services will be regularly available to members;</text> </paragraph> <paragraph num="(h)"> <text>Type and specialty of physicians and health care personnel engaged to provide health care services;</text> </paragraph> <paragraph num="(i)"> <text>Number of physicians and personnel in each category;</text> </paragraph> <paragraph num="(j)"> <text>Health and medical records system to provide documentation of utilization by members.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Forms of all health maintenance contracts the HMO proposes to offer to subscribers showing the benefits to which they are entitled, together with a table of the rates charged, or proposed to be charged, for each form of contract.</text> </paragraph> <paragraph num="(7)"> <text>A statement describing with reasonable certainty the geographic area or areas to be served by the HMO.</text> </paragraph> <paragraph num="(8)"> <text>A certified statement of the financial condition of the HMO, including:</text> <paragraph num="(a)"> <text>Sources of financial support;</text> </paragraph> <paragraph num="(b)"> <text>Assets and liabilities and minimum tangible net equity;</text> </paragraph> <paragraph num="(c)"> <text>Other financial information the Commissioner requires for adequate financial evaluation.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Copies of proposed advertising and proposed techniques and methods of marketing the services of the HMO.</text> </paragraph> <paragraph num="(10)"> <text>A power of attorney duly executed by the HMO appointing the Commissioner and his duly authorized deputies, as the true and lawful attorney of the HMO in and for the State upon whom may be served all lawful process in any action, proceeding, or cause of action arising in this State against the HMO.</text> </paragraph> <paragraph num="(11)"> <text>A certificate of compliance evidencing employee coverage under Workers' Compensation law (Labor and Employment Article, Title 9, Annotated Code of Maryland).</text> </paragraph> <paragraph num="(12)"> <text>An official written notification from the Maryland Department of Health that the HMO's proposed health-related services, operations, and functions falling under the regulatory jurisdictions of the Department appear to meet its requirements and have been approved by the Department in accordance with its regulations.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Insurance—General Liability and Medical Malpractice. Evidence of insurance or a plan for self-insurance shall be presented and approved by the Commissioner both as to amounts and type of coverage before the HMO is licensed. Evidence of renewal shall be submitted with each annual report.</text> </paragraph> <paragraph num="F."> <text>Fiscal Requirements.</text> <paragraph num="(1)"> <text>In order to qualify for a certificate of authority, the HMO shall at the time of making its initial application demonstrate to the satisfaction of the Commissioner that:</text> <paragraph num="(a)"> <text>The HMO has on hand sufficient funds or a reasonably certain source of income to meet all organizational, administrative, promotional, and marketing expenses incurred or expected to be incurred before opening;</text> </paragraph> <paragraph num="(b)"> <text>On its date of opening, the HMO will have a net worth sufficient to cover all expenses which may reasonably be anticipated will be incurred during the first month of operation, and on that date the HMO will have cash on hand or on deposit at least equal to the anticipated expenses;</text> </paragraph> <paragraph num="(c)"> <text>The HMO can anticipate with reasonable certainty that its cash flow plus funds already on hand will be sufficient to meet all expenses which it anticipates will be incurred on an accrual basis during the first 3 months of operation; and</text> </paragraph> <paragraph num="(d)"> <text>The HMO has a prospective budget and expected cash flow analysis for the first 24 months of its anticipated operation demonstrating its financial viability based on reasonable assumptions.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For purposes of this regulation, amounts due and payable to the HMO directly or indirectly under contracts with federal, State, or local governmental agencies or with any of their instrumentalities may be regarded as an asset on the date the amounts become due and payable and any amounts becoming due within the first month of operation may be included in net worth or be considered as funds on hand or a part of the HMO's cash flow for purposes of §F(1)(b) and (c) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If the HMO has received a loan, other than a first mortgage loan on real estate, fixtures, chattels, and equipment, from a State or national bank, and, if under the terms of the loan agreement the loan is subordinated to the rights of enrollees under the benefit provisions of their subscription agreements, the HMO may, for purposes of this regulation, take credit as income for up to 75 percent of the outstanding balance of the loan which is neither due nor callable before 1 year from the date the credit is taken. This credit may be taken only if, based on the cash flow analysis, all amounts falling due or becoming callable under the loan agreement may reasonably be expected to be available from the operation of the HMO on or before the respective due dates of amounts payable or callable under the loan agreement. Any interest accruing on the loan shall be treated as a current expense during each month of the HMO's budget and cash flow analysis.</text> </paragraph> <paragraph num="(4)"> <text>Exceptions in whole or in part as to the fiscal requirements of this regulation may be made by the Commissioner in the Commissioner's discretion for such periods as the Commissioner determines if:</text> <paragraph num="(a)"> <text>The HMO is funded primarily or substantially under programs sponsored by federal, State, or local governmental agencies or their instrumentalities, or by well established and reputable foundations for demonstration or charitable purposes, or by organizations except under §§501(c)(3) and 501(c)(4) of the Internal Revenue Code;</text> </paragraph> <paragraph num="(b)"> <text>The HMO has contracts with its provider physicians and hospitals under which the providers agree to continue furnishing their services for a stated period (not less than 30 days) even if the revenues of the HMO are insufficient to pay the providers for their services; or</text> </paragraph> <paragraph num="(c)"> <text>The HMO has an agreement with a Maryland licensed insurer or nonprofit health service plan under which the insurer or plan agrees to issue to enrollees in the HMO standard forms of hospital, medical, and surgical insurance at standard premium rates without any underwriting or other requirement other than an application and payment of the first monthly premium by the enrollee if the HMO is unable to continue in operation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Determination of Financial Condition. In any determination of the financial condition of any HMO, there shall be allowed as assets only the following:</text> <paragraph num="(1)"> <text>Cash in the possession of the HMO or in transit under its control, and the balance of any deposit of the HMO in a solvent bank or trust company;</text> </paragraph> <paragraph num="(2)"> <text>Investments, securities, properties, and loans acquired or held in accordance with this regulation and income due or accrued thereon;</text> </paragraph> <paragraph num="(3)"> <text>Member charges in the course of collection, not more than 90 days past due (the foregoing limitation does not apply to amounts payable directly or indirectly by federal, State, or local governmental agencies or their instrumentalities);</text> </paragraph> <paragraph num="(4)"> <text>Notes and like written obligations not past due, taken for member charges or contracts permitted to be issued on that basis, to the extent of the unearned charges reserve carried thereon;</text> </paragraph> <paragraph num="(5)"> <text>Medical, surgical, and dental equipment directly used to provide health care;</text> </paragraph> <paragraph num="(6)"> <text>Prepaid charges on contracts with other organizations, hospitals, or other persons as approved by the Commissioner;</text> </paragraph> <paragraph num="(7)"> <text>Pharmaceutical and medical supply inventories; accounts receivable for health care provided, not including notes receivable, less adequate reserves for bad debts;</text> </paragraph> <paragraph num="(8)"> <text>Cost of land and depreciated cost of buildings owned and occupied by the HMO and used to directly provide health care, in excess of any encumbrances on it;</text> </paragraph> <paragraph num="(9)"> <text>Leasehold estate improvements, provided the initial cost is amortized over the useful life of the improvements but not beyond the termination of the lease;</text> </paragraph> <paragraph num="(10)"> <text>Federal funds may be counted as assets as approved by the Commissioner for that fiscal year in which funds are committed, awarded, or otherwise made available;</text> </paragraph> <paragraph num="(11)"> <text>Electronic, mechanical, and computer hardware including the operating system software used for data processing and accounting purposes, the cost of which shall be amortized in full over a period not to exceed 10 calendar years; and</text> </paragraph> <paragraph num="(12)"> <text>Other assets, not inconsistent with the foregoing provisions, deemed by the Commissioner available for the provision of health care, at values to be determined by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="H."> <text>The following may not be allowed as assets in determination of the financial condition of an HMO:</text> <paragraph num="(1)"> <text>Good will, trade names, and other like intangible assets;</text> </paragraph> <paragraph num="(2)"> <text>Advances to officers, whether secured or not, and advances to employees, agents, and other persons on personal security only;</text> </paragraph> <paragraph num="(3)"> <text>Stock of the HMO, owned by it, or any equity in it or loans secured by it, or any proportionate interest in the stock through the ownership by the HMO or an interest in another firm, corporation, or business unit;</text> </paragraph> <paragraph num="(4)"> <text>The amount, if any, by which the aggregate book value of investments as carried in the ledger assets of the HMO exceeds the aggregate value thereof as determined by the values approved annually by the Securities Valuation Office of the National Association of Insurance Commissioners;</text> </paragraph> <paragraph num="(5)"> <text>All assets not allowed and all other assets of doubtful value or character included in any statement by an HMO to the Commissioner, or in any examiner's report to the Commissioner, shall also be reported to the extent of the value disallowed, as deductions from the gross assets of the HMO;</text> </paragraph> <paragraph num="(6)"> <text>Furniture and fixtures, leasehold improvements other than leasehold estate improvements which qualify under §G(9) of this regulation, vehicles, and maintenance equipment.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Liabilities Chargeable Against Assets. In any determination of the financial condition of an HMO, liabilities to be charged against its assets shall include:</text> <paragraph num="(1)"> <text>The amount of its capital stock outstanding, if any;</text> </paragraph> <paragraph num="(2)"> <text>The estimated amount necessary to pay for all accrued benefits to enrollees and all claims, both reported or unreported, incurred on or before the date of the statement, together with estimated costs of adjusting or settling disputed claims;</text> </paragraph> <paragraph num="(3)"> <text>The pro rata amount of premium charges paid by or on behalf of enrollees for any period of coverage beyond the date of the statement; and</text> </paragraph> <paragraph num="(4)"> <text>Its other liabilities, including but not limited to taxes, expenses, and other obligations due or accrued at the date of the statement.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Earned Charges.</text> <paragraph num="(1)"> <text>Earned charges shall include premium charges on all contracts written, including all determined excess and additional charges, less return charges, less charges returned or credited to members as dividends, and less charges on cancelled contracts, and less unearned charges on contracts in force as shown by the HMO's annual statement. Every HMO shall maintain an unearned charge reserve on all health care contracts in force, which reserve shall be set up as a liability. All prepaid charges shall be deemed unearned.</text> </paragraph> <paragraph num="(2)"> <text>“Charges” means the consideration for health services by whatever name called. Any “assessment”, or any “membership”, “policy”, “survey”, “inspection”, “service”, or similar fee or charge in consideration for an HMO contract is deemed part of the charge.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Deposit of Securities.</text> <paragraph num="(1)"> <text>The Insurance Commissioner may not issue or renew a certificate of authority for any HMO unless it has deposited and maintains in trust with the State Treasurer, for the protection of its members or its members and creditors, cash or government securities of the type described in Insurance Article, §5-701(b), Annotated Code of Maryland, in the amount of $100,000.</text> </paragraph> <paragraph num="(2)"> <text>The Insurance Commissioner may, in the Commissioner's discretion, waive the requirement for deposit of securities for any HMO which is domiciled in a state other than Maryland if that state has a security deposit greater than that of Maryland, provided that the deposit is for the benefit of all of the subscribers of that HMO including all Maryland residents.</text> </paragraph> <paragraph num="(3)"> <text>In determining whether to waive the requirement for deposit of securities, the Commissioner shall consider, but not be limited to, the following factors:</text> <paragraph num="(a)"> <text>The number of states in which the HMO is licensed to operate;</text> </paragraph> <paragraph num="(b)"> <text>The number of states in which the HMO has deposited securities; and</text> </paragraph> <paragraph num="(c)"> <text>Whether the residents of states other than Maryland have priority over nonresidents to the securities deposited in their states.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>This security deposit requirement does not apply to any HMO operating solely under contracts with the Maryland Medical Assistance Programs pursuant to Title XIX of the Social Security Act, 42 U.S.C. §1396 et seq.</text> </paragraph> <paragraph num="(5)"> <text>The Insurance Commissioner may, in his discretion, waive the requirement for deposit of securities for any HMO, which is domiciled in Maryland or a state other than Maryland, if the Insurance Commissioner is satisfied that the deposit is not necessary to protect the members or creditors of that HMO.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Change of Ownership."> <text>The HMO shall notify the Commissioner within 10 days of any transfer of ownership or more than an aggregate of 10 percent of the stock or ownership interest in the HMO occurring during any 12-month period.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Change of Name."> <text>No name other than that approved by the Commissioner may be used. The name of the HMO may not be changed without prior approval of the Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Filings, Forms, and Rates."> <text>HMOs shall be subject to the applicable procedures and requirements for filings, forms, and rates as outlined in COMAR 31.12.02.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Repealed." /> <regulation prefix="Regulation" num=".09" heading="Marketing."> <text>The manner of marketing health care contracts shall be fully set forth in writing by the HMO before licensing, and any substantive alterations in marketing procedures must be approved by the Commissioner before use.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Repealed." /> <regulation prefix="Regulation" num=".11" heading="Annual Report."> <paragraph num="A."> <text>Each licensed health maintenance organization, unless the time is extended for good cause shown, shall file a report with the Commissioner, certified by an audit of a certified public accounting firm, showing its financial condition on the last day of the preceding calendar year. The report shall be on the form adopted by the Commissioner and shall annually be filed with the Commissioner on or before the first day of March. The report shall be supplemented with a description of any changes in the information submitted with the last previous annual report or with the HMO's original application for a certificate of authority.</text> </paragraph> <paragraph num="B."> <text>If the fiscal year of the HMO does not coincide with the calendar year, at the request of the HMO the Commissioner may, in his discretion, accept a certified audit showing the HMO's financial condition at the end of its last completed fiscal year, the audit to be accomplished by an annual report for the corresponding fiscal year to be filed on or before the 60th day following the last day of the fiscal year. As a condition for granting this exception, the Commissioner will require the HMO to also file on or before the first day of the following March an unaudited calendar year report.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Fiscal Examination."> <paragraph num="A."> <text>The Commissioner may make an examination of the operation of any health maintenance organization as often as the Commissioner deems necessary for the protection of the interest of the people of Maryland, but the examinations may not be less frequent than once every 5 years.</text> </paragraph> <paragraph num="B."> <text>The expense of each examination shall be assessed against the HMO being examined and the HMO shall remit the cost of the examination to the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Repealed." /> <regulation prefix="Regulation" num=".14" heading="Insurance — Catastrophic or Back-Up Coverage."> <paragraph num="A."> <text>Unless the Commissioner grants an exemption from the requirements of this section, the HMO shall secure insurance coverage to provide:</text> <paragraph num="(1)"> <text>Payments or services required to be made or furnished under the health care contract to those enrollees who are injured or become ill outside the geographic limits served by the HMO; and</text> </paragraph> <paragraph num="(2)"> <text>Reinsurance protection to the HMO in event of catastrophic or unusual losses which would be in excess of the levels of loss which the HMO assumes in the basis of its calculation of premium charges.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Any exemption to requirements of §A of this regulation shall be for a period of 1 year, and may be renewed from year to year thereafter. Any requests for renewal shall be made by the HMO at least 90 days before the expiration date of the then current exemption.</text> </paragraph> <paragraph num="C."> <text>With the approval of the Commissioner, the HMO may reinsure any portion or aspect of its operation.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-705(a), 19-707, 19-708, 19-710, and 19-728, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 1, 1977 (4:18 Md. R. 1422)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A and C amended effective August 5, 1991 (18:15 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D—F adopted effective August 5, 1991 (18:15 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02D amended effective November 9, 1992 (19:22 Md. R. 1988)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04G, H, and K amended effective August 5, 1991 (18:15 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04K adopted effective June 29, 1987 (14:13 Md. R. 1472)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective August 5, 1991 (18:15 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12B amended effective August 5, 1991 (18:15 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13C amended effective August 5, 1991 (18:15 Md. R. 1725)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.54 to COMAR 31.12.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 repealed effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 repealed effective October 10, 2005 (32:20 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12A amended effective April 2, 2012 (39:6 Md. R. 412)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 repealed effective October 10, 2005 (32:20 Md. R. 1657)</annotation> </annotations> </chapter> <chapter num="02" heading="Health Maintenance Organizations — Contract Forms and Premium Rates"> <regulation prefix="Regulation" num=".01" heading="Authority and Purpose."> <text>The Insurance Commissioner promulgates this chapter pursuant to Health-General Article, Title 19, Subtitle 7, Annotated Code of Maryland, for the purpose of governing and regulating various phases of the operations of health maintenance organizations.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Advertising” means:</text> <paragraph num="(a)"> <text>Printed and published material;</text> </paragraph> <paragraph num="(b)"> <text>Descriptive literature and sales aids;</text> </paragraph> <paragraph num="(c)"> <text>Sales talks;</text> </paragraph> <paragraph num="(d)"> <text>Sales materials, booklets, forms, pamphlets, brochures, illustrations, depictions, and form letters;</text> </paragraph> <paragraph num="(e)"> <text>Newspaper, radio, television, or direct mail advertising; and</text> </paragraph> <paragraph num="(f)"> <text>Any other material used for the promotion of enrollment.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An HMO;</text> </paragraph> <paragraph num="(b)"> <text>An insurer;</text> </paragraph> <paragraph num="(c)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(d)"> <text>A dental plan organization; or</text> </paragraph> <paragraph num="(e)"> <text>A fraternal benefit society.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Contract on an Insert Page Basis.</text> <paragraph num="(a)"> <text>“Contract on an insert page basis” means a contract that is composed of insert pages, with each insert page being identified with a unique form number.</text> </paragraph> <paragraph num="(b)"> <text>“Contract on an insert page basis” does not include a contract that contains an insert that is identified with a unique form number and is longer than one page.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Contract on a Sectional Basis.</text> <paragraph num="(a)"> <text>“Contract on a sectional basis” means a contract that is composed of sections, with each section being identified with a unique form number.</text> </paragraph> <paragraph num="(b)"> <text>“Contract on a sectional basis” includes a contract that contains sections that are only one page long.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Form.</text> <paragraph num="(a)"> <text>“Form” means:</text> <paragraph num="(i)"> <text>A policy;</text> </paragraph> <paragraph num="(ii)"> <text>A contract;</text> </paragraph> <paragraph num="(iii)"> <text>A certificate;</text> </paragraph> <paragraph num="(iv)"> <text>A rider;</text> </paragraph> <paragraph num="(v)"> <text>An endorsement; or</text> </paragraph> <paragraph num="(vi)"> <text>An application.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Form” does not include a provider contract.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Group certificate” means the description of benefits and rights which pertain to the members covered under a group policy.</text> </paragraph> <paragraph num="(7)"> <text>“Group contract” or “group policy” means a contractual agreement entered into between an HMO and an employer, union, trustee, association, or organization for the provision of health care services on a prepaid basis to:</text> <paragraph num="(a)"> <text>Subscribers; or</text> </paragraph> <paragraph num="(b)"> <text>Subscribers and the subscriber's dependents, family members, or both.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“HMO” means a health maintenance organization.</text> </paragraph> <paragraph num="(9)"> <text>“Individual contract” means a contractual agreement for the provision of health care services on a prepaid basis entered into between an HMO and a subscriber, provided the contract covers only the following persons:</text> <paragraph num="(a)"> <text>The subscriber;</text> </paragraph> <paragraph num="(b)"> <text>The subscriber and the subscriber's dependents, family members, or both; or</text> </paragraph> <paragraph num="(c)"> <text>The subscriber's dependents, family members, or both.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Member” means the subscriber and any of the subscriber's dependents or family members who are entitled to receive health care benefits from the HMO.</text> </paragraph> <paragraph num="(11)"> <text>“Subscriber” means for:</text> <paragraph num="(a)"> <text>Group contracts, the person who is eligible to be covered under the contract, other than as a dependent or a family member by reason of satisfying the eligibility requirements of the group contract; and</text> </paragraph> <paragraph num="(b)"> <text>Individual contracts, the person who completes the application for coverage with the HMO and who is covered under the contract.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Submittals."> <paragraph num="A."> <text>Submittals of Forms to Commissioner.</text> <paragraph num="(1)"> <text>An HMO shall submit to the Commissioner for approval every form that it intends to use in Maryland.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner shall either approve or disapprove the form for use within 60 days of the receipt of the form in the Commissioner's office.</text> </paragraph> <paragraph num="(3)"> <text>An HMO may not use a form before the Commissioner's approval unless the Commissioner has not acted at the end of the 60-day period described in §A(2) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The Commissioner may withdraw the Commissioner's prior approval or may disapprove a form previously permitted to be used if the Commissioner gives the HMO at least 30 days' notice before the effective date of the Commissioner's action disapproving the form.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Duplicate Forms Required For Nonelectronic Form Submissions.</text> <paragraph num="(1)"> <text>An HMO shall submit duplicate copies of each nonelectronic form the HMO intends to use in Maryland to the Commissioner for approval.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner approves the nonelectronic form submitted by or on behalf of the HMO, the Commissioner shall:</text> <paragraph num="(a)"> <text>Retain one copy; and</text> </paragraph> <paragraph num="(b)"> <text>Return to the HMO one copy, with an appropriate notation indicating approval.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Each form submitted for approval shall be accompanied by:</text> <paragraph num="(1)"> <text>A current transmittal form developed by:</text> <paragraph num="(a)"> <text>The Maryland Insurance Administration; or</text> </paragraph> <paragraph num="(b)"> <text>The National Association of Insurance Commissioners (NAIC);</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A filing fee in accordance with Insurance Article, §2-112, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>Except for electronic form filings, a self-addressed, stamped envelope; and</text> </paragraph> <paragraph num="(4)"> <text>A cover letter listing the forms submitted for approval by form number, with a brief description of each form filed for approval.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The HMO may not use a form disapproved by the Commissioner.</text> </paragraph> <paragraph num="E."> <text>If a printed form has been disapproved, the HMO may resubmit the form with modifications made by imprinting, multigraph, mimeograph, multilith, electronic printer, or rubber stamp. The HMO may not resubmit a form with handwritten or typewritten changes, interlineations, or deletions.</text> </paragraph> <paragraph num="F."> <text>Submission of Forms.</text> <paragraph num="(1)"> <text>Except as provided in §F(2) of this regulation, an HMO shall submit forms for approval with the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>A third party may submit a form for approval on behalf of an HMO, if the third party includes a written authorization from the HMO to make the form filing.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Representative Specimen Data. Except for applications filed for approval, an HMO shall complete each form filed for approval with representative specimen data.</text> </paragraph> <paragraph num="H."> <text>Contracts with Insert Pages.</text> <paragraph num="(1)"> <text>An HMO may file for approval of a contract on an insert page basis, only if:</text> <paragraph num="(a)"> <text>Each insert page is identified by a unique form number appearing in the lower left corner of the insert page; and</text> </paragraph> <paragraph num="(b)"> <text>The HMO includes the following information in the filing submission:</text> <paragraph num="(i)"> <text>A description of how the various insert pages will be combined;</text> </paragraph> <paragraph num="(ii)"> <text>A listing of the insert pages that can be substituted for other specific insert pages; and</text> </paragraph> <paragraph num="(iii)"> <text>The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each insert page with a unique form number.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>An HMO may not file for approval of insert pages for use with a previously approved contract, if the previously approved contract was not approved on an insert page basis.</text> </paragraph> <paragraph num="(3)"> <text>If an HMO files for approval of insert pages for a previously approved contract, the submission shall:</text> <paragraph num="(a)"> <text>Identify by form number and date of approval any insert pages that the new insert pages will replace; and</text> </paragraph> <paragraph num="(b)"> <text>Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Contracts Comprised of Sections.</text> <paragraph num="(1)"> <text>An HMO may file for approval of a contract on a sectional basis, only if:</text> <paragraph num="(a)"> <text>Each section is identified by a unique form number appearing in the lower left corner of the first page of the section; and</text> </paragraph> <paragraph num="(b)"> <text>The HMO includes the following information in the filing submission:</text> <paragraph num="(i)"> <text>A description of how the various sections will be combined;</text> </paragraph> <paragraph num="(ii)"> <text>A listing of the sections that can be substituted for other specific sections; and</text> </paragraph> <paragraph num="(iii)"> <text>The filing fee required under Insurance Article, §2-112, Annotated Code of Maryland, for each section with a unique form number.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>An HMO may not file for approval of sections for use with a previously approved contract, if the previously approved contract was not approved on a sectional basis.</text> </paragraph> <paragraph num="(3)"> <text>If an HMO files for approval of sections for a previously approved contract, the submission shall:</text> <paragraph num="(a)"> <text>Identify by form number and date of approval any sections that the new sections will replace; and</text> </paragraph> <paragraph num="(b)"> <text>Include a copy of the currently approved contract, unless the Commissioner waives the requirement or determines that a copy is not necessary to review the submission.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Variable Information."> <paragraph num="A."> <text>Individual Contracts.</text> <paragraph num="(1)"> <text>Except as specified in §A(2) of this regulation, an HMO may not include variable material in an individual contract, or in a form to be used with an individual contract.</text> </paragraph> <paragraph num="(2)"> <text>An HMO may include variable material, in an individual contract or in a form to be used with an individual contract in the following portions of the form:</text> <paragraph num="(a)"> <text>The specifications, data, or schedule page;</text> </paragraph> <paragraph num="(b)"> <text>The product marketing name;</text> </paragraph> <paragraph num="(c)"> <text>The address of the HMO;</text> </paragraph> <paragraph num="(d)"> <text>Signatures of officers of the HMO;</text> </paragraph> <paragraph num="(e)"> <text>Descriptions of copayment amounts, deductibles, coinsurance amounts, out-of-pocket limits, annual maximums, or lifetime maximums;</text> </paragraph> <paragraph num="(f)"> <text>Specific dates, such as effective dates and termination dates; and</text> </paragraph> <paragraph num="(g)"> <text>Descriptions of benefit amounts or benefit limits.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If an individual contract or a form to be used with an individual contract contains variable material as permitted under §A(2) of this regulation, the HMO shall:</text> <paragraph num="(a)"> <text>Bracket the variable material or otherwise mark the variable material to denote variability; and</text> </paragraph> <paragraph num="(b)"> <text>Include a statement of variability, in duplicate, that discusses how each variable item may change.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If an individual contract or a form to be used with an individual contract is approved with variable material, an HMO may not submit a new statement of variability to be used with the previously approved contract or form, except for the following:</text> <paragraph num="(a)"> <text>Copayment amounts;</text> </paragraph> <paragraph num="(b)"> <text>Coinsurance amounts;</text> </paragraph> <paragraph num="(c)"> <text>Deductible amounts;</text> </paragraph> <paragraph num="(d)"> <text>Out-of-pocket limits;</text> </paragraph> <paragraph num="(e)"> <text>Annual maximums;</text> </paragraph> <paragraph num="(f)"> <text>Lifetime maximums;</text> </paragraph> <paragraph num="(g)"> <text>Benefit amounts; or</text> </paragraph> <paragraph num="(h)"> <text>Benefit limits.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>An HMO shall include the following with a new statement of variability filing for a previously approved form:</text> <paragraph num="(a)"> <text>A cover letter identifying the HMO and the HMO's National Association of Insurance Commissioners company code number; and</text> </paragraph> <paragraph num="(b)"> <text>The form number and date of approval of the form for which new variable material is being submitted.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Group Contracts.</text> <paragraph num="(1)"> <text>An HMO may include variable material in a group contract or in a form to be used with a group contract, if the HMO:</text> <paragraph num="(a)"> <text>Brackets the variable material or otherwise marks the variable material to denote variability; and</text> </paragraph> <paragraph num="(b)"> <text>Includes a statement of variability, in duplicate, that discusses how each variable item may change, including all textual variations that are intended.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If a group contract or a form to be used with a group contract is approved with variable material, an HMO may not submit a new statement of variability to be used with the previously approved group contract or form, except for the following:</text> <paragraph num="(a)"> <text>Copayment amounts;</text> </paragraph> <paragraph num="(b)"> <text>Coinsurance amounts;</text> </paragraph> <paragraph num="(c)"> <text>Deductible amounts;</text> </paragraph> <paragraph num="(d)"> <text>Out-of-pocket limits;</text> </paragraph> <paragraph num="(e)"> <text>Annual maximums;</text> </paragraph> <paragraph num="(f)"> <text>Lifetime maximums;</text> </paragraph> <paragraph num="(g)"> <text>Benefit amounts; or</text> </paragraph> <paragraph num="(h)"> <text>Benefit limits.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An HMO shall include the following with a new statement of variability filing for a previously approved form:</text> <paragraph num="(a)"> <text>A cover letter identifying the HMO and the HMO's National Association of Insurance Commissioners company code number; and</text> </paragraph> <paragraph num="(b)"> <text>The form number and date of approval of the form for which new variable material is being submitted.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Failure to Respond to the Commissioner's Correspondence."> <paragraph num="A."> <text>The Commissioner shall deem a filing withdrawn by the HMO if the HMO fails to respond to correspondence from the Commissioner regarding the filing within 90 days of the date of the correspondence from the Commissioner.</text> </paragraph> <paragraph num="B."> <text>If an HMO resubmits a form for approval after 90 days of the date of the Commissioner's correspondence regarding the filing in which the form was included, the HMO shall:</text> <paragraph num="(1)"> <text>Include a new filing fee for the form and associated premium rates included in the filing; and</text> </paragraph> <paragraph num="(2)"> <text>Include in the filing all the information required in Regulation .03 of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Contract Forms."> <paragraph num="A."> <text>Form Numbers.</text> <paragraph num="(1)"> <text>Each form shall be identified by a form number that is unique to that form.</text> </paragraph> <paragraph num="(2)"> <text>The form number shall be printed in the lower left corner of the first page, and no other number may appear near the form number.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The text of each form shall be printed in a style of type which is easily legible, the size of which shall be uniform and not less than 10 point with a lower case unspaced alphabet length not less than 120 point. The text shall include all printed matter except the name and address of the HMO, name or title of the policy, the brief description, if any, and captions and subcaptions.</text> </paragraph> <paragraph num="C."> <text>Each form shall be clearly worded with all limitations, exclusions, and exceptions printed in the same size of type used to describe the benefits and grouped together under appropriate captions in boldfaced type.</text> </paragraph> <paragraph num="D."> <text>Name of HMO.</text> <paragraph num="(1)"> <text>Each complete form, except riders or endorsements, shall bear on the face the corporate name and either:</text> <paragraph num="(a)"> <text>The address (city and state) of the HMO; or</text> </paragraph> <paragraph num="(b)"> <text>The address of the company office that will administer the form.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The name of the HMO shall appear more prominently on a form than the name of:</text> <paragraph num="(a)"> <text>An affiliate;</text> </paragraph> <paragraph num="(b)"> <text>A producer;</text> </paragraph> <paragraph num="(c)"> <text>An underwriter;</text> </paragraph> <paragraph num="(d)"> <text>A holding company; or</text> </paragraph> <paragraph num="(e)"> <text>A third party administrator.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The name of the HMO shall be printed in a size of type larger than the title of the policy.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Time shall be determined by any of the following which the HMO specifies in the contract:</text> <paragraph num="(1)"> <text>Time at the place the enrollee resides;</text> </paragraph> <paragraph num="(2)"> <text>Time at the place the contract is delivered;</text> </paragraph> <paragraph num="(3)"> <text>Time at the place the treatment is delivered; or</text> </paragraph> <paragraph num="(4)"> <text>Time at the location of the administrative office of the HMO.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Each form shall contain the signature of a responsible officer of the HMO.</text> </paragraph> <paragraph num="G."> <text>A contract, certificate, rider, or endorsement may not contain any advertising material.</text> </paragraph> <paragraph num="H."> <text>HMO Coverage as Secondary Coverage.</text> <paragraph num="(1)"> <text>Each individual contract, group contract, and group certificate shall state whether or not benefits provided are to be secondary to the benefits which the member is entitled to receive under:</text> <paragraph num="(a)"> <text>Workers' compensation insurance;</text> </paragraph> <paragraph num="(b)"> <text>Medicare; and</text> </paragraph> <paragraph num="(c)"> <text>Any programs for which the member is not required to pay.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An HMO contract may not:</text> <paragraph num="(a)"> <text>Provide benefits that are secondary to benefits payable under an automobile policy; or</text> </paragraph> <paragraph num="(b)"> <text>Include an exclusion for losses covered by an automobile policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Each individual contract and group contract shall provide that notice of any increase in charges shall be given to the contract holder by the HMO at least 45 days before the change in rate is proposed to become effective.</text> </paragraph> <paragraph num="J."> <text>Each individual contract provided to subscribers shall describe the health services to be provided under the contract and shall contain the entire agreement between the HMO and the subscriber, including but not limited to:</text> <paragraph num="(1)"> <text>Date and time of inception and termination of contract;</text> </paragraph> <paragraph num="(2)"> <text>Initial rate to be charged and when the initial rate may be modified;</text> </paragraph> <paragraph num="(3)"> <text>Mode of payment, with provision for change of mode, if available;</text> </paragraph> <paragraph num="(4)"> <text>Late payment and reinstatement privileges;</text> </paragraph> <paragraph num="(5)"> <text>Cost sharing provisions, including copayments, coinsurance, and deductibles;</text> </paragraph> <paragraph num="(6)"> <text>Renewal conditions and applicable termination provisions;</text> </paragraph> <paragraph num="(7)"> <text>Provisions for adding new family members;</text> </paragraph> <paragraph num="(8)"> <text>Services to be provided under the contract;</text> </paragraph> <paragraph num="(9)"> <text>Provision for out-of-area coverage;</text> </paragraph> <paragraph num="(10)"> <text>Limits on length of stay, if any;</text> </paragraph> <paragraph num="(11)"> <text>Other limitations, exclusions, and exceptions; and</text> </paragraph> <paragraph num="(12)"> <text>The formal procedure to be followed in filing complaints or grievances.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Each individual contract which covers the spouse of the subscriber shall provide that, in the event of the death of the subscriber, the spouse will become the successor subscriber.</text> </paragraph> <paragraph num="L."> <text>Each individual contract shall provide that the subscriber may, if the contract is not satisfactory for any reason, return it within 10 days of its receipt and receive a full refund of the charges paid. This right may not be exercised, however, if any member under the contract utilizes the services of the HMO within the 10-day period.</text> </paragraph> <paragraph num="M."> <text>Each group contract and each group certificate furnished to subscribers of a group shall comply with all applicable provisions required by §§A—J of this regulation, inclusive, except that the certificate may omit those items which pertain only to the group contract holder.</text> </paragraph> <paragraph num="N."> <text>Each individual contract, group contract, and group certificate shall include an incapacitated child provision that complies with the requirements found in Insurance Article, §15-402, Annotated Code of Maryland.</text> </paragraph> <paragraph num="O."> <text>Newborn Child, Adopted Child, Child Under Guardianship Provision. Each individual contract, group contract, and group certificate shall contain a provision for covering newborn children, adopted children, and children under guardianship in accordance with Insurance Article, §15-401, Annotated Code of Maryland.</text> </paragraph> <paragraph num="P."> <text>Each individual contract, group contract, and group certificate shall provide that, if the HMO for any reason beyond its control is unable to provide the health services promised in the contract, the HMO shall be liable for reimbursement of the expenses necessarily incurred by any member in procuring the services through other providers, to the extent prescribed by the Insurance Commissioner of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Application."> <paragraph num="A."> <text>An application form shall stipulate the plan and any optional benefits being applied for.</text> </paragraph> <paragraph num="B."> <text>Permissible Look-Back Periods.</text> <paragraph num="(1)"> <text>Except as provided in §B(2) of this regulation, an application form may not ask any question relative to any previously existing injury, sickness, or condition which has not required medical care or advice during the:</text> <paragraph num="(a)"> <text>7-year period immediately preceding the date of the application if the application is made for coverage under a group contract; or</text> </paragraph> <paragraph num="(b)"> <text>5-year period immediately preceding the date of the application, if the application is made for coverage under an individual contract.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An application may inquire about a dismemberment or other current impairment, the cause of which may have occurred before the time periods permitted by §B(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If an application contains questions regarding past or present health conditions:</text> <paragraph num="(1)"> <text>The questions shall be asked to the best of the applicant's knowledge and belief; or</text> </paragraph> <paragraph num="(2)"> <text>The application shall include a statement that all of the answers provided are representations and are not warranties.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If a rider or endorsement modifies the coverage applied for, signed acceptance by the applicant is required at or before delivery of the contract.</text> </paragraph> <paragraph num="E."> <text>A statement may not appear in the application with respect to a proxy through which one or more members of the board of directors is authorized to vote in the election of directors, or at any meeting of the board of directors.</text> </paragraph> <paragraph num="F."> <text>If an application inquires about the applicant's participation in “hazardous activities”, the application shall list the activities that are considered to be “hazardous”.</text> </paragraph> <paragraph num="G."> <text>If an application inquires about the applicant's use of “other habit-forming drugs”, the application shall list the specific drugs that are considered “habit-forming”.</text> </paragraph> <paragraph num="H."> <text>If an application inquires about a symptom of an applicant, the question shall be asked about a “known symptom” of a physical condition or mental condition.</text> </paragraph> <paragraph num="I."> <text>If an application inquires if an applicant has had any indication of a physical condition or mental condition, the question shall be asked about a “known indication” of a physical condition or mental condition.</text> </paragraph> <paragraph num="J."> <text>Applications for Individual HMO Contracts.</text> <paragraph num="(1)"> <text>If an application is to be used by more than one carrier, the application shall include check-off boxes to indicate the carrier to which application is being made.</text> </paragraph> <paragraph num="(2)"> <text>Each carrier using the application shall:</text> <paragraph num="(a)"> <text>File the application with the Commissioner for approval; and</text> </paragraph> <paragraph num="(b)"> <text>Receive approval of use of the application from the Commissioner before using it in Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="K."> <text>Applications for Group HMO Contracts.</text> <paragraph num="(1)"> <text>A group application may be used by more than one carrier if each carrier using the application:</text> <paragraph num="(a)"> <text>Files the application with the Commissioner; and</text> </paragraph> <paragraph num="(b)"> <text>Receives approval of the application from the Commissioner before using it in Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If more than one carrier requests approval to use the same application with different group applicants, the application shall include check-off boxes to indicate the carrier to which application is being made.</text> </paragraph> <paragraph num="(3)"> <text>If more than one carrier requests approval to use the same application with the same group applicant, the application shall clearly identify the coverages underwritten by each carrier.</text> </paragraph> </paragraph> <paragraph num="L."> <text>If an application is to be completed by more than one individual, the signature box in the application shall clearly indicate that the signature applies only to the portion of the application completed by that individual.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Charges."> <paragraph num="A."> <text>The submittal of a form shall be accompanied by the submittal of the rates charged for it, together with detailed supporting actuarial data. Subsequent changes in charged rates shall be submitted with detailed supporting actuarial data at least 60 days before the date that any change in the rate is proposed to become effective.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall approve or disapprove any rate submittal or change in the same manner as prescribed for approval or disapproval of forms.</text> </paragraph> <paragraph num="C."> <text>An HMO may not make or permit any differential in charged rates for any reason based on the age or sex of an enrollee unless there is actuarial justification for the differential.</text> </paragraph> <paragraph num="D."> <text>Charges may not be excessive, inadequate, or unfairly discriminatory.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Advertising."> <paragraph num="A."> <text>Advertising shall be truthful and may not be misleading in fact or implication.</text> </paragraph> <paragraph num="B."> <text>Advertising may not use words or phrases whose:</text> <paragraph num="(1)"> <text>Meaning is unclear or ambiguous; or</text> </paragraph> <paragraph num="(2)"> <text>Understanding depends upon familiarity with technical terminology.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Advertising may not include words, phrases, or illustrations that are used in a manner which misleads or has the capacity or tendency to deceive or mislead.</text> </paragraph> <paragraph num="D."> <text>All advertising shall contain the name and address of the HMO as filed with the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Termination of Services."> <paragraph num="A."> <text>Termination of a Particular Service.</text> <paragraph num="(1)"> <text>If an HMO desires to cease offering a service under the health care contract in force, the services may not be terminated without prior approval of the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>If an HMO ceases offering a service under an in-force health care contract, arrangements equitable to the members regarding a cost adjustment or substitution of an equivalent service satisfactory to the Commissioner shall be made.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A member of an HMO may have the membership cancelled or nonrenewed by the HMO only for the following reasons:</text> <paragraph num="(1)"> <text>Termination of the conditions, other than a change in the health of the member, under which the member became eligible to be enrolled under a group contract;</text> </paragraph> <paragraph num="(2)"> <text>Inability of the medical staff and the member to establish a reasonable physician-patient relationship;</text> </paragraph> <paragraph num="(3)"> <text>The member no longer resides, lives, or works in the service area;</text> </paragraph> <paragraph num="(4)"> <text>Failure of the member to pay any deductible or copayment charges permitted under any contracts approved by the Commissioner;</text> </paragraph> <paragraph num="(5)"> <text>Fraudulent use of the HMO's identification card by the member;</text> </paragraph> <paragraph num="(6)"> <text>The alteration or sale of prescriptions by the member;</text> </paragraph> <paragraph num="(7)"> <text>An attempt by the subscriber to enroll noneligible persons as dependents;</text> </paragraph> <paragraph num="(8)"> <text>The member has performed an act or practice that constitutes fraud;</text> </paragraph> <paragraph num="(9)"> <text>The member has made an intentional misrepresentation of material fact under the application for the HMO coverage; or</text> </paragraph> <paragraph num="(10)"> <text>Failure of the subscriber to pay any premium charge when due.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Failure to Follow Prescribed Course of Treatment.</text> <paragraph num="(1)"> <text>An HMO may not cancel or nonrenew a member's HMO membership due to the member's refusal to follow a prescribed course of treatment.</text> </paragraph> <paragraph num="(2)"> <text>The HMO contract may provide that the HMO is not required to furnish any further benefits or services for a particular condition if the member refuses to follow a prescribed course of treatment for that condition.</text> </paragraph> <paragraph num="(3)"> <text>If the member disagrees with a prescribed course of treatment from an HMO physician, the HMO shall permit the member to receive a second opinion from another HMO physician.</text> </paragraph> <paragraph num="(4)"> <text>If the member receives a second opinion as described in §C(3) of this regulation, and if the second physician disagrees with the prescribed course of treatment, the HMO may not refuse to provide services or benefits for that particular condition, subject to the HMO's coverage documents and its utilization review protocols and policies.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Required Notice of Termination.</text> <paragraph num="(1)"> <text>Except as provided in §D(3) of this regulation, if a member's coverage in an HMO is terminated or nonrenewed for a reason set forth in §B(2)—(9) of this regulation, the HMO shall provide notice of the termination or nonrenewal not less than 30 days before the date of cancellation or nonrenewal.</text> </paragraph> <paragraph num="(2)"> <text>The notice required by §D(1) of this regulation shall be delivered to the member in person or by first class mail addressed to the member's address last known to the HMO.</text> </paragraph> <paragraph num="(3)"> <text>An HMO is not required to provide the notice described in §D(1) of this regulation if the cause of termination is nonpayment of premium.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If the member is entitled to have issued a health care contract, the notice required by §D(1) of this regulation shall be accompanied by information as to how the member may apply for a contract.</text> </paragraph> <paragraph num="F."> <text>If termination or nonrenewal is for nonpayment of copayments or deductibles, the notice required by §D(1) of this regulation shall state:</text> <paragraph num="(1)"> <text>The amount of charges due; and</text> </paragraph> <paragraph num="(2)"> <text>That if the member pays the amount of charges due, plus any administrative cost incurred in preparing and delivering the notice before the date of cancellation, membership will remain in full force and effect.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Conversion of Coverage. — Repealed" /> <regulation prefix="Regulation" num=".12" heading="General Operation of Health Maintenance Organizations."> <paragraph num="A."> <text>The HMO shall provide, without limitations as to frequency or cost, except as established in the health care contract and provided for in these regulations, basic and supplemental health services to its members in the following manner:</text> <paragraph num="(1)"> <text>Reasonable deductibles and copayments may be required for the provision of specific services within the basic health services, unless the payments or the manner of payment unduly serves as a barrier to the delivery of basic health services;</text> </paragraph> <paragraph num="(2)"> <text>All services of health care providers provided for in the health care contract shall be provided through health care providers that are under contract to, or have agreements with, the HMO, except that this subsection does not apply to:</text> <paragraph num="(a)"> <text>Health care providers' services which the HMO and the Commissioner determine are unusual or infrequently used;</text> </paragraph> <paragraph num="(b)"> <text>Emergency services;</text> </paragraph> <paragraph num="(c)"> <text>Services performed outside of the HMO's service area for urgent care services;</text> </paragraph> <paragraph num="(d)"> <text>Services received from health care providers that do not contract with the HMO, if the member has a benefit under the HMO contract for services received from non-HMO health care providers; or</text> </paragraph> <paragraph num="(e)"> <text>Services received from a health care provider that does not contract with the HMO, if the member was referred to the health care provider by the HMO or by a provider under contract with the HMO;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>All services provided for in the health care contract shall, within the area serviced by the HMO, be available and accessible to each of its members:</text> <paragraph num="(a)"> <text>Promptly as appropriate;</text> </paragraph> <paragraph num="(b)"> <text>In a manner which assures continuity; and</text> </paragraph> <paragraph num="(c)"> <text>When medically necessary, 24 hours a day and 7 days a week; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Emergency services as follows:</text> <paragraph num="(a)"> <text>The HMO shall be liable for emergency expenses incurred by the member in securing any service customarily provided in the contract for emergency services incurred by the member which cannot reasonably be provided through the facilities of the HMO and which are considered medically necessary and justified; and</text> </paragraph> <paragraph num="(b)"> <text>The method used to establish the necessity of these services and the method the HMO shall use in fulfilling its financial responsibility for its health care services shall be set forth in the health care contract.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Health Care Contracts.</text> <paragraph num="(1)"> <text>The HMO shall bind itself to provide to the members basic health services and other supplemental services as specified in the health care contract.</text> </paragraph> <paragraph num="(2)"> <text>A copy of coverages and costs shall be given to each member or member family unit.</text> </paragraph> <paragraph num="(3)"> <text>All services included in the benefits, as well as any limitations or exclusions, shall be clearly stated in written form.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Provider Contracts."> <paragraph num="A."> <text>All signed written agreements, including those defining physicians' services, shall be on file and available for review by the Commissioner at all times in the HMO's central office.</text> </paragraph> <paragraph num="B."> <text>If agreements with consultants or other institutions are established by any HMO, the responsibilities, functions, objectives, and the terms of the agreements including financial arrangements and charges, of each outside resource shall be described in writing and signed by an authorized representative of the facility and the person or the agency providing the services.</text> </paragraph> <paragraph num="C."> <text>Filing Requirements.</text> <paragraph num="(1)"> <text>The HMO may not use a provider contract unless the form of the contract has been filed in duplicate with the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>The HMO shall file a provider contract at least 30 days before its intended use.</text> </paragraph> <paragraph num="(3)"> <text>Form Numbers.</text> <paragraph num="(a)"> <text>The provider contract shall be identified by a unique form number that appears in the lower left corner of the first page of the provider contract.</text> </paragraph> <paragraph num="(b)"> <text>Each amendment rider to a provider contract shall be identified by a unique form number that appears in the lower left corner of the first page of the amendment rider.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the HMO intends to amend any of the following provisions of a previously filed provider contract, the HMO shall file the amendment with the Commissioner at least 30 days before its intended use:</text> <paragraph num="(a)"> <text>The hold-harmless clause;</text> </paragraph> <paragraph num="(b)"> <text>Any provision dealing with the administration of a coordination of benefits clause;</text> </paragraph> <paragraph num="(c)"> <text>Any provision dealing with termination of the provider contract, as described in Insurance Article, §15-112, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Any provision dealing with the process of filing or payment of claims, as described in Insurance Article, §§15-1004 and 15-1005, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>Any provision dealing with when capitation payments are due for newly assigned HMO members, as described in Insurance Article, §15-113, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(f)"> <text>Any provision dealing with retroactive denials of reimbursement or denials of reimbursement for preauthorized care, as described in Insurance Article, §§15-1008 and 15-1009, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(g)"> <text>Any provision dealing with the payment of bonuses or other incentive-based compensation, as described in Insurance Article, §15-113, Annotated Code of Maryland, but actual payment amounts or percentages are not required to be filed;</text> </paragraph> <paragraph num="(h)"> <text>Any provision requiring the health care provider to provide services to other than HMO members or giving the health care provider an option to provide services to other than HMO members, as described in Insurance Article, §15-112, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(i)"> <text>Any provision that gives the HMO the right to assign, transfer or subcontract a health care provider's contract to an insurer that offers personal injury protection coverage, as described in Insurance Article, §15-125, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(j)"> <text>Any provision dealing with a provider's responsibility for the acts or decisions of the HMO, as described in Health-General Article, §19-710, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(k)"> <text>Any provision dealing with the applicability of Maryland law; or</text> </paragraph> <paragraph num="(l)"> <text>Any provision of the contract that is revised to comply with Maryland law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The Commissioner shall consider any provider contract filed with the Commissioner to be proprietary commercial information and not a public record.</text> </paragraph> <paragraph num="E."> <text>All provider contracts, including agreements with hospitals, nonphysician providers, clinics, physicians' offices, and other related providers are subject to disapproval by the Commissioner for any of the following reasons:</text> <paragraph num="(1)"> <text>The provider contract does not meet reasonable requirements of providing quality medical care;</text> </paragraph> <paragraph num="(2)"> <text>The provider contract does not contain a hold-harmless clause in compliance with Health-General Article, §19-710(i), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(3)"> <text>The provider contract does not provide for the rendition of services called for in the contracts with members in a reasonable manner; or</text> </paragraph> <paragraph num="(4)"> <text>The provider contract contains a provision that does not comply with Maryland law.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, Title 19, Subtitle 7; Insurance Article, §§2-109 and 15-122; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 1, 1977 (4:18 Md. R. 1426)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective April 1, 1991 (18:6 Md. R. 684)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02 amended effective April 1, 1991 (18:6 Md. R. 684)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective April 1, 1991 (18:6 Md. R. 684)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.55 to COMAR 31.12.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04H amended effective January 9, 2000 (26:27 Md. R. 2018)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 10, 2005 (32:10 Md. R. 1657)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective May 17, 2010 (37:10 Md. R. 724)</annotation> </annotations> </chapter> <chapter num="03" heading="Health Maintenance Organizations — Mandatory Point-of-Service Option"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all health maintenance organizations operating in this State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Required Notice."> <text>When a health maintenance organization is the sole carrier offered to group members by a group policyholder, the health maintenance organization:</text> <paragraph num="A."> <text>Shall offer the group policyholder a point-of-service option for the individual group member to accept or reject;</text> </paragraph> <paragraph num="B."> <text>May not impose a minimum participation level on the mandatory point-of-service option; and</text> </paragraph> <paragraph num="C."> <text>As part of the application, shall provide to each group policyholder the following disclosure statement, for each point-of-service option offered:</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Record Retention."> <text>Each health maintenance organization shall maintain copies of the notice and the group policyholder response for a period of 3 years or until its next market conduct examination, whichever occurs first.</text> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§19-705(a)(2) and 19-710.2, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 1, 1996 (23:13 Md. R. 943)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended as an emergency provision effective July 1, 1996 (23:15 Md. R. 1079); amended permanently effective November 4, 1996 (23:22 Md. R. 1496)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.07 to COMAR 31.12.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02C amended effective August 3, 2015 (42:15 Md. R. 1019)</annotation> </annotations> </chapter> <chapter num="04" heading="Dental Plans — General Provisions"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to provide appropriate standards and requirements for dental plan contracts.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Closed panel dental benefit contract” means a dental benefit contract that does not provide benefits for services provided by a dentist who is not a plan dentist, with the exception of:</text> <paragraph num="(a)"> <text>Emergency services; and</text> </paragraph> <paragraph num="(b)"> <text>Out-of-network services required by Insurance Article, §15-830, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Contract holder” means for:</text> <paragraph num="(a)"> <text>Group contracts, the organization or entity to which the contract is issued;</text> </paragraph> <paragraph num="(b)"> <text>Individual contracts, the person who applies for a contract covering:</text> <paragraph num="(i)"> <text>One individual, or</text> </paragraph> <paragraph num="(ii)"> <text>One individual and that individual's dependents.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Copayment” means the amount:</text> <paragraph num="(a)"> <text>Payable for a particular service by an enrollee in accordance with the patient charge schedule; or</text> </paragraph> <paragraph num="(b)"> <text>For which the enrollee is responsible as a condition for receiving benefits under a dental benefit contract.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Dental benefit contract” means a contract which provides benefits for dental services entered into between the dental plan organization and:</text> <paragraph num="(a)"> <text>An individual contract holder covering the:</text> <paragraph num="(i)"> <text>Subscriber;</text> </paragraph> <paragraph num="(ii)"> <text>Subscriber and the subscriber’s dependents;</text> </paragraph> <paragraph num="(iii)"> <text>Subscriber and the subscriber’s family members;</text> </paragraph> <paragraph num="(iv)"> <text>Subscriber’s dependent or dependents; or</text> </paragraph> <paragraph num="(v)"> <text>Subscriber and the subscriber’s dependents and family members; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The group contract holder covering the:</text> <paragraph num="(i)"> <text>Enrolled members of the group;</text> </paragraph> <paragraph num="(ii)"> <text>Enrolled members of the group and their dependents;</text> </paragraph> <paragraph num="(iii)"> <text>Enrolled members of the group and their family members; or</text> </paragraph> <paragraph num="(iv)"> <text>Enrolled members of the group and their dependents and family members.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Dental plan” means any contractual arrangement for dental services.</text> </paragraph> <paragraph num="(6)"> <text>“Dental plan organization” means a:</text> <paragraph num="(a)"> <text>Person that provides directly, arranges for, or administers a dental plan on a prepaid or postpaid individual or group capitation basis; or</text> </paragraph> <paragraph num="(b)"> <text>Nonprofit health service plan which limits its operation to providing directly, or arranging for or administering a plan providing, dental services.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Dental service” has the meaning stated in Insurance Article, §14-401, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Dependent” means an individual who is the spouse or child of a subscriber.</text> </paragraph> <paragraph num="(9)"> <text>“Enrollee” means a subscriber, or any dependent of the subscriber, who is enrolled in the dental plan organization.</text> </paragraph> <paragraph num="(10)"> <text>“Evidence of coverage” means any certificate, agreement, or contract issued to a subscriber of a group that sets out the dental services to which the enrollees are entitled.</text> </paragraph> <paragraph num="(11)"> <text>“Patient charge schedule” means a list of amounts which the enrollee is required to pay the plan dentist or the dental plan organization for particular services rendered under the dental benefit contract.</text> </paragraph> <paragraph num="(12)"> <text>“Plan dentist” means any dentist who has contracted with the dental plan organization or with an entity acting on behalf of the dental plan organization to provide dental services to the enrollees.</text> </paragraph> <paragraph num="(13)"> <text>“Provider contract” means a contract between the dental plan organization or an entity acting on behalf of the dental plan organization and a plan dentist.</text> </paragraph> <paragraph num="(14)"> <text>“Subscriber” means, for:</text> <paragraph num="(a)"> <text>Group dental benefit contracts, the person who is eligible to be covered under the contract, other than as a dependent, by reason of satisfying the eligibility requirements of the group;</text> </paragraph> <paragraph num="(b)"> <text>Individual dental benefit contracts, the individual who applies to the dental plan organization for coverage for:</text> <paragraph num="(i)"> <text>That individual only;</text> </paragraph> <paragraph num="(ii)"> <text>The individual and the individual’s dependents; or</text> </paragraph> <paragraph num="(iii)"> <text>The individual’s dependent or dependents.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <text>This chapter applies to:</text> <paragraph num="A."> <text>Dental plan organizations authorized under Insurance Article, Title 14, Subtitles 1 and 4, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="B."> <text>Contracts issued or renewed by the dental plan organizations listed in §A of this regulation on or after the effective date of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Dental Benefit Contract."> <text>Each dental benefit contract shall contain the following provisions:</text> <paragraph num="A."> <text>The effective date of contract provision;</text> </paragraph> <paragraph num="B."> <text>A provision describing the payment of required subscription fees or premiums;</text> </paragraph> <paragraph num="C."> <text>A grace period provision, pursuant to Regulation .05 of this chapter;</text> </paragraph> <paragraph num="D."> <text>For group dental benefit contracts, the eligibility requirements and effective date of coverage for members of the group and their dependents;</text> </paragraph> <paragraph num="E."> <text>A provision describing the benefits available under the contract;</text> </paragraph> <paragraph num="F."> <text>A provision describing the copayments for which the enrollee is responsible;</text> </paragraph> <paragraph num="G."> <text>A provision describing the service area, if applicable;</text> </paragraph> <paragraph num="H."> <text>If a dental plan organization generally provides benefits only within a stated service area, a provision providing for emergency dental services outside the service area, with the term “emergency” including care to alleviate acute pain;</text> </paragraph> <paragraph num="I."> <text>For closed panel dental benefit contracts:</text> <paragraph num="(1)"> <text>A provision indicating that if a plan dentist refers the enrollee to a specialist who is not a plan dentist for dental services which are covered under the dental benefit contract, the dental plan organization shall be responsible for payment of the specialist’s charges to the extent the charges exceed the copayment specified in the dental benefit contract; and</text> </paragraph> <paragraph num="(2)"> <text>A provision which reads substantially as follows: “If during the term of this contract none of the plan dentists can render necessary care and treatment to the enrollee due to circumstances not reasonably within the control of the dental plan organization, such as complete or partial destruction of facilities, war, riot, civil insurrection, labor disputes, or the disability of a significant number of the plan dentists, then the enrollee may seek treatment from an independent licensed dentist of the enrollee’s own choosing. The dental plan organization will pay the enrollee for the expenses incurred for the dental services with the following limitations: The dental plan organization will pay the enrollee for services which are listed in the patient charge schedule as No Charge, to the extent that such fees are reasonable and customary for dentists in the same geographic area; the dental plan organization will also pay the enrollee for those services listed in the contract for which there is a copayment, to the extent that the reasonable and customary fees for such services exceed the copayment for such services as set forth in the contract. The enrollee may be required to give written proof of loss. The dental plan organization agrees to be subject to the jurisdiction of the Maryland Insurance Commissioner in any determination of the impossibility of providing services by plan dentists.”;</text> </paragraph> </paragraph> <paragraph num="J."> <text>A provision setting out the terms under which coverage will terminate;</text> </paragraph> <paragraph num="K."> <text>A provision setting out a grievance procedure provision that complies with the requirements of Insurance Article, Title 15, Subtitle 10D, and as applicable, Subtitle 10A, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="L."> <text>A provision setting out an extension of benefits in accordance with Insurance Article, §15-833, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Grace Period Requirements."> <paragraph num="A."> <text>Individual Dental Benefit Contracts.</text> <paragraph num="(1)"> <text>If the individual dental benefit contract is guaranteed renewable for the life of the individual dental benefit contract, the dental benefit contract shall contain in substance the following provision: “Grace Period: A grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”</text> </paragraph> <paragraph num="(2)"> <text>If the individual dental benefit contract gives the dental plan organization the right to refuse renewal, the individual dental benefit contract shall contain in substance the following provision: “Grace Period: Unless at least 30 days before the premium due date the dental plan organization has delivered to the subscriber, or has mailed to the subscriber's last address as shown by the records of the dental plan organization, written notice of its intention not to renew this contract beyond the period for which the premium has been accepted, a grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”</text> </paragraph> </paragraph> <paragraph num="B."> <text>Group Dental Benefit Contracts.</text> <paragraph num="(1)"> <text>Each group dental benefit contract shall contain in substance the following provision: “Grace Period: A grace period of 30 days will be granted for payment of each premium due after the first premium, unless the dental plan organization does not intend to renew the contract beyond the period for which premium has been accepted and notice of the intention not to renew is delivered to the contract holder at least 45 days before the premium is due. During the grace period the contract shall continue in force”.</text> </paragraph> <paragraph num="(2)"> <text>Any additional provisions related to the grace period shall be expressly stated in the group dental benefit contract, subject to the following limitations:</text> <paragraph num="(a)"> <text>Unless a dental plan organization receives a notice of the contract holder's intention to terminate the policy before the end of the grace period, the dental plan organization may collect premium for the 30-day grace period;</text> </paragraph> <paragraph num="(b)"> <text>If a dental plan organization receives a notice of intention to terminate the group dental benefit contract during the grace period, the dental plan organization may collect premium for the period beginning on the first day of the grace period until the date on which notice is received or the date of termination stated in the notice, whichever is later; and</text> </paragraph> <paragraph num="(c)"> <text>If premium for the 30-day grace period is paid after the grace period ends, a dental plan organization may charge interest for the premium for the group dental benefit contract, but:</text> <paragraph num="(i)"> <text>Interest may not begin to accrue during the 30-day grace period; and</text> </paragraph> <paragraph num="(ii)"> <text>The interest rate charged may not exceed an effective rate of 6 percent per year.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Evidence of Coverage."> <paragraph num="A."> <text>Except for Regulation .04A—C of this chapter, the evidence of coverage under any group contract shall contain all of the provisions required in Regulation .04 of this chapter.</text> </paragraph> <paragraph num="B."> <text>The name of the group shall be specified in the evidence of coverage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Optional Provisions."> <paragraph num="A."> <text>Dental benefit contracts may contain the provisions in §§B—D of this regulation, and if any of the provisions are included in a group dental benefit contract, the same provision shall be contained in the corresponding evidence of coverage.</text> </paragraph> <paragraph num="B."> <text>General Provisions.</text> <paragraph num="(1)"> <text>A provision may be included specifying the dental plan organization's intention to charge a specified missed appointment fee. The fee shall be reasonable in relation to the nature of the procedure for which the missed appointment had been made. Neither the plan dentist nor the dental plan organization may charge a missed appointment fee unless this provision appears in the dental benefit contract.</text> </paragraph> <paragraph num="(2)"> <text>A provision may be included specifying the dental plan organization's ability to increase premiums or subscription fees, with this provision indicating that these fees may not be increased unless:</text> <paragraph num="(a)"> <text>The contract holder has been given written notice at least 45 days before the effective date of the increase; and</text> </paragraph> <paragraph num="(b)"> <text>In the case of:</text> <paragraph num="(i)"> <text>An individual contract, present rates have not been changed for at least 12 months,</text> </paragraph> <paragraph num="(ii)"> <text>A group contract, present rates under the contract have been in effect for at least 12 months.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>A provision may be included specifying the dental plan organization's intention to impose a financial penalty on an enrollee for voluntarily withdrawing from the dental plan during the first year of coverage, which penalty may not:</text> <paragraph num="(a)"> <text>Be charged if the enrollee withdraws from the dental plan after being covered for at least 12 months; or</text> </paragraph> <paragraph num="(b)"> <text>Exceed the usual, customary, and reasonable charge for services received reduced by the sum of the subscription fees paid by or for the enrollee and any copayments paid by or for the enrollee.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A provision may be included specifying the dental plan organization's ability to increase the patient charge schedule, with the provision indicating that the increase may not be effective unless the:</text> <paragraph num="(a)"> <text>Present schedule has been in effect for at least 12 months; and</text> </paragraph> <paragraph num="(b)"> <text>Contract holder has been given written notice of the increase at least 30 days before the effective date of the increase.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A provision may be included specifying the dental plan organization's rights if an enrollee refuses to follow a particular course of treatment. The dental plan organization may not terminate the membership of an enrollee for refusal to follow an appropriate course of treatment for a particular condition. The provision may indicate that the dental plan organization may refuse to provide any further benefits for the particular condition if the enrollee refuses to accept the recommended course of treatment.</text> </paragraph> <paragraph num="(6)"> <text>A provision may be included specifying the dental plan organization's rights if an enrollee fraudulently uses his membership card or knowingly permits his membership card to be used by others. The dental plan organization may terminate an enrollee's coverage if the enrollee fraudulently uses his membership card or knowingly permits his membership card to be used by others. The dental plan organization may not terminate coverage for an entire family because a dependent fraudulently uses the membership card. In this instance, only the dependent's coverage may terminate.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Termination Provision. A provision may be included which specifies that the dental plan organization may terminate an enrollee's coverage if the enrollee is unable to maintain a satisfactory dentist-patient relationship with a plan dentist, with this provision:</text> <paragraph num="(1)"> <text>Indicating that before terminating the enrollee's coverage, the dental plan organization shall permit the enrollee to change primary dentists at least once;</text> </paragraph> <paragraph num="(2)"> <text>Specifying that the enrollee shall be given written notice of the termination at least 30 days before the termination of the enrollee's membership.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Dependent Children Provision. If the contract provides coverage for dependent children, the contract shall also contain the following provision: “Notwithstanding any limiting age stated in the contract, any unmarried child covered under the contract as a dependent of an enrollee who is chiefly dependent for support upon the enrollee, and who, at the time of reaching the limiting age, is incapable of self-support because of mental or physical incapacity that commenced prior to the child's attaining the limiting age, shall continue to be covered under the contract while remaining so dependent, unmarried, and mentally or physically incapacitated, until the coverage on the enrollee upon whom the child is dependent terminates.”</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Provider Contracts."> <paragraph num="A."> <text>Each provider contract shall contain the provisions in §§B—G of this regulation.</text> </paragraph> <paragraph num="B."> <text>A provision shall be included to require the provider to make an initial commitment to the plan of at least 12 months. The provider may not terminate the contract during this 12-month period unless the provider becomes unavailable during that initial time for reasons beyond the control of the dental plan organization or the provider.</text> </paragraph> <paragraph num="C."> <text>Hold-Harmless Clause. A hold-harmless clause, which shall read substantially as follows is required: “The provider agrees that under no circumstances, including nonpayment by the dental plan organization, insolvency of the dental plan organization, or breach of this contract, shall provider seek payment from an enrollee for services rendered under this contract for other than a copayment listed in the dental benefit contract. Provider further agrees that this provision shall survive the termination of this provider contract regardless of the cause of the termination.”</text> </paragraph> <paragraph num="D."> <text>A provision specifying when the contract becomes effective is required.</text> </paragraph> <paragraph num="E."> <text>A provision specifying the date the contract terminates is required.</text> </paragraph> <paragraph num="F."> <text>A renewal provision is required.</text> </paragraph> <paragraph num="G."> <text>A provision specifying the benefits the provider shall supply the enrollees is required, specifying that:</text> <paragraph num="(1)"> <text>The provider shall supply services to enrollees in exchange for the copayments specified in the dental benefit contract while the provider's provider contract is in force; and</text> </paragraph> <paragraph num="(2)"> <text>After the provider contract terminates, the provider shall continue to provide services to enrollees in accordance with Insurance Article, §15-112, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Contract Forms."> <paragraph num="A."> <text>The dental plan organization:</text> <paragraph num="(1)"> <text>Shall provide a written dental benefit contract to each group contract holder;</text> </paragraph> <paragraph num="(2)"> <text>Shall provide a written evidence of coverage to each individual covered under a group dental benefit contract;</text> </paragraph> <paragraph num="(3)"> <text>Shall provide a written dental benefit contract to each individual who applies for individual dental coverage;</text> </paragraph> <paragraph num="(4)"> <text>Shall execute a written provider contract with each of the dental plan organization's plan dentists;</text> </paragraph> <paragraph num="(5)"> <text>May not deliver or issue for delivery in this State any of the following forms unless the form has been filed with and approved by the Insurance Commissioner:</text> <paragraph num="(a)"> <text>Dental benefit contract,</text> </paragraph> <paragraph num="(b)"> <text>Evidence of coverage,</text> </paragraph> <paragraph num="(c)"> <text>Provider contract,</text> </paragraph> <paragraph num="(d)"> <text>Application form, and</text> </paragraph> <paragraph num="(e)"> <text>Riders or endorsement forms.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The Commissioner shall disapprove any form filed, or withdraw any previous approval, if the form:</text> <paragraph num="(1)"> <text>Contains or incorporates by reference, when the incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract;</text> </paragraph> <paragraph num="(2)"> <text>Has any title, heading, or other indication of its provisions which is likely to mislead the contract holder or individual;</text> </paragraph> <paragraph num="(3)"> <text>Contains an inequitable provision or a provision without substantial benefit to the contract holder;</text> </paragraph> <paragraph num="(4)"> <text>Is printed or otherwise reproduced in a manner as to render any provision of the form substantially illegible;</text> </paragraph> <paragraph num="(5)"> <text>Includes benefit provisions which are unreasonable in relation to the premium or subscription fee charged; or</text> </paragraph> <paragraph num="(6)"> <text>Is a provider contract which does not provide for the rendering of covered services in a reasonable manner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Filing Requirements for Premium Rates and Subscription Fees."> <paragraph num="A."> <text>The filing of any dental plan contract or rider or endorsement by a dental plan organization in accordance with Regulation .09A(5) of this chapter shall be accompanied by the filing of premium rates or subscription fees.</text> </paragraph> <paragraph num="B."> <text>A subsequent change in premium rates or subscription fees shall be filed with supporting data at least 30 days before the change is proposed to become effective.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 14-124(b), 14-410, 14-412, 15-112(b)(1)(i), 15-122(b), 15-833(j),and Title 15, Subtitles 10A and 10D, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 16, 1991 (18:18 Md. R. 2004)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.82 to COMAR 31.12.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective August 2, 2004 (31:15 Md. R. 1187); August 3, 2015 (42:15 Md. R. 1019)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective August 2, 2004 (31:15 Md. R. 1187); August 3, 2015 (42:15 Md. R. 1019)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 repealed and new Regulation .05 adopted effective August 2, 2004 (31:15 Md. R. 1187)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective August 2, 2004 (31:15 Md. R. 1187)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07B amended effective August 2, 2004 (31:15 Md. R. 1187)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08G amended effective August 2, 2004 (31:15 Md. R. 1187)</annotation> </annotations> </chapter> <chapter num="05" heading="Dental Benefit Plan Coverage — Mandatory Point-of-Service Option"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to health maintenance organizations and dental plan organizations operating in this State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Required Notice."> <paragraph num="A."> <text>When a health maintenance organization or dental plan organization dental provider panel is the sole dental provider panel offered to group members by a group policyholder, the dental plan organization or the health maintenance organization:</text> <paragraph num="(1)"> <text>Shall offer the group policyholder a dental point-of-service option for the individual group member to accept or reject;</text> </paragraph> <paragraph num="(2)"> <text>May not impose a minimum participation level on the mandatory dental point-of-service option; and</text> </paragraph> <paragraph num="(3)"> <text>As part of the application, shall provide to each group policyholder the disclosure statement described in §B of this regulation, for each dental point-of-service option offered.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The notice shall read as follows:</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Record Retention."> <text>Each health maintenance organization or dental plan organization shall maintain copies of the notice and the group policyholder response for a period of 3 years or until its next market conduct examination, whichever occurs first.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 15-114, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted as an emergency provision effective July 1, 1996 (23:14 Md. R. 1005); adopted permanently effective November 4, 1996 (23:22 Md. R. 1496)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.21 to COMAR 31.12.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective August 3, 2015 (42:15 Md. R. 1019)</annotation> </annotations> </chapter> <chapter num="06" heading="Managed Care Organizations — Financial Compliance Requirements"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>All terms defined in Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland, which are used in this chapter have the same meaning as in that statute unless the terms are defined differently in this chapter. In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” means the Maryland Insurance Administration.</text> </paragraph> <paragraph num="(2)"> <text>“Applicant” means an organization applying to become a managed care organization.</text> </paragraph> <paragraph num="(3)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>“Contract” means the contractual agreement for the provision of health care services on a prepaid, capitated basis entered into between a managed care organization and the Maryland Department of Health to provide health care benefits only to medical assistance program recipients.</text> </paragraph> <paragraph num="(5)"> <text>“Department” means the Maryland Department of Health.</text> </paragraph> <paragraph num="(6)"> <text>“Leasehold estate improvements” means capital improvements made to properties leased for 20 or more years and depreciated over the remaining life of the lease.</text> </paragraph> <paragraph num="(7)"> <text>“Managed care organization (MCO)” means a managed care organization as defined in Health-General Article, §15-101(e)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“NAIC” means the National Association of Insurance Commissioners.</text> </paragraph> <paragraph num="(9)"> <text>“Secretary” means the Secretary of Health.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Financial Requirements."> <paragraph num="A."> <text>An applicant or MCO may not engage in business as an MCO unless determined by the Insurance Commissioner to be in compliance with the financial requirements of Health-General Article, §15-102.4, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Upon request, the MCO shall submit to the Administration the following documents:</text> <paragraph num="(1)"> <text>A copy of the articles of incorporation of the applicant or MCO and any amendments to it, certified by the Maryland Department of Assessments and Taxation;</text> </paragraph> <paragraph num="(2)"> <text>A copy of the applicant's or MCO's current bylaws, if any, certified by the appropriate officer of the applicant or MCO;</text> </paragraph> <paragraph num="(3)"> <text>A list of the names, addresses, and official capacity with the applicant or MCO of the individuals who are to be responsible for the conduct of the applicant's or MCO's affairs, including the members of the governing body, the officers, and directors;</text> </paragraph> <paragraph num="(4)"> <text>A resume of the qualifications of the administrator, the medical director, officers, and other individuals associated with the applicant or MCO as requested by the Commissioner and the Department;</text> </paragraph> <paragraph num="(5)"> <text>A statement generally describing the:</text> <paragraph num="(a)"> <text>Applicant or MCO and its corporate structure;</text> </paragraph> <paragraph num="(b)"> <text>Applicant's or MCO's operations;</text> </paragraph> <paragraph num="(c)"> <text>Location of the facilities at which health care services will be regularly available to enrollees;</text> </paragraph> <paragraph num="(d)"> <text>Number of physicians and personnel engaged or contracted with to provide health care services;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A statement describing with reasonable certainty the geographic area or areas to be served by the applicant or MCO;</text> </paragraph> <paragraph num="(7)"> <text>A financial statement audited by an independent certified public accountant of the financial condition of the applicant or MCO, including:</text> <paragraph num="(a)"> <text>Assets, liabilities, and minimum tangible net equity;</text> </paragraph> <paragraph num="(b)"> <text>A prospective budget and expected cash flow analysis of the applicant or MCO for the first 24 months of its anticipated operation demonstrating its financial viability based on reasonable assumptions; and</text> </paragraph> <paragraph num="(c)"> <text>Other financial information the Commissioner requires for adequate financial evaluation;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>A power of attorney duly executed by the applicant or MCO appointing the Commissioner and the Commissioner's authorized deputies as the true and lawful attorney of the MCO in and for the State upon whom may be served all lawful process in any action, proceeding, or cause of action arising in this State against the MCO regarding the solvency and financial condition of the MCO; and</text> </paragraph> <paragraph num="(9)"> <text>A certificate of compliance evidencing employee coverage under Labor and Employment Article, §9-105, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The list under §B(3) of this regulation shall include a full disclosure to the Commissioner of the extent and nature of any contracts or arrangements between any person listed in §B(3) of this regulation and the applicant or MCO, including any possible conflicts of interest. The applicant or MCO shall continually update the information required under §B(3)(a) of this regulation and make it available to the Commissioner at the Commissioner's request.</text> </paragraph> <paragraph num="D."> <text>Insurance—General Liability and Medical Malpractice.</text> <paragraph num="(1)"> <text>With the application, an applicant or MCO shall submit evidence of insurance for general liability and medical malpractice insurance.</text> </paragraph> <paragraph num="(2)"> <text>The minimum limits of coverage shall be $1 million for any one loss and $3 million in the aggregate.</text> </paragraph> <paragraph num="(3)"> <text>Evidence of renewal of coverage for the current year shall be submitted with the annual report.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Financial Requirements. In order to qualify for a determination of financial compliance, the applicant or MCO shall, at the time of making its initial application, demonstrate to the satisfaction of the Commissioner that the applicant or MCO has on hand sufficient liquid funds or a reasonably adequate cash flow to meet all organizational and administrative expenses incurred or expected to be incurred before commencing operations.</text> </paragraph> <paragraph num="F."> <text>Determination of Financial Condition.</text> <paragraph num="(1)"> <text>In a determination of the financial condition of an applicant or MCO, only the following shall be considered as admitted assets for both applicants and, on an ongoing basis, for MCOs:</text> <paragraph num="(a)"> <text>Cash, in the possession of the applicant or MCO or in transit under its control, and the balance of any deposit of the applicant or MCO in a solvent Maryland bank or trust company;</text> </paragraph> <paragraph num="(b)"> <text>Amounts due and payable to the applicant or MCO under contracts with the Department, net of any Department withholds, on the date the amounts become due and payable, but not more than 90 days past due;</text> </paragraph> <paragraph num="(c)"> <text>Medical, surgical, and dental equipment, net of depreciation, and net of any liens, encumbrances, pledges, or judgments, that is used directly to provide health care benefits to medical assistance beneficiaries;</text> </paragraph> <paragraph num="(d)"> <text>Prepaid charges on health care contracts with hospitals, or other health care institutions when approved by the Commissioner, including premiums prepaid for malpractice or general liability insurance;</text> </paragraph> <paragraph num="(e)"> <text>Pharmaceutical and medical supply inventories;</text> </paragraph> <paragraph num="(f)"> <text>Cost of land and depreciated cost of buildings owned and occupied by the applicant or MCO and used by it to directly provide health care, in excess of any encumbrances on it in an amount not greater than 20 percent of total admitted assets as reported by the applicant or MCO for:</text> <paragraph num="(i)"> <text>An existing MCO as reported in its annual statement as of December 31 preceding the date of acquisition, or</text> </paragraph> <paragraph num="(ii)"> <text>An applicant MCO as reported in the certified audited financial statement submitted as part of the application;</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>Leasehold estate improvements not exceeding 20 percent of total admitted assets as reported by the applicant or MCO for:</text> <paragraph num="(i)"> <text>An existing MCO as reported in its annual statement as of December 31 preceding the date of acquisition to the extent that the initial cost is amortized over the useful life of the improvements but not beyond the termination of the lease, or</text> </paragraph> <paragraph num="(ii)"> <text>An applicant MCO as reported in the certified audited financial statement submitted as part of the application;</text> </paragraph> </paragraph> <paragraph num="(h)"> <text>Electronic, mechanical, and computer hardware, and any operating system software, used for data processing and accounting purposes, which is free and clear of any liens, encumbrances, pledges, or judgments, the cost of which shall be depreciated in full over a period not to exceed 5 calendar years;</text> </paragraph> <paragraph num="(i)"> <text>Other assets, not inconsistent with the provisions of §§H and I of this regulation, deemed by the Commissioner available for the provision of health care, at values to be determined by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Investments and securities owned and held by the applicant or MCO, must be held free and clear of any liens, encumbrances, pledges or judgments, and the income due or accrued thereon. No investment shall be made or engaged in by any domestic applicant or MCO unless the same have been authorized or ratified by the board of directors or by a committee thereof charged with the duty of supervising investments. All investments of the applicant or MCO may be held in a custodial account pursuant to the requirements of COMAR 31.04.09, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Assets Not Admitted.</text> <paragraph num="(1)"> <text>The following may not be considered as admitted assets in the determination of the financial condition of an applicant or MCO:</text> <paragraph num="(a)"> <text>Good will, trade names, and other like intangible assets;</text> </paragraph> <paragraph num="(b)"> <text>Advances to officers, whether secured or not, and advances to employees, agents, and other persons on personal security only;</text> </paragraph> <paragraph num="(c)"> <text>The amount, if any, by which the aggregate book value of the investments as carried in the ledger assets of the applicant or MCO exceeds the aggregate value as reported in the applicant or MCO's annual statement;</text> </paragraph> <paragraph num="(d)"> <text>Office or administrative furniture and fixtures, leasehold improvements other than leasehold estate improvements which qualify under §F(1)(g) of this regulation, vehicles, and maintenance equipment;</text> </paragraph> <paragraph num="(e)"> <text>Amount estimated as receivable under coordination of benefits and subrogation provisions; and</text> </paragraph> <paragraph num="(f)"> <text>Any other amounts receivable in excess of 90 days past due.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>All assets not allowed and all other assets of doubtful value or character included in any statement by an applicant or MCO to the Commissioner, or in any examiner's report to the Commissioner, shall also be reported to the extent of the value disallowed, as deductions from the gross assets of the applicant or MCO.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Liabilities Chargeable Against Assets. In any determination of the financial condition of an applicant or MCO, liabilities to be charged against its assets shall include but not be limited to:</text> <paragraph num="(1)"> <text>The estimated amount necessary to pay for all accrued benefits to enrollees and all claims, both reported or unreported, incurred on or before the date of the statement, together with estimated costs of adjusting or settling disputed claims;</text> </paragraph> <paragraph num="(2)"> <text>The pro rata amount of premium charges paid by or on behalf of enrollees for any period of coverage beyond the date of the statement; and</text> </paragraph> <paragraph num="(3)"> <text>Any other liabilities, including but not limited to federal income taxes, payroll taxes, expenses, and other obligations due or accrued at the date of the statement.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Deposit of Securities. Every MCO to be considered in compliance with financial requirements shall deposit and maintain in trust with the State Treasurer, for the protection of its enrollees or its enrollees and creditors, cash or government securities of the type described in Insurance Article, §5-701(b), Annotated Code of Maryland, in the market value amount of $100,000.</text> </paragraph> <paragraph num="J."> <text>Valuation of Investments.</text> <paragraph num="(1)"> <text>All obligations having a fixed term and rate shall be:</text> <paragraph num="(a)"> <text>If purchased at par, at the par value;</text> </paragraph> <paragraph num="(b)"> <text>If purchased above or below par, on the basis of the purchased price adjusted so as to bring the value to par at maturity and so as to yield in the meantime the effective rate of interest at which the purchase was made.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Common, preferred, or guaranteed stocks shall be valued at market value. Market value may be from the original broker-dealer transaction advice and one of the following:</text> <paragraph num="(a)"> <text>A nationally recognized rating agency such as Moody's Investor Service, Standard and Poor's Corporation, or any other similar organization approved by the Maryland Insurance Administration at the request of the MCO;</text> </paragraph> <paragraph num="(b)"> <text>A nationally recognized publication such as the Wall Street Journal or Barron's; or</text> </paragraph> <paragraph num="(c)"> <text>Written documentation from a registered broker-dealer or investment adviser.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The written documentation substantiating the values reported by the MCO in the annual and/or quarterly statements shall be maintained by the MCO and readily available for review by the Insurance Administration at financial examinations.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02-1" heading="Risk-Based Capital Requirements."> <paragraph num="A."> <text>Health Insurer. In this regulation, the term “health insurer” has the meaning stated in Insurance Article, §4-301(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Requirements Applicable to MCOs. Unless exempted by the Insurance Commissioner, beginning with the Annual Statement filed for the year ending December 31, 2001, an MCO shall comply with the risk-based capital requirements of Insurance Article, Title 4, Subtitle 3, Annotated Code of Maryland, in the same manner as a health insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Application of Maryland Insurance Acquisitions Disclosure and Control Act."> <paragraph num="A."> <text>Exemption. If the Commissioner determines that this regulation or a part of this regulation is not intended to apply to a managed care organization or affiliate, the Commissioner may exempt the managed care organization or affiliate from this regulation or the part of this regulation.</text> </paragraph> <paragraph num="B."> <text>In this regulation, the following terms have the meanings indicated:</text> <paragraph num="(1)"> <text>“Holding company” means a person that directly or indirectly controls a managed care organization, or controls a person that controls a managed care organization.</text> </paragraph> <paragraph num="(2)"> <text>“Holding company system” means two or more affiliates, at least one of which is a managed care organization.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Subject to this regulation, the provisions of Insurance Article, Title 7, Annotated Code of Maryland apply to managed care organizations.</text> </paragraph> <paragraph num="D."> <text>Change of Ownership.</text> <paragraph num="(1)"> <text>An MCO shall notify the Commissioner within 10 days of any transfer of ownership or of more than an aggregate of 10 percent of the stock or ownership interest in the MCO to a purchaser occurring during any 12-month period.</text> </paragraph> <paragraph num="(2)"> <text>An MCO shall comply with the procedures required by Insurance Article, Title 7, Annotated Code of Maryland, before the purchaser may:</text> <paragraph num="(a)"> <text>Make a tender for, or a request or invitation for tenders of, or enter into an agreement to exchange securities for, or acquire in the open market or otherwise, any voting security of a domestic MCO or enter into any other such agreement if, after the consummation thereof, that purchaser would, directly or indirectly, or by conversion, or by exercise of any right to acquire, be in control of the domestic MCO; or</text> </paragraph> <paragraph num="(b)"> <text>Enter into an agreement to merge or consolidate with, or otherwise to acquire control of, a domestic MCO.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Before approval of any transfer of ownership, stock, or ownership interest in an MCO, the Commissioner shall consult with the Secretary.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Registration Statements.</text> <paragraph num="(1)"> <text>Each managed care organization that is a member of a holding company system shall file a registration statement with the Commissioner on or before:</text> <paragraph num="(a)"> <text>July 31, 2004; and</text> </paragraph> <paragraph num="(b)"> <text>May 1 of each year after 2004.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The registration statement shall be in a form similar to that required under Insurance Article, §7-603, Annotated Code of Maryland, containing the following current information:</text> <paragraph num="(a)"> <text>The corporate and capital structure, general financial condition, ownership, and management of the managed care organization and of any person controlling the managed care organization;</text> </paragraph> <paragraph num="(b)"> <text>The identity and relationship of each member of the holding company system;</text> </paragraph> <paragraph num="(c)"> <text>Any pledge of the managed care organization's stock, including stock of a subsidiary or controlling affiliate, for a loan made to any member of the holding company system;</text> </paragraph> <paragraph num="(d)"> <text>The following agreements in force, and transactions currently outstanding or that have occurred during the previous calendar year between the managed care organization and the managed care organization's affiliates:</text> <paragraph num="(i)"> <text>Loans, other investments, purchases, sales, and exchanges of securities of the affiliates by the managed care organization or of the managed care organization by its affiliates;</text> </paragraph> <paragraph num="(ii)"> <text>Purchases, sales, and exchanges of assets;</text> </paragraph> <paragraph num="(iii)"> <text>Transactions not in the ordinary course of business;</text> </paragraph> <paragraph num="(iv)"> <text>Except for managed care contracts entered into in the ordinary course of the managed care organization's business, guarantees or undertakings for the benefit of an affiliate that result in an actual contingent exposure to liability of the managed care organization's assets;</text> </paragraph> <paragraph num="(v)"> <text>Management agreements, service contracts, and cost-sharing arrangements;</text> </paragraph> <paragraph num="(vi)"> <text>Reinsurance agreements;</text> </paragraph> <paragraph num="(vii)"> <text>Dividends and other distributions to shareholders; and</text> </paragraph> <paragraph num="(viii)"> <text>Consolidated tax allocation agreements;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Any other matters about transactions between the managed care organization and its affiliates that the registration statement form requires; and</text> </paragraph> <paragraph num="(f)"> <text>A summary outlining all items in the current registration statement that represent changes from the prior registration statement.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Each affiliate in a holding company system shall give a managed care organization subject to registration under this section that is in the same holding company system complete and accurate information if that information is reasonably necessary to enable the managed care organization to comply with this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The Commissioner may allow or require affiliated managed care organizations subject to registration under this section to file a consolidated registration statement.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Agreements in Force.</text> <paragraph num="(1)"> <text>As part of its initial registration statement, each managed care organization shall report each agreement in force as of December 31, 2002, pertaining to the transactions specified in §E(2)(d) of this regulation, between the managed care organization and any other member of its holding company system.</text> </paragraph> <paragraph num="(2)"> <text>Each agreement in force reported under §E(2)(d) of this regulation and otherwise subject to prior approval of the Commissioner, shall be deemed approved as of the date the initial registration is filed with the Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>Notwithstanding §F(2) of this regulation, the Commissioner retains the right to request the managed care organization to submit any of the reported agreements in force to the Commissioner for review.</text> </paragraph> </paragraph> <paragraph num="G."> <text>A transaction specified in Insurance Article, §7-703(e), Annotated Code of Maryland, between a managed care organization and another member of the same insurance holding company system is subject to the requirements of Insurance Article, §7-703(b)—(d), Annotated Code of Maryland, if the projected annual amount of the transaction equals or exceeds the lesser of 3 percent of the managed care organization's admitted assets, or 25 percent of its surplus as regards policyholders as of the December 31 immediately preceding the transaction.</text> </paragraph> <paragraph num="H."> <text>Agreements Between MCOs and Health Care Providers.</text> <paragraph num="(1)"> <text>Except as provided in §H(2) of this regulation, the provisions of Insurance Article, §7-703, Annotated Code of Maryland, do not apply to agreements entered into between a managed care organization and a provider of health care services that is a member of the same holding company system, if the rates paid to the provider are regulated by the Health Services Cost Review Commission.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may require the managed care organization to submit an agreement under this section to the Commissioner for review.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Annual and Interim Financial Reports."> <paragraph num="A."> <text>On or before March 1 of each year, each MCO operating under a contract with the Department shall file, in duplicate, a report that includes a consolidated financial statement.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may require interim statements of the MCOs, on such points as the Commissioner deems necessary and proper at any time during the period between the filing of annual statements.</text> </paragraph> <paragraph num="C."> <text>The report shall:</text> <paragraph num="(1)"> <text>Cover the MCO and all of its affiliates and subsidiaries;</text> </paragraph> <paragraph num="(2)"> <text>Consist of the financial statements of the MCO, and all of its affiliates and subsidiaries, prepared in accordance with statutory accounting principles on a form approved by the Commissioner and certified by an independent certified public accountant as to the financial condition, transactions, and affairs of the MCO and its affiliates and subsidiaries for the immediately preceding calendar year;</text> </paragraph> <paragraph num="(3)"> <text>Provide a list of the total compensation from the MCO, including all cash and deferred compensation stock, and stock options in addition to salary, of each member of the board of directors of the MCO, and each senior officer of the MCO, or any subsidiary of the MCO, as designated by the Commissioner;</text> </paragraph> <paragraph num="(4)"> <text>Contain loss ratios for medical assistance business as required under Insurance Article, §15-605, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(5)"> <text>Be on the form adopted by the Commissioner;</text> </paragraph> <paragraph num="(6)"> <text>Be supplemented with a description of any changes in the information submitted with the last previous annual report or with the MCO's original application for financial compliance; and</text> </paragraph> <paragraph num="(7)"> <text>Provide any other information or documents necessary to assure compliance with Health-General Article, Title 15, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Financial Examination."> <paragraph num="A."> <text>The Commissioner may make an examination of the operation of a managed care organization as often as the Commissioner deems necessary for the protection of the interest of the people of Maryland, but the examinations may not be less frequent than once every 5 years.</text> </paragraph> <paragraph num="B."> <text>The expense of examinations shall be assessed against the MCO being examined in accordance with Health-General Article, §19-718, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Rehabilitation or Liquidation of an MCO."> <text>Any rehabilitation or liquidation of an MCO shall be:</text> <paragraph num="A."> <text>Deemed to be the rehabilitation or liquidation of a health maintenance organization; and</text> </paragraph> <paragraph num="B."> <text>Subject to the requirements of Health-General Article, §19-706.1, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §§15-102.3, 15-102.4(d), and 15-102.6; Insurance Article, §§2-109 and 4-311(b)(2);Annotated Code of Maryland Ch. 331, §3, Acts of 2000</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.06 adopted as an emergency provision effective November 8, 1996 (23:25 Md. R. 1730); adopted permanently effective February 10, 1997 (24:3 Md. R. 186)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.24 to COMAR 31.12.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02-1 adopted effective August 20, 2001 (28:16 Md. R. 1484)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective May 24, 2004 (31:10 Md. R. 796)</annotation> </annotations> </chapter> <chapter num="07" heading="Required Standard Provisions"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter applies to all health maintenance organizations operating in this State.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Coverage period” means the interval of time the individual contract or group contract provides protection, in exchange for the payment of a particular premium.</text> </paragraph> <paragraph num="(1-1)"> <text>Group Contract.</text> <paragraph num="(a)"> <text>“Group contract” means a contractual agreement entered into between an HMO and an employer, union, trustee, association, or other organization for the provision of health care services on a prepaid basis to:</text> <paragraph num="(i)"> <text>Subscribers of the group contract holder; or</text> </paragraph> <paragraph num="(ii)"> <text>Subscribers of the group contract holder and the subscriber's dependents.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Group contract” includes a small employer health benefit plan as defined in Insurance Article, §15-1201, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Group contract holder” means the entity to whom the group contract is issued.</text> </paragraph> <paragraph num="(3)"> <text>“HMO” means a health maintenance organization.</text> </paragraph> <paragraph num="(4)"> <text>“Individual contract” means a contractual agreement for the provision of health care services on a prepaid basis entered into between an HMO and a subscriber covering:</text> <paragraph num="(a)"> <text>The subscriber;</text> </paragraph> <paragraph num="(b)"> <text>The subscriber and the subscriber's dependents; or</text> </paragraph> <paragraph num="(c)"> <text>The subscriber's dependents.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Member” means an individual entitled to receive health care benefits from the HMO under an individual or group contract.</text> </paragraph> <paragraph num="(6)"> <text>“Subscriber” means for:</text> <paragraph num="(a)"> <text>Group contracts, the individual who is eligible to be covered under the contract, other than as a dependent, by reason of satisfying the eligibility requirements of the group contract; and</text> </paragraph> <paragraph num="(b)"> <text>Individual contracts, the individual to whom the HMO contract is issued.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Standard Provisions."> <paragraph num="A."> <text>A group contract may not be delivered in Maryland unless it contains in substance the provisions:</text> <paragraph num="(1)"> <text>Listed in Regulation .04 of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Which in the opinion of the Commissioner, as compared to the provisions in Regulation .04 of this chapter, are:</text> <paragraph num="(a)"> <text>More favorable to the members, or</text> </paragraph> <paragraph num="(b)"> <text>At least as favorable to the members and more favorable to the group contract holder.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>An individual contract may not be delivered in Maryland unless it contains in substance the provisions:</text> <paragraph num="(1)"> <text>Listed in Regulation .05 of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>Which in the opinion of the Commissioner, as compared to the provisions in Regulation .05 of this chapter, are at least as favorable to the subscriber and members.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Inapplicable and Inconsistent Provisions. If a provision required by Regulation .04 or .05 of this chapter is wholly or partly inapplicable to or inconsistent with the coverage provided by a particular contract, the HMO shall:</text> <paragraph num="(1)"> <text>Omit from the contract the inapplicable provision or part of the provision; or</text> </paragraph> <paragraph num="(2)"> <text>Modify the inconsistent provision or part of the provision to make it consistent with the coverage provided by the contract.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Group Contract Standard Provisions."> <paragraph num="A."> <text>Entire Contract; Changes. Each group contract shall contain a provision that specifies:</text> <paragraph num="(1)"> <text>Which documents constitute the entire contract; and</text> </paragraph> <paragraph num="(2)"> <text>That a change in the contract may not be valid:</text> <paragraph num="(a)"> <text>Until approved by an executive officer of the HMO, and</text> </paragraph> <paragraph num="(b)"> <text>Unless the approval is endorsed on the contract or attached to the contract.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Contestability of the Contract.</text> <paragraph num="(1)"> <text>Each group contract shall contain a provision that:</text> <paragraph num="(a)"> <text>The contract may not be contested, except for nonpayment of premiums, after it has been in force for 2 years from its date of issue;</text> </paragraph> <paragraph num="(b)"> <text>A statement made by a member covered under the contract relating to insurability may not be used in contesting the validity of the coverage with respect to which the statement was made after the coverage has been in force before the contest for a period of 2 years during the member's lifetime;</text> </paragraph> <paragraph num="(c)"> <text>Absent fraud, each statement made by an applicant, group contract holder, or member is considered to be a representation and not a warranty; and</text> </paragraph> <paragraph num="(d)"> <text>A statement made to effectuate coverage may not be used to avoid the coverage or reduce benefits under the contract unless:</text> <paragraph num="(i)"> <text>The statement is contained in a written instrument signed by the group contract holder or member, and</text> </paragraph> <paragraph num="(ii)"> <text>A copy of the statement is given to the group contract holder or member.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>The provision required by §B(1) of this regulation does not preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the contract or upon other provisions in the contract.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Notice of Claim.</text> <paragraph num="(1)"> <text>Each group contract shall contain a provision describing how and when a claim form can be requested from the HMO.</text> </paragraph> <paragraph num="(2)"> <text>If the HMO requires written notice of claim for the HMO to send a claim form to the claimant, the provision shall indicate that:</text> <paragraph num="(a)"> <text>The written notice of claim is not required before 20 days after the occurrence or commencement of the loss covered by the contract; and</text> </paragraph> <paragraph num="(b)"> <text>The HMO may not invalidate or reduce a claim if it is shown that:</text> <paragraph num="(i)"> <text>It was not reasonably possible to give notice within 20 days, and</text> </paragraph> <paragraph num="(ii)"> <text>Notice was given as soon as was reasonably possible.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Claim Forms. Each group contract shall contain a provision that:</text> <paragraph num="(1)"> <text>The HMO shall provide claim forms for filing proof of loss to each claimant or to the group contract holder for delivery to the claimant; and</text> </paragraph> <paragraph num="(2)"> <text>If the HMO does not provide the claim forms within 15 days after notice of claim is given, the claimant is considered to have complied with the requirements of the contract as to proof of loss if the claimant submits, within the time fixed in the contract for filing proof of loss, written proof of the occurrence, character, and extent of the loss for which the claim is made.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Proofs of Loss. Each group contract shall contain a provision that:</text> <paragraph num="(1)"> <text>Written proof of loss shall be furnished to the HMO at its office within 90 days after the date of the loss; and</text> </paragraph> <paragraph num="(2)"> <text>Failure to furnish the proof within the time required does not invalidate or reduce any claim if it was not reasonably possible to give proof within the required time, if the proof is furnished as soon as reasonably possible and, except in the absence of legal capacity, not later than 1 year from the time proof is otherwise required.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Time of Payment of Claims. Each group contract shall contain a provision that benefits payable under the contract for any loss will be paid not more than 30 days after receipt of written proof of loss.</text> </paragraph> <paragraph num="G."> <text>Payment of Claims.</text> <paragraph num="(1)"> <text>Each group contract shall contain a provision that all benefits, other than those described in §G(2) of this regulation, will be paid to the health care provider who rendered the services.</text> </paragraph> <paragraph num="(2)"> <text>The provision may indicate that, if the member has paid the health care provider for services rendered, benefits will be payable to the member.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Legal Action. Each group contract shall contain a provision that an action at law or in equity may not be brought:</text> <paragraph num="(1)"> <text>To recover on the contract before the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of the contract; or</text> </paragraph> <paragraph num="(2)"> <text>After the expiration of 3 years after the written proof of loss is required to be furnished.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Grace Period.</text> <paragraph num="(1)"> <text>Each group contract shall contain in substance the following provision: “Grace Period: A grace period of 30 days will be granted for payment of each premium due after the first premium, unless the HMO does not intend to renew the contract beyond the period for which premiums have been accepted and notice of the intention not to renew is delivered to the group contract holder at least 45 days before the premium is due. During the grace period the contract shall continue in force.”</text> </paragraph> <paragraph num="(2)"> <text>Any additional provisions related to the grace period shall be expressly stated in the contract subject to the following limitations:</text> <paragraph num="(a)"> <text>Unless the HMO receives a notice of the group contract holder's intention to terminate the contract before the end of the grace period, the HMO may collect premiums for the 30-day grace period;</text> </paragraph> <paragraph num="(b)"> <text>If the HMO receives a notice of intention to terminate the contract during the grace period, the HMO may collect premiums for the period beginning on the first day of the grace period until the date on which notice is received or the date of termination stated in the notice, whichever is later; and</text> </paragraph> <paragraph num="(c)"> <text>If premiums for the 30-day grace period are paid after the grace period ends, the HMO may charge interest for the premium, but:</text> <paragraph num="(i)"> <text>Interest may not begin to accrue during the 30-day grace period, and</text> </paragraph> <paragraph num="(ii)"> <text>The interest rate charged may not exceed an effective rate of 6 percent per year.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="J."> <text>Certificates. Each group contract shall contain a provision that:</text> <paragraph num="(1)"> <text>Unless the HMO makes delivery directly to the employee or member, the HMO will provide to the group contract holder, for delivery to each employee or member of the group, a statement that summarizes the benefits and rights which pertain to the members covered under the group contract; and</text> </paragraph> <paragraph num="(2)"> <text>If dependents are included in the coverage, only one statement need be issued for each family unit.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Addition of Employees/Members. Each group contract shall contain a provision that eligible new employees, members, or dependents may be added periodically to the group originally covered in accordance with the terms of the contract.</text> </paragraph> <paragraph num="L."> <text>Misstatement of Age. If the premiums or benefits vary by age, each group contract shall contain a provision specifying an equitable adjustment of premiums or benefits to be made in the event the age of a member has been misstated.</text> </paragraph> <paragraph num="M."> <text>Premium Due Date.</text> <paragraph num="(1)"> <text>Each group contract shall specify the premium due date.</text> </paragraph> <paragraph num="(2)"> <text>The premium due date shall be the date the coverage period begins.</text> </paragraph> <paragraph num="(3)"> <text>An HMO may offer each group contract holder the option to pay the premium through an electronic payment.</text> </paragraph> <paragraph num="(4)"> <text>If the group contract holder elects an electronic payment, the HMO may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the group contract holder.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Individual Contract Standard Provisions."> <paragraph num="A."> <text>Each individual contract shall contain in substance the provisions set forth in Regulation .04C, E, F, G, H, and L of this chapter.</text> </paragraph> <paragraph num="B."> <text>Entire Contract; Changes. Each individual contract shall contain in substance the following provision: “Entire contract; changes: This agreement, including the endorsements and the attached papers, if any, constitutes the entire contract. No change in this agreement shall be valid until approved by an executive officer of the HMO and unless such approval is endorsed on the agreement or attached to the agreement. No agent has authority to change this agreement or to waive any of its provisions.”</text> </paragraph> <paragraph num="C."> <text>Contestability of the Contract.</text> <paragraph num="(1)"> <text>Each individual contract shall contain in substance a provision that:</text> <paragraph num="(a)"> <text>The contract may not be contested, except for nonpayment of premiums, after it has been in force for 2 years from its date of issue;</text> </paragraph> <paragraph num="(b)"> <text>Absent fraud, each statement made by an applicant or member is considered to be a representation and not a warranty; and</text> </paragraph> <paragraph num="(c)"> <text>A statement made to effectuate coverage may not be used to avoid the coverage or reduce benefits under the contract unless:</text> <paragraph num="(i)"> <text>The statement is contained in a written instrument signed by the subscriber or member, and</text> </paragraph> <paragraph num="(ii)"> <text>a copy of the statement is given to the subscriber or member.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>The provision required by §C(1) of this regulation does not preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the contract or upon other provisions in the contract.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Grace Period.</text> <paragraph num="(1)"> <text>If the individual contract is guaranteed renewable for the life of the contract, the contract shall contain in substance the following provision: “Grace period: A grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”</text> </paragraph> <paragraph num="(2)"> <text>If the contract gives the HMO the right to refuse renewal, the contract shall contain in substance the following provision: “Grace period: Unless not less than thirty days prior to the premium due date the HMO has delivered to the subscriber or has mailed to the subscriber's last address as shown by the records of the HMO written notice of its intention not to renew this contract beyond the period for which the premium has been accepted, a grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period this contract shall continue in force.”</text> </paragraph> <paragraph num="(3)"> <text>If an individual contract lapses due to nonpayment of premium, an HMO may not charge a premium for the time coverage continues in force under the grace period, except as permitted in the unpaid premiums provision in Regulation .08C of this chapter.</text> </paragraph> <paragraph num="(4)"> <text>An HMO must not apply the unpaid premiums provision to recover a premium due for the grace period as described in §D(3) of this regulation, unless the HMO includes the unpaid premiums provision in the individual's contract.</text> </paragraph> <paragraph num="(5)"> <text>An individual contract may not require the subscriber to notify the HMO in advance of the subscriber's intention to terminate the individual contract.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Reinstatement. Each individual contract shall contain in substance the following provision: “Reinstatement: If any renewal premium is not paid in full within the time granted the subscriber for payment, a later acceptance of premium in full by the HMO or by any agent authorized by the HMO to accept the premium, without requiring a reinstatement application in connection with the acceptance of the premium in full, shall reinstate the contract. However, if the HMO or the agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the contract will be reinstated upon approval of the application by the HMO or, lacking approval, upon the forty-fifth day following the date of the conditional receipt unless the HMO has previously notified the subscriber in writing of its disapproval of the reinstatement application. The subscriber and HMO shall have the same rights under the reinstated contract as they had under the contract immediately before the due date of the defaulted premium, subject to any provisions endorsed on the contract or attached to the contract in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not been previously paid, but not to any period more than sixty days prior to the date of reinstatement.”</text> </paragraph> <paragraph num="F."> <text>Claims Forms. Each individual contract shall contain in substance the following provision: “Claim forms: The HMO, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If claim forms are not furnished within fifteen days after the giving of notice, the claimant shall be deemed to have complied with the requirements of this contract as to proof of loss upon submitting, within the time fixed in the contract for filing proof of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.”</text> </paragraph> <paragraph num="G."> <text>Age Limit; Misstatement of Age.</text> <paragraph num="(1)"> <text>Each individual contract shall state that the contract will continue in effect until the end of the period for which the HMO has accepted the premium if an individual contract establishes, as an age limit or otherwise, a date after which the coverage provided by the contract will not be effective and:</text> <paragraph num="(a)"> <text>The date falls within a period for which the HMO accepts a premium for the contract; or</text> </paragraph> <paragraph num="(b)"> <text>The HMO accepts a premium for the contract after the date specified in this section.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Each individual contract shall state that the liability of the HMO is limited to the refund, on request, of the premiums paid for the period not covered by the contract if the age of the member is misstated and according to the correct age of the member, the coverage provided by the contract would:</text> <paragraph num="(a)"> <text>Not have become effective; or</text> </paragraph> <paragraph num="(b)"> <text>Have ceased before the acceptance of the premium for the contract.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Premium Due Date.</text> <paragraph num="(1)"> <text>Each individual contract shall specify the premium due date.</text> </paragraph> <paragraph num="(2)"> <text>The premium due date shall be no earlier than the date the coverage period begins.</text> </paragraph> <paragraph num="(3)"> <text>An HMO may offer each subscriber the option to pay the premium through an electronic payment.</text> </paragraph> <paragraph num="(4)"> <text>If the subscriber elects an electronic payment, the HMO may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the subscriber.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Limitations and Exclusions."> <paragraph num="A."> <text>Crime.</text> <paragraph num="(1)"> <text>An individual or group contract may not include a limitation or exclusion for loss to which a contributing cause was the member's commission of or attempt to commit a crime.</text> </paragraph> <paragraph num="(2)"> <text>An individual or group contract may not include a limitation or exclusion for loss for which a contributing cause was the commission of or the attempt to commit a crime by an individual other than the member.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Illegal Occupation. An individual or group contract may not include a limitation or exclusion for loss to which a contributing cause was the member being engaged in an illegal occupation.</text> </paragraph> <paragraph num="C."> <text>Intoxicants and Narcotics or Use of Intoxicants or Narcotics.</text> <paragraph num="(1)"> <text>An individual or group contract may not include a limitation or exclusion for loss sustained or contracted in consequence of the member being intoxicated or under the influence of any drug.</text> </paragraph> <paragraph num="(2)"> <text>An individual or group contract may not include a limitation or exclusion for loss due to:</text> <paragraph num="(a)"> <text>The use of alcohol;</text> </paragraph> <paragraph num="(b)"> <text>The use of drugs or narcotics; or</text> </paragraph> <paragraph num="(c)"> <text>Alcoholism or drug addiction.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Preexisting Conditions. An individual or group contract may not include a limitation or exclusion for a preexisting condition.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Group Contract Optional Provisions."> <paragraph num="A."> <text>An HMO may include in group contracts any of the optional provisions described in §§C and D of this regulation.</text> </paragraph> <paragraph num="B."> <text>An HMO may not include in a group contract an optional provision dealing with the same subjects set forth in §§C and D of this regulation if the provision is drafted in a manner that is less favorable to the group contract holder, subscriber, or member than the corresponding optional provision set forth in §§C and D of this regulation.</text> </paragraph> <paragraph num="C."> <text>Physical Examination.</text> <paragraph num="(1)"> <text>An HMO may include a provision in a group contract giving the HMO the right to examine the person of the member when and as often as it may reasonably require during the pendency of a claim under the contract.</text> </paragraph> <paragraph num="(2)"> <text>If the HMO includes the provision described in §C(1) of this regulation, the provision shall indicate that any physical examination required by the HMO will be performed at the expense of the HMO.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Arbitration.</text> <paragraph num="(1)"> <text>An HMO may include a provision in a group contract giving the group contract holder or the member the option of entering binding arbitration to settle a dispute with the HMO.</text> </paragraph> <paragraph num="(2)"> <text>If the HMO includes the provision described in §D(1) of this regulation, the provision may not require the group contract holder or the member to enter binding arbitration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Individual Contract Optional Provisions."> <paragraph num="A."> <text>An HMO may include in an individual contract any of the optional provisions described in Regulation .07C and D of this chapter and §C of this regulation.</text> </paragraph> <paragraph num="B."> <text>An HMO may not include in an individual contract an optional provision dealing with the same subjects set forth in Regulation .07C and D of this chapter and §C of this regulation if the provision is drafted in a manner that is less favorable to the subscriber or member than the corresponding optional provision set forth in Regulation .07C and D of this chapter and §C of this regulation.</text> </paragraph> <paragraph num="C."> <text>Unpaid Premiums. An individual contract may contain the following provision: “Unpaid premiums: Upon the payment of a claim under this contract, any premium then due and unpaid or covered by any note or written order may be deducted from the claim payment.”</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §19-713(f); Insurance Article, §12-203(g); Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: October 30, 2000 (27:21 Md. R. 1979)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 18, 2010 (37:21 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective August 3, 2015 (42:15 Md. R. 1019)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04N adopted effective October 18, 2010 (37:21 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05D amended effective November 7, 2005 (32:22 Md. R. 1760)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05E amended effective August 3, 2015 (42:15 Md. R. 1019)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05H adopted effective October 18, 2010 (37:21 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05H amended effective April 22, 2019 (46:8 Md. R. 402)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended as an emergency provision effective May 9, 2003 (30:11 Md. R. 733); amended permanently effective October 27, 2003 (30:21 Md. R. 1531)</annotation> </annotations> </chapter> <chapter num="08" heading="Payments to Nonparticipating Providers"> <regulation prefix="Regulation" num=".01" heading="Applicability."> <text>This chapter applies to covered services paid by health maintenance organizations to nonparticipating providers for services provided on or after January 1, 2010.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Berenson-Eggers Type of Service Code” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“CPT code” means the Current Procedural Terminology Code maintained and distributed by the American Medical Association, including its codes and modifiers, and codes for anesthesia services.</text> </paragraph> <paragraph num="(3)"> <text>“Enrollee” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Evaluation and management services” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Geographic area” means each geographic area as published by the Centers for Medicare and Medicaid Services.</text> </paragraph> <paragraph num="(6)"> <text>“HCPCS” means the Healthcare Common Procedure Coding System, a set of health care procedure codes based on the American Medical Association's Current Procedural Terminology and other services such as ambulance services, prosthetic devices, other supplies, and non-physician services that are not covered by CPT codes but are recognized and maintained by the Centers for Medicare and Medicaid Services.</text> </paragraph> <paragraph num="(7)"> <text>“Health maintenance organization” has the meaning stated in Health-General Article, §19-701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Medicare Economic Index” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Nonparticipating provider” means a provider other than a hospital or trauma physician who is not included on the provider panel of a health maintenance organization.</text> </paragraph> <paragraph num="(10)"> <text>“Participating provider” means a provider other than a hospital or trauma physician who is included on the provider panel of a health maintenance organization.</text> </paragraph> <paragraph num="(11)"> <text>“Provider” means a health care practitioner licensed, certified, or otherwise authorized by law to provide health care services.</text> </paragraph> <paragraph num="(12)"> <text>“Provider panel” has the meaning stated in Insurance Article, §15-112, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(13)"> <text>“Reference year” means, for services provided in a particular calendar year, the period beginning with July 1 of the second previous calendar year through June 30 of the previous calendar year.</text> </paragraph> <paragraph num="(14)"> <text>“Similarly licensed provider” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(15)"> <text>“Trauma physician” has the meaning stated in Health-General Article, §19-710.1, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Payment to Nonparticipating Providers."> <paragraph num="A."> <text>A health maintenance organization shall calculate the amount owed to a nonparticipating provider for covered evaluation and management services provided to an enrollee in accordance with Regulation .05 of this chapter.</text> </paragraph> <paragraph num="B."> <text>A health maintenance organization shall calculate the amount owed to a nonparticipating provider for covered services other than evaluation and management services provided to an enrollee in accordance with Regulation .06 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Annual Rate Schedule."> <paragraph num="A."> <text>Each year, beginning with January 1, 2010, each health maintenance organization shall develop an annual rate schedule for each geographic area.</text> </paragraph> <paragraph num="B."> <text>The annual rate schedule required by §A of this regulation shall include a rate for each occurrence of a CPT code or HCPCS code that describes covered services for each type of similarly licensed provider in the same geographic area derived in accordance with the formula specified in §C of this regulation.</text> </paragraph> <paragraph num="C."> <text>The rate in the annual rate schedule for each CPT code or HCPCS code shall be developed as follows:</text> <paragraph num="(1)"> <text>For each type of similarly licensed provider, the rate paid for the CPT code or HCPCS code shall be equal to the total amount allowed for the occurrences of the CPT code or HCPCS code to participating providers who are similarly licensed providers in the same geographic area during the reference year divided by the total number of occurrences paid for the same CPT code or HCPCS code to participating providers who are similarly licensed providers in the same geographic area during the reference year.</text> </paragraph> <paragraph num="(2)"> <text>For any new CPT code or HCPCS code, the rate paid for the CPT code or HCPCS code shall be equal to 125 percent of the rate paid to a similarly licensed provider in the same geographic area.</text> </paragraph> </paragraph> <paragraph num="D."> <text>By not later than December 31 of each year, each health maintenance organization shall provide written certification to the Insurance Commissioner, signed by an individual with the authority to bind the health maintenance organization that the:</text> <paragraph num="(1)"> <text>Annual rating schedule applicable to the year in which the certification is made is, to the best of that individual's knowledge, information, and belief, compliant with this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Individual making the certification has undertaken an adequate inquiry to make the required certification.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Evaluation and Management Services."> <paragraph num="A."> <text>If a nonparticipating provider submits a claim to a health maintenance organization for a covered evaluation and management service, the health maintenance organization shall pay the nonparticipating provider, less any applicable copayment, coinsurance or deductible amount, an amount not less than the greater of:</text> <paragraph num="(1)"> <text>125 percent of the fee for the covered evaluation and management service in the annual fee schedule applicable to similarly licensed providers in the same geographic area; or</text> </paragraph> <paragraph num="(2)"> <text>140 percent of the fee for the covered evaluation and management service paid by Medicare as published by the Centers for Medicare and Medicaid Services as of August 1, 2008, inflated by the four quarter moving average percent change in the Medicare Economic Index from 2008 to the current year.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Maryland Health Care Commission may publish on its website each year by October 15:</text> <paragraph num="(1)"> <text>A list of covered services that qualify as Berenson-Eggers Type of Service Code evaluation and management services; and</text> </paragraph> <paragraph num="(2)"> <text>The inflation factor applicable for inflating 2008 fees to the current year using four quarter moving average percent change for the previous calendar year second quarter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Other Covered Services."> <text>If a nonparticipating provider submits a claim to a health maintenance organization for a covered service other than a covered evaluation and management service, the health maintenance organization shall pay the nonparticipating provider, less any applicable copayment, coinsurance or deductible amount, an amount not less than 125 percent of the rate for the covered service in the annual rate schedule applicable to similarly licensed providers in the same geographic area.</text> </regulation> <annotations> <annotation type="Authority">Health General Article, §19-710.1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.06 adopted as an emergency provision effective January 1, 2010 (37:4 Md. R. 337); adopted permanently effective March 8, 2010 (37:5 Md. R. 433)</annotation> </annotations> </chapter> </subtitle> <subtitle num="13" heading="Credit Life and Credit Health Insurance"> <chapter num="01" heading="Standards for Credit Life and Credit Health Insurance"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to:</text> <paragraph num="A."> <text>Establish standards for premium rates for credit life and credit health insurance which are neither excessive nor inadequate in relation to benefits, giving due consideration to past and expected loss experience within and outside of this State, to underwriting practice and judgement, to past and prospective expense factors, to a reasonable margin for profit and contingencies, and to other relevant factors; and</text> </paragraph> <paragraph num="B."> <text>Regulate certain other aspects of the credit life and credit health insurance business in order to assure that the credit life and credit health insurance operations of an insurer do not endanger the solvency of the insurer so as to render its transaction of business hazardous to its policyholders or the public, and do not adversely affect other classes of business of the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Regulation of Commissions."> <text>To assure that credit life and credit health insurance operations of insurers do not result in rates which are excessive in relation to benefits, do not endanger the solvency of insurers rendering their transaction of business hazardous to policyholders or the public, and do not adversely affect other classes of business of insurers, the Commissioner has found it necessary to establish maximum rates of commission which may be paid to agents or brokers and maximum benefits payable to creditor group policyholders in the form of dividends, retrospective rate credits, or in any other form.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <text>This chapter applies to all authorized life insurers and all authorized health insurers delivering or issuing for delivery or proposing to deliver or issue for delivery credit life insurance or credit health insurance in Maryland under individual policies, group policies, or group certificates which are required to be filed in accordance with the provisions of Insurance Article, §13-110, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Definitions."> <paragraph num="A."> <text>In this chapter the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Account” means the coverage for a single plan of benefits for either credit life insurance or credit health insurance under one premium payment method offered to a single class of business in Maryland by one creditor whether written on a group or individual basis, or both.</text> </paragraph> <paragraph num="(2)"> <text>“Advance loan payment” means the payment of a scheduled loan installment before the installment's scheduled due date on a loan repayable in substantially equal installments.</text> </paragraph> <paragraph num="(3)"> <text>“Agent” means a person who sells a group or individual policy of credit life or credit health insurance, or who receives any form of commission compensation, remuneration, or other benefit based on his enrolling individuals or issuing certificates under group credit life or credit health insurance.</text> </paragraph> <paragraph num="(3-1)"> <text>“Balloon loan” means an indebtedness, the initial amount of which includes both:</text> <paragraph num="(a)"> <text>An amount that decreases by substantially equal periodic payments; and</text> </paragraph> <paragraph num="(b)"> <text>A final installment amount that is larger than any one of the periodic payments.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Case” means an account, or, at the option of the insurer, a combination of some or all of the insurer's accounts written under an identical plan of benefits where the gross premiums before refunds and at prima facie rates, whether consisting of one or more accounts, exceed or may reasonably be expected to exceed $50,000 in a policy year.</text> </paragraph> <paragraph num="(5)"> <text>“Class of business” means every one of the following:</text> <paragraph num="(a)"> <text>Cash loans not secured by real estate made by banks;</text> </paragraph> <paragraph num="(b)"> <text>Cash loans made by credit unions;</text> </paragraph> <paragraph num="(c)"> <text>Cash loans not secured by real estate made by creditors other than banks and credit unions;</text> </paragraph> <paragraph num="(d)"> <text>Cash loans secured by real estate made by banks;</text> </paragraph> <paragraph num="(e)"> <text>Cash loans secured by real estate made by creditors other than banks and credit unions;</text> </paragraph> <paragraph num="(f)"> <text>Production credit association and other agricultural loans;</text> </paragraph> <paragraph num="(g)"> <text>Installment sales finance contracts; or</text> </paragraph> <paragraph num="(h)"> <text>Revolving charge agreements, credit card accounts, and open-end credit other than credit union accounts.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Commission” means all forms of compensation or remuneration including dividends, retrospective rating credits, or any other form of benefit, including but not limited to:</text> <paragraph num="(a)"> <text>Commissions as a percentage of, or otherwise based on, premiums or amounts of insurance sold.</text> </paragraph> <paragraph num="(b)"> <text>Retrospective or refund rate credits, except credits on creditor paid insurance.</text> </paragraph> <paragraph num="(c)"> <text>Dividends, except dividends on creditor paid insurance.</text> </paragraph> <paragraph num="(d)"> <text>Commissions or any other form of compensation or remuneration for reinsurance ceded or assumed.</text> </paragraph> <paragraph num="(e)"> <text>Service fees or administrative fees.</text> </paragraph> <paragraph num="(f)"> <text>Consulting fees.</text> </paragraph> <paragraph num="(g)"> <text>Expense allowances.</text> </paragraph> <paragraph num="(h)"> <text>Gifts.</text> </paragraph> <paragraph num="(i)"> <text>Expense for vacations or travel other than travel for training purposes or attendance at conventions.</text> </paragraph> <paragraph num="(j)"> <text>Value of electronic data-processing equipment or services furnished.</text> </paragraph> <paragraph num="(k)"> <text>Allowances or subsidies for rent, payroll, advertising, telephone, or other purposes.</text> </paragraph> <paragraph num="(l)"> <text>Advertising provided by the insurer.</text> </paragraph> <paragraph num="(m)"> <text>Supplies, excluding application, reporting and claim forms, envelopes for transmitting the forms, and brochures, rate books, and rate charts related to the insurer's credit life or credit health insurance.</text> </paragraph> <paragraph num="(n)"> <text>Dividends, profits, capital gains, commissions, or other benefits which may be reasonably anticipated under reinsurance agreements with any unauthorized reinsurer affiliated with or controlled by a licensed agent or broker, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance agent. An unauthorized reinsurer does not include any insurer authorized to do business in this State or any insurer qualified under Insurance Article, §13-116, Annotated Code of Maryland, or any insurer meeting the qualifications of a nonadmitted accredited reinsurer.</text> </paragraph> <paragraph num="(o)"> <text>Services, including an amount paid to an employee of the insurer specifically for services provided to a creditor or affiliate of the creditor if the services are normally performed outside the home office of the insurer, but not including services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals and who are regular salaried officers or employees of the insurer and who receive no commission or other compensation directly dependent upon the amount of business obtained.</text> </paragraph> <paragraph num="(p)"> <text>Value of training programs for employees of the creditor or agent, excluding training of employees provided solely in connection with a program of credit life or credit health insurance for the purpose of acquainting the creditor's employees with administrative procedures of the insurer when the salary of the employees during the training period is paid by the creditor.</text> </paragraph> <paragraph num="(q)"> <text>Rental by the insurer of space or equipment from the agent or creditor, excluding rentals not related to any insurance transaction on terms approved by the Commissioner;</text> </paragraph> <paragraph num="(r)"> <text>Commission or some other form of compensation or remuneration in excess of what otherwise would be payable in connection with the sale of allied lines of insurance or other business, such as credit property insurance and maintenance warranties.</text> </paragraph> <paragraph num="(s)"> <text>Profit sharing plans.</text> </paragraph> <paragraph num="(t)"> <text>Bonuses.</text> </paragraph> <paragraph num="(u)"> <text>Finders fees.</text> </paragraph> <paragraph num="(v)"> <text>Offers of share ownership in an agency or corporation at less than the fair market value.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(8)"> <text>“Consumer loans” means loans issued by lenders licensed under the provisions of Financial Institutions Article, Title 11, Subtitle 2, Annotated Code of Maryland, and made pursuant to Commercial Law Article, Title 12, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Creditor-paid insurance” means insurance in which the creditor pays the insurance premium without separate charge to the debtor. A transaction will not be regarded as creditor-paid insurance if the debtor is required to pay an identifiable charge or premium for credit life or credit health insurance or if there is a differential in finance, interest, carrying, service, or other similar charge made to debtors who are in similar circumstances except for their insured or non-insured status.</text> </paragraph> <paragraph num="(9-1)"> <text>“Critical period disability insurance” means insurance on a debtor that provides indemnity for payments that are due on a specific loan or other credit transactions:</text> <paragraph num="(a)"> <text>For a period less than the entire term of the loan; and</text> </paragraph> <paragraph num="(b)"> <text>If the debtor is disabled as defined by the policy.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>“Decreasing term insurance” means insurance sold in connection with loans repayable in substantially equal installments and for which a single premium is paid in advance.</text> </paragraph> <paragraph num="(10-1)"> <text>“Earned premiums at prima facie” means the premiums that would have been earned if all earned premiums had been written at prima facie rates.</text> </paragraph> <paragraph num="(11)"> <text>“Enroller” means a person who enrolls individuals or issues certificates under group credit life or credit health insurance and who does not receive any form of commission, compensation, remuneration, or other benefit based on this activity and whose salary scale is not dependent on the volume of insurance.</text> </paragraph> <paragraph num="(12)"> <text>“Experience period” means 2 consecutive calendar years or, at the option of the insurer, 2 consecutive policy years under a group policy issued to one creditor, or under one case.</text> </paragraph> <paragraph num="(12-1)"> <text>“Joint health insurance” means health insurance issued to two co-debtors when both are jointly and severally liable for the debt.</text> </paragraph> <paragraph num="(13)"> <text>“Joint life insurance” means insurance issued to two co-debtors with an insurable interest, as defined in Insurance Article, §12-201(b), Annotated Code of Maryland, when both are jointly and severally liable for the debt.</text> </paragraph> <paragraph num="(14)"> <text>“Level term insurance” means insurance sold in connection with loans repayable in a single sum. Insurance covering a balloon loan is considered a combination of level term insurance and decreasing term insurance.</text> </paragraph> <paragraph num="(15)"> <text>“Loss ratio” means the ratio of incurred claims to premiums earned during a specified period.</text> </paragraph> <paragraph num="(15-1)"> <text>“Lump sum disability insurance” means insurance on a debtor that pays the insured outstanding debt that is due on a specific loan or other credit transaction after the debtor has been disabled as defined in the policy for a period specified in the policy.</text> </paragraph> <paragraph num="(16)"> <text>“Net payoff balance method” means decreasing term insurance sold to cover the unpaid insured principal amount of a loan plus current interest and charges as they fall due.</text> </paragraph> <paragraph num="(16-1)"> <text>“New case” means an account where the gross premiums before refunds and at prima facie premium rates exceed or may reasonably be expected to exceed $50,000 in the most recent policy year, but did not exceed $50,000 in the prior policy year.</text> </paragraph> <paragraph num="(17)"> <text>“Outstanding balance insurance” means insurance for which a separate identifiable insurance premium is paid each month based on the insured indebtedness then outstanding.</text> </paragraph> <paragraph num="(18)"> <text>Policy Year.</text> <paragraph num="(a)"> <text>“Policy year”, in the case of a group policy, means the period between a policy anniversary and the next succeeding policy anniversary.</text> </paragraph> <paragraph num="(b)"> <text>“Policy year”, in the case of individual policies, means a calendar year, or a period of 12 consecutive months beginning from an anniversary of the opening of an account, as the insurer may elect.</text> </paragraph> </paragraph> <paragraph num="(18-1)"> <text>“Prima facie loss ratio” means the ratio of incurred claims to earned premiums at prima facie during a specified period.</text> </paragraph> <paragraph num="(18-2)"> <text>“Prima facie premium rates” means maximum applicable premium rates as authorized and promulgated by the Commissioner from time to time in accordance with and listed in Regulations .10—.12 and .14—.16 of this chapter.</text> </paragraph> <paragraph num="(19)"> <text>“Single premium insurance” means insurance in which the debtor pays or finances the entire required premium in advance. If the creditor adds identifiable insurance charges or premiums for credit insurance to the indebtedness and a direct or indirect finance, carrying, credit, or service charge is made to the debtor on the insurance charges or premiums, the insurance shall be considered single premium.</text> </paragraph> <paragraph num="(20)"> <text>“Total-of-payments method” means decreasing term insurance sold to cover the entire schedule of payments under a loan, subject to policy limitations.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Loss Ratio."> <text>Benefits for policies issued under these regulations shall be deemed reasonable in relation to premiums if claims incurred under the policies result in, or may reasonably be expected to result in, a loss ratio of not less than 55 percent when premiums do not exceed prima facie premium rates. When the prima facie loss ratio exceeds 55 percent, the premiums shall be determined in accordance with the methods of Regulation .18 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Statistics and Reporting Forms."> <paragraph num="A."> <text>Filing with Commissioner.</text> <paragraph num="(1)"> <text>To permit the Commissioner to review the basis of prima facie premium rates and the basis of premium rates being charged on the case method, each insurer writing credit life or credit health insurance shall:</text> <paragraph num="(a)"> <text>Maintain statistics relating to the insurer's Maryland business; and</text> </paragraph> <paragraph num="(b)"> <text>File the statistics with the Commissioner in the form required by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer shall file the statistics for each:</text> <paragraph num="(a)"> <text>Account that has qualified as a case for the 2 most recent policy years, not later than 120 days after the end of the second calendar year to which the statistics relate; and</text> </paragraph> <paragraph num="(b)"> <text>New case and for all other business, not later than June 30 following the close of the calendar year to which the statistics relate.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Each insurer writing credit life or credit health insurance also shall file with the Commissioner:</text> <paragraph num="(a)"> <text>Notice of each account that is a new case;</text> </paragraph> <paragraph num="(b)"> <text>The identity of the creditor for each new case, including:</text> <paragraph num="(i)"> <text>The corporate name of the creditor,</text> </paragraph> <paragraph num="(ii)"> <text>Any “trading as” name used by the creditor,</text> </paragraph> <paragraph num="(iii)"> <text>The address and phone number of the creditor, and</text> </paragraph> <paragraph num="(iv)"> <text>The name of a contact person for insurance matters at the creditor; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The statistics for the most recent calendar year, certified by a responsible officer of the insurer, that would have been required under this regulation if the new case had been a case for each of the 2 most recent policy years.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>An insurer shall file the information on a new case with the Commissioner not later than the June 30 following the close of the calendar year in which the account became a new case.</text> </paragraph> <paragraph num="(5)"> <text>Use of Code Numbers.</text> <paragraph num="(a)"> <text>In filing the information required by this section, an insurar may use a code number instead of the name and address of a creditor.</text> </paragraph> <paragraph num="(b)"> <text>If an insurer uses a code number instead of the name and address of a creditor, the insurer shall submit a separate list that identifies the name and address of each creditor with the creditor's code number.</text> </paragraph> <paragraph num="(c)"> <text>The list that identifies the name and address of each creditor with the creditor's code number is confidential commercial information under State Government Article, §10-617(d), Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Reports for business other than on a case method shall be submitted under these regulations on a calendar year basis for the calendar year 1980 and every year after that. Reports for business for the calendar year 1979 shall be submitted in accordance with the corresponding regulations in effect on December 31, 1979.</text> </paragraph> <paragraph num="C."> <text>All reports, both those on a calendar year basis and those on the case method, shall be submitted separately for each class of business of credit life insurance and for each class of business of credit health insurance written, and shall be submitted separately for each premium payment method (single premium decreasing total-of-payments, single premium decreasing net payoff balance, single premium level, monthly outstanding balance), and shall be submitted separately for each pattern of benefits (for example, 7-day retro, 14-day retro), and shall be submitted separately for single life and joint life credit life insurance, and shall be submitted separately for single health and for joint health credit health insurance.</text> </paragraph> <paragraph num="D."> <text>Every report filed with the Commissioner shall contain the following information:</text> <paragraph num="(1)"> <text>Gross premiums written;</text> </paragraph> <paragraph num="(2)"> <text>Refunds of premiums on terminated insurance;</text> </paragraph> <paragraph num="(3)"> <text>Net premiums written;</text> </paragraph> <paragraph num="(4)"> <text>Unearned premium reserve at beginning of period;</text> </paragraph> <paragraph num="(5)"> <text>Unearned premium reserve at end of period;</text> </paragraph> <paragraph num="(6)"> <text>Earned premiums (1-2) minus (5-4);</text> </paragraph> <paragraph num="(7)"> <text>Earned premiums at prima facie;</text> </paragraph> <paragraph num="(8)"> <text>Claims paid;</text> </paragraph> <paragraph num="(9)"> <text>Claim reserve at beginning of period;</text> </paragraph> <paragraph num="(10)"> <text>Claim reserve at end of period;</text> </paragraph> <paragraph num="(11)"> <text>Claims incurred (7) plus (9-8);</text> </paragraph> <paragraph num="(12)"> <text>Loss ratio (10) divided by (6);</text> </paragraph> <paragraph num="(13)"> <text>Prima facie loss ratio (rounded to two decimal places);</text> </paragraph> <paragraph num="(14)"> <text>Dividends and experience rating refunds;</text> </paragraph> <paragraph num="(15)"> <text>All other commissions, compensation, and remuneration to creditors or agents;</text> </paragraph> <paragraph num="(16)"> <text>Total of items (12) and (13);</text> </paragraph> <paragraph num="(17)"> <text>Ratio (14) divided by (3);</text> </paragraph> <paragraph num="(18)"> <text>Combined ratio, sum of (11) and (15);</text> </paragraph> <paragraph num="(19)"> <text>Year-end amount of insurance in force;</text> </paragraph> <paragraph num="(20)"> <text>Year-end number of individual policies and certificates in force; and</text> </paragraph> <paragraph num="(21)"> <text>Minimum and maximum rates charged.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Every statistical report shall be certified by a responsible officer of the insurer and shall be accompanied by a statement certified by the president or other responsible officer of the insurer that the insurer has not paid or credited or provided commission as defined in these regulations in excess of the applicable maximum amounts specified in Regulation .20 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Rate Changes and Creditor-Paid Insurance."> <paragraph num="A."> <text>Premium rates under a group policy of credit life or credit health insurance may not be increased more than once during the first policy year, and a subsequent increased rate may not be charged within 12 months of any prior change in rates.</text> </paragraph> <paragraph num="B."> <text>In a policy of outstanding balance insurance, a change in rates may not be made effective until 31 days after all existing debtors in the group have been notified of any increased charge that they will be required to pay as a result of the change in rates. If the insurer is unable to identify the existing debtors, notice required by this section shall be deemed to be satisfied if the insurer notifies the creditor and provides necessary forms to be mailed by the creditor to the debtors advising them of the increased charge.</text> </paragraph> <paragraph num="C."> <text>An insurer may file for approval of policy forms and premium rates for creditor-paid insurance on a basis other than that established by these regulations upon a showing satisfactory to the Commissioner that the forms and rates meet the requirements of Insurance Article, Title 13, Subtitle 1, Annotated Code of Maryland, and that the rates are actuarially consistent with rates prescribed by these regulations for other forms of credit life and credit health insurance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Premium Rates by Case Method."> <paragraph num="A."> <text>Vacant.</text> </paragraph> <paragraph num="B."> <text>Vacant.</text> </paragraph> <paragraph num="C."> <text>Case Comprised of Two or More Accounts.</text> <paragraph num="(1)"> <text>If an insurer has combined two or more accounts to establish a case, it may not add additional accounts or remove accounts from that case except with the permission of the Commissioner and under conditions which the Commissioner may specify.</text> </paragraph> <paragraph num="(2)"> <text>When submitting an experience report for a case comprised of two or more accounts, the insurer shall include a list of the names of each account included in the case.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Premium rates for each case shall be established by the insurer to afford a loss ratio of at least 55 percent if the resulting rates do not exceed prima facie premium rates, and may be established in accordance with the methods of Regulation .18 of this chapter if the substitution of prima facie premium rates would result in a loss ratio in excess of 55 percent.</text> </paragraph> <paragraph num="E."> <text>If an insurer acquires an existing account for which rates were established by another insurer by the case method, the new insurer shall use the same rates or rates not greater than those which were approved for use by the former insurer until the end of the existing experience period established by the former insurer. In reporting this account at the end of the experience period, the new insurer shall combine the experience of the former insurer with its own experience for the term of the experience period in order to determine subsequent rates for the account.</text> </paragraph> <paragraph num="F."> <text>Reports for each case shall be submitted by the insurer at the end of each experience period, together with a statement of the then applicable premium rates proposed by the insurer. If the premium rates proposed by the insurer for the case do not meet the loss ratio standards of §D of this regulation, the insurer shall make an appropriate premium reduction, to be effective on or before 45 days after the date of filing of the experience report, unless, for good cause shown, the Commissioner approves a higher premium rate. If the insurer does not propose to reduce premium rates in accordance with these regulations, the Commissioner shall notify the insurer and afford it a hearing. The Commissioner shall notify the insurer in writing within 60 days of the filing of the experience report of the Commissioner's findings in regard to the premium rate which the Commissioner determines should be charged. The insurer shall implement the rates determined by the Commissioner not later than 45 days after receipt of the Commissioner's notice of the rates which the Commissioner authorizes for the case.</text> </paragraph> <paragraph num="G."> <text>Credit Health Insurance — Case Experience and Application of Rate Adjustment Factor.</text> <paragraph num="(1)"> <text>If a plan of benefits for credit health insurance qualifies as a case, whether consisting of accounts of one or more creditors, the case experience submitted by the insurer at the end of the experience period shall include the experience of all plans of benefits for credit health insurance written by creditors comprising the case.</text> </paragraph> <paragraph num="(2)"> <text>If the experience of the case results in a downward rate adjustment, the insurer shall apply the rate adjustment factor to all plans of benefits for credit health insurance written by the creditors comprising the case.</text> </paragraph> <paragraph num="(3)"> <text>If the experience of the case results in an upward rate adjustment, the insurer may apply the rate adjustment factor to all plans of benefits for credit health insurance written by the creditors comprising the case.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="General Premium Rate Standards and Increased Rates."> <paragraph num="A."> <text>With respect to all premium rates not eligible for filing in accordance with the case method, the Commissioner will accept as meeting the standards of Insurance Article, §13-110(b)(1) and (2), Annotated Code of Maryland, those premium rate filings which do not exceed prima facie premium rates stated in Regulations .10—.11 and .14—.15 of this chapter for the several categories of insurance described in those regulations. The prima facie premium rates in those regulations are based on the assumption that a policy fee, policy issue fee, certificate fee, or other additional charge will not be made.</text> </paragraph> <paragraph num="B."> <text>Premium rates for use with forms which have more restrictive provisions than those described in Regulation .13 or .17 of this chapter, whichever is applicable, shall reflect those restrictions in a reduction in rates commensurate with the differences in claim costs which can reasonably be anticipated by reason of the restrictions. Filings in connection with a policy containing those restrictions shall be accompanied by credible statistics applicable to the policy form and shall require an application for specific approval as in the case of a filing made for increased rates.</text> </paragraph> <paragraph num="C."> <text>Unless specific reference is made in these regulations to joint life insurance, all prima facie premium rates and standards and formulas for increased rates refer to individual policies and group certificates insuring single lives.</text> </paragraph> <paragraph num="D."> <text>With respect to premium rates not eligible for filing in accordance with the case method, an insurer may file with the Commissioner an application for approval of rates higher than the prima facie premium rates for a single creditor or for one or more classes of business. The application shall specify the basis for the increased rate requested and shall be accompanied by credible statistics applicable to the business under consideration and by a demonstration that the requested rates are in conformity with, or less than, rates which would meet the guidelines for increased rates set forth in Regulation .18 of this chapter.</text> </paragraph> <paragraph num="E."> <text>The Commissioner may grant approval of an increased rate for a stated period, or for an indefinite period until revoked by him on 90 days' notice. If a period is not specified in the Commissioner's notice of approval, an approval by the Commissioner of an increased rate shall be effective for a period of 1 year.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Prima Facie Premium Rates for Credit Life Insurance."> <paragraph num="A."> <text>Except as specified in Regulation .11 of this chapter, the premiums charged for credit life insurance policies having all policy provisions not less favorable to the insured debtor than those permitted by Regulation .13 of this chapter, may not exceed the following:</text> <paragraph num="(1)"> <text>For single premium decreasing term policies insuring one life, issued on the total-of-payments method, $0.43 per annum per $100 of initial amount of insured indebtedness;</text> </paragraph> <paragraph num="(2)"> <text>For outstanding balance term policies insuring one life, $0.66 per month per $1,000 of the amount of insured outstanding indebtedness; or</text> </paragraph> <paragraph num="(3)"> <text>For single premium level term policies insuring one life, $0.71 per annum per $100 of the amount of insured indebtedness.</text> </paragraph> </paragraph> <paragraph num="B."> <text>For a credit life insurance policy or certificate of insurance issued to cover a husband and wife jointly, the face amount of the policy or certificate form being payable upon the death of the first to die during the term of the coverage, the premium for the life insurance benefits may not exceed 1.80 times the premium which would be charged if one debtor was insured under a comparable single life policy or certificate of insurance. To determine a unit rate for joint lives, the insurer may use the unit rates specified in these regulations for single lives, with the product of the single life unit rate times 1.80 being rounded to the nearest cent.</text> </paragraph> <paragraph num="C."> <text>For all other types of credit life insurance policies and premium rating methods, the premium shall be subject to approval by the Commissioner and may not exceed rates which are actuarially consistent with those specified in this chapter.</text> </paragraph> <paragraph num="D."> <text>Rounding Rate Calculations. Single premium credit life insurance rates that are determined by interpolation of the rates stated in this regulation or required to be reduced in accordance with Regulation .08 of this chapter shall be rounded to two decimal places.</text> </paragraph> <paragraph num="E."> <text>The prima facie premium rates for credit life insurance in this regulation apply to all premiums charged on or after March 1, 2001, for every class of business.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Prima Facie Premium Rates — Credit Life Insurance — Net Payoff Balance Method."> <paragraph num="A."> <text>The premium charged for credit life insurance policies issued under the net payoff balance method and having all policy provisions not less favorable to the insured debtor than those permitted by Regulation .13 of this chapter, may not exceed the following:</text> <paragraph num="(1)"> <text>For single premium decreasing term policies insuring one life, a premium based on $0.66 per $1,000 of the sum of the scheduled insured outstanding principal indebtedness each month over the term of insurance coverage; or</text> </paragraph> <paragraph num="(2)"> <text>For joint life policies, the premium determined in accordance with Regulation .10D of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The prima facie premium rates for credit life insurance in this regulation apply to all premiums charged on or after March 1, 2001 for every class of business.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Repealed." /> <regulation prefix="Regulation" num=".13" heading="Underwriting Requirements for Credit Life Prima Facie Premium Rates."> <paragraph num="A."> <text>The prima facie premium rates used in Regulations 10—.11 of this chapter assume that contracts providing credit life insurance do not require evidence of individual insurability from any eligible debtor electing to purchase coverage within 30 days of the date the debtor becomes eligible.</text> </paragraph> <paragraph num="B."> <text>If an insurer requires evidence of insurability from debtors electing to purchase coverage within 30 days of the date they become eligible and the initial amount of credit life insurance or the insurable maximum revolving credit account limit of an insured debtor does not exceed $15,000, the insurer shall reduce the premium rates stated in Regulations .10—.11 of this chapter by 10 percent on all:</text> <paragraph num="(1)"> <text>Individual policies of credit life insurance issued through the same creditor, regardless of whether the initial amount of credit life insurance or the insurable maximum revolving credit account limit exceeds $15,000; or</text> </paragraph> <paragraph num="(2)"> <text>Certificates of credit life insurance issued under the group policy through the same credit or creditor, regardless of whether the initial amount of credit life insurance or the insurable maximum revolving credit account limit exceeds $15,000.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Subject to the conditions and requirements of Regulations .08, .09, and .18 of this chapter, the maximum premium rates shall be the rates stated in Regulations .10—.11 of this chapter if the:</text> <paragraph num="(1)"> <text>Insurer requires evidence of insurability only from debtors whose initial amount of insurance or insurable maximum revolving credit account limit exceeds $15,000; or</text> </paragraph> <paragraph num="(2)"> <text>Debtor elects to purchase coverage more than 30 days after the date the debtor became eligible.</text> </paragraph> </paragraph> <paragraph num="D."> <text>For individual policies or for certificates of insurance issued under group policies insuring open lines of credit, the insurer may require evidences of insurability for:</text> <paragraph num="(1)"> <text>Advances which increase the outstanding indebtedness over $15,000; or</text> </paragraph> <paragraph num="(2)"> <text>Increases in the insured debtor's insurable maximum revolving credit account limit that increase the limit over $15,000.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Underwriting Limitations.</text> <paragraph num="(1)"> <text>Regardless of policy or certificate amounts, the underwriting limitations specified in this section apply.</text> </paragraph> <paragraph num="(2)"> <text>The policy contains no provision which excludes or restricts liability for death caused in a certain specific manner or occurring while the insured has a specified status, except that the policy may exclude death resulting from suicide within 6 months after the effective date of coverage.</text> </paragraph> <paragraph num="(3)"> <text>There are no age restrictions, or the only age restrictions are those which comply with this regulation and the insured acknowledges on the application that he is aware of the age restriction.</text> </paragraph> <paragraph num="(4)"> <text>The insurer, at its option, may adopt any one of the following provisions with regard to age limitations:</text> <paragraph num="(a)"> <text>The policy may provide that the insurer may terminate the insurance within 60 days after the effective date and refund all premiums paid by the debtor if the debtor's true age is greater than the limiting age stated in the policy. The notice of termination shall state that the premium paid by the debtor shall be refunded to the person entitled to it. Under this provision, an insurer using this method shall pay the claim in full if the insurer does not terminate the coverage within 60 days or if the debtor dies within the 60-day period but before notification by the insurer of termination.</text> </paragraph> <paragraph num="(b)"> <text>The policy may provide that debtors who have reached age 65 on the effective date of the insurance are not eligible for insurance. However, if an individual policy or a certificate of insurance issued under a group policy is issued beyond the age limits established in the policy due to misstatement of age of the debtor, §E(4)(d) of this regulation shall apply. On policies issued on the outstanding balance insurance basis, the policy may exclude from the classes eligible for insurance, debtors who have reached age 65, and provide for the termination of insurance or reduction in the amount of insurance upon the debtor's attaining a stated age not less than 65. If premium charges continue to be made beyond the stated age due to misstatement of age of the debtor, §E(4)(d) of this regulation applies. If premium charges continue to be made beyond the stated age even though the correct age of the debtor is known to the insurer or to the creditor, the insurer shall pay in full any claim for loss occurring during any period for which a premium has been charged.</text> </paragraph> <paragraph num="(c)"> <text>The policy may provide that debtors who will have reached age 69 on the scheduled maturity date of the indebtedness or, at the option of the insurer, on the expiration date of the insurance, are not eligible for insurance. However if an individual policy or a certificate of insurance issued under a group policy is issued beyond the age limits established in the policy due to misstatement of age of the debtor, §E(4)(d) of this regulation applies.</text> </paragraph> <paragraph num="(d)"> <text>In the case of a single premium policy issued in accordance with §E(4)(b) or (c) of this regulation and in the case of an outstanding balance policy issued in accordance with §E(4)(b) of this regulation, the policy shall contain a provision that if the debtor misstates the debtor's age, the benefit shall be such as the premium paid would have purchased at the correct age. For purposes of administering this requirement, the reduction in benefits for persons over the limiting age stated in the policy where the limiting age is age 65 on the effective date of the insurance shall be not less favorable to the insured debtor than a benefit provided in accordance with the following table:</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>In the case of a policy providing joint life coverage:</text> <paragraph num="(a)"> <text>If the first death to occur during the term of insurance is that of an insured debtor whose age has been correctly stated, there may not be a reduction in the amount otherwise payable under the policy;</text> </paragraph> <paragraph num="(b)"> <text>If the first death to occur during the term of insurance is that of an insured debtor whose age has been incorrectly stated, adjustment may be made in accordance with the procedure stated in this regulation.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>When the age of the debtor has been misstated and the debtor's true age on the effective date of the insurance is beyond the limiting age or if premium charges continue to be made beyond the termination age in the case of outstanding balance insurance due to misstatement of age of the debtor, instead of the adjustments for payment of benefits provided in §E(4) of this regulation, the insurer, at its option, may void the insurance within 2 years from the effective date (or at any time after that date if the debtor dies within the 2-year period) and refund the premium paid if at the time of the debtor's application the insurer has obtained a separate statement signed by the debtor that the debtor is aware that no insurance will be provided beyond the stated limiting age. This separate statement shall be printed in 18-point boldface capital letters. A copy of the statement shall be given to the applicant at the time of the application and the original shall be kept on file by the insurer until at least 1 year beyond the date the indebtedness is satisfied in the case of single premium insurance, or until at least 1 year beyond the date that the debtor's insurance is cancelled in the case of outstanding balance insurance.</text> </paragraph> <aftertext>When the limiting age stated in the policy is other than age 65 the effective date of the insurance or when the limiting age is stated on a basis of the insured attaining a particular age on the scheduled maturity date of the indebtedness, or, at the option of the insurer, on the expiration date of the insurance, the insurer shall file with the Commissioner an appropriate table similar to the one above for reduction in benefits in the event of misstatement of age.</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Disability Benefit Provisions."> <paragraph num="A."> <text>If a credit life insurance policy, otherwise meeting the requirements of Regulation .13 of this chapter provides for payment of the policy proceeds in the event of the loss of two limbs or in the event of the complete loss of eyesight, the insurer may charge a rate not to exceed 1 percent more than the rates in Regulation .10 or .11 of this chapter, whichever is applicable. If the policy provides for payment of the policy proceeds in event of loss of a single limb or in event of the loss of the sight of one eye, the insurer may charge a rate not to exceed 3 percent more than the rates in Regulation .10 or .11 of this chapter, whichever is applicable.</text> </paragraph> <paragraph num="B."> <text>If a credit life insurance policy otherwise meeting the requirements of Regulation .13 of this chapter provides for payment of the policy proceeds in event of total and permanent disability, other than the benefit described in §A of this regulation, the Commissioner shall determine an appropriate increase in the premium rates on application of the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Prima Facie Premium Rates for Credit Health Insurance."> <paragraph num="A."> <text>The premiums charged for credit health insurance policies having all policy provisions not less favorable to the insured debtor than those required by Regulation .17 of this chapter may not exceed, on policies of credit health insurance for which a single premium is charged in advance for the entire duration of the insurance and the indebtedness is repayable in equal installments, the amount shown in the table below for each $100 of the initial amount of insured indebtedness:</text> </paragraph> <paragraph num="B."> <text>On policies of credit health insurance with elimination or waiting periods of 7, 14, or 30 days, and with modes of premium payment other than single premium, the prima facie premium rates may not exceed rates which are actuarially consistent with those in §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>Other Types of Credit Health Insurance.</text> <paragraph num="(1)"> <text>With respect to critical period disability insurance and lump sum disability insurance, the premium rate charged by an insurer may not exceed a rate that is determined by adjusting the applicable prima facie premium rate set by §A of this regulation to an actuarially equivalent rate approved by the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>For all other types of credit health insurance, the prima facie premium rates shall be subject to approval by the Commissioner and may not exceed rates which are actuarially consistent with those specified in §§A and B of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Credit health insurance premiums for elimination or waiting periods of 7, 14, or 30 days may not be approved for policy terms less than the shortest term for which a premium rate is shown under the respective columns in §A of this regulation.</text> </paragraph> <paragraph num="E."> <text>On policies of group credit health insurance issued on the outstanding balance, a composite monthly outstanding balance premium rate shall be used instead of the rates referred to in §C of this regulation. The rates under this plan may not exceed those shown in the schedule immediately below, with the rates being based on the amount of insured indebtedness currently being repaid. The composite rate shall be applied to all outstanding balances under the plan each month irrespective of the duration of the loans. Application for a higher rate under this type of plan may be made upon a showing of need for an increased rate on a basis actuarially consistent with Regulation .18D of this regulation.</text> </paragraph> <paragraph num="F."> <text>Joint Credit Health Insurance.</text> <paragraph num="(1)"> <text>For credit health insurance issued to cover two debtors jointly, the monthly benefit payable upon the total disability of the first to be totally disabled during the term of the coverage, the premium for the health insurance benefits may not exceed 1.80 times the premium that would be charged if one debtor alone were insured.</text> </paragraph> <paragraph num="(2)"> <text>To determine a unit rate for joint health coverage, the insurer may use the unit rates specified in this chapter for single health coverage, with the product of the single unit rate times 1.80 being rounded to the nearest cent.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The prima facie premium rates for credit health insurance in this regulation apply to all premiums charged on or after March 1, 2001, for every class of business.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Repealed." /> <regulation prefix="Regulation" num=".17" heading="Underwriting Requirements for Credit Health Prima Facie Premium Rates."> <paragraph num="A."> <text>The prima facie premium rates in Regulation .15 of this chapter assume that contracts providing credit health insurance do not require evidence of individual insurability from any eligible debtor electing to purchase coverage within 30 days of the date the debtor becomes eligible.</text> </paragraph> <paragraph num="B."> <text>If an insurer requires evidence of insurability from debtors electing to purchase coverage within 30 days of the date they become eligible and the total amount of insured periodic indemnity payable in event of disability of the debtor or the insurable maximum revolving credit account limit of an insured debtor does not exceed $15,000, the insurer shall reduce the premium rates stated in Regulation .15 of this chapter by 10 percent on all:</text> <paragraph num="(1)"> <text>Individual policies of credit health insurance issued through the same creditor; or</text> </paragraph> <paragraph num="(2)"> <text>Certificates of credit health insurance issued under the group policy through the same creditor.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Subject to the conditions and requirements of Regulations .08, .09, and .18 of this chapter, the maximum premium rates shall be the rates stated in Regulation .15 of this chapter if:</text> <paragraph num="(1)"> <text>The insurer requires evidence of insurability only from debtors whose total amount of insured periodic indemnity payable in the event of disability or insurable maximum revolving credit account limit exceeds $15,000; or</text> </paragraph> <paragraph num="(2)"> <text>The debtor elects to purchase coverage more than 30 days after the date the debtor became eligible:</text> </paragraph> </paragraph> <paragraph num="D."> <text>For policies insuring open lines of credit, the insurer may require evidence of insurability for advances or for increases in the insured debtor's maximum revolving credit account limit which increase the insurable outstanding indebtedness or the debtor's insurable maximum revolving credit account limit over $15,000.</text> </paragraph> <paragraph num="E."> <text>Regardless of individual policy or certificate amounts, the following underwriting assumptions apply:</text> <paragraph num="(1)"> <text>The policy contains no exclusions for preexisting conditions except conditions which, within 6 months before the effective date of the coverage, manifested themselves to the insured debtor by requiring medical consultation, diagnosis, or treatment, provided the preexisting conditions cause loss commencing within 6 months following the effective date of the coverage, and provided further that the preexisting conditions would ordinarily be expected to affect materially the health of the debtor during that period. Loss due to total disability shall include loss of time from work, and, in the case of persons not employed, the inability of the insured to engage in the insured's usual and customary activities. In the case of disability by reason of loss of time from work, total disability for which benefits may become due and payable shall be defined as “inability by reason of injury or sickness to substantially perform the duties pertaining to the insured's occupation” for at least the first 12 months for which a claim may be made, and after that may be defined as “inability to substantially perform the duties of any business or occupation for which the insured is reasonably fitted by education, training, and experience.” Disability commencing 6 months or more after the effective date of the coverage may not be excluded regardless of whether the disability results from any preexisting condition. The policy shall provide that if the indebtedness covered by the policy results from the refinancing in whole or in part of a prior debt with the same creditor, the period of exclusion for preexisting conditions shall be reduced by the period that creditor-debtor disability coverage was in force in connection with the prior indebtedness. However, if the resulting period of exclusion for preexisting conditions is less than the period that would normally be applicable, and if, as a result, a claim for disability benefits which would not otherwise be allowed is payable, the benefits for the claim need not be greater than those which would have been paid under the prior coverage if it had not terminated.</text> </paragraph> <paragraph num="(2)"> <text>The policy contains no other exclusions except for disability resulting from pregnancy.</text> </paragraph> <paragraph num="(3)"> <text>There are no age restrictions, or, at the option of the insurer, the only age restrictions are those which make ineligible for coverage debtors who have reached age 65 at the time the indebtedness is incurred, or, alternately, debtors who will have reached age 69 on the scheduled maturity date of the indebtedness. On policies issued on the outstanding balance insurance basis in connection with open-end or revolving credit transactions, the policy may exclude from the classes eligible for insurance, debtors who have reached age 65, and provide for the termination of insurance or reduction in the amount of insurance upon the debtor's attaining a stated age not less than 65.</text> </paragraph> <paragraph num="(4)"> <text>Except as provided in this chapter, the policy contains no provision which excludes or restricts liability for disability caused in a certain specific manner or occurring while the insured debtor has a specified status.</text> </paragraph> <paragraph num="(5)"> <text>If an insurer acquires an existing account providing disability benefits on an outstanding balance basis or on another basis for which the debtor is charged monthly, the new insurer shall honor all claims for periods of disability commencing on or after the date of takeover and all claims after that which would have been paid under the former policy. The original insurer shall honor all claims for periods of disability commencing before the date of takeover.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Guidelines for Increased Rates."> <paragraph num="A."> <text>Applications to the Commissioner for higher than prima facie premium rates shall be accompanied by credible statistics. Approval of applications for increased rates will depend on whether the requested rates are not greater than rates based on the standards in this regulation.</text> </paragraph> <paragraph num="B."> <text>Decreasing Term Credit Life Insurance. On policies of decreasing term credit life insurance for which a single premium is charged in advance providing coverage for the outstanding amount of insured indebtedness in connection with a loan repayable in 12 equal monthly installments, when the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - .55) × 1.41 + 1) × Prima Facie Rate. For terms other than 12 months under single premium decreasing term credit life policies, and for other modes of premium payment under decreasing term credit life insurance, this formula shall be the basis of determining actuarially consistent rates.</text> </paragraph> <paragraph num="C."> <text>Level Term Credit Life Insurance. On policies of level term credit life insurance for which a single premium is charged in advance providing a level amount of life insurance coverage for 12 months, when the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - 0.55) × 1.41 + 1) × Prima Facie Rate. For terms other than 12 months under single premium level term credit life policies and for other modes of premium payment under level term credit life insurance, this formula shall be the basis of determining actuarially consistent rates.</text> </paragraph> <paragraph num="D."> <text>Outstanding Balance Credit Life Insurance. On policies of outstanding balance credit life insurance for which an insurance premium is charged each month based on the insured loan amount then outstanding, where the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - 0.55) × 1.41 + 1) × Prima Facie Rate.</text> </paragraph> <paragraph num="E."> <text>Credit Health Insurance. On policies of credit health insurance for which the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula: ((Prima Facie Loss Ratio - 0.55) × 1.41 + 1) × Prima Facie Rate.</text> </paragraph> <paragraph num="F."> <text>Rounding Rate Calculations. Premium rates for credit life insurance or credit health insurance determined under this regulation shall be rounded to:</text> <paragraph num="(1)"> <text>Two decimal places per hundred dollars of initial amount of single premium insurance; and</text> </paragraph> <paragraph num="(2)"> <text>Three decimal places per thousand dollars of monthly outstanding balance insurance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Refunds."> <paragraph num="A."> <text>In event of termination of the insurance before the scheduled maturity date of the indebtedness, other than by performance of the insurance contract, the insurer shall promptly refund or credit to the person entitled to it the appropriate portion of any premiums paid for the insurance.</text> </paragraph> <paragraph num="B."> <text>In the case of decreasing term credit life insurance or of credit health insurance on which premiums are charged to the debtor other than as a single premium payable in advance, or in the case of level term credit life insurance, the amount of the refund or credit shall be not less than the pro rata gross unearned premium.</text> </paragraph> <paragraph num="C."> <text>In the case of decreasing credit life insurance on which premiums are charged to the debtor in a single sum payable in advance, the amount of the refund or credit shall be not less than the amount computed by the “sum of the digits” method commonly known as the Rule of 78.</text> </paragraph> <paragraph num="D."> <text>In the case of credit health insurance on which premiums are charged to the debtor in a single sum payable in advance, the amount of the refund or credit shall be not less than the amount computed by the “sum of the digits” method, commonly known as the Rule of 78.</text> </paragraph> <paragraph num="E."> <text>At the option of the insurer, refunds under §§C and D of this regulation may be calculated on a daily or on a monthly basis, as may be elected in the filing made by the insurer. Refunds may be calculated on an approximate daily basis by interpolating pro rata between the values at the beginning and at the end of the month. For this purpose, the insurer shall assume that every month has 30 days. If refunds are calculated on a monthly basis, a charge may not be made for a period less than 15 days elapsing since the last monthly installment due date, but if the period is 15 days or more, a charge may be made for the full month.</text> </paragraph> <paragraph num="F."> <text>A premium refund need not be made under §A of this regulation if the sum of the refunds on all insurance issued to the debtor by an insurer in connection with the loan would be less than $1.</text> </paragraph> <paragraph num="G."> <text>If a refund or credit is due the debtor in accordance with Insurance Article, §13-107(b), Annotated Code of Maryland, or in accordance with Insurance Article, §13-112(b), Annotated Code of Maryland, the amount of refund or credit shall be not less than the amount paid by the debtor less the amount payable under any substituted or delayed coverage issued to the debtor.</text> </paragraph> <paragraph num="H."> <text>In the event of the death of a debtor who is covered for both credit life and credit health insurance, the credit health insurance may not be deemed to have terminated by the performance of the insurance contract by reason of the debtor's death. In this case, the insurer shall make the appropriate refund for the health insurance coverage which terminated at the date of death.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Commission to Agents and Creditors."> <paragraph num="A."> <text>Maximum Commission.</text> <paragraph num="(1)"> <text>On all loans originating in Maryland, an insurer may not directly or indirectly pay, allow, or offer to pay any form of commission, as defined in Regulation .04B(6) of this chapter, in excess of the limits stated in these regulations on a form of credit life or credit health insurance regardless of whether the payment is made to a licensed agent, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance agent.</text> </paragraph> <paragraph num="(2)"> <text>The maximum commission payable to all payees on each policy of credit life or credit health insurance may not exceed a total of 36 percent of prima facie premium rates.</text> </paragraph> <paragraph num="(3)"> <text>Commission paid to a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor, regardless of whether the payee is a licensed agent, may not exceed 32 percent of prima facie premium rates.</text> </paragraph> <paragraph num="(4)"> <text>Payment as described in §A(3) of this regulation will not preclude payment of commission to a licensed agent not listed in §A(3) of this regulation, provided the total commission paid under §A(3) of this regulation and under this subsection does not exceed the maximum rate stated in §A(2) of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>A licensed agent proposing to pay commission to any payee listed in §A(3) of this regulation shall first inquire of the insurer whether any commission is being paid by the insurer to that payee on the same business. The agent may not pay that payee an amount which, when added to the amount paid by the insurer for the same business, would cause the payment to exceed the maximum rate stated in §A(3) of this regulation. The insurer shall cooperate with the agent in providing the information called for by this subsection.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Excluded from Commission. The following will not be deemed commission to an agent or creditor:</text> <paragraph num="(1)"> <text>The cost to the insurer of conducting a review performed in accordance with Regulation .26 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>Services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals and who are regular salaried officers or employees of the insurer and who receive no commission or other compensation directly dependent upon the amount of business obtained.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Reinsurance Treaties."> <paragraph num="A."> <text>To permit the Commissioner to enforce the provisions of Regulation .20 of this chapter with respect to that portion of commission defined by Regulation .04B(6)(n) of this chapter and to permit the Commissioner to ascertain that there are no violations of Insurance Article, Title 27, Annotated Code of Maryland, and other applicable sections of Insurance Article, Annotated Code of Maryland, a contract of reinsurance of credit life or credit health insurance on loans originating in Maryland may not be entered into, or continued, after the effective date of these regulations unless approved by the Commissioner and unless the reinsurer is licensed in Maryland, or qualifies under Insurance Article, §13-116, Annotated Code of Maryland, or is an accredited reinsurer.</text> </paragraph> <paragraph num="B."> <text>A person proposing to enter into a reinsurance treaty as described in this regulation or a person proposing to continue a treaty entered into before the effective date of this chapter shall submit the treaty to the Commissioner for his approval.</text> </paragraph> <paragraph num="C."> <text>If the Commissioner does not approve or disapprove the proposed or existing reinsurance treaty within 90 days after the date it is filed with him, the treaty shall be deemed to be approved.</text> </paragraph> <paragraph num="D."> <text>The Commissioner may withdraw approval of a reinsurance treaty after a hearing held not less than 20 days after written notice to the insurer and the reinsurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Prohibited Transactions."> <paragraph num="A."> <text>A person may not solicit or sell a group or individual policy of credit life or credit health insurance unless the person is then licensed as an agent in accordance with Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland. A person possessing a restricted license in accordance with Insurance Article, §10-105(e)(2)(i), Annotated Code of Maryland, shall be deemed appropriately licensed for this purpose.</text> </paragraph> <paragraph num="B."> <text>Enroller.</text> <paragraph num="(1)"> <text>An enroller may not receive any form of commission, compensation, remuneration, or other benefit based on the enrollee's activity in enrolling persons in group policies of credit life or credit health insurance.</text> </paragraph> <paragraph num="(2)"> <text>An enroller who is not also licensed as an agent may not engage in solicitation or selling or assist in solicitation or selling of an individual policy of credit life or credit health insurance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Joint life credit insurance may not be issued on a consumer loan for an amount of less than $700.</text> </paragraph> <paragraph num="D."> <text>Repealed.</text> </paragraph> <paragraph num="E."> <text>Level term credit life insurance may not be written for a term exceeding 18 months unless written in combination with decreasing term credit life insurance in connection with a balloon loan.</text> </paragraph> <paragraph num="F."> <text>Level term credit life insurance may not be written under group policies on loans repayable in installments unless:</text> <paragraph num="(1)"> <text>Written in combination with decreasing term credit life insurance in connection with balloon loans; and</text> </paragraph> <paragraph num="(2)"> <text>Limited to the balloon payment portion of balloon loans.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Disability Benefits.</text> <paragraph num="(1)"> <text>If credit health insurance is provided, disability benefits of the types stated in Regulation .14 of this chapter may not be issued to insure the same loan.</text> </paragraph> <paragraph num="(2)"> <text>This section does not prohibit the disability benefits coverage from being included in a policy or certificate of insurance covering a loan that is insured for credit health coverage as long as both coverages are not in force at the same time.</text> </paragraph> </paragraph> <paragraph num="H."> <text>An insurer or agent may not engage in any of the following practices in connection with the solicitation or sale of credit life or credit health insurance as an inducement to the sale of the insurance, and each of these practices shall be considered an unfair trade practice in accordance with Insurance Article, Title 27, Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>The offer or grant by an insurer or by any insurance agent to a creditor or to any person connected or affiliated with the creditor of any special advantage or any service not specified in the insurance contract.</text> </paragraph> <paragraph num="(2)"> <text>Agreement by an insurer or by an insurance agent to deposit with a bank or financial institution money or securities of the insurer or the agent with the design or intent that the deposit shall reduce or take the place of a deposit of money or securities which otherwise would be required of the creditor or an affiliate of the creditor by the bank or financial institution as a compensating balance or offsetting deposit for a loan or other advance.</text> </paragraph> <paragraph num="(3)"> <text>Allowing the creditor to retain premiums on credit life and credit health insurance on policies issued to the creditor or on policies sold or collected by the creditor for more than 60 days beyond the due date of the premiums. Premiums shall be remitted to the insurer within 60 days of their due dates and for purposes of these regulations, the deposit of premiums to any demand deposit account with the creditor or affiliate and the continued retention of the premiums in the deposit account for more than 60 days may not be deemed remittance to the insurer.</text> </paragraph> <paragraph num="(4)"> <text>Deposit with the creditor or an affiliate of the creditor by an insurer or by an insurance agent of money or securities without interest or at a lesser rate of interest than is generally being paid by the creditor bank or financial institution to other depositors of like amounts. This subsection may not be construed to prohibit the maintenance by an insurer or agent of demand deposits or premium deposit accounts which are reasonably necessary for use in the ordinary course of the insurer's or the agent's business.</text> </paragraph> </paragraph> <paragraph num="I."> <text>If the beneficiary or the estate of a debtor or any other person makes payments on the loan after the death of the debtor, the insurer may not reduce the amount of credit life insurance payable which would otherwise have been payable on the date of the debtor's death.</text> </paragraph> <paragraph num="J."> <text>If advance loan payments are made before the date of total disability of the debtor on a loan covered by single premium credit health insurance, or if the debtor or the beneficiary or any other person makes payments on a loan after the date the debtor is first entitled to receive a benefit for disability, the insurer may not reduce the amount of payments which were scheduled to be paid under the provisions of the credit health insurance policy because of these loan payments.</text> </paragraph> <paragraph num="K."> <text>Accidental Death Benefit Coverage.</text> <paragraph num="(1)"> <text>If credit life insurance is provided, accidental death benefit coverage may not be issued to insure the same loan.</text> </paragraph> <paragraph num="(2)"> <text>This section does not prohibit accidental death benefit coverage from being included in a policy or certificate of insurance covering a loan that is insured for credit life coverage as long as both coverages as not in force at the same time.</text> </paragraph> </paragraph> <paragraph num="L."> <text>Credit life insurance sold on the net payoff basis may not be written for an amount in excess of the scheduled principal indebtedness.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Combinations of Coverages."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>If an individual policy of credit life insurance or a certificate of group credit life insurance is used to provide more than one type of coverage, the policy or certificate shall include, for each type of coverage, a box that is:</text> <paragraph num="(a)"> <text>Prominently placed in the schedule of benefits; and</text> </paragraph> <paragraph num="(b)"> <text>Clearly and prominently labeled with the name of the type of coverage.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Before an insurer issues an individual policy of credit life insurance or a certificate of group credit life insurance that is used to provide more than one type of coverage, the insurer shall check the appropriate box to indicate the type of coverage that is being provided.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Individual Credit Life and Credit Health. Credit life insurance and credit health insurance may not be combined in a single individual policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Notice to Debtors."> <paragraph num="A."> <text>If a debtor is covered by a group credit life or credit health insurance policy providing for payment of premiums to the insurer on a monthly outstanding balance basis, the policy shall provide that in the event of termination of the policy for any reason the insured debtor shall be given written notice of termination, and that coverage will continue for at least 31 days from the date of notice, except when replacement of the coverage by the same or another insurer in the same or greater amount takes place without interruption of coverage and a new certificate reflecting the replacement coverage is delivered to the insured debtor. The notice of termination required by this section shall be given by the insurer unless the insurer is unable to identify the debtors, in which case it shall be given by the creditor. There shall be a prominent notice printed or stamped close to the schedule of benefits in the certificate form that the insurance coverage will terminate if the group policy terminates. An insurer also may include notice of additional events that would lead to termination of insurance coverage.</text> </paragraph> <paragraph num="B."> <text>If a credit life insurance policy is issued under which the benefit upon death may not completely extinguish the total principal indebtedness even if the loan account and the insurance premiums are paid on a current basis, or if a credit health insurance policy is so written that in event of disability the monthly benefit may not cover payment of the entire scheduled monthly loan installment or the total benefit may not cover payment of all of the unpaid scheduled installments under the loan, even if the loan account and the insurance premiums are paid on a current basis, then there shall be a notice to this effect in the individual policy or in certificates of insurance issued under a group policy. This notice shall be prominently printed or stamped close to the schedule of benefits in the policy and in the certificate form.</text> </paragraph> <paragraph num="C."> <text>If a policy or certificate of credit life or credit health insurance contains any age limitations, there must be printed in, or close to, the schedule of benefits, language clearly calling attention to the limitation.</text> </paragraph> <paragraph num="D."> <text>If a policy or certificate of credit life or credit health insurance insuring open lines of credit requires evidence of insurability for advances of credit, there shall be printed in, or close to, the schedule of benefits, language clearly calling attention to the evidence of insurability requirement.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Benefits."> <paragraph num="A."> <text>When a debtor has filed in accordance with the policy provisions a claim for benefits for which the insurer is liable under a credit health insurance policy, the insurer shall pay any late charges accruing on the amount payable under the claim after the date the claim has been filed.</text> </paragraph> <paragraph num="B."> <text>The amount of the claim payable under a credit life insurance policy shall be determined as of the date of death of the debtor or in the case of benefits described in Regulation .14 of this chapter, as of the date of the loss.</text> </paragraph> <paragraph num="C."> <text>For purposes of these regulations a claim shall be deemed to be filed if it is transmitted to the creditor, to the insurer, or to an agent of the insurer.</text> </paragraph> <paragraph num="D."> <text>The benefit at death under a policy of net payoff credit life insurance shall include earned but unpaid interest to date of death and any past-due installments of principal and late charges.</text> </paragraph> <paragraph num="E."> <text>An amount due under a credit life or credit health insurance policy in excess of the amount due to the creditor shall be paid by the insurer directly to the debtor, the designated second beneficiary, or the estate of the debtor, whichever is entitled to the payment. If the insurer does not have the address of the person entitled to the excess amount, the insurer shall send a check payable to that person to the creditor for transmittal.</text> </paragraph> <paragraph num="F."> <text>Claims shall be paid either by a check of the insurer or by a draft drawn upon the insurer. The creditor may not be authorized to settle or adjust claims or to act as a claim representative for the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Review of Credit Operations."> <paragraph num="A."> <text>Every insurer transacting credit life or credit health insurance in Maryland shall conduct a review of each of its creditor accounts with respect to the credit life and credit health insurance business of the creditor to assure compliance with the insurance laws and regulations of Maryland. Unless a satisfactory review has been made within 2 years before the effective date of these regulations, the first review shall be made not later than 15 months after the effective date of these regulations or of the date of the initial credit life or credit health insurance transaction between the creditor and the insurer, whichever is later. After that, a review shall be made not later than 36 months following the last preceding review.</text> </paragraph> <paragraph num="B."> <text>The review shall include but need not be limited to a determination that:</text> <paragraph num="(1)"> <text>The proper premium charges to debtors are made by the creditor and remitted in a timely manner to the insurer;</text> </paragraph> <paragraph num="(2)"> <text>The proper refunds are being accurately calculated and promptly made by the creditor;</text> </paragraph> <paragraph num="(3)"> <text>All claims are being filed promptly and properly handled;</text> </paragraph> <paragraph num="(4)"> <text>Amounts of insurance payable on death in excess of the amounts necessary to extinguish the indebtedness are properly calculated and reported to the insurer in proofs of loss;</text> </paragraph> <paragraph num="(5)"> <text>The creditor is promptly and fairly processing complaints concerning its credit insurance operations and is maintaining proper procedures for and records of the complaints processed.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Insurers shall retain copies of the reviews in their home offices for a period of at least 5 years.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Effective Date."> <text>This chapter shall take effect September 1, 1980. An individual policy or group policy or group certificate of credit life or credit health insurance not in conformity with this chapter may not be issued or continued to be used in connection with any loan made on or after the effective date of this chapter. A premium in excess of that permitted by these regulations may not be charged for credit life or credit health insurance, and a commission or other form of benefit may not be paid to agents or creditors, in excess of the premium and commission rates permitted under this chapter for credit life or credit health insurance which is issued in connection with any loan made on or after the effective date of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".28" heading="Clerical Errors."> <paragraph num="A."> <text>Excess Insurance.</text> <paragraph num="(1)"> <text>If a policy of credit life or credit health insurance limits the life or health insurance benefits to stated policy maximums, the policy and certificates of insurance issued under a group policy shall provide that if the insured has been charged premiums for insurance in excess of the stated maximums the insurer may terminate the excess insurance and refund all premiums paid by the debtor for the excess insurance.</text> </paragraph> <paragraph num="(2)"> <text>The notice of termination of the excess insurance shall state that the premium paid by the debtor for the excess coverage shall be refunded to the person entitled to it.</text> </paragraph> <paragraph num="(3)"> <text>A single premium credit life or credit health insurance policy and certificate shall further provide that excess insurance shall remain in force if the insurer does not terminate the excess insurance within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the excess coverage.</text> </paragraph> <paragraph num="(4)"> <text>An outstanding balance credit life or credit health insurance policy and certificate shall further provide that the excess insurance shall be in force for the period for which a premium was charged unless the excess insurance is cancelled before the occurrence of a loss.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Ineligible Debtor.</text> <paragraph num="(1)"> <text>Misstatement of Age.</text> <paragraph num="(a)"> <text>The policy or certificate provisions required by this section do not apply to an ineligible debtor who has misstated the debtor's age.</text> </paragraph> <paragraph num="(b)"> <text>An ineligible debtor who has misstated the debtor's age is subject to:</text> <paragraph num="(i)"> <text>For credit life insurance, the policy or certificate provisions required by Regulation .13 of this chapter; or</text> </paragraph> <paragraph num="(ii)"> <text>For credit health insurance, the policy or certificate provisions required by Regulation .17 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>If a debtor's eligibility for credit life or credit health insurance is subject to restrictions based on health, employment, age, or other factors, the policy and certificates of insurance issued under a group policy shall provide that if insurance is issued to an ineligible debtor, including a debtor who has correctly stated the debtor's age as exceeding the stated maximum eligibility age, the insurer may terminate the insurance and refund all premiums paid by the debtor.</text> </paragraph> <paragraph num="(3)"> <text>The notice of termination of the insurance shall state that the premium paid by the debtor shall be refunded to the person entitled to it.</text> </paragraph> <paragraph num="(4)"> <text>A single premium credit life or credit health insurance policy and certificate shall further provide that the insurance shall remain in force if the insurer does not terminate the coverage within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the insurance.</text> </paragraph> <paragraph num="(5)"> <text>An outstanding balance credit life or credit health insurance policy and certificate shall provide that the insurance shall be in force for the period for which a premium was charged unless the insurance is cancelled with no less than 31 days notice before the occurrence of a loss.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".29" heading="Change of Insurers — Reporting Requirements — Coverage and Rates."> <paragraph num="A."> <text>Insurers That Cease to Offer Credit Insurance. Within 90 days after an insurer ceases to offer credit insurance through a case, the insurer shall notify the Commissioner of:</text> <paragraph num="(1)"> <text>The name of the creditor;</text> </paragraph> <paragraph num="(2)"> <text>Each coverage no longer offered;</text> </paragraph> <paragraph num="(3)"> <text>he date on which the coverage ceased to be offered; and</text> </paragraph> <paragraph num="(4)"> <text>The current approved premium rate applicable to each coverage no longer offered.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Insurers That Begin to Offer Credit Insurance.</text> <paragraph num="(1)"> <text>At the end of a calendar year in which an insurer has begun to offer credit insurance for which premium rates have not yet been established by the case method but for which a prior insurer submitted notification of a new case required by Regulation .06A(3) and (4) of this chapter, the insurer shall:</text> <paragraph num="(a)"> <text>File the report for the case required by Regulation .06A(2) of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Submit the insurer's experience and the experience of the prior insurer for the experience period even if the account did not qualify as a case for the most recent policy year.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer that is required to submit its experience and the experience of a prior insurer under §B(1) of this regulation shall submit the experience of each insurer:</text> <paragraph num="(a)"> <text>Separately by year; and</text> </paragraph> <paragraph num="(b)"> <text>As a total for a 2-year period.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Commissioner shall notify an insurer if a report for a case is required to be filed under §B(2) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>If an insurer begins to offer credit insurance through a case during an experience period for which premium rates were established for a prior insurer by the case method, the insurer shall certify to the Commissioner that the insurer will not charge premium rates that exceed the rates permitted under Regulation .08E of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>If an insurer begins to offer credit insurance for a case after the end of a previously established experience period but before the effective date of new premium rates approved by the Commissioner based on that experience period, the:</text> <paragraph num="(a)"> <text>Commissioner shall, when new premium rates are established, send written notice of the new premium rates to the insurer, stating an effective date that provides the insurer at least 30 days notice; and</text> </paragraph> <paragraph num="(b)"> <text>Insurer shall:</text> <paragraph num="(i)"> <text>Beginning not later than the effective date established by the Commissioner, use premium rates not greater than the new premium rates approved by the Commissioner; and</text> </paragraph> <paragraph num="(ii)"> <text>At the end of the experience period stated by the Commissioner, file the report for the case required by Regulation .06A(2) of this chapter, submitting the experience of the former insurer and the insurer's own experience for the term of the experience period in order to determine subsequent rates for the account.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>An insurer that is required to submit its experience and the experience of a former insurer under §B(5)(b)(ii) of this regulation shall submit the experience of each insurer:</text> <paragraph num="(a)"> <text>Separately by year; and</text> </paragraph> <paragraph num="(b)"> <text>As a total for a 2-year period.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>On the request of a succeeding insurer, a prior insurer shall provide the succeeding insurer with any experience information of the prior insurer that the succeeding insurer needs to meet the requirements of this section.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Commercial Law Article, §12-312 and Title 12, Subtitle 3; Insurance Article, §§2-109, 13-110, 13-111, and 13-112; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1978 (4:25 Md. R. 1940)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised at 7:11 Md. R. 1035</annotation> <annotation type="History" subtype="Administrative History">Regulations .04 and .21 amended as an emergency provision effective September 1, 1980 (7:14 Md. R. 1345); adopted permanently effective December 30, 1980 (7:24 Md. R. 2256)</annotation> <annotation type="History" subtype="Administrative History">Regulations .13 and .17 amended effective January 28, 1985 (12:2 Md. R. 139)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective August 8, 1988 (15:16 Md. R. 1914)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended effective August 8, 1988 (15:16 Md. R. 1914)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24D adopted effective August 8, 1988 (15:16 Md. R. 1914)</annotation> <annotation type="History" subtype="Administrative History">Regulation .27 amended as an emergency provision effective June 24, 1980 (7:14 Md. R. 1345); adopted permanently effective December 30, 1980 (7:24 Md. R. 2256) This amendment changed the effective date given in the Notice of Final Adoption (see 7:11 Md. R. 1035) from July 1, 1980 to September 1, 1980</annotation> <annotation type="History" subtype="Administrative History">Annotation: Regulations .04F(14), .20, and .21, concerning the regulation of maximum commissions, held valid and within the legislative grant of authority to the Insurance Commissioner. Agency quasi-legislative actions are not limited by a recorded administrative record. These regulations and their enabling statute do not violate the Contract Clause of the U.S. Constitution. Automobile Trade Association v. Insurance Commissioner, 292 Md. 15, 437 A. 2d 199 (1981).</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.51 to COMAR 31.13.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective May 15, 2000 (27:9 Md. R. 860)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective May 15, 2000 (27:9 Md. R. 860)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08A, B repealed effective May 15, 2000 (27:9 Md. R. 860)</annotation> <annotation type="History" subtype="Administrative History">Regulation .29 adopted effective May 15, 2000 (27:9 Md. R. 860)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective March 1, 2001 (27:22 Md. R. 2062)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective October 12, 2015 (42:20 Md. R. 1266); November 7, 2016 (43:22 Md. R. 1223)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09A amended effective October 12, 2015 (42:20 Md. R. 1266)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13 amended effective October 12, 2015 (42:20 Md. R. 1266)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15A, E amended effective June 1, 2016 (43:5 Md. R. 387)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 amended effective October 12, 2015 (42:20 Md. R. 1266)</annotation> <annotation type="History" subtype="Administrative History">Regulation .21A amended effective November 7, 2016 (43:22 Md. R. 1223)</annotation> <annotation type="History" subtype="Administrative History">Regulation .22C amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="02" heading="Credit Life and Credit Health Reinsurance"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>In connection with credit life and credit health insurance written in Maryland by an authorized insurer, Insurance Article, §13-116, Annotated Code of Maryland, permits a fronting agreement between the authorized insurer writing the business and an otherwise unauthorized insurer if the unauthorized insurer maintains certain deposits with the Commissioner. The purpose of these regulations is to establish rules with regard to the deposits which are to be held by the Commissioner for the protection of affected authorized insurers, policyholders, certificate holders, and creditors in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Acceptable securities” means any one of or a combination of the following, provided the securities are not in default as to payment of principal or interest at the time of deposit with the Commissioner:</text> <paragraph num="(a)"> <text>Cash;</text> </paragraph> <paragraph num="(b)"> <text>General obligations of, or obligations guaranteed by, the federal government;</text> </paragraph> <paragraph num="(c)"> <text>General obligations of, or obligations guaranteed by this State or any of its political subdivisions; or</text> </paragraph> <paragraph num="(d)"> <text>General obligations of the District of Columbia or of any state of the United States.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Commissioner” means the Insurance Commissioner of the State of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Fronting agreement” means an agreement by reinsurance or otherwise under which an authorized insurer transfers to one or more unauthorized insurers substantially the entire risk of loss under substantially:</text> <paragraph num="(a)"> <text>All of the insurance written by the authorized insurer in this State;</text> </paragraph> <paragraph num="(b)"> <text>All of one or more kinds, lines, types, or classes of insurance;</text> </paragraph> <paragraph num="(c)"> <text>All of the business produced through one or more agents or agencies;</text> </paragraph> <paragraph num="(d)"> <text>All of the business in a designated geographical area; or</text> </paragraph> <paragraph num="(e)"> <text>All of the business written on one or more policy forms.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Insurer”, unless the context indicates otherwise, means an insurer not licensed to do life and health insurance business in Maryland and not an accredited reinsurer but qualified or proposing to qualify as a fronting reinsurer under Insurance Article, §13-116, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Deposit."> <paragraph num="A."> <text>Securities on Deposit with the Commissioner.</text> <paragraph num="(1)"> <text>In order to qualify as an insurer in accordance with Insurance Article, §13-116, Annotated Code of Maryland, the insurer at all times shall keep on deposit with the Commissioner acceptable securities with a total value at least equal to the sum of §A(1)(a) and (b) of this regulation:</text> <paragraph num="(a)"> <text>$500,000 reduced by the amount of the insurer's actual capital; and</text> </paragraph> <paragraph num="(b)"> <text>$750,000 at the time of initial qualification and, after that, $500,000, in either case reduced by the amount of the insurer's actual surplus.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the insurer's actual capital exceeds $500,000, the excess may be used by the insurer to reduce the amount required by §A(1)(b) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>If the insurer's actual surplus exceeds the amount required under §A(1)(b) of this regulation, the excess may not be used to reduce the amount required by §A(1)(a), of this regulation, except as provided in §A(4) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>If, after deducting investments which qualify under Insurance Article, §5-510(a) and (b), Annotated Code of Maryland, in the amount of the insurer's actual capital, the insurer's remaining investments which qualify under Insurance Article, §5-511, Annotated Code of Maryland, exceed the amount of the insurer's liabilities as defined in Insurance Article, §5-103, that part of the excess assets which also qualifies under Insurance Article, §5-510(a) and (b), Annotated Code of Maryland, may be used, at the insurer's option, as a credit against either §A(1)(a) or A(1)(b) of this regulation, but not both.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In determining the amount of the insurer's actual capital, only the type of investments listed in Insurance Article, §5-510(a) and (b), Annotated Code of Maryland, shall be considered.</text> </paragraph> <paragraph num="C."> <text>The requirements of Insurance Article, Title 5, Subtitle 5, shall be used to determine the amount of the insurer's actual surplus.</text> </paragraph> <paragraph num="D."> <text>In determining the value of the deposit, securities shall be valued at market but not in excess of par value.</text> </paragraph> <paragraph num="E."> <text>In order to ascertain that the value of the securities on deposit is sufficient to meet the requirements of Insurance Article, §13-116, Annotated Code of Maryland, and of this regulation, the insurer shall:</text> <paragraph num="(1)"> <text>File with the Commissioner not later than March 1 in each calendar year a certified copy of its NAIC Convention Blank form of Annual Statement as of the preceding December 31; and</text> </paragraph> <paragraph num="(2)"> <text>Require the custodian to supply the Commissioner not later than January 31 in each calendar year with a proper accounting of the securities on deposit as of the preceding December 31. This accounting shall include a listing of the securities on deposit showing the par value and the market value of each, together with a statement as to whether any are in default.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If an insurer which has previously qualified under Insurance Article, §13-116, Annotated Code of Maryland, no longer meets the requirements of that section, the Commissioner shall notify the insurer in writing of the additional amount of deposit required to restore the insurer's qualification. If the insurer does not satisfy the requirements by making the additional deposit within 30 days after the date of the Commissioner's notice, the insurer shall forthwith cease to accept any reinsurance under any fronting agreement to which Insurance Article, §13-116, Annotated Code of Maryland, applies.</text> </paragraph> <paragraph num="G."> <text>Unless the Commissioner liquidates a deposit for the purpose of paying claims to Maryland policyholders, certificate holders, authorized insurers, or creditors and for providing for the expenses incurred in connection with the payment of these claims, a deposit made by an insurer for the purpose of qualifying under Insurance Article, §13-116, Annotated Code of Maryland, shall remain on deposit with the Commissioner until:</text> <paragraph num="(1)"> <text>The insurer notifies the Commissioner that it no longer wishes to qualify; and</text> </paragraph> <paragraph num="(2)"> <text>All policies issued in Maryland and reinsured by the insurer are terminated.</text> </paragraph> </paragraph> <paragraph num="H."> <text>If the insurer is adjudged insolvent, or, if for any reason the Commissioner, after a hearing, determines that the rights of authorized insurers, policyholders, certificate holders, or creditors may be in jeopardy, the Commissioner may direct the custodian to immediately deliver to him the securities then held on deposit, or at the Commissioner's option, he may direct the custodian to sell the securities and remit the proceeds of the sale to the Commissioner.</text> </paragraph> <paragraph num="I."> <text>An authorized insurer desiring to make a fronting agreement shall first ascertain that the reinsurer is appropriately licensed in Maryland, or is an accredited reinsurer, or is qualified as a fronting reinsurer under Insurance Article, §13-116, Annotated Code of Maryland. An authorized insurer shall be subject to the penalties provided in Insurance Article, §4-113, Annotated Code of Maryland, as well as any other applicable penalties if:</text> <paragraph num="(1)"> <text>The authorized insurer makes a fronting agreement with a reinsurer which is not licensed, or is not an accredited reinsurer, or has not qualified in accordance with Insurance Article, §13-116, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(2)"> <text>The authorized insurer continues in a fronting agreement after having been notified by the Commissioner that the reinsurer has ceased to be qualified as a fronting reinsurer.</text> </paragraph> </paragraph> <paragraph num="J."> <text>The deposit required by these regulations may be made either by the insurer, or by another person on behalf of the insurer. If the deposit is made by another person, the custodian agreement shall provide the Commissioner all the rights of access to the deposit which these regulations require. If any agreement with reference to the deposit is made between the insurer and the person making the deposit, the insurer shall submit the agreement to the Commissioner for his approval at the time the insurer requests the Commissioner to accept the custodian agreement under which the deposit is kept.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Custodian Agreement."> <paragraph num="A."> <text>The deposit of acceptable securities shall be maintained under a custodian agreement acceptable to the Commissioner. If the deposit is made by a person other than the insurer, the Commissioner will require that person to also become a party to the custodian agreement.</text> </paragraph> <paragraph num="B."> <text>The custodian shall be a bank located in Maryland, which has deposits insured by the Federal Deposit Insurance Corporation, and which is not affiliated with the insurer.</text> </paragraph> <paragraph num="C."> <text>Not later than January 31 in each calendar year, the custodian shall give the accounting referred to in Regulation .03E(2) of this chapter to the Commissioner and to the insurer. At the Commissioner's request at any other time, the custodian also shall give an accounting to the Commissioner and to the insurer within 15 days of the Commissioner's request.</text> </paragraph> <paragraph num="D."> <text>The expense of maintaining the deposit under the custodian agreement and of making the reports required of the custodian shall be borne by the insurer.</text> </paragraph> <paragraph num="E."> <text>The custodian agreement shall provide that the custodian shall promptly return the deposit to the Commissioner at the Commissioner's request, or at the Commissioner's option the custodian shall sell all or a portion of the deposit and remit the net proceeds of the sale to the Commissioner.</text> <paragraph num="(a)"> <text>Cash,</text> </paragraph> <paragraph num="(b)"> <text>General obligations of, or obligations guaranteed by, the federal government,</text> </paragraph> <paragraph num="(c)"> <text>General obligations of, or obligations guaranteed by this State or any of its political subdivisions, or</text> </paragraph> <paragraph num="(d)"> <text>General obligations of the District of Columbia or of any state of the United States, provided in any case that the obligations are not in default as to payment of principal or interest at the time of deposit with the Commissioner.</text> </paragraph> </paragraph> <text>WHEREAS the reinsurance of credit life and credit health insurance written in Maryland is prohibited unless the reinsurer is an authorized insurer or is an accredited reinsurer, or unless the reinsurer makes a deposit of securities with the Commissioner in accordance with Insurance Article, §13-116, Annotated Code of Maryland,</text> <text>NOW, THEREFORE, in consideration of these covenants, the parties agree as follows:</text> <paragraph num="1."> <text>The Insurer agrees to pledge securities and deliver them to the custodian as directed by the Commissioner in accordance with the provisions of Insurance Article, Annotated Code of Maryland.</text> </paragraph> <text>The total value of the securities shall be not less than required by Insurance Article, §13-116, Annotated Code of Maryland, and by regulations under COMAR 31.13.02.</text> <text>The insurer has assigned, transferred, and delivered to the Commissioner, and the Commissioner has received securities which have been accepted and approved by the Commissioner to the aggregate amount in value prescribed by the Commissioner, which are to be held by the custodian for the Commissioner in accordance with Insurance Article, Annotated Code of Maryland, the securities being as follows:</text> <text>_________________________________________________________________</text> <text>______________________________________________________________________________</text> <text>______________________________________________________________________________</text> <paragraph num="2."> <text>The custodian agrees, at the expense of the insurer, to hold all of the securities received by it from the insurer in accordance with the terms of this agreement. The custodian also agrees not later than January 31 in each calendar year to give a proper accounting of the securities as of the preceding December 31 to the Commissioner and to the insurer, and to give anaccounting to the Commissioner and to the insurer at other times at the Commissioner's request within 15 days of the request. The accounting shall include a listing of the securities on deposit, showing the par value and the market value of each, together with a statement as to whether any are in default.</text> </paragraph> <paragraph num="3."> <text>The custodian assumes no responsibility for the character of the securities held by it under this agreement nor for the sufficiency of the value of the securities.</text> </paragraph> <paragraph num="4."> <text>The insurer shall have the right, from time to time, to deliver to the custodian additional securities as prescribed by Insurance Article, §13-116, Annotated Code of Maryland, and by regulations under COMAR 31.13.02 to be held by the custodian, subject to the terms of this agreement and to substitute other securities in the place and stead of the securities then held by the custodian, provided that every addition, substitution, or withdrawal shall first be approved in writing by the Commissioner.</text> </paragraph> <paragraph num="5."> <text>The insurer shall be entitled to all interest which may become due and payable on the securities, and the custodian shall permit the insurer to remove and withdraw the interest unless otherwise directed by the Commissioner.</text> </paragraph> <paragraph num="6."> <text>If the insurer becomes insolvent, or, if for any reason the Commissioner determines that the rights of policyholders, certificate holders, authorized insurers, or creditors may be in jeopardy, the Commissioner may issue a written order briefly stating his determination and directing the custodian immediately to deliver to the Commissioner the securities then held by the custodian under the terms of this agreement. This order shall be effective upon delivery to the custodian. A copy of the order shall also be delivered to the insurer. Upon receipt of the order, the custodian shall promptly deliver to the Commissioner the securities then held by the custodian under the terms of this agreement.</text> </paragraph> <paragraph num="7."> <text>Instead of requesting that the securities be delivered to him, the Commissioner may direct the custodian to sell, assign and deliver all or any portion of the securities at any public or private sale within or without the State of Maryland. If the custodian is directed by the Commissioner to sell securities, the custodian is authorized to deduct from the proceeds of the sale the amount necessary for the payment of costs and expenses incident to the sale. The custodian shall promptly pay the balance of the proceeds of the sale to the Commissioner.</text> </paragraph> <paragraph num="8."> <text>This agreement may be terminated by either the insurer or the custodian 60 days following delivery of written notice of intention to terminate to each of the other parties, including the Commissioner, provided, however, that the custodian may not release or return to the insurer any of the securities held by it under this agreement without first having received written authority from the Commissioner to do so.</text> </paragraph> <paragraph num="9."> <text>The Commissioner may at any time terminate this agreement by written notice to each of the other parties. Upon receipt of the notice, the custodian shall immediately deliver all securities held under this agreement to the Commissioner.</text> </paragraph> <text>IN WITNESS WHEREOF, the Insurance Commissioner of the State of Maryland has affixed his hand and seal, and XYZ Life Insurance Company and ABC Bank have caused this agreement to be executed on their behalf by their president or vice president and have caused their corporate seals to be affixed, and duly attested, all as of the day and year first above written.</text> <text>ATTEST:</text> <text>________________________________________________ ______________________________________________________</text> <text>Secretary Insurer</text> <text>Corporate Seal By:___________________________________________________</text> <text>President-Vice President</text> <text>________________________________________________ ______________________________________________________</text> <text>Secretary Custodian</text> <text>Corporate Seal By:___________________________________________________</text> <text>President-Vice President</text> <text>(SEAL) ______________________________________________________</text> <text>Insurance Commissioner</text> <text>State of Maryland</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Letter of Credit."> <paragraph num="A."> <text>To the extent that the securities on deposit with the Commissioner and the other assets of the fronting reinsurer are insufficient to qualify in accordance with Insurance Article, §13-116, Annotated Code of Maryland, and these regulations, the insurer may provide the Commissioner with an irrevocable letter of credit in an amount at least equal to the shortfall.</text> </paragraph> <paragraph num="B."> <text>In order to be acceptable for the purpose of this regulation, the letter of credit shall be issued by a bank located in Maryland, which has deposits insured by the Federal Deposit Insurance Corporation, and which is not affiliated with the insurer.</text> </paragraph> <paragraph num="C."> <text>The letter of credit shall be automatically renewable from time to time, and may only be terminated by the issuing bank upon 30 days' written notice sent to the Commissioner by certified or registered mail.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 4-105, 4-116, and 13-116, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 12, 1980 (7:25 Md. R. 2334)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A amended effective October 29, 1990 (17:21 Md. R. 2527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03E amended effective October 29, 1990 (17:21 Md. R. 2527)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 adopted effective October 29, 1990 (17:21 Md. R. 2527)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.52 to COMAR 31.13.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective November 7, 2016 (43:22 Md. R. 1223)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03I amended effective November 7, 2016 (43:22 Md. R. 1223)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 Exhibit A amended effective November 7, 2016 (43:22 Md. R. 1223)</annotation> </annotations> </chapter> <chapter num="03" heading="Standards for Credit Involuntary Unemployment Benefit Insurance"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to promote the public welfare by regulating credit involuntary unemployment benefit insurance and to establish standards for premium rates.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Regulation of Commissions."> <text>The Commissioner finds it necessary to establish maximum rates of commission that may be paid to insurance producers and maximum benefits payable to creditor group policyholders in the form of dividends, retrospective rate credits, or any other form, to ensure that credit involuntary unemployment benefit insurance operations of insurers do not:</text> <paragraph num="A."> <text>Result in rates that are excessive in relation to benefits;</text> </paragraph> <paragraph num="B."> <text>Endanger the solvency of insurers rendering their transaction of business hazardous to policyholders or the public; and</text> </paragraph> <paragraph num="C."> <text>Adversely affect other classes of business of insurers.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <text>This chapter applies to all authorized insurers delivering, issuing for delivery, or proposing to deliver or issue for delivery, credit involuntary unemployment benefit insurance in Maryland under individual policies, group policies, or group certificates that are required to be filed under Insurance Article, §13-110, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Account” means the coverage for a single plan of benefits for credit involuntary unemployment benefit insurance under one premium payment method offered to a single class of business in Maryland by one creditor, whether written on a group or individual basis, or both.</text> </paragraph> <paragraph num="(2)"> <text>“Advance loan payment” means the payment of a scheduled loan installment before the installment's scheduled due date on a loan repayable in substantially equal installments.</text> </paragraph> <paragraph num="(3)"> <text>“Balloon loan” means an indebtedness, the initial amount of which includes both:</text> <paragraph num="(a)"> <text>An amount that decreases by substantially equal periodic payments; and</text> </paragraph> <paragraph num="(b)"> <text>A final installment amount that is larger than any one of the periodic payments.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Case” means an account or, at the option of the insurer, a combination of some or all of the insurer's accounts written under an identical plan of benefits in which the gross premiums before refunds and at prima facie rates, whether consisting of one or more accounts, exceed or may reasonably be expected to exceed $50,000 in a policy year.</text> </paragraph> <paragraph num="(5)"> <text>“Case method” means the filing and rate requirements stated in this chapter for business that meets the definition of a case.</text> </paragraph> <paragraph num="(6)"> <text>“Class of business” includes:</text> <paragraph num="(a)"> <text>Cash loans not secured by real estate and made by banks;</text> </paragraph> <paragraph num="(b)"> <text>Cash loans made by credit unions;</text> </paragraph> <paragraph num="(c)"> <text>Cash loans not secured by real estate and made by creditors other than banks and credit unions;</text> </paragraph> <paragraph num="(d)"> <text>Cash loans secured by real estate and made by banks;</text> </paragraph> <paragraph num="(e)"> <text>Cash loans secured by real estate and made by creditors other than banks and credit unions;</text> </paragraph> <paragraph num="(f)"> <text>Production credit association and other agricultural loans;</text> </paragraph> <paragraph num="(g)"> <text>Installment sales finance contracts; and</text> </paragraph> <paragraph num="(h)"> <text>Revolving charge agreements, credit card accounts, and open-end credit other than credit union accounts.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>Commission.</text> <paragraph num="(a)"> <text>“Commission” means all forms of compensation or remuneration including dividends, retrospective rating credits, or any other form of benefit.</text> </paragraph> <paragraph num="(b)"> <text>“Commission” includes, but is not limited to:</text> <paragraph num="(i)"> <text>Commissions as a percentage of, or otherwise based on, premiums or amounts of insurance sold;</text> </paragraph> <paragraph num="(ii)"> <text>Retrospective or refund rate credits, except credits on creditor paid insurance;</text> </paragraph> <paragraph num="(iii)"> <text>Dividends, except dividends on creditor paid insurance;</text> </paragraph> <paragraph num="(iv)"> <text>Commissions or any other form of compensation or remuneration for reinsurance ceded or assumed;</text> </paragraph> <paragraph num="(v)"> <text>Service fees or administrative fees;</text> </paragraph> <paragraph num="(vi)"> <text>Consulting fees;</text> </paragraph> <paragraph num="(vii)"> <text>Expense allowances;</text> </paragraph> <paragraph num="(viii)"> <text>Gifts;</text> </paragraph> <paragraph num="(ix)"> <text>Expense for vacations or travel other than travel for training purposes or attendance at conventions;</text> </paragraph> <paragraph num="(x)"> <text>Value of electronic data-processing equipment or services furnished;</text> </paragraph> <paragraph num="(xi)"> <text>Allowances or subsidies for rent, payroll, advertising, telephone, or other purposes;</text> </paragraph> <paragraph num="(xii)"> <text>Advertising provided by the insurer;</text> </paragraph> <paragraph num="(xiii)"> <text>Supplies, excluding application, reporting and claim forms, envelopes for transmitting the forms, and brochures, rate books, and rate charts related to the insurer's credit involuntary unemployment benefit insurance;</text> </paragraph> <paragraph num="(xiv)"> <text>Dividends, profits, capital gains, commissions, or other benefits that may be reasonably anticipated under reinsurance agreements with any unauthorized reinsurer affiliated with or controlled by a licensed insurance producer, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance producer;</text> </paragraph> <paragraph num="(xv)"> <text>Services, including an amount paid to an employee of the insurer specifically for services provided to a creditor or affiliate of the creditor if the services are normally performed outside the home office of the insurer, but not including services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals, are regular salaried officers or employees of the insurer, and receive no commission or other compensation directly dependent upon the amount of business obtained;</text> </paragraph> <paragraph num="(xvi)"> <text>Value of training programs for employees of the creditor or insurance producer, excluding training of employees provided solely in connection with a program of credit involuntary unemployment benefit insurance for the purpose of acquainting the creditor's employees with administrative procedures of the insurer when the salary of the employees during the training period is paid by the creditor;</text> </paragraph> <paragraph num="(xvii)"> <text>Rental by the insurer of space or equipment from the insurance producer or creditor, excluding rentals not related to any insurance transaction on terms approved by the Commissioner;</text> </paragraph> <paragraph num="(xviii)"> <text>Commission or some other form of compensation or remuneration in excess of what otherwise would be payable in connection with the sale of allied lines of insurance or other business, such as credit property insurance and maintenance warranties;</text> </paragraph> <paragraph num="(xix)"> <text>Profit sharing plans;</text> </paragraph> <paragraph num="(xx)"> <text>Bonuses;</text> </paragraph> <paragraph num="(xxi)"> <text>Finders' fees; and</text> </paragraph> <paragraph num="(xxii)"> <text>Offers of share ownership in an agency or corporation at less than the fair market value.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Commission” does not include:</text> <paragraph num="(i)"> <text>The cost to the insurer of conducting a review performed under Regulation .21 of this chapter; or</text> </paragraph> <paragraph num="(ii)"> <text>Services performed by account executives or liaison personnel of the insurer who visit the offices of the creditor at occasional intervals, are regular salaried officers or employees of the insurer, and receive no commission or other compensation directly dependent upon the amount of business obtained.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(9)"> <text>“Consumer loans” means loans issued by lenders licensed under Financial Institutions Article, Title 11, Subtitle 2, Annotated Code of Maryland, and made under Commercial Law Article, Title 12, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Credit involuntary unemployment benefit insurance” means insurance on a debtor that provides indemnity for payments that are due on a specific loan or other credit transaction while the debtor is involuntarily unemployed.</text> </paragraph> <paragraph num="(11)"> <text>Creditor-Paid Insurance.</text> <paragraph num="(a)"> <text>“Creditor-paid insurance” means insurance in which the creditor pays the insurance premium without separate charge to the debtor.</text> </paragraph> <paragraph num="(b)"> <text>“Creditor-paid insurance” does not include a transaction if:</text> <paragraph num="(i)"> <text>The debtor is required to pay an identifiable charge or premium for credit involuntary unemployment benefit insurance; or</text> </paragraph> <paragraph num="(ii)"> <text>There is a differential in finance, interest, carrying, service, or other similar charge made to debtors who are in similar circumstances except for their insured or noninsured status.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Earned premiums at prima facie” means the premiums that would have been earned if all earned premiums had been written at prima facie rates.</text> </paragraph> <paragraph num="(13)"> <text>“Enroller” means a person:</text> <paragraph num="(a)"> <text>Who enrolls individuals or issues certificates under group credit involuntary unemployment benefit insurance;</text> </paragraph> <paragraph num="(b)"> <text>Who does not receive any form of commission, compensation, remuneration, or other benefit based on this activity; and</text> </paragraph> <paragraph num="(c)"> <text>Whose salary scale is not dependent on the volume of insurance.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Experience period” means 2 consecutive calendar years or, at the option of the insurer, 2 consecutive policy years under a group policy issued to one creditor or under one case.</text> </paragraph> <paragraph num="(15)"> <text>“Family leave” means an employer-approved temporary leave of absence due to one of the following:</text> <paragraph num="(a)"> <text>The birth of a child;</text> </paragraph> <paragraph num="(b)"> <text>The placement of a child for adoption or foster care;</text> </paragraph> <paragraph num="(c)"> <text>The need to care for a spouse, child, or parent, if the spouse, child, or parent has a serious health condition; or</text> </paragraph> <paragraph num="(d)"> <text>Any other event as may be defined in the policy and approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Full time” means working for wages or salary for at least 30 hours per week.</text> </paragraph> <paragraph num="(17)"> <text>Insurance Producer.</text> <paragraph num="(a)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101(u), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Insurance producer” includes a person who:</text> <paragraph num="(i)"> <text>Sells a group or individual policy of credit involuntary unemployment benefit insurance; or</text> </paragraph> <paragraph num="(ii)"> <text>Receives any form of commission, compensation, remuneration, or other benefit based on enrolling individuals or issuing certificates under group credit involuntary unemployment benefit insurance.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(18)"> <text>Involuntary Unemployment.</text> <paragraph num="(a)"> <text>“Involuntary unemployment” means involuntary loss of employment.</text> </paragraph> <paragraph num="(b)"> <text>“Involuntary unemployment” includes a loss of employment as a result of individual or mass layoff, termination by employer, organized labor dispute including general strike and lockout, or any other event defined by the policy.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Joint involuntary unemployment insurance” means credit involuntary unemployment benefit insurance issued to two codebtors if both are jointly and severally liable for the debt which pays a full benefit as defined in the policy if either or both of the codebtors becomes eligible for benefits under the policy.</text> </paragraph> <paragraph num="(20)"> <text>“Loss ratio” means the ratio of incurred claims to premiums earned during a specified period.</text> </paragraph> <paragraph num="(21)"> <text>“New case” means an account in which the gross premiums before refunds and at prima facie premium rates exceed or may reasonably be expected to exceed $50,000 in the most recent policy year, but did not exceed $50,000 in the prior policy year.</text> </paragraph> <paragraph num="(22)"> <text>“Monthly premium insurance” means insurance for which a separately identifiable insurance premium is paid each month.</text> </paragraph> <paragraph num="(23)"> <text>Plan of Benefits.</text> <paragraph num="(a)"> <text>“Plan of benefits” means credit involuntary unemployment benefit insurance that provides benefits after either a 30-day elimination period or a 30-day retroactive waiting period, on either a single premium or monthly premium basis, and provides a maximum number of 6, 9, 12, 18, or 24 monthly benefits.</text> </paragraph> <paragraph num="(b)"> <text>“Plan of benefits” includes:</text> <paragraph num="(i)"> <text>Each possible combination of waiting period, premium method, and maximum number of benefits; and</text> </paragraph> <paragraph num="(ii)"> <text>Any other plan of benefits approved by the Commissioner.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(24)"> <text>Policy Year.</text> <paragraph num="(a)"> <text>“Policy year” means, in the case of a group policy, the period between a policy anniversary and the next succeeding policy anniversary.</text> </paragraph> <paragraph num="(b)"> <text>“Policy year” means, in the case of an individual policy, a calendar year or a period of 12 consecutive months beginning from an anniversary of the opening of an account, as the insurer may elect.</text> </paragraph> </paragraph> <paragraph num="(25)"> <text>“Prima facie loss ratio” means the ratio of incurred claims to earned premiums at prima facie during a specified period.</text> </paragraph> <paragraph num="(26)"> <text>“Prima facie premium rates” means maximum applicable premium rates as authorized and promulgated by the Commissioner from time to time under Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(27)"> <text>Single Premium Insurance.</text> <paragraph num="(a)"> <text>“Single premium insurance” means insurance for which the debtor pays or finances the entire required premium in advance.</text> </paragraph> <paragraph num="(b)"> <text>“Single premium insurance” includes insurance if:</text> <paragraph num="(i)"> <text>The creditor adds identifiable insurance charges or premiums for credit insurance to the indebtedness; and</text> </paragraph> <paragraph num="(ii)"> <text>A direct or indirect finance, carrying, credit, or service charge is made to the debtor on the insurance charges or premiums.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(28)"> <text>Unauthorized Reinsurer.</text> <paragraph num="(a)"> <text>“Unauthorized reinsurer” means any insurer meeting the qualifications of a nonadmitted accredited reinsurer.</text> </paragraph> <paragraph num="(b)"> <text>“Unauthorized reinsurer” does not include any insurer authorized to do business in this State or any insurer qualified under Insurance Article, §13-116, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Loss Ratio."> <paragraph num="A."> <text>Benefits for policies issued under these regulations shall be deemed reasonable in relation to premiums if claims incurred under the policies result in, or may reasonably be expected to result in, a loss ratio of not less than 55 percent when premiums do not exceed prima facie premium rates.</text> </paragraph> <paragraph num="B."> <text>When the prima facie loss ratio exceeds 58 percent, the premiums shall be determined in accordance with the methods of Regulation .12 of this chapter.</text> </paragraph> <paragraph num="C."> <text>Rate Reduction.</text> <paragraph num="(1)"> <text>When the prima facie loss ratio is less than 52 percent:</text> <paragraph num="(a)"> <text>A reduced premium rate shall be used that is calculated by dividing the prima facie loss ratio by 0.55 and multiplying the result by the prima facie premium rate; but</text> </paragraph> <paragraph num="(b)"> <text>Except as provided in §C(2) of this regulation, the reduced premium rate may not be less than 40 percent of the prima facie premium rate.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>At the option of the insurer, a premium rate less than 40 percent of the prima facie premium rate may be used.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Statistics and Reporting Forms."> <paragraph num="A."> <text>General Requirements. To permit the Commissioner to review the basis of prima facie premium rates and the basis of premium rates being charged on the case method, each insurer writing credit involuntary unemployment benefit insurance shall:</text> <paragraph num="(1)"> <text>Maintain statistics relating to the insurer's Maryland business; and</text> </paragraph> <paragraph num="(2)"> <text>File the statistics with the Commissioner in the form required by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Case Filing Requirements.</text> <paragraph num="(1)"> <text>An insurer shall file with the Commissioner the statistics:</text> <paragraph num="(a)"> <text>For each account that has qualified as a case for the 2 most recent policy years, not later than 120 days after the end of the second calendar year to which the statistics relate; and</text> </paragraph> <paragraph num="(b)"> <text>For all other business, including new cases, not later than June 30 following the close of the calendar year to which the statistics relate.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Each insurer writing credit involuntary unemployment benefit insurance also shall file with the Commissioner:</text> <paragraph num="(a)"> <text>Notice of each account that is a new case;</text> </paragraph> <paragraph num="(b)"> <text>The identity of the creditor for each new case, including:</text> <paragraph num="(i)"> <text>The corporate name of the creditor;</text> </paragraph> <paragraph num="(ii)"> <text>Any “trading as” name used by the creditor;</text> </paragraph> <paragraph num="(iii)"> <text>The address and phone number of the creditor; and</text> </paragraph> <paragraph num="(iv)"> <text>The name of a contact person for insurance matters at the creditor; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The statistics for the most recent calendar year, certified by a responsible officer of the insurer, that would have been required under this regulation if the new case had been a case for each of the 2 most recent policy years.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An insurer shall file the information on a new case with the Commissioner not later than the June 30 following the close of the calendar year in which the account became a new case.</text> </paragraph> <paragraph num="(4)"> <text>Use of Code Numbers.</text> <paragraph num="(a)"> <text>In filing the information required by this section, an insurer may use a code number instead of the name and address of a creditor.</text> </paragraph> <paragraph num="(b)"> <text>If an insurer uses a code number instead of the name and address of a creditor, the insurer shall submit a separate list that identifies the name and address of each creditor with the creditor's code number.</text> </paragraph> <paragraph num="(c)"> <text>The list that identifies the name and address of each creditor with the creditor's code number is confidential commercial information under State Government Article, §10-617(d), Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Reports required under §B(1)(b) of this regulation shall be submitted on a calendar year basis.</text> </paragraph> <paragraph num="D."> <text>All reports, both those on a calendar year basis and those on the case method, shall be submitted separately for:</text> <paragraph num="(1)"> <text>Each class of business;</text> </paragraph> <paragraph num="(2)"> <text>Each premium payment method, single premium or monthly premium;</text> </paragraph> <paragraph num="(3)"> <text>Each plan of benefits;</text> </paragraph> <paragraph num="(4)"> <text>Single credit involuntary unemployment benefit insurance and joint credit involuntary unemployment benefit insurance; and</text> </paragraph> <paragraph num="(5)"> <text>Family leave.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Every report filed with the Commissioner shall contain the following information:</text> <paragraph num="(1)"> <text>Gross premiums written;</text> </paragraph> <paragraph num="(2)"> <text>Refunds of premiums on terminated insurance;</text> </paragraph> <paragraph num="(3)"> <text>Net premiums written;</text> </paragraph> <paragraph num="(4)"> <text>Unearned premium reserve at beginning of period;</text> </paragraph> <paragraph num="(5)"> <text>Unearned premium reserve at end of period;</text> </paragraph> <paragraph num="(6)"> <text>Earned premiums, which equal §E(1) of this regulation minus §E(2) of this regulation, minus the result of §E(5) of this regulation minus §E(4) of this regulation;</text> </paragraph> <paragraph num="(7)"> <text>Earned premiums at prima facie;</text> </paragraph> <paragraph num="(8)"> <text>Claims paid;</text> </paragraph> <paragraph num="(9)"> <text>Claim reserve at beginning of period;</text> </paragraph> <paragraph num="(10)"> <text>Claim reserve at end of period;</text> </paragraph> <paragraph num="(11)"> <text>Claims incurred, which equal §E(8) of this regulation plus the result of §E(10) of this regulation minus §E(9) of this regulation;</text> </paragraph> <paragraph num="(12)"> <text>Loss ratio, which equals §E(11) of this regulation divided by §E(6) of this regulation;</text> </paragraph> <paragraph num="(13)"> <text>Prima facie loss ratio, which equals §E(11) of this regulation divided by §E(7) of this regulation, rounded to two decimal places;</text> </paragraph> <paragraph num="(14)"> <text>Dividends and experience rating refunds;</text> </paragraph> <paragraph num="(15)"> <text>All other commissions, compensation, and remuneration to creditors or insurance producers;</text> </paragraph> <paragraph num="(16)"> <text>Total of §E(14) and (15) of this regulation;</text> </paragraph> <paragraph num="(17)"> <text>Ratio of §E(16) of this regulation divided by §E(3) of this regulation; and</text> </paragraph> <paragraph num="(18)"> <text>Combined ratio, which equals the sum of §E(12) of this regulation and §E(17) of this regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Every statistical report shall be certified by a responsible officer of the insurer and shall be accompanied by a statement certified by the president or other responsible officer of the insurer that the insurer has not paid or credited or provided commission as defined in this chapter in excess of the applicable maximum amounts specified in Regulation .15 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Rate Changes and Creditor-Paid Insurance."> <paragraph num="A."> <text>Premium rates under a group policy of credit involuntary unemployment benefit insurance may not be increased more than once during the first policy year, and a subsequent increased rate may not be charged within 12 months of any prior change in rates.</text> </paragraph> <paragraph num="B."> <text>Monthly Premium Insurance.</text> <paragraph num="(1)"> <text>In a policy of monthly premium insurance, a change in rates may not be made effective until 31 days after all existing debtors in the group have been notified of any increased charge that they will be required to pay as a result of the change in rates.</text> </paragraph> <paragraph num="(2)"> <text>The notice required by §B(1) of this regulation shall be deemed to be satisfied if the insurer:</text> <paragraph num="(a)"> <text>Notifies the creditor of the increased charge;</text> </paragraph> <paragraph num="(b)"> <text>Provides the creditor with the necessary forms to be mailed by the creditor to the debtors advising them of the increased charge; and</text> </paragraph> <paragraph num="(c)"> <text>Verifies that the creditor has mailed the notices to the debtors.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>An insurer may file for approval of policy forms and premium rates for creditor-paid insurance on a basis other than that established by these regulations upon a showing satisfactory to the Commissioner that the:</text> <paragraph num="(1)"> <text>Forms and rates meet the requirements of Insurance Article, Title 13, Subtitle 1, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Rates are actuarially consistent with rates prescribed by this chapter for other forms of credit involuntary unemployment benefit insurance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Premium Rates by Case Method."> <paragraph num="A."> <text>Case Comprising Two or More Accounts.</text> <paragraph num="(1)"> <text>If an insurer has combined two or more accounts to establish a case, it may not add additional accounts or remove accounts from that case except with the permission of the Commissioner and under conditions that the Commissioner may specify.</text> </paragraph> <paragraph num="(2)"> <text>When submitting an experience report for a case comprising two or more accounts, the insurer shall include a list of the names of each account included in the case.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Premium rates for each case shall be established by the insurer to afford a loss ratio of at least 55 percent if the resulting rates do not exceed prima facie premium rates, and may be established in accordance with the methods of Regulation .12 of this chapter if the substitution of prima facie premium rates would result in a loss ratio in excess of 55 percent.</text> </paragraph> <paragraph num="C."> <text>Existing Account with Rate Established by Case Method.</text> <paragraph num="(1)"> <text>If an insurer acquires an existing account for which rates were established by another insurer by the case method, the new insurer shall use the same rates or rates not greater than those which were approved for use by the former insurer until the end of the existing experience period established by the former insurer.</text> </paragraph> <paragraph num="(2)"> <text>In reporting this account at the end of the experience period, the new insurer shall combine the experience of the former insurer with its own experience for the term of the experience period in order to determine subsequent rates for the account.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Reports.</text> <paragraph num="(1)"> <text>Reports for each case shall be submitted by the insurer at the end of each experience period, together with a statement of the then-applicable premium rates proposed by the insurer.</text> </paragraph> <paragraph num="(2)"> <text>If the premium rates proposed by the insurer for the case do not meet the loss ratio standards of §B of this regulation, the insurer shall make an appropriate premium reduction, to be effective on or before the 45th day after the date of filing of the experience report, unless, for good cause shown, the Commissioner approves a higher premium rate.</text> </paragraph> <paragraph num="(3)"> <text>If the insurer does not propose to reduce premium rates in accordance with these regulations, the Commissioner shall notify the insurer and afford it a hearing to show cause to the Commissioner why the premium rate should not be reduced.</text> </paragraph> <paragraph num="(4)"> <text>The Commissioner shall notify the insurer in writing within 60 days after the filing of the experience report of the Commissioner's findings in regard to the premium rate which the Commissioner determines should be charged.</text> </paragraph> <paragraph num="(5)"> <text>The insurer shall implement the rates determined by the Commissioner not later than 45 days after receipt of the Commissioner's notice of the rates that the Commissioner authorizes for the case.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Credit Involuntary Unemployment Benefit Insurance Case Experience and Application of Rate Adjustment Factor.</text> <paragraph num="(1)"> <text>If a plan of benefits for credit involuntary unemployment benefit insurance qualifies as a case, whether consisting of accounts of one or more creditors, the case experience submitted by the insurer at the end of the experience period shall include the experience of all plans of benefits for credit involuntary unemployment benefit insurance written by creditors comprising the case.</text> </paragraph> <paragraph num="(2)"> <text>If the experience of the case results in a downward rate adjustment, the insurer shall apply the rate adjustment factor to all plans of benefits for credit involuntary unemployment benefit insurance written by the creditors comprising the case.</text> </paragraph> <paragraph num="(3)"> <text>If the experience of the case results in an upward rate adjustment, the insurer may apply the rate adjustment factor to all plans of benefits for credit involuntary unemployment benefit insurance written by the creditors comprising the case.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Rounding Rate Calculations. Premium rates for credit involuntary unemployment benefit insurance determined under this regulation shall be rounded to three decimal places per $10 of monthly benefit payable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="General Premium Rate Standards and Increased Rates."> <paragraph num="A."> <text>General.</text> <paragraph num="(1)"> <text>With respect to all premium rates not eligible for filing in accordance with the case method, the Commissioner shall accept as meeting the standards of Insurance Article, §13-110(b)(1), Annotated Code of Maryland, those premium rate filings that do not exceed prima facie premium rates stated in Regulation .10 of this chapter for the several categories of insurance described in Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>The prima facie premium rates in Regulation .10 of this chapter are based on the assumption that a policy fee, policy issue fee, certificate fee, or other additional charge will not be made.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Premium rates for use with forms that have less restrictive provisions than those described in this chapter may not exceed the prima facie rates specified in Regulation .10 of this chapter.</text> </paragraph> <paragraph num="C."> <text>All prima facie premium rates and standards and formulas for increased rates refer to individual policies and group certificates insuring single lives.</text> </paragraph> <paragraph num="D."> <text>Joint Credit Involuntary Unemployment Benefit Insurance. For credit involuntary unemployment benefit insurance issued to cover two debtors jointly, the premium for the involuntary unemployment insurance benefits may not exceed 1.80 times the premium that would be charged if one debtor alone were insured.</text> </paragraph> <paragraph num="E."> <text>Application for Approval of Higher Rates.</text> <paragraph num="(1)"> <text>With respect to premium rates not eligible for filing in accordance with the case method, an insurer may file with the Commissioner an application for approval of rates higher than the prima facie premium rates for a single creditor or for one or more classes of business.</text> </paragraph> <paragraph num="(2)"> <text>The application shall specify the basis for the increased rate requested and shall be accompanied and supported by:</text> <paragraph num="(a)"> <text>Credible statistics applicable to the business under consideration; and</text> </paragraph> <paragraph num="(b)"> <text>A demonstration that the requested rates are in conformity with, or less than, rates that would meet the guidelines for increased rates set forth in Regulation .12 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Notice of Increased Rate.</text> <paragraph num="(1)"> <text>The Commissioner may grant approval of an increased rate for a stated period.</text> </paragraph> <paragraph num="(2)"> <text>If a period is not specified in the Commissioner's notice of approval, an approval by the Commissioner of an increased rate shall be effective for a period of 1 year.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Prima Facie Premium Rates for Credit Involuntary Unemployment Insurance."> <paragraph num="A."> <text>Prima Facie Single Premium Rates. The premiums charged for credit involuntary unemployment insurance policies having all policy provisions not less favorable to the insured debtor than those required by Regulation .l1 of this chapter may not exceed, on policies of credit involuntary unemployment insurance for which a single premium is charged in advance for the entire duration of the insurance and the indebtedness is repayable in equal installments, the amount shown in the table below for each $10 of the monthly benefit insured:</text> <paragraph num="(1)"> <text>Prima Facie Single Premium Rates per $10 of Monthly Benefit Payable</text> </paragraph> <paragraph num="(2)"> <text>Prima Facie Single Premium Rates per $10 of Monthly Benefit Payable</text> </paragraph> </paragraph> <paragraph num="B."> <text>Prima Facie Monthly Premium Rates.</text> <paragraph num="(1)"> <text>On policies of group credit involuntary unemployment insurance issued as monthly premium insurance, a monthly premium rate shall be used instead of the rates referred to in §A of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The rates under this plan may not exceed those shown in the schedule immediately below.</text> </paragraph> <paragraph num="(3)"> <text>The rate shall be applied to the amount of the monthly payment insured in that month regardless of the duration of the loan.</text> </paragraph> <aftertext>Prima Facie Monthly Premium Rates per $10 of Monthly Benefit Payable</aftertext> </paragraph> <paragraph num="C."> <text>If a credit involuntary unemployment policy, otherwise meeting the requirements of Regulation .11 of this chapter, provides for payment of benefits in the event of family leave as defined in Regulation .04B(15) of this chapter, the insurer may charge a rate not to exceed 4 percent more than the rates in Regulations .09E, .10A or B, or .12B of this chapter.</text> </paragraph> <paragraph num="D."> <text>The prima facie premium rates for credit involuntary unemployment benefit insurance in this regulation apply to all premiums charged on or after the effective date of this chapter, for every class of business.</text> </paragraph> <paragraph num="E."> <text>Rates Per $100 Outstanding Balance Per Month.</text> <paragraph num="(1)"> <text>Rates stated as $0.xx per $100 outstanding balance per month shall be consistent with the above rates.</text> </paragraph> <paragraph num="(2)"> <text>For example, if a credit card requires a minimum payment of 5 percent of the balance, a rate of $0.40 per $10 of monthly benefit may also be stated as $0.20 per $100 of outstanding balance because $10 is 5 percent of $200.</text> </paragraph> <paragraph num="(3)"> <text>As another example, if the minimum required payment is 3 percent of the outstanding balance, the $0.40 per $10 of monthly benefit rates translates to $0.12 per $100 of outstanding balance.</text> </paragraph> <paragraph num="(4)"> <text>For purposes of this section, the following formula may be used:</text> </paragraph> <aftertext>If: M = monthly rate per $100 of outstanding balance,</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Underwriting Requirements for Insurance Prima Facie Premium Rates."> <paragraph num="A."> <text>The prima facie premium rates in Regulation .10 of this chapter assume that contracts providing credit involuntary unemployment benefit insurance do not require evidence of individual insurability from any eligible debtor electing to purchase coverage except:</text> <paragraph num="(1)"> <text>A requirement that the debtor has been employed full-time for not more than 30 days before the effective date of coverage;</text> </paragraph> <paragraph num="(2)"> <text>A requirement that the debtor has not received notice of impending termination or layoff within 60 days before the effective date of coverage; and</text> </paragraph> <paragraph num="(3)"> <text>That there are no age restrictions, except that coverage may be restricted based on age if:</text> <paragraph num="(a)"> <text>There is credit health insurance coverage or credit life insurance coverage on the same debt;</text> </paragraph> <paragraph num="(b)"> <text>The credit health insurance coverage or credit life insurance coverage is subject to an age restriction; and</text> </paragraph> <paragraph num="(c)"> <text>The credit involuntary unemployment benefit insurance is:</text> <paragraph num="(i)"> <text>Subject to the same age restriction that applies to the credit health insurance coverage; or</text> </paragraph> <paragraph num="(ii)"> <text>If no age restriction applies to the credit health insurance, subject to the same age restriction that applies to the credit life insurance.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Regardless of individual policy or certificate amounts, for underwriting purposes it is assumed that the policy contains no exclusions except the following:</text> <paragraph num="(1)"> <text>Voluntary forfeiture of salary, wages, or employment income;</text> </paragraph> <paragraph num="(2)"> <text>Resignation;</text> </paragraph> <paragraph num="(3)"> <text>Retirement;</text> </paragraph> <paragraph num="(4)"> <text>Loss of employment as a result of willful or criminal misconduct;</text> </paragraph> <paragraph num="(5)"> <text>Loss of employment as a result of seasonal employment;</text> </paragraph> <paragraph num="(6)"> <text>Loss of employment as a result of disability;</text> </paragraph> <paragraph num="(7)"> <text>Discharge from military; or</text> </paragraph> <paragraph num="(8)"> <text>Loss of self-employment without a declaration of bankruptcy, either of the debtor or of the debtor's business.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Acquisition of Existing Account.</text> <paragraph num="(1)"> <text>If an insurer acquires an existing account providing involuntary unemployment benefits on a monthly premium basis or on another basis for which the debtor is charged monthly, the new insurer shall honor all claims for periods of involuntary unemployment commencing on or after the date of takeover and all claims after that which would have been paid under the former policy.</text> </paragraph> <paragraph num="(2)"> <text>The original insurer shall honor all claims for periods of involuntary unemployment commencing before the date of takeover.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Guidelines for Increased Rates."> <paragraph num="A."> <text>Applications to the Commissioner for higher than prima facie premium rates shall be accompanied and supported by credible statistics.</text> </paragraph> <paragraph num="B."> <text>Approval of applications for increased rates shall depend on whether the requested rates are not greater than rates based on the standards in this chapter.</text> </paragraph> <paragraph num="C."> <text>On policies of credit involuntary unemployment benefit insurance for which the prima facie loss ratio exceeds 58 percent, the rate shall be determined by the formula:</text> </paragraph> <paragraph num="D."> <text>Premium rates for credit involuntary unemployment benefit insurance determined under this regulation shall be rounded to three decimal places per $10 of monthly benefit payable.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Remittance of Premiums to Insurer."> <paragraph num="A."> <text>Premiums shall be remitted to the insurer within 60 days of their due dates.</text> </paragraph> <paragraph num="B."> <text>For purposes of this chapter, the deposit of premiums to any demand deposit account with the creditor or affiliate and the continued retention of the premiums in the deposit account for more than 60 days may not be deemed remittance to the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Refunds."> <paragraph num="A."> <text>In event of termination of the insurance before the scheduled maturity date of the indebtedness, the insurer promptly shall refund or credit to the person entitled to it the appropriate portion of any premiums paid for the insurance.</text> </paragraph> <paragraph num="B."> <text>In the case of monthly premium credit involuntary unemployment benefit insurance, the amount of the refund or credit may not be less than the pro rata gross unearned premium.</text> </paragraph> <paragraph num="C."> <text>Single Premium Credit Insurance.</text> <paragraph num="(1)"> <text>In the case of single premium credit involuntary unemployment benefit insurance, the amount of the refund or credit may not be less than the refund computed by the sum of the digits method commonly known as the Rule of 78.</text> </paragraph> <paragraph num="(2)"> <text>The insurer may not reduce the amount of the refund based on the amounts of benefit paid.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Calculation.</text> <paragraph num="(1)"> <text>At the option of the insurer, refunds under §C of this regulation may be calculated on a daily or on a monthly basis, as may be elected in the filing made by the insurer.</text> </paragraph> <paragraph num="(2)"> <text>Refunds may be calculated on an approximate daily basis by interpolating pro rata between the values at the beginning and at the end of the month.</text> </paragraph> <paragraph num="(3)"> <text>For a calculation under §D(2) of this regulation, the insurer shall assume that every month has 30 days.</text> </paragraph> <paragraph num="(4)"> <text>If refunds are calculated on a monthly basis, a charge may not be made for a period less than 15 days elapsing since the last monthly installment due date. If the period elapsing since the last monthly installment due date is 15 days or more, a charge may be made for the full month.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A premium refund is not required under §A of this regulation if the sum of the refunds on all insurance issued to the debtor by an insurer in connection with the loan would be less than $1.</text> </paragraph> <paragraph num="F."> <text>If a refund or credit is due to the debtor in accordance with Insurance Article, §13-107(c)(3) or 13-112(b), Annotated Code of Maryland, the amount of refund or credit may not be less than the amount paid by the debtor, less the amount payable under any substituted or delayed coverage issued to the debtor.</text> </paragraph> <paragraph num="G."> <text>Death of Debtor. In the event of the death of a debtor who is covered for credit involuntary unemployment benefit insurance:</text> <paragraph num="(1)"> <text>The credit involuntary unemployment benefit insurance may not be deemed to have terminated by the performance of the insurance contract by reason of the debtor's death; and</text> </paragraph> <paragraph num="(2)"> <text>The insurer shall make the appropriate refund for the credit involuntary unemployment benefit insurance coverage that terminated at the date of death.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Commission to Insurance Producers and Creditors."> <paragraph num="A."> <text>On all loans originating in Maryland, an insurer may not directly or indirectly pay, allow, or offer to pay any form of commission, as defined in Regulation .04B(7) of this chapter, in excess of the limits stated in this chapter on a form of credit involuntary unemployment benefit insurance, regardless of whether the payment is made to a licensed insurance producer, a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor or the licensed insurance producer.</text> </paragraph> <paragraph num="B."> <text>The maximum commission payable to all payees on each policy of credit involuntary unemployment benefit insurance may not exceed a total of 36 percent of prima facie premium rates.</text> </paragraph> <paragraph num="C."> <text>A commission paid to a creditor, or an affiliate, corporate parent, subsidiary, associate, director, officer, active or retired employee, or other representative of the creditor, regardless of whether the payee is a licensed insurance producer, may not exceed 32 percent of prima facie premium rates.</text> </paragraph> <paragraph num="D."> <text>Payment as described in §C of this regulation does not preclude payment of commission to a licensed insurance producer not listed in §C of this regulation, if the total commission paid under §C of this regulation and under this section does not exceed the maximum rate allowed in §B of this regulation.</text> </paragraph> <paragraph num="E."> <text>Payment of Commission by Insurance Producer.</text> <paragraph num="(1)"> <text>A licensed insurance producer proposing to pay commission to any payee listed in §C of this regulation shall first inquire of the insurer whether any commission is being paid by the insurer to that payee on the same business.</text> </paragraph> <paragraph num="(2)"> <text>The insurance producer may not pay that payee an amount which, if added to the amount paid by the insurer for the same business, would cause the payment to exceed the maximum rate allowed in §C of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The insurer shall cooperate with the insurance producer in providing the information called for by this section.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Reinsurance Treaties."> <paragraph num="A."> <text>To permit the Commissioner to enforce the provisions of Regulation .15 of this chapter with respect to that portion of commission defined by Regulation .04B(7)(a)(xiv) of this chapter and to permit the Commissioner to ascertain that there are no violations of Insurance Article, Title 27, Annotated Code of Maryland, and other applicable sections of Insurance Article, Annotated Code of Maryland, a contract of reinsurance of credit involuntary unemployment benefit insurance on loans originating in Maryland may not be entered into, or continued, after the effective date of this chapter unless approved by the Commissioner and unless the reinsurer is licensed in Maryland, qualifies under Insurance Article, §13-116, Annotated Code of Maryland, or is an accredited reinsurer.</text> </paragraph> <paragraph num="B."> <text>A person proposing to enter into a reinsurance treaty as described in this regulation or a person proposing to continue a treaty entered into before the effective date of this chapter shall submit the treaty to the Commissioner for the Commissioner's approval.</text> </paragraph> <paragraph num="C."> <text>If the Commissioner does not approve or disapprove the proposed or existing reinsurance treaty within 90 days after the date it is filed with the Commissioner, the treaty shall be deemed to be approved.</text> </paragraph> <paragraph num="D."> <text>The Commissioner may withdraw approval of a reinsurance treaty after a hearing held not less than 20 days after written notice to the insurer and the reinsurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Prohibited Transactions."> <paragraph num="A."> <text>A person may not solicit, sell, or negotiate a group or individual policy of credit involuntary unemployment benefit insurance unless the person is licensed as an insurance producer in accordance with Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Enroller.</text> <paragraph num="(1)"> <text>An enroller may not receive any form of commission, compensation, remuneration, or other benefit based on the enroller's activity in enrolling persons in group policies of credit involuntary unemployment benefit insurance.</text> </paragraph> <paragraph num="(2)"> <text>An enroller who is not also licensed as an insurance producer may not engage in soliciting, selling, or negotiating, or assist in soliciting, selling, or negotiating, an individual policy of credit involuntary unemployment benefit insurance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Unfair Trade Practices.</text> <paragraph num="(1)"> <text>An insurer or insurance producer may not engage in any of the following practices in connection with the solicitation, sale, or negotiation of credit involuntary unemployment benefit insurance as an inducement to the sale of the insurance, and each of these practices is an unfair trade practice under Insurance Article, Title 27, Annotated Code of Maryland:</text> <paragraph num="(a)"> <text>Offering or granting to a creditor or to a person connected or affiliated with the creditor any special advantage or service not specified in the insurance contract;</text> </paragraph> <paragraph num="(b)"> <text>Agreeing to deposit with a bank or financial institution money or securities of the insurer or the insurance producer with the design or intent that the deposit reduce or take the place of a deposit of money or securities that otherwise would be required of the creditor or an affiliate of the creditor by the bank or financial institution as a compensating balance or offsetting deposit for a loan or other advance;</text> </paragraph> <paragraph num="(c)"> <text>Allowing the creditor to retain premiums on credit involuntary unemployment benefit insurance on policies issued to the creditor or on policies sold or collected by the creditor for more than 60 days after the due date of the premiums; or</text> </paragraph> <paragraph num="(d)"> <text>Depositing with the creditor or an affiliate of the creditor money or securities without interest or at a lesser rate of interest than is generally being paid by the creditor bank or financial institution to other depositors of like amounts.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Section C(1)(d) of this regulation may not be construed to prohibit the maintenance by an insurer or insurance producer of demand deposits or premium deposit accounts that are reasonably necessary for use in the ordinary course of the insurer's or the insurance producer's business.</text> </paragraph> </paragraph> <paragraph num="D."> <text>If advance loan payments are made before the date of involuntary unemployment of the debtor on a loan covered by single premium credit involuntary unemployment benefit insurance, or if the debtor, the beneficiary, or any other person makes payments on a loan after the date the debtor is first entitled to receive a benefit for involuntary unemployment, the insurer may not reduce the amount of payments that were scheduled to be paid under the provisions of the credit involuntary unemployment benefit insurance policy because of these loan payments.</text> </paragraph> <paragraph num="E."> <text>Benefit Eligibility Requirements.</text> <paragraph num="(1)"> <text>Benefit eligibility requirements may not include a requirement that as of the date of loss of employment the insured debtor had been employed for a:</text> <paragraph num="(a)"> <text>Set number of hours per week; or</text> </paragraph> <paragraph num="(b)"> <text>Set period of time.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The insurer may require only that the insured debtor had been employed and that separation from employment was the result of involuntary unemployment as defined in Regulation .04B(18) this chapter.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Credit involuntary unemployment benefit insurance may not be permitted in a package sold to any individual who is not eligible for coverage on the date of the application for coverage.</text> </paragraph> <paragraph num="G."> <text>Reeligibility Conditions.</text> <paragraph num="(1)"> <text>A credit involuntary unemployment benefit insurance policy may impose conditions upon which an insured debtor becomes reeligible for credit unemployment benefits after a period of receiving benefits.</text> </paragraph> <paragraph num="(2)"> <text>If reeligibility conditions are required for full benefits for a subsequent period of unemployment, the conditions may not:</text> <paragraph num="(a)"> <text>Be more stringent than the initial eligibility conditions; and</text> </paragraph> <paragraph num="(b)"> <text>Require that the insured be actively at work for more than 30 consecutive days.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If an insured debtor has not satisfied the reeligibility requirement at the time of a subsequent unemployment, the unemployment shall be considered a continuation of the prior unemployment with no waiting period, with the maximum benefit period equal to the unused portion of the maximum benefit period for the prior unemployment.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Return To Work.</text> <paragraph num="(1)"> <text>If a debtor was working full time on the date of involuntary unemployment and returns to work less than full time, the insurer shall consider the debtor to be involuntarily unemployed until the debtor returns to full-time employment.</text> </paragraph> <paragraph num="(2)"> <text>If a debtor was working less than full time on the date of involuntary unemployment and returns to work less than full time, the insurer may consider the debtor to be no longer involuntarily unemployed.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Combinations of Coverages."> <text>If an individual policy form or group policy form of credit involuntary unemployment benefit insurance or a certificate form of group credit involuntary unemployment benefit insurance is used to provide both single and joint coverage, the coverage in effect shall clearly and prominently be indicated in the schedule of benefits.</text> </regulation> <regulation prefix="Regulation" num=".19" heading="Notice to Debtors."> <paragraph num="A."> <text>Notice of Termination.</text> <paragraph num="(1)"> <text>If a debtor is covered by a group credit involuntary unemployment benefit insurance policy providing for payment of premiums to the insurer on a monthly premium basis, the policy shall provide that in the event of termination of the policy for any reason:</text> <paragraph num="(a)"> <text>The insured debtor shall be given written notice of termination; and</text> </paragraph> <paragraph num="(b)"> <text>Except if replacement of the coverage by the same or another insurer in the same or greater amount takes place without interruption of coverage and a new certificate reflecting the replacement coverage is delivered to the insured debtor, coverage will continue for at least 31 days from the date of notice.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The notice of termination required by this section shall be given by the insurer unless the insurer is unable to identify the debtors, in which case it shall be given by the creditor.</text> </paragraph> <paragraph num="(3)"> <text>There shall be a prominent notice printed or stamped close to the schedule of benefits in the certificate form that the insurance coverage will terminate if the group policy terminates.</text> </paragraph> <paragraph num="(4)"> <text>An insurer also may include notice of additional events that would lead to termination of insurance coverage if the events are approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Notice that Benefit May Not Cover Installments.</text> <paragraph num="(1)"> <text>If a credit involuntary unemployment benefit insurance policy is issued under which the monthly benefit might not cover payment of the entire scheduled monthly loan installment or the total benefit might not cover payment of all of the unpaid scheduled installments under the loan even if the loan account and the insurance premiums are paid on a current basis, then there shall be a notice to this effect in the individual policy or in certificates of insurance issued under a group policy.</text> </paragraph> <paragraph num="(2)"> <text>The notice under §B(1) of this regulation shall be prominently printed or stamped close to the schedule of benefits in the policy and in the certificate form.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Other Notices. A policy or certificate of credit involuntary benefit insurance shall include a notice printed in or close to the schedule of benefits that clearly calls attention to any of the following limitations or requirements that are applicable to the policy or certificate:</text> <paragraph num="(1)"> <text>Any evidence of insurability required for advances of credit;</text> </paragraph> <paragraph num="(2)"> <text>Any limit on the number of monthly benefit payments that the insurance will provide per occurrence of involuntary unemployment;</text> </paragraph> <paragraph num="(3)"> <text>Any limit on the number of monthly benefit payments that the insurance will provide over the term of the insurance;</text> </paragraph> <paragraph num="(4)"> <text>The right of the insured to cancel credit involuntary unemployment benefit coverage that has been issued without canceling any other coverage that has been issued covering the same debt;</text> </paragraph> <paragraph num="(5)"> <text>Any limit on the term of coverage;</text> </paragraph> <paragraph num="(6)"> <text>Any limit on the amount of any monthly benefit payment that the insurance will provide over the term of the insurance;</text> </paragraph> <paragraph num="(7)"> <text>Any limit on the aggregate of any monthly benefit payments that the insurance will provide over the term of the insurance; and</text> </paragraph> <paragraph num="(8)"> <text>Any requirement that the insured register with the Office of Unemployment Insurance or a recognized employment agency to be eligible for benefits.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Benefits."> <paragraph num="A."> <text>If a debtor has filed in accordance with the policy provisions a claim for benefits for which the insurer is liable under a credit involuntary unemployment benefit insurance policy, the insurer shall pay any late charges accruing on the amount payable under the claim after the date the claim has been filed.</text> </paragraph> <paragraph num="B."> <text>For monthly premium credit involuntary unemployment benefit insurance:</text> <paragraph num="(1)"> <text>The amount of the monthly benefit payable on a revolving, open end, account shall be the greater of the minimum payment required by the creditor or 3 percent of the debt at the time of involuntary unemployment, subject to any policy maximum; and</text> </paragraph> <paragraph num="(2)"> <text>If involuntary unemployment occurs prior to the date of termination of the policy or prior to the date of termination of coverage of an insured debtor and if benefits would otherwise have been payable, benefits shall be paid as if coverage continued.</text> </paragraph> </paragraph> <paragraph num="C."> <text>For single premium and nonrevolving, closed end, monthly outstanding balance credit involuntary unemployment benefit insurance, the amount of the monthly benefit payable shall be the scheduled payment required by the creditor, subject to any policy maximum.</text> </paragraph> <paragraph num="D."> <text>For purposes of this chapter, a claim shall be deemed filed if it is transmitted to the creditor, the insurer, or an insurance producer of the insurer.</text> </paragraph> <paragraph num="E."> <text>Amount Due in Excess of Amount Due to Creditor.</text> <paragraph num="(1)"> <text>An amount due under a credit involuntary unemployment benefit insurance policy in excess of the payment due at the time of involuntary unemployment shall be paid by the insurer directly to the debtor, the designated second beneficiary, or the estate of the debtor, whichever is entitled to the payment.</text> </paragraph> <paragraph num="(2)"> <text>If the insurer does not have the address of the person entitled to the excess amount, the insurer shall send a check payable to that person to the creditor for transmittal.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Claims shall be paid either by a check of the insurer, by a draft drawn upon the insurer, or by electronic transmission.</text> </paragraph> <paragraph num="G."> <text>The creditor may not be authorized to settle or adjust claims or to act as a claim representative for the insurer.</text> </paragraph> <paragraph num="H."> <text>Benefits for a covered period of unemployment less than a full month shall be paid at a rate of 1/30 of a full monthly benefit for each day of unemployment.</text> </paragraph> <paragraph num="I."> <text>The benefit payable under a joint credit involuntary unemployment benefit insurance policy if only one debtor is receiving benefits may not be less than the benefit that would have been paid if both were eligible for benefits.</text> </paragraph> <paragraph num="J."> <text>If a policy requires registration with the Office of Unemployment Insurance or a recognized employment agency within a stated time period in order to be eligible for benefits:</text> <paragraph num="(1)"> <text>The time period may not be less than 15 days; and</text> </paragraph> <paragraph num="(2)"> <text>If the debtor registers after the stated time period has expired, benefits otherwise payable may not be denied for periods of unemployment after the registration.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Review of Credit Operations."> <paragraph num="A."> <text>Review Required.</text> <paragraph num="(1)"> <text>Every insurer transacting credit involuntary unemployment benefit insurance business in Maryland shall conduct a review of each of its creditor accounts with respect to the credit involuntary unemployment benefit insurance business of the creditor to ensure compliance with the insurance laws and regulations of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>Unless a satisfactory review has been made within 2 years before the effective date of this chapter, the first review shall be made not later than 15 months after the effective date of this chapter or of the date of the initial credit involuntary unemployment benefit insurance transaction between the creditor and the insurer, whichever is later.</text> </paragraph> <paragraph num="(3)"> <text>After review under §A(2) of this regulation, a review shall be made not later than 36 months after the last preceding review.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The review shall include but need not be limited to a determination that:</text> <paragraph num="(1)"> <text>The proper premium charges to debtors are made by the creditor and remitted in a timely manner to the insurer;</text> </paragraph> <paragraph num="(2)"> <text>The proper refunds are being accurately calculated and promptly made by the creditor;</text> </paragraph> <paragraph num="(3)"> <text>All claims are being filed promptly and properly handled;</text> </paragraph> <paragraph num="(4)"> <text>Amounts of insurance payable in excess of the amounts necessary to extinguish the indebtedness are properly calculated and reported to the insurer in proofs of loss; and</text> </paragraph> <paragraph num="(5)"> <text>The creditor is promptly and fairly processing complaints concerning its credit insurance operations and is maintaining proper procedures for, and records of, the complaints processed.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Insurers shall retain copies of the reviews in their home offices for at least 5 years.</text> </paragraph> <paragraph num="D."> <text>An insurer may retain copies of the reviews in paper, photographic, microprocessed, magnetic, mechanical, electronic, digital, or any other medium if the copies of the reviews are maintained in a manner that:</text> <paragraph num="(1)"> <text>Is clear and legible;</text> </paragraph> <paragraph num="(2)"> <text>Accurately represents the original document in its entirety, including any attachment to the document;</text> </paragraph> <paragraph num="(3)"> <text>Is capable of producing a clean and legible hard copy of the original document; and</text> </paragraph> <paragraph num="(4)"> <text>Preserves evidence of any signature contained in the original document.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Effective Date."> <paragraph num="A."> <text>An individual policy, group policy, or group certificate of credit involuntary unemployment benefit insurance not in conformity with this chapter may not be issued or continued to be used in connection with any loan made on or after the effective date of this chapter.</text> </paragraph> <paragraph num="B."> <text>A premium in excess of that permitted by these regulations may not be charged for credit involuntary unemployment benefit insurance, and a commission or other form of benefit may not be paid to insurance producers or creditors in excess of the premium and commission rates permitted under this chapter for credit involuntary unemployment benefit insurance which is issued in connection with any loan made on or after the effective date of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".23" heading="Clerical Errors."> <paragraph num="A."> <text>Excess Insurance.</text> <paragraph num="(1)"> <text>If a policy of credit involuntary unemployment benefit insurance limits the involuntary unemployment benefits to stated policy maximums, the policy and certificates of insurance issued under a group policy shall provide that if the insured has been charged premiums for insurance in excess of the stated maximums, the insurer may terminate the excess insurance and refund all premiums paid by the debtor for the excess insurance.</text> </paragraph> <paragraph num="(2)"> <text>The notice of termination of the excess insurance shall state that the premium paid by the debtor for the excess coverage shall be refunded to the person entitled to it.</text> </paragraph> <paragraph num="(3)"> <text>A single premium credit involuntary unemployment benefit insurance policy and certificate shall further provide that excess insurance shall remain in force if the insurer does not terminate the excess insurance within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the excess coverage.</text> </paragraph> <paragraph num="(4)"> <text>A monthly premium credit involuntary unemployment benefit insurance policy and certificate shall further provide that the excess insurance shall be in force for the period for which a premium was charged unless the excess insurance is cancelled before the occurrence of a loss.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Ineligible Debtor.</text> <paragraph num="(1)"> <text>Misstatement of Age.</text> <paragraph num="(a)"> <text>If a policy of credit involuntary unemployment benefit insurance or certificate of credit involuntary unemployment benefit insurance issued under a group policy contains an age restriction, the policy or certificate may allow the insurer to terminate the coverage and refund all premiums paid by the debtor if:</text> <paragraph num="(i)"> <text>The debtor has misstated the debtor's age; and</text> </paragraph> <paragraph num="(ii)"> <text>The debtor's true age is greater than the limiting age stated in the policy.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If a policy of credit involuntary unemployment benefit insurance or certificate of credit involuntary unemployment benefit insurance issued under a group policy contains an age restriction, the policy or certificate may not provide for an adjustment of premiums or benefits if:</text> <paragraph num="(i)"> <text>The debtor misstates the debtor's age; and</text> </paragraph> <paragraph num="(ii)"> <text>The debtor's true age is not greater than the limiting age stated in the policy or certificate.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>If a debtor's eligibility for credit involuntary unemployment benefit insurance is subject to restrictions based on employment or other factors, the policy and certificates of insurance issued under a group policy shall provide that if insurance is issued to an ineligible debtor who has truthfully answered all eligibility questions, the insurer may terminate the insurance and refund all premiums paid by the debtor.</text> </paragraph> <paragraph num="(3)"> <text>The notice of termination of the insurance shall state that the premium paid by the debtor shall be refunded to the person entitled to it.</text> </paragraph> <paragraph num="(4)"> <text>A single premium credit involuntary unemployment benefit insurance policy and certificate shall also provide that the insurance shall remain in force if the insurer does not terminate the coverage within 60 days after the effective date of coverage or if the debtor suffers a covered loss within the 60-day period but before notification by the insurer of termination of the insurance.</text> </paragraph> <paragraph num="(5)"> <text>A monthly premium credit involuntary unemployment benefit policy and certificate shall provide that the insurance shall be in force for the period for which a premium was charged unless the insurance is cancelled with not less than 31 days notice before the occurrence of a loss.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Change of Insurers Reporting Requirements Coverage and Rates."> <paragraph num="A."> <text>Insurers That Cease to Offer Credit Involuntary Unemployment Benefit Insurance. Within 90 days after an insurer ceases to offer credit involuntary unemployment benefit insurance through a case, the insurer shall notify the Commissioner of:</text> <paragraph num="(1)"> <text>The name or code number of the creditor;</text> </paragraph> <paragraph num="(2)"> <text>Each coverage no longer offered;</text> </paragraph> <paragraph num="(3)"> <text>The date on which the coverage ceased to be offered; and</text> </paragraph> <paragraph num="(4)"> <text>The current approved premium rate applicable to each coverage no longer offered.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Insurers That Begin to Offer Credit Insurance.</text> <paragraph num="(1)"> <text>At the end of a calendar year in which an insurer has begun to offer credit involuntary unemployment benefit insurance for which premium rates have not yet been established by the case method but for which a prior insurer submitted notification of a new case required by Regulation .06B(2) and (3) of this chapter, the insurer shall:</text> <paragraph num="(a)"> <text>File the report for the case required by Regulation .06B(1) of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Submit the insurer's experience and the experience of the prior insurer for the experience period even if the account did not qualify as a case for the most recent policy year.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer that is required to submit its experience and the experience of a prior insurer under §B(1) of this regulation shall submit the experience of each insurer:</text> <paragraph num="(a)"> <text>Separately by year; and</text> </paragraph> <paragraph num="(b)"> <text>As a total for a 2-year period.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The Commissioner shall notify an insurer if a report for a case is required to be filed under §B(2) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>If an insurer begins to offer credit insurance through a case during an experience period for which premium rates were established for a prior insurer by the case method, the insurer shall certify to the Commissioner that the insurer will not charge premium rates that exceed the rates permitted under Regulation .08E of this chapter.</text> </paragraph> <paragraph num="(5)"> <text>If an insurer begins to offer credit insurance for a case after the end of a previously established experience period but before the effective date of new premium rates approved by the Commissioner based on that experience period, the:</text> <paragraph num="(a)"> <text>Commissioner shall, when new premium rates are established, send written notice of the new premium rates to the insurer, stating an effective date that provides the insurer at least 30 days notice; and</text> </paragraph> <paragraph num="(b)"> <text>Insurer shall:</text> <paragraph num="(i)"> <text>Beginning not later than the effective date established by the Commissioner, use premium rates not greater than the new premium rates approved by the Commissioner; and</text> </paragraph> <paragraph num="(ii)"> <text>At the end of the experience period stated by the Commissioner, file the report for the case required by Regulation .06B(1) of this chapter, submitting the experience of the former insurer and the insurer's own experience for the term of the experience period in order to determine subsequent rates for the account.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(6)"> <text>An insurer required to submit its experience and the experience of a former insurer under §B(5)(b)(ii) of this regulation shall submit the experience of each insurer:</text> <paragraph num="(a)"> <text>Separately by year; and</text> </paragraph> <paragraph num="(b)"> <text>As a total for a 2-year period.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>On the request of a succeeding insurer, a prior insurer promptly shall provide the succeeding insurer with any experience information of the prior insurer that the succeeding insurer needs to meet the requirements of this section.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109 and Title 13, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 2003 (29:12 Md. R. 934)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective November 7, 2016 (43:22 Md. R. 1223)</annotation> <annotation type="History" subtype="Administrative History">Regulation .16A amended effective November 7, 2016 (43:22 Md. R. 1223)</annotation> </annotations> </chapter> </subtitle> <subtitle num="14" heading="Long-Term Care"> <chapter num="01" heading="Long-Term Care Insurance"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <text>Except as otherwise specifically provided, this chapter applies to all long-term care insurance policies delivered or issued for delivery in this State on or after the effective date by insurers, nonprofit health service plans, and health maintenance organizations. These regulations are not intended to supersede other applicable insurance laws or regulations which do not conflict with this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Activities of daily living” means at least bathing, continence, dressing, eating, toileting, and transferring.</text> </paragraph> <paragraph num="(2)"> <text>“Acute condition” means that the individual is medically unstable and requires frequent monitoring by physicians, registered nurses, or other medical professionals in order to maintain the individual's health status.</text> </paragraph> <paragraph num="(3)"> <text>“Adult day care” means a program providing social and health-related services, during the day, in a community group setting for the purpose of supporting frail, impaired, elderly, or other disabled adults who could benefit from care in a group setting outside the home.</text> </paragraph> <paragraph num="(4)"> <text>“Alzheimer's disease” means a progressive brain disease diagnosed as Alzheimer's disease by the licensed attending physician of the insured or certificate holder and confirmed by a second opinion of a licensed physician.</text> </paragraph> <paragraph num="(5)"> <text>“Applicant” means in the case of:</text> <paragraph num="(a)"> <text>An individual long-term care insurance policy or contract, the person who seeks to contract for benefits; and</text> </paragraph> <paragraph num="(b)"> <text>A group long-term care insurance policy, the proposed certificate holder.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Association” means any association described in Insurance Article, §15-302(c)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Bathing” means washing oneself:</text> <paragraph num="(a)"> <text>By sponge bath; or</text> </paragraph> <paragraph num="(b)"> <text>In either a tub or shower, including the task of getting into or out of the tub or shower.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Certificate” means any certificate issued under a group long-term care insurance policy if the certificate is delivered or issued for delivery in the State and covers individuals who reside in the State.</text> </paragraph> <paragraph num="(9)"> <text>“Cognitive impairment” means a deficiency in an individual's short or long-term memory, orientation as to person, place, and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.</text> </paragraph> <paragraph num="(10)"> <text>“Continence” means the ability to:</text> <paragraph num="(a)"> <text>Maintain control of bowel and bladder function; or</text> </paragraph> <paragraph num="(b)"> <text>When unable to maintain control of bowel or bladder function, perform associated personal hygiene, including caring for catheter or colostomy bag.</text> </paragraph> </paragraph> <paragraph num="(11)"> <text>“Domiciliary care” means care, including general supervision and assistance in daily living, such as, but not limited to, aid in walking, getting in and out of bed, bathing, dressing, or eating, which is provided on a prearranged basis in a licensed residential facility for three or more unrelated individuals who need the care because of advanced age, infirmity, or physical or mental limitations.</text> </paragraph> <paragraph num="(12)"> <text>“Dressing” means putting on and taking off all items of clothing and any necessary braces, fasteners, or artificial limbs.</text> </paragraph> <paragraph num="(13)"> <text>“Eating” means feeding oneself by getting food into the body from a receptable, such as a plate, cup, or table, or by feeding tube or intravenously.</text> </paragraph> <paragraph num="(14)"> <text>“Employer group long-term care insurance” means a long-term care insurance policy that is:</text> <paragraph num="(a)"> <text>Issued or delivered in Maryland to:</text> <paragraph num="(i)"> <text>One or more employers or labor organizations; or</text> </paragraph> <paragraph num="(ii)"> <text>A trust or the trustees of a fund established by one or more employers or labor organizations, or by a combination of employers or labor organizations; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Designed for:</text> <paragraph num="(i)"> <text>Employees or former employees, or a combination of employees and former employees, of the employer or employers; or</text> </paragraph> <paragraph num="(ii)"> <text>Members or former members, or a combination of members and former members, of the labor organization or labor organizations.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(15)"> <text>“Field issued” means a policy or certificate issued by an insurance producer or a third-party administrator:</text> <paragraph num="(a)"> <text>Pursuant to the underwriting authority granted to the insurance producer or third-party administrator by an insurer; and</text> </paragraph> <paragraph num="(b)"> <text>Using the insurer's underwriting guidelines.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Guaranteed renewable” means that the:</text> <paragraph num="(a)"> <text>Policyholder or certificate holder has the right to continue long-term care insurance in force during the lifetime of the covered person by the timely payment of premiums; and</text> </paragraph> <paragraph num="(b)"> <text>Insurer may not decline to renew the policy or unilaterally make any change in any provision of the policy while the policy is in force, except that the insurer may revise the premium rates on a class basis.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Hands-on assistance” means physical assistance, whether minimal, moderate, or maximal, without which the individual would not be able to perform the activity of daily living.</text> </paragraph> <paragraph num="(18)"> <text>Home Health Care Services.</text> <paragraph num="(a)"> <text>“Home health care services” means medical and nonmedical services provided to ill, disabled, or infirm persons in their residences.</text> </paragraph> <paragraph num="(b)"> <text>“Home health care services” includes:</text> <paragraph num="(i)"> <text>Assistance with activities of daily living;</text> </paragraph> <paragraph num="(ii)"> <text>Homemakers' services; and</text> </paragraph> <paragraph num="(iii)"> <text>Respite care services.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(19)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(20)"> <text>“Insurer” means an insurance company, nonprofit health service plan, health maintenance organization, or preferred provider organization.</text> </paragraph> <paragraph num="(21)"> <text>“Limited distribution channel” means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public.</text> </paragraph> <paragraph num="(22)"> <text>Long-Term Care Insurance.</text> <paragraph num="(a)"> <text>“Long-term care insurance” means any group or individual insurance policy, contract, certificate, or rider issued, delivered, or offered by an insurer that:</text> <paragraph num="(i)"> <text>Is advertised, marketed, offered, or designed to provide coverage for not less than 24 consecutive months for covered persons on an expense incurred, indemnity, prepaid, or insured basis; and</text> </paragraph> <paragraph num="(ii)"> <text>Provides one or more necessary or appropriate diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services furnished in a situation other than an acute care unit of a hospital.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Long-term care insurance includes any product that is advertised, marketed, or offered as long-term care insurance.</text> </paragraph> <paragraph num="(c)"> <text>“Long-term care insurance” does not include any insurance policy, contract, certificate, or rider which is offered primarily to provide:</text> <paragraph num="(i)"> <text>Basic Medicare supplement coverage;</text> </paragraph> <paragraph num="(ii)"> <text>Hospital confinement indemnity coverage;</text> </paragraph> <paragraph num="(iii)"> <text>Basic hospital expense or medical-surgical expense coverage;</text> </paragraph> <paragraph num="(iv)"> <text>Disability income protection coverage;</text> </paragraph> <paragraph num="(v)"> <text>Accident only coverage;</text> </paragraph> <paragraph num="(vi)"> <text>Specified disease or specified accident coverage; or</text> </paragraph> <paragraph num="(vii)"> <text>Skilled nursing care.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Long-term care insurance” does not include a life insurance policy:</text> <paragraph num="(i)"> <text>That accelerates the death benefit specifically for one or more of the qualifying events of terminal illness, a medical condition requiring extraordinary medical intervention, or permanent institutional confinement;</text> </paragraph> <paragraph num="(ii)"> <text>That provides a lump sum payment for any of the events in §B(22)(d)(i) of this regulation; or</text> </paragraph> <paragraph num="(iii)"> <text>In which neither benefits nor eligibility for benefits is conditioned on receipt of long-term care.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>“Long-term care insurance” does not include any certificate issued under an out-of-State employer group contract.</text> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Medicaid” means the Maryland Medical Assistance Program or any similar program provided by the state in which the insured person resides.</text> </paragraph> <paragraph num="(24)"> <text>“Medicare” means the Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended.</text> </paragraph> <paragraph num="(25)"> <text>“Mental or nervous disorder” means a condition diagnosed as neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder.</text> </paragraph> <paragraph num="(26)"> <text>“Noncancellable policy” means a policy which the policyholder has the right to continue in force by the timely payment of premiums, and in which the insurer is precluded from unilaterally making any change in any provision of the policy or in the premium rates while the policy is in force.</text> </paragraph> <paragraph num="(27)"> <text>“Nursing care” means service for a patient that is ordered by a physician and provided or supervised by a registered or licensed practical nurse.</text> </paragraph> <paragraph num="(28)"> <text>“Nursing home” means a licensed organized institution that maintains conditions or facilities and equipment to provide domiciliary, personal, or nursing care for a number of unrelated individuals who are dependent on the administrator, operator, or proprietor for nursing care or the subsistence of daily living in a safe, sanitary, and healthy environment, and which admits or retains the individuals for overnight care.</text> </paragraph> <paragraph num="(29)"> <text>“Out-of-State employer group contract” means a group contract that is:</text> <paragraph num="(a)"> <text>Entered into with an employer in a state other than Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Issued directly to an employer under the laws of that employer's state.</text> </paragraph> </paragraph> <paragraph num="(30)"> <text>“Partnership policy” means a long-term care insurance policy that is:</text> <paragraph num="(a)"> <text>Certified by the Commissioner to meet the requirements under §1917(b) of the Social Security Act; and</text> </paragraph> <paragraph num="(b)"> <text>Issued on or after the date of the State plan amendment.</text> </paragraph> </paragraph> <paragraph num="(31)"> <text>“Partnership Program” means the program established by Health-General Article, Title 15, Subtitle 4, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(32)"> <text>“Personal care” means the provision of hands-on services to assist an individual with the activities of daily living.</text> </paragraph> <paragraph num="(33)"> <text>Policy.</text> <paragraph num="(a)"> <text>“Policy” means any policy, contract, individual certificate, subscriber agreement, rider, or endorsement delivered or issued for delivery in this State by:</text> <paragraph num="(i)"> <text>An insurer;</text> </paragraph> <paragraph num="(ii)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(iii)"> <text>A health maintenance organization; or</text> </paragraph> <paragraph num="(iv)"> <text>A preferred provider organization.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Policy” does not include a life insurance policy which contains an optional provision for acceleration of payment of all or a portion of the face amount under stated conditions relating to the medical condition, the disability, or the need for long-term care of the insured.</text> </paragraph> </paragraph> <paragraph num="(34)"> <text>“Preexisting condition” means a condition for which medical advice or treatment was recommended by or received from a provider of health care services within 6 months before the effective date of coverage of the insured or certificate holder.</text> </paragraph> <paragraph num="(35)"> <text>“Qualified long-term care insurance” has the meaning stated in §C of this regulation.</text> </paragraph> <paragraph num="(36)"> <text>“Service benefit long-term care insurance policy” means a long-term care insurance policy that provides for benefits based on the amount of expenses incurred, rather than on an indemnity basis.</text> </paragraph> <paragraph num="(37)"> <text>“State of policy issue” means the state in which the individual policy or group certificate was originally issued.</text> </paragraph> <paragraph num="(38)"> <text>“State plan amendment” means an amendment filed by the Maryland Department of Health with the Centers for Medicare and Medicaid Services under Title 42, U.S.C., which provides for the disregard of any assets or resources by the Maryland Department of Health in an amount equal to the insurance payments that are made to or on behalf of the individual who is covered under a partnership policy.</text> </paragraph> <paragraph num="(39)"> <text>“Toileting” means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.</text> </paragraph> <paragraph num="(40)"> <text>“Transferring” means moving into or out of a bed, chair, or wheelchair.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Qualified Long-Term Care Insurance.</text> <paragraph num="(1)"> <text>“Qualified long-term care insurance” means:</text> <paragraph num="(a)"> <text>An individual or group insurance contract that meets the requirements of §7702B(b) of the Internal Revenue Code of 1986, as amended, as follows:</text> <paragraph num="(i)"> <text>The only insurance protection provided under the contract is coverage of qualified long-term care services;</text> </paragraph> <paragraph num="(ii)"> <text>The contract does not pay or reimburse expenses incurred for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, as amended, or would be reimbursable under Title XVIII of the Social Security Act but for the application of a deductible or coinsurance amount;</text> </paragraph> <paragraph num="(iii)"> <text>The contract is guaranteed renewable, within the meaning of §7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended;</text> </paragraph> <paragraph num="(iv)"> <text>The contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed except as provided in §C(1)(a)(v) of this regulation;</text> </paragraph> <paragraph num="(v)"> <text>All refunds of premiums, and all policyholder dividends or similar amounts, under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund on the event of death of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract; and</text> </paragraph> <paragraph num="(vi)"> <text>The contract meets the consumer protection provisions set forth in §7702B(g) of the Internal Revenue Code of 1986, as amended; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The portion of a life insurance contract that:</text> <paragraph num="(i)"> <text>Provides long-term care insurance coverage by rider or as part of the contract; and</text> </paragraph> <paragraph num="(ii)"> <text>Satisfies the requirements of §§7702B(b) and (e) of the Internal Revenue Code of 1986, as amended.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>A contract may not fail to satisfy the requirements of §C(1)(a)(i) or (ii) of this regulation by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.</text> </paragraph> <paragraph num="(3)"> <text>The requirements of §C(1)(a)(ii) of this regulation do not apply to expenses that are reimbursable under Title XVIII of the Social Security Act only as a secondary payor.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Policy Terms."> <paragraph num="A."> <text>A long-term care policy shall define “skilled nursing care”, “intermediate care”, “domiciliary care”, “custodial care”, “personal care”, “home care”, “specialized care”, “assisted living care”, and other services in relation to the level of skill required, the nature of the care, and the setting in which care shall be delivered.</text> </paragraph> <paragraph num="B."> <text>Definitions in Contracts Regarding Providers of Services.</text> <paragraph num="(1)"> <text>A long-term care insurance policy shall define all providers of services, including, but not limited to, “skilled nursing facility”, “extended care facility”, “convalescent nursing home”, “personal care facility”, “specialized care providers”, “assisted living facility”, and “home care agency” in relation to the services and facilities required to be available and the licensure, certification, registration, or degree status of those providing or supervising the services.</text> </paragraph> <paragraph num="(2)"> <text>When the definition of a type of provider requires that the provider be appropriately licensed, certified, or registered, the definition shall also state what requirements a provider must meet instead of licensure, certification, or registration when the state in which the service is to be furnished:</text> <paragraph num="(a)"> <text>Does not require a provider of these services to be licensed, certified or registered; or</text> </paragraph> <paragraph num="(b)"> <text>Licenses, certifies, or registers the provider of services under another name.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>A long-term care insurance policy may not use any of the terms defined in Regulation .02 of this chapter in a manner which is less favorable to the policyholder, the certificate holder, or the covered person.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Policy Practices and Provisions."> <paragraph num="A."> <text>Renewability and Premium Charges.</text> <paragraph num="(1)"> <text>Renewability Provision.</text> <paragraph num="(a)"> <text>Individual long-term care insurance policies shall contain an appropriately captioned renewability provision on the first page of the policy form.</text> </paragraph> <paragraph num="(b)"> <text>The renewability provision shall clearly state that the coverage is guaranteed renewable or noncancellable.</text> </paragraph> <paragraph num="(c)"> <text>Section A(1)(a) of this regulation is not applicable to policies that do not contain a renewability provision and under which the right to nonrenew is reserved solely to the policyholder.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A long-term care insurance policy or certificate, other than one where the insurer does not have the right to change the premium, shall include a statement that premium rates may change.</text> </paragraph> <paragraph num="(3)"> <text>An individual long-term care policy may not be issued on any basis other than on a noncancellable or a guaranteed renewable basis.</text> </paragraph> <paragraph num="(4)"> <text>The premiums for a noncancellable policy shall be level for the duration of the policy and may not vary by policy duration or by the attained age of the insured.</text> </paragraph> <paragraph num="(5)"> <text>An insurer may not charge a renewal premium rate for a long-term care policy which exceeds by more than 15 percent any premium charged for the policy during the preceding 12 months.</text> </paragraph> <paragraph num="(6)"> <text>With the approval of the Commissioner, the insurer may charge a renewal premium exceeding a 15 percent increase upon a showing that a larger increase is necessary because of utilization of policy benefits greatly in excess of the expected rate.</text> </paragraph> <paragraph num="(7)"> <text>Premium Rate Increases.</text> <paragraph num="(a)"> <text>The premium charged to an insured may not increase due to either:</text> <paragraph num="(i)"> <text>The increasing age of the insured; or</text> </paragraph> <paragraph num="(ii)"> <text>The duration the insured has been covered under the policy.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The purchase of additional coverage may not be considered a premium rate increase, but for purposes of the calculation required under Regulation .13 of this chapter, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.</text> </paragraph> <paragraph num="(c)"> <text>A reduction in benefits may not be considered a premium change, but for the purposes of the calculation required under Regulation .13 of this chapter, the initial annual premium shall be based on the reduced benefits.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>The term “level premium” may only be used when the insurer does not have the right to change the premium.</text> </paragraph> <paragraph num="(9)"> <text>In addition to the other requirements of this section, a qualified long-term care insurance contract shall be guaranteed renewable, within the meaning of §7702(b)(1)(C) of the Internal Revenue Code of 1986, as amended.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Limitations and Exclusions.</text> <paragraph num="(1)"> <text>Long-term care insurance policies may not:</text> <paragraph num="(a)"> <text>Be cancelled, nonrenewed, or otherwise terminated on the grounds of the age or of the deterioration of the mental or physical health of the insured individual or certificate holder;</text> </paragraph> <paragraph num="(b)"> <text>Except with respect to an increase in benefits voluntarily selected by an insured individual or a group policyholder, contain a provision establishing a new waiting period if existing coverage is converted to or replaced by a new or other form of long-term care coverage in the same or another insurer;</text> </paragraph> <paragraph num="(c)"> <text>Limit coverage to skilled nursing care only, or provide an increased level of coverage in a facility for skilled care greater than the coverage for lower levels of care.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A long-term care policy may not be delivered or issued for delivery in the State if the policy limits or excludes coverage by type of illness, treatment, medical condition, or accident, except as follows:</text> <paragraph num="(a)"> <text>Preexisting conditions or diseases to the extent permitted in §C of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>Mental and nervous disorders, except that there may be no limitation or exclusion for Alzheimer's disease or senile dementia disorders;</text> </paragraph> <paragraph num="(c)"> <text>Alcoholism and drug addiction;</text> </paragraph> <paragraph num="(d)"> <text>Illness, treatment, or medical conditions arising out of:</text> <paragraph num="(i)"> <text>War or act of war, whether declared or undeclared,</text> </paragraph> <paragraph num="(ii)"> <text>Participation in a felony, riot, or insurrection,</text> </paragraph> <paragraph num="(iii)"> <text>Service in the armed forces,</text> </paragraph> <paragraph num="(iv)"> <text>Attempted suicide or intentionally self-inflicted injury, whether sane or insane, or</text> </paragraph> <paragraph num="(v)"> <text>Aviation when the covered person is not a fare-paying passenger;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Services provided by a member of the covered person's immediate family;</text> </paragraph> <paragraph num="(f)"> <text>Services provided or available under a workers' compensation, employer's liability, or occupational disease law;</text> </paragraph> <paragraph num="(g)"> <text>Treatment provided in a government facility, unless otherwise required by law;</text> </paragraph> <paragraph num="(h)"> <text>Services for which benefits are available under Medicare or other governmental programs, except Medicaid; or</text> </paragraph> <paragraph num="(i)"> <text>In the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, or would be reimbursable under Title XVIII of the Social Security Act but for the application of a deductible or coinsurance amount.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Section B(2) of this regulation does not prohibit limitations by territory.</text> </paragraph> <paragraph num="(4)"> <text>Section B(2) of this regulation does not prohibit exclusions and limitations by type of provider, but a long-term care insurer may not deny a claim because services are provided in a state other than the state of policy issue under the following conditions:</text> <paragraph num="(a)"> <text>When the state, other than the state of policy issue, does not have the provider licensing, certification, or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers instead of licensure, certification or registration; or</text> </paragraph> <paragraph num="(b)"> <text>When the state, other than the state of policy issue, licenses, certifies or registers the provider under another name.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Preexisting Condition.</text> <paragraph num="(1)"> <text>A long-term care insurance policy or certificate may not exclude coverage for a loss or confinement which results from a preexisting condition unless the loss or confinement begins within 6 months following the effective date of coverage of the covered person.</text> </paragraph> <paragraph num="(2)"> <text>The definition of “preexisting condition” does not prohibit an insurer from using an application form designed to elicit the health history of an applicant and, on the basis of the answers on the application, from underwriting the risk in accordance with the insurer's established underwriting standards.</text> </paragraph> <paragraph num="(3)"> <text>A preexisting condition, regardless of whether it is disclosed on an application form, may not be excluded beyond the 6-month waiting period, or the period provided in the policy, if shorter.</text> </paragraph> <paragraph num="(4)"> <text>A long-term care insurance policy or certificate may not exclude, or use waivers or riders of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting conditions beyond the 6-month waiting period.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A long-term care insurance policy may not be delivered or issued for delivery in the State if the policy conditions eligibility for benefits on:</text> <paragraph num="(1)"> <text>A requirement for earlier hospitalization; or</text> </paragraph> <paragraph num="(2)"> <text>The earlier receipt of a higher level of institutional care.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A long-term care insurance policy may provide for coordination of benefits with other long-term care coverage in force on the same covered person.</text> </paragraph> <paragraph num="F."> <text>Termination.</text> <paragraph num="(1)"> <text>A long-term care insurance policy may be terminated by the insurer only:</text> <paragraph num="(a)"> <text>For nonpayment of premiums;</text> </paragraph> <paragraph num="(b)"> <text>Within the contestable period for material misrepresentation in the application; or</text> </paragraph> <paragraph num="(c)"> <text>For fraud in the application.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer may not terminate a long-term care insurance policy for nonpayment of premiums unless the insurer provides 30 days written notice to the:</text> <paragraph num="(a)"> <text>Covered person, and in the case of an individual policy, to the covered person and the policyowner if different; and</text> </paragraph> <paragraph num="(b)"> <text>Individual designated by the covered person or the policyholder to receive notice of termination.</text> </paragraph> </paragraph> </paragraph> <paragraph num="G."> <text>Extension of Benefits. Termination of long-term care insurance shall be without prejudice to any benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. The extension of benefits beyond the period the long-term care insurance was in force may be:</text> <paragraph num="(1)"> <text>Limited by the duration of the benefit period, if any, or by the payment of the maximum benefits under the policy; and</text> </paragraph> <paragraph num="(2)"> <text>Subject to any policy waiting period and all other applicable provisions of the policy.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Continuation or Conversion.</text> <paragraph num="(1)"> <text>Group long-term care insurance policies issued or delivered in this State shall provide covered individuals with the rights of continuation or conversion of coverage.</text> </paragraph> <paragraph num="(2)"> <text>Continuation of coverage may be provided by the right of the certificate holder to maintain coverage under the existing group policy subject only to the continued timely payment of premiums.</text> </paragraph> <paragraph num="(3)"> <text>A group policy that restricts benefits and services to certain providers or facilities under a managed care or preferred provider arrangement, or that contains incentives to use certain providers or facilities, may provide continuation benefits that are substantially equivalent to the benefits of the existing group policy. In determining whether the benefits of a converted policy are substantially equivalent to the original coverage, the Commissioner shall consider the difference between managed care and nonmanaged care plans.</text> </paragraph> <paragraph num="(4)"> <text>Conversion Policy.</text> <paragraph num="(a)"> <text>Written application for the conversion policy shall be made and the first premium due, if any, shall be paid as directed by the insurer not later than 31 days after termination of coverage under the group policy.</text> </paragraph> <paragraph num="(b)"> <text>The conversion policy shall be issued effective on the day following the termination of coverage under the group policy and shall be renewable annually.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Premium for Conversion Policies.</text> <paragraph num="(a)"> <text>Unless the group policy from which conversion is made replaced previous group coverage, the premium for an individual policy issued as a conversion from a group policy shall be calculated on the basis of the insured's age at inception of the coverage under the group policy from which conversion is made.</text> </paragraph> <paragraph num="(b)"> <text>If the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy replaced.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Continuation of coverage or issuance of a converted policy shall be mandatory, except if:</text> <paragraph num="(a)"> <text>Termination of group coverage results from an individual's failure to make any required payment of premium or contribution when due; or</text> </paragraph> <paragraph num="(b)"> <text>The terminating coverage is replaced not later than 31 days after termination, by group coverage effective on the day following the termination of coverage, if the:</text> <paragraph num="(i)"> <text>Benefits for the replacement group coverage are identical to, or determined by the Commissioner to be substantially equivalent to or in excess of, those provided by the terminating coverage; and</text> </paragraph> <paragraph num="(ii)"> <text>Premium for the replacement group coverage is calculated in a manner consistent with the requirements of §H(5) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>A converted policy, issued to an individual who at the time of conversion is covered by another long-term care insurance policy which provides benefits on the basis of incurred expenses, may contain a provision which results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent of incurred expenses. If this provision is included in the converted policy, the policy shall also provide for a decrease in premiums or a partial refund reflecting the reduction in benefits payable.</text> </paragraph> <paragraph num="(8)"> <text>A converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the extension of benefits of the group policy from which conversion is made, do not exceed the benefits that would have been payable had the individual's coverage under the group policy remained in full force and effect.</text> </paragraph> <paragraph num="(9)"> <text>An insured individual whose eligibility for individual or group long-term care coverage is based upon the individual's relationship to another person is entitled to continuation of coverage under the individual or group policy upon termination of the qualifying relationship by death or dissolution of marriage or otherwise.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Discontinuance and Replacement. If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder within 12 months of the termination of the previous policy, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination and to all persons who could qualify for reinstatement under the previous policy. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy may not:</text> <paragraph num="(1)"> <text>Result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced; and</text> </paragraph> <paragraph num="(2)"> <text>Vary or otherwise depend on the individual's health or disability status, claim experience, or use of long-term care services.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Right to Return Policy.</text> <paragraph num="(1)"> <text>Except for an employer-employee group policy, a long-term care policy shall provide that the policyholder or certificate holder may return the policy or certificate to the insurer or agent within 30 days after receipt of the policy or certificate, and obtain a full refund of premium paid. A statement to this effect shall be printed in a prominent manner on the first page of the policy or certificate.</text> </paragraph> <paragraph num="(2)"> <text>The statement required under §J(1) of this regulation shall read as follows:</text> </paragraph> <paragraph num="(3)"> <text>This section does not apply to any “cafeteria plan” issued under §125 of the Internal Revenue Service Code.</text> </paragraph> <aftertext>“NOTICE TO BUYER: YOU MAY SURRENDER THIS (POLICY) (CERTIFICATE) OF LONG-TERM CARE INSURANCE WITHOUT PENALTY OR OBLIGATION WITHIN 30 DAYS FROM THE DATE OF DELIVERY OF THE (POLICY) (CERTIFICATE). IF YOU DECIDE TO SURRENDER THIS (POLICY) (CERTIFICATE), YOU MUST PROVIDE NOTICE OF THE SURRENDER TO THE INSURER OR ITS AGENT. ANY ATTEMPT BY THE INSURER TO OBTAIN A WAIVER OF YOUR RIGHT TO SURRENDER IS UNLAWFUL. YOUR NOTICE OF SURRENDER WILL CAUSE THIS (POLICY) (CERTIFICATE) TO BE VOID AND WITHOUT BENEFIT FROM ITS BEGINNING. SURRENDER ENTITLES YOU TO A REFUND OF ALL MONIES WITHIN 30 BUSINESS DAYS AFTER RECEIPT BY THE INSURER OR ITS AGENT OF NOTICE OF SURRENDER.”</aftertext> </paragraph> <paragraph num="K."> <text>Electronic Enrollment for Group Policies.</text> <paragraph num="(1)"> <text>In the case of employer group long-term care insurance, any requirement that a signature of an insured be obtained by an insurance producer or insurer shall be deemed satisfied if the:</text> <paragraph num="(a)"> <text>Consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer;</text> </paragraph> <paragraph num="(b)"> <text>Telephonic or electronic enrollment provides necessary and reasonable safeguards to ensure the accuracy, retention, and prompt retrieval of records; and</text> </paragraph> <paragraph num="(c)"> <text>Telephonic or electronic enrollment provides necessary and reasonable safeguards to ensure that the confidentiality of individually identifiable information is maintained.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the consent is obtained by telephonic or electronic enrollment as described in §K(1)(a) of this regulation, a verification of enrollment information shall be provided to the enrollee.</text> </paragraph> <paragraph num="(3)"> <text>The insurer shall make available, upon request of the Commissioner, records that demonstrate the insurer's ability to confirm enrollment and coverage amounts.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Disclosure."> <paragraph num="A."> <text>Riders and Endorsements.</text> <paragraph num="(1)"> <text>Except for riders or endorsements by which the insurer fulfills a request made in writing by the policyholder under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after the date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage of the policy shall require signed acceptance by the policyholder.</text> </paragraph> <paragraph num="(2)"> <text>After the date of policy issue, any rider or endorsement which increases benefits or coverage and which will require an increase in premium shall be agreed to in writing and signed by the insured, unless the increased benefits are required by law.</text> </paragraph> <paragraph num="(3)"> <text>When a separate additional premium is charged for benefits provided in connection with riders or endorsements, the additional premium charge shall be set forth in the policy or in the rider or endorsement.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Payment of Benefits. A long-term care insurance policy which provides for the payment of benefits based on standards described as “usual and customary”, “reasonable and customary”, or words of similar import shall include a definition of these terms. The outline of coverage accompanying the policy shall include an explanation of these terms if used.</text> </paragraph> <paragraph num="C."> <text>Preexisting Condition Limitations. If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear in a separate paragraph of the policy or certificate under the heading “Preexisting Condition Limitations”.</text> </paragraph> <paragraph num="D."> <text>Disclosure of Tax Consequences.</text> <paragraph num="(1)"> <text>This section is not applicable to qualified long-term care insurance contracts.</text> </paragraph> <paragraph num="(2)"> <text>If a life insurance policy or rider to a life insurance policy provides an accelerated death benefit for long-term care, a disclosure statement shall be provided by the insurer at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted.</text> </paragraph> <paragraph num="(3)"> <text>The disclosure statement required in §D(2) of this regulation shall state that:</text> <paragraph num="(i)"> <text>Receipt of the accelerated benefits may be taxable; and</text> </paragraph> <paragraph num="(ii)"> <text>Assistance should be sought from a personal tax advisor.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The disclosure statement required in §D(2) of this regulation shall be prominently displayed on the first page of the policy or rider and any other related documents.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Benefit Triggers</text> <paragraph num="(1)"> <text>An insurer shall:</text> <paragraph num="(a)"> <text>Use activities of daily living and cognitive impairment to measure an insured's need for long-term care; and</text> </paragraph> <paragraph num="(b)"> <text>Describe in the policy or certificate in a separate provision the benefit triggers described in §E(1)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Additional Benefit Triggers.</text> <paragraph num="(a)"> <text>If the policy or certificate contains any additional benefit triggers other than described in §E(1) of this regulation, these triggers shall be described in the same provision described in §E(1)(b) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>If the additional benefit triggers differ for different benefits, explanation of the trigger shall accompany each benefit description.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the contract or certificate requires that an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this requirement shall appear in the provision described in §E(1)(b) of this regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Each qualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage that the policy is intended to be a qualified long-term care insurance contract under §7702B(b) of the Internal Revenue Code of 1986, as amended.</text> </paragraph> <paragraph num="G."> <text>Each nonqualified long-term care insurance contract shall include a disclosure statement in the policy and the outline of coverage that the policy is not intended to be a qualified long-term care insurance contract.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Requirements for Applications."> <paragraph num="A."> <text>If the application for a long-term care insurance policy is to be made part of the policy or certificate, the insurer shall print:</text> <paragraph num="(1)"> <text>Conspicuously and in close conjunction with the applicant's signature block on the application form for the policy or certificate:</text> </paragraph> <paragraph num="(2)"> <text>On the first page of the policy or certificate the following or substantially similar language:</text> </paragraph> </paragraph> <paragraph num="B."> <text>Application forms for individual policies and for certificate holders under group policies other than employer-employee groups shall include the questions in §C of this regulation, designed to elicit information as to whether at the time of the application the applicant has another long-term care insurance policy or certificate in force, or whether a long-term care policy or certificate is intended to replace any other long-term care policy or certificate or other insurance then in force. A supplementary application to be signed by the applicant may be used for this purpose.</text> </paragraph> <paragraph num="C."> <text>Application questions include the following:</text> <paragraph num="(1)"> <text>“Do you have other long-term care insurance in force or other health insurance, including membership in a health maintenance organization?”;</text> </paragraph> <paragraph num="(2)"> <text>“Did you have another long-term care insurance policy or certificate in force during the last 12 months?”:</text> <paragraph num="(a)"> <text>“If so, with which company?”;</text> </paragraph> <paragraph num="(b)"> <text>“If that policy lapsed, when did it lapse?”;</text> </paragraph> <paragraph num="(c)"> <text>“Are you covered by Medicaid?”; and</text> </paragraph> <paragraph num="(d)"> <text>“Do you intend to replace any of your medical or health insurance coverage with this policy (certificate)?”.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>An agent soliciting applications for long-term care insurance shall list any other long-term care coverage or other health insurance policies which the applicant has or has had. The agent shall list policies which:</text> <paragraph num="(1)"> <text>Are still in force;</text> </paragraph> <paragraph num="(2)"> <text>Have lapsed or otherwise terminated during the past 5 years.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Solicitations Other Than Direct Response. Upon determining that a sale will involve replacement, the agent or the insurer, other than an insurer using direct response solicitation, shall furnish the applicant a notice regarding replacement of long-term care coverage or other health insurance before delivering an individual long-term care insurance policy. A copy of the notice shall be given to the applicant, and another copy signed by the applicant shall be retained by the insurer. The required notice shall be substantially in the form and language shown in Regulation .22 of this chapter.</text> </paragraph> <paragraph num="F."> <text>Direct Response Solicitation. Insurers using direct response solicitation shall deliver a notice regarding replacement of long-term care coverage or other health insurance to the applicant upon issuance of a long-term care policy. The required notice shall be substantially in the form and language shown in Regulation .23 of this chapter.</text> </paragraph> <paragraph num="G."> <text>When replacement is intended, the replacing insurer shall give written notice to the existing insurer of the proposed replacement. This notice shall identify the insured and the policy number or the address of the insured. The notice shall be given within 5 working days from the date the application for the newly applied coverage is received at the home office of the insurer, or the date the policy is issued, whichever is earlier.</text> </paragraph> <paragraph num="H."> <text>Before issuing a long-term care insurance policy or certificate to an applicant 80 years old or older, unless the policy or certificate is to be issued on a guaranteed issue basis, the insurer shall obtain at least one of the following:</text> <paragraph num="(1)"> <text>A report of a recent physical examination;</text> </paragraph> <paragraph num="(2)"> <text>An assessment by a qualified person of the applicant's functional capacity;</text> </paragraph> <paragraph num="(3)"> <text>An attending physician's statement; or</text> </paragraph> <paragraph num="(4)"> <text>A copy of recent medical records.</text> </paragraph> </paragraph> <paragraph num="I."> <text>A copy of the completed application or enrollment form shall be delivered to the insured at the time of delivery of the policy or certificate.</text> </paragraph> <paragraph num="J."> <text>Life Insurance Policies.</text> <paragraph num="(1)"> <text>Life insurance policies that accelerate death benefits for long-term care shall comply with this section if the policy being replaced is a long-term care insurance policy.</text> </paragraph> <paragraph num="(2)"> <text>If the policy being replaced is a life insurance policy, the insurer shall comply with the replacement requirements of COMAR 31.09.05.</text> </paragraph> <paragraph num="(3)"> <text>If a life insurance policy that accelerates the death benefits for long-term care is replaced by another life insurance policy that accelerates the death benefits for long-term care, the replacing insurer shall comply with both the long-term care and the life insurance replacement requirements.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Person To Be Notified."> <paragraph num="A."> <text>Except as provided in §E of this regulation, an insurer may not issue an individual long-term care insurance policy or certificate to an insured until the insurer has received from the applicant either a written:</text> <paragraph num="(1)"> <text>Designation of at least one person in addition to the insured who is to receive notice of termination of the policy or certificate for nonpayment of premium; or</text> </paragraph> <paragraph num="(2)"> <text>Waiver dated and signed by the applicant electing not to designate additional persons to receive notice of nonpayment of premium.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The written designation shall be on a form provided by the insurer and shall:</text> <paragraph num="(1)"> <text>Provide space clearly designated for listing at least one person; and</text> </paragraph> <paragraph num="(2)"> <text>Include a space for listing the full name and home address of the designated person.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the applicant elects to waive the right to designate additional persons to receive notice of nonpayment of premium, the insurer shall use a waiver form that states: “Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice.”</text> </paragraph> <paragraph num="D."> <text>An insurer shall notify the insured of the right to change the written designation described in §§A—C of this regulation, at least once every 2 years.</text> </paragraph> <paragraph num="E."> <text>Payroll or Pension Deduction Plans.</text> <paragraph num="(1)"> <text>If the policyholder or certificate holder pays premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the insurer is not required to satisfy the requirements contained in §§A — C of this regulation until 60 days after the policyholder or certificate holder is no longer on a payroll or pension deduction plan.</text> </paragraph> <paragraph num="(2)"> <text>The application or enrollment form for a long-term care insurance policy or certificate through a payroll or pension deduction plan shall clearly indicate the payment plan selected by the applicant.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Lapse or Termination for Nonpayment of Premium.</text> <paragraph num="(1)"> <text>Notice of Lapse.</text> <paragraph num="(a)"> <text>An individual long-term care policy or certificate may not lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, provides notice to the insured and to those persons designated under §§A and B of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The notice required by §F(1) of this regulation shall be provided by the insurer to the addresses provided by the insured for purposes of receiving notice of lapse or termination.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The notice required in §F(1) of this regulation:</text> <paragraph num="(a)"> <text>Shall be given by first class United States mail, postage prepaid; and</text> </paragraph> <paragraph num="(b)"> <text>May not be given until 30 days after a premium is due and unpaid.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The notice required in §F(1) of this regulation shall be deemed to be given as of 5 days after the date of mailing.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Reinstatement.</text> <paragraph num="(1)"> <text>A long-term care insurance policy or certificate shall include a provision that provides for reinstatement of coverage, in the event of lapse, if the insurer is provided proof that, before the grace period contained in the policy expired, the policyholder or certificate holder:</text> <paragraph num="(a)"> <text>Was cognitively impaired; or</text> </paragraph> <paragraph num="(b)"> <text>Had a loss of functional capacity.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The reinstatement option described in §G(1) of this regulation shall be available to the insured if it is requested within 5 months after termination and shall allow for the collection of past due premium, if appropriate.</text> </paragraph> <paragraph num="(3)"> <text>The standard of proof of cognitive impairment or loss of functional capacity referenced in §G(1) of this regulation may not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy and certificate.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Applicant's Options."> <paragraph num="A."> <text>Except as provided in §§B and C of this regulation, the application for a long-term care insurance policy or certificate, or a form attached to the policy or certificate, shall contain a statement to be signed separately by the applicant to the effect that the:</text> <paragraph num="(1)"> <text>Applicant has been informed of the applicant's right to:</text> <paragraph num="(a)"> <text>Designate a person to receive any notice of termination;</text> </paragraph> <paragraph num="(b)"> <text>Purchase:</text> <paragraph num="(i)"> <text>Inflation protection,</text> </paragraph> <paragraph num="(ii)"> <text>Home health care if not included in the policy, and</text> </paragraph> <paragraph num="(iii)"> <text>Nonforfeiture benefits; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Choose the form of nonforfeiture benefit if the policy provides a choice; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Benefits and any costs of each of the options in this regulation have been fully explained to the applicant.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The statement of the applicant's right to purchase inflation protection specified in §A(1)(b)(i) of this regulation is not required when the policy is issued to an employer-employee group described in Regulation .12D of this chapter.</text> </paragraph> <paragraph num="C."> <text>The statement of the applicant's right to purchase nonforfeiture benefits specified in §A(1)(b)(iii) of this regulation is not required when the policy is issued to a group described in Regulation .13B(1)(b) or (c) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Prohibition Against Post-Claims Underwriting."> <paragraph num="A."> <text>Except in a case of guaranteed issue, application forms for long-term care insurance policies or certificates shall contain clear and unambiguous questions designed to ascertain the condition of health of the applicant.</text> </paragraph> <paragraph num="B."> <text>Medical Condition—Medication.</text> <paragraph num="(1)"> <text>If an application for long-term care insurance contains a question which asks whether the applicant has had medication prescribed by a physician, it shall also ask the applicant to name the medication which has been prescribed.</text> </paragraph> <paragraph num="(2)"> <text>A long-term care insurance policy or certificate may not be rescinded for failure by the applicant to list in the application for the policy or certificate a medical condition, if the medications listed in the application were known or should have been known by the insurer at the time of application to be directly related to a medical condition for which coverage would otherwise be denied.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An insurer issuing long-term care insurance shall maintain a record of all policy or certificate rescissions, both Statewide and countywide, except those which the policyholder voluntarily effectuated. The insurer shall annually furnish this information to the Insurance Commissioner in the format in Regulation .29 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Preexisting Condition and Waiting Period Provisions in Replacement Policies."> <text>If a long-term care insurance policy or certificate replaces other long-term care coverage, the replacing insurer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy or certificate for similar benefits to the extent that corresponding time periods have been satisfied under the original policy.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Minimum Standards for Home Health Care Benefits in Long-Term Insurance Policies."> <paragraph num="A."> <text>Optional Home Health Care Benefit.</text> <paragraph num="(1)"> <text>An insurer issuing a long-term care insurance policy shall offer the applicant for the policy the option to purchase a policy that provides for home health care benefits in addition to the benefits provided for nursing home care.</text> </paragraph> <paragraph num="(2)"> <text>The benefits required to be offered for home health care under this section are as follows:</text> <paragraph num="(a)"> <text>If the benefit for nursing home care is on a scheduled or indemnity-type basis, the daily limit for home health care benefits shall be at least 50 percent of the daily benefit for nursing home care;</text> </paragraph> <paragraph num="(b)"> <text>The period of eligibility for home health care benefits shall be at least equal to the period of eligibility for benefits for nursing home care; and</text> </paragraph> <paragraph num="(c)"> <text>If the policy provides for an overall lifetime limit, the benefits for home health care shall be at least equal to 50 percent of the overall lifetime limit.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The minimum benefits required in §A(2) of this regulation do not apply to policies or certificates issued to residents of continuing care retirement communities.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If the offer required by §A of this regulation is rejected in writing by the applicant, then the insurer may offer a home health care rider providing benefits for a longer or shorter duration or for differing benefit levels.</text> </paragraph> <paragraph num="C."> <text>A long-term care insurance policy or certificate may not limit benefits for home health care by:</text> <paragraph num="(1)"> <text>Requiring that the insured would need skilled nursing care or care in a hospital and skilled nursing facility if home health care services were not provided;</text> </paragraph> <paragraph num="(2)"> <text>Requiring that the insured first receive nursing care or therapeutic services, or both, in a community setting before home health care services are covered;</text> </paragraph> <paragraph num="(3)"> <text>Requiring that eligibility for services be limited to services provided by registered nurses or licensed practical nurses;</text> </paragraph> <paragraph num="(4)"> <text>Requiring that a nurse or licensed therapist provide services covered by the policy if the services can be provided by a home health aide or other home health care worker, unless required by applicable licensing regulations;</text> </paragraph> <paragraph num="(5)"> <text>Requiring that the insured have an acute condition before home health care services are covered;</text> </paragraph> <paragraph num="(6)"> <text>Limiting benefits to services provided by Medicare-certified agencies or providers;</text> </paragraph> <paragraph num="(7)"> <text>Excluding coverage for personal care services provided by a home health aide; or</text> </paragraph> <paragraph num="(8)"> <text>Requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Home health care coverage may be applied to the nonhome health care benefits provided in the policy or certificate to determine maximum coverage under the terms of the policy or certificate.</text> </paragraph> <paragraph num="E."> <text>An insurer soliciting the sale of a long-term care insurance policy shall offer the applicant the option of including the policy home health care benefits in accordance with the provision in §§A—D of this regulation.</text> </paragraph> <paragraph num="F."> <text>A qualified long-term care insurance policy that provides benefits for home health care or community care services may not exclude coverage for adult day care services.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Requirement To Offer Inflation Protection."> <paragraph num="A."> <text>An insurer issuing a long-term care insurance policy shall offer the applicant for the policy the option to purchase a policy that provides for benefit levels to increase at a rate not less than 5 percent compounded annually.</text> </paragraph> <paragraph num="B."> <text>Instead of the requirement of §A of this regulation, the insurer may offer a policy that guarantees the policyholder the right to increase periodically benefit levels without providing evidence of insurability of health status as long as the option for the preceding period has not been declined, with the amount of the additional benefit being not less than the difference between the existing policy benefit and the amount of the benefit which would have been payable if the policy provided the option described in §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>Instead of the requirement of §A of this regulation, the insurer may offer a policy that provides a specified percentage, not less than 50 percent, of actual and reasonable charges and does not include a maximum specified indemnity amount or limit.</text> </paragraph> <paragraph num="D."> <text>In a policy issued to an employer-employee group, the offer required in §A, B, or C of this regulation shall be made to the group policyholder. In a policy issued to any other group, the offer shall be made to each proposed certificate holder.</text> </paragraph> <paragraph num="E."> <text>The offer in §A of this regulation may not be required of life insurance policies or riders on life insurance policies containing accelerated death benefits for long-term care.</text> </paragraph> <paragraph num="F."> <text>In connection with the offer to provide inflation protection, the insurer shall provide the applicant with:</text> <paragraph num="(1)"> <text>A graphic comparison and a table illustrating for at least the first 20 policy years the benefits or the reasonably anticipated benefits which would be available if the inflation protection is purchased, in comparison with a policy which does not provide inflation protection; and</text> </paragraph> <paragraph num="(2)"> <text>Any expected premium increases or additional premiums to pay for automatic or optional benefit increases.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The initial premium for including the inflation protection provision in the policy shall be calculated on the basis of a level premium for the duration of the policy.</text> </paragraph> <paragraph num="H."> <text>Inflation protection benefit increases under a policy that contains inflation protection benefits shall continue without regard to an insured's age, claim status, or claim history, or the length of time the individual has been insured under the policy.</text> </paragraph> <paragraph num="I."> <text>Disclosure of Premium in Offer of Inflation Protection.</text> <paragraph num="(1)"> <text>An offer of inflation protection that provides for automatic benefit increases shall include an offer of a premium which the insurer expects to remain constant.</text> </paragraph> <paragraph num="(2)"> <text>The offer described in §I(1) of this regulation shall disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Rejection of Inflation Protection.</text> <paragraph num="(1)"> <text>Inflation protection as provided in §A of this regulation shall be included in a long-term care insurance policy unless an insurer obtains a rejection of inflation protection signed by the policyholder as required in this section.</text> </paragraph> <paragraph num="(2)"> <text>The rejection described in §J(1) of this regulation may be either in the application or on a separate form.</text> </paragraph> <paragraph num="(3)"> <text>The rejection required by this section shall be considered a part of the application and shall state:</text> </paragraph> <aftertext>“I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protection. Specifically, I have reviewed Plans (insert names or descriptions of plans), and I reject inflation protection.”</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Nonforfeiture Benefit Requirement."> <paragraph num="A."> <text>This regulation does not apply to life insurance policies or riders containing accelerated death benefits for long-term care.</text> </paragraph> <paragraph num="B."> <text>Required Option.</text> <paragraph num="(1)"> <text>An insurer may not deliver or issue a long-term care insurance policy in Maryland unless the option of purchasing a policy including a nonforfeiture benefit has been offered to the:</text> <paragraph num="(a)"> <text>Applicant, when the policy is an individual long-term care insurance policy;</text> </paragraph> <paragraph num="(b)"> <text>Group policyholder, when the policy is an employer group long-term care insurance policy;</text> </paragraph> <paragraph num="(c)"> <text>Group policyholder, when the policy is a group long-term care insurance policy issued to a professional, trade, or occupational association for its members, former members, or retired members, or a combination of members, former members or retired members, if the association:</text> <paragraph num="(i)"> <text>Is composed of individuals all of whom are or were actively engaged in the same profession, trade, or occupation; and</text> </paragraph> <paragraph num="(ii)"> <text>Has been maintained in good faith for purposes other than obtaining insurance; or</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Proposed certificate holder, when the group long-term care insurance policy is a policy other than one of the policies described in §B(1)(b)—(c) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The offer of a nonforfeiture benefit required by §B(1) of this regulation may be in the form of a rider that is attached to the policy.</text> </paragraph> </paragraph> <paragraph num="C."> <text>To comply with the requirement to offer a nonforfeiture benefit under §B of this regulation:</text> <paragraph num="(1)"> <text>A policy offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers, and benefit length that are the same as coverage to be issued without nonforfeiture benefits;</text> </paragraph> <paragraph num="(2)"> <text>The nonforfeiture benefit included in the offer shall be the benefit described in §F of this regulation; and</text> </paragraph> <paragraph num="(3)"> <text>The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the Outline of Coverage or other materials given to the applicant.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Options if Nonforfeiture Offer is Rejected.</text> <paragraph num="(1)"> <text>If the offer required to be made under §B(1) of this regulation is rejected, the insurer shall provide the contingent benefit upon lapse described in §E of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Even if the offer under §B(1) of this regulation is accepted, for a policy with a fixed or limited premium paying period, the contingent benefit on lapse in §E(6) of this regulation shall still apply.</text> </paragraph> <paragraph num="(3)"> <text>The requirement of §D(2) of this regulation shall apply to:</text> <paragraph num="(a)"> <text>Except as provided in §D(3)(b) of this regulation, any long-term care insurance policy or certificate issued in Maryland on or after March 1, 2008; and</text> </paragraph> <paragraph num="(b)"> <text>Any certificate issued under an employer group long-term care insurance policy, if the certificate is issued on or after September 10, 2008.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Contingent Benefit Upon Lapse Provision.</text> <paragraph num="(1)"> <text>Except as provided in §E(6)(e) and (11) of this regulation, the requirements of this section become effective on April 1, 2003, and apply as follows:</text> <paragraph num="(a)"> <text>Except as provided in §E(1)(b) of this regulation, the provisions of this section apply to any long-term care insurance issued in this State on or after April 1, 2003; and</text> </paragraph> <paragraph num="(b)"> <text>The requirements of this section do not apply to certificates issued on or after April 1, 2003, under an employer group long-term care insurance policy which was in force before April 1, 2003.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the offer required to be made under §B(1) of this regulation is rejected, the insurer shall provide the contingent benefit upon lapse provided in this section.</text> </paragraph> <paragraph num="(3)"> <text>The contingent benefit on lapse shall be triggered each time:</text> <paragraph num="(a)"> <text>An insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth in §E(5) of this regulation based on the insured's issue age; and</text> </paragraph> <paragraph num="(b)"> <text>The policy or certificate lapses within 120 days of the due date of the premium increase described in §E(3)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Unless otherwise required, policyholders shall be notified at least 30 days before the due date of the premium reflecting the rate increase described in §E(3)(a) of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>The following table lists the triggers for a substantial premium increase:</text> </paragraph> <paragraph num="(6)"> <text>Policies With a Fixed or Limited Premium Paying Period.</text> <paragraph num="(a)"> <text>A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time:</text> <paragraph num="(i)"> <text>An insurer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth in §E(6)(c) of this regulation, based on the insured's age;</text> </paragraph> <paragraph num="(ii)"> <text>The policy or certificate lapses within 120 days of the due date of the premium that was increased as described in §E(6)(a)(i) of this regulation; and</text> </paragraph> <paragraph num="(iii)"> <text>The ratio in §E(9)(b) of this regulation is 40 percent or more.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Unless otherwise required, policyholders shall be notified at least 30 days before the due date of the premium reflecting the rate increase.</text> </paragraph> <paragraph num="(c)"> <text>The following table lists the triggers for a substantial premium increase for a long-term care insurance policy with a fixed or limited premium paying period:</text> </paragraph> <paragraph num="(d)"> <text>The contingent benefit upon lapse described in §E(6) of this regulation shall be in addition to the contingent benefit provided by §E(3) of this regulation and where both contingent benefits are triggered, the benefit provided shall be at the option of the insured.</text> </paragraph> <paragraph num="(e)"> <text>The requirements found in §E(6) of this regulation shall apply to:</text> <paragraph num="(i)"> <text>Except as provided in §E(6)(e)(ii) of this regulation, any long-term care insurance policy or certificate issued in Maryland on or after March 1, 2008; and</text> </paragraph> <paragraph num="(ii)"> <text>Any certificate issued under an employer group long-term care insurance policy, if the certificate is issued on or after September 10, 2008.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>On or before the effective date of a substantial premium increase as described in §E(3) and (5) of this regulation, the insurer shall:</text> <paragraph num="(a)"> <text>Offer to reduce policy benefits provided by the current coverage consistent with the requirements of Regulation .36 of this chapter so that required premium payments are not increased;</text> </paragraph> <paragraph num="(b)"> <text>Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of §F of this regulation; and</text> </paragraph> <paragraph num="(c)"> <text>Notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period in §E(3)(b) of this regulation shall be deemed to be the election of the offer to convert in §E(7)(b) of this regulation, unless the automatic option in §E(9)(c) of this regulation applies.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>The conversion to a paid-up contract option in §E(7)(b) of this regulation may be elected at any time during the 120-day period in §E(3)(b) of this regulation.</text> </paragraph> <paragraph num="(9)"> <text>On or before the effective date of a substantial premium increase as described in §E(6)(a) and (c) of this regulation, the insurer shall:</text> <paragraph num="(a)"> <text>Offer to reduce policy benefits provided by the current coverage consistent with the requirements of Regulation .36 of this chapter so that required premium payments are not increased;</text> </paragraph> <paragraph num="(b)"> <text>Offer to convert the coverage to a paid-up status where the amount payable for each benefit is 90 percent of the amount payable in effect immediately before lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period; and</text> </paragraph> <paragraph num="(c)"> <text>Notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period described in §E(6)(a)(ii) of this regulation shall be deemed to be the election of the offer to convert described in §E(9)(b) of this regulation, if the ratio is 40 percent or more.</text> </paragraph> </paragraph> <paragraph num="(10)"> <text>The option to convert coverage as described in §E(9)(b) of this regulation may be elected at any time during the 120-day period described in §E(6)(a)(ii) of this regulation.</text> </paragraph> <paragraph num="(11)"> <text>The requirements found in §E(9)—(10) of this regulation shall apply to:</text> <paragraph num="(a)"> <text>Except as provided in §E(11)(b) of this regulation, any long-term care insurance policy or certificate issued in Maryland on or after March 1, 2008; and</text> </paragraph> <paragraph num="(b)"> <text>Any certificate issued under an employer group long-term care insurance policy, if the certificate is issued on or after September 10, 2008.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>For any long-term care policy issued in Maryland on or after September 1, 2017:</text> <paragraph num="(a)"> <text>If the policy or certificate was issued at least 20 years before the effective date of the increase, a value of 0 percent shall be used in place of all values in the table in §E(6)(c) of this regulation; and</text> </paragraph> <paragraph num="(b)"> <text>Values above 100 percent in the table in §E(5) of this regulation shall be reduced to 100 percent.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Description of Nonforfeiture Benefits.</text> <paragraph num="(1)"> <text>Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with §E(3) of this regulation, but not §E(6) of this regulation, are described in §F of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>For purposes of this section, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse.</text> </paragraph> <paragraph num="(3)"> <text>The shortened benefit period nonforfeiture benefit required by §F(2) of this regulation shall:</text> <paragraph num="(a)"> <text>Have the same benefit amounts and frequency in effect at the time of lapse but not increased after the time of lapse; and</text> </paragraph> <paragraph num="(b)"> <text>Be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as described in §F(4) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Calculation of the Nonforfeiture Credit.</text> <paragraph num="(a)"> <text>Except as provided in §F(4)(c) of this regulation, the standard nonforfeiture credit shall be equal to 100 percent of the sum of all premiums paid, including the premiums paid before any changes in benefits.</text> </paragraph> <paragraph num="(b)"> <text>The insurer may offer other shortened benefit period options in addition to the option described in §F(4)(a) of this regulation, provided the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration.</text> </paragraph> <paragraph num="(c)"> <text>The minimum nonforfeiture credit may not be less than 30 times the daily nursing home benefit at the time of lapse.</text> </paragraph> <paragraph num="(d)"> <text>The calculation of the nonforfeiture credit shall be subject to the limitation described in §G of this regulation.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date.</text> </paragraph> <paragraph num="(6)"> <text>The contingent benefit upon lapse shall be effective during the first 3 years the policy is in force, as well as after the first 3 years the policy is in force.</text> </paragraph> <paragraph num="(7)"> <text>Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.</text> </paragraph> </paragraph> <paragraph num="G."> <text>An insurer may limit benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status so that the benefits will not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium paying status.</text> </paragraph> <paragraph num="H."> <text>There shall be no difference in the minimum nonforfeiture benefits as required under this regulation for group and individual policies.</text> </paragraph> <paragraph num="I."> <text>Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit upon lapse shall be subject to the loss ratio requirements of COMAR 31.14.02.05 or .06, whichever is applicable, treating the policy as a whole.</text> </paragraph> <paragraph num="J."> <text>To determine whether contingent nonforfeiture upon lapse provisions are triggered under §E(3) or (6) of this regulation, a replacing insurer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer.</text> </paragraph> <paragraph num="K."> <text>A nonforfeiture benefit for qualified long-term care insurance contracts shall be offered that meets the following requirements:</text> <paragraph num="(1)"> <text>The nonforfeiture provision shall be appropriately captioned;</text> </paragraph> <paragraph num="(2)"> <text>The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums; and</text> </paragraph> <paragraph num="(3)"> <text>The nonforfeiture provision shall provide at least one of the following:</text> <paragraph num="(a)"> <text>Reduced paid-up insurance;</text> </paragraph> <paragraph num="(b)"> <text>Extended term insurance;</text> </paragraph> <paragraph num="(c)"> <text>Shortened benefit period; or</text> </paragraph> <paragraph num="(d)"> <text>Other similar offerings approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The nonforfeiture benefit option provided by the insurer under this section shall comply with the requirements of §F of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Group Coverage."> <text>Group long-term care insurance coverage may not be offered to a resident of this State under a group policy issued in another jurisdiction unless the coverage complies with the statutes and regulations pertaining to group long-term care insurance issued in this State.</text> </regulation> <regulation prefix="Regulation" num=".15" heading="Advertising."> <paragraph num="A."> <text>An insurer soliciting long-term care insurance in the State shall provide the Commissioner with a copy of any long-term care insurance advertisement intended for use in the State. For purposes of this regulation, “advertising” includes any material:</text> <paragraph num="(1)"> <text>Published, disseminated, circulated, or placed before the public in a newspaper, magazine, or other publication;</text> </paragraph> <paragraph num="(2)"> <text>In the form of a notice, circular, pamphlet, letter, or poster;</text> </paragraph> <paragraph num="(3)"> <text>Seen or heard over any radio or television station;</text> </paragraph> <paragraph num="(4)"> <text>Sent by direct mail; or</text> </paragraph> <paragraph num="(5)"> <text>Issued in any other manner intended to be seen or heard by the general public.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The insurer shall submit a copy of the advertising in advance to be received in the office of the Commissioner at least 30 days before its intended use.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may exempt an insurer's advertising form or material from the requirements of this regulation when, in the Commissioner's opinion, these requirements cannot be reasonably applied.</text> </paragraph> <paragraph num="D."> <text>An insurer shall maintain in its home office a file of all long-term care advertisements for at least 3 years from the date the advertisements were first issued.</text> </paragraph> <paragraph num="E."> <text>An insurer may not use the term “level premium” in a guaranteed renewable policy.</text> </paragraph> <paragraph num="F."> <text>An insurer may not describe a policy which provides benefits for less than 24 months as a long-term care insurance policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Standards for Marketing."> <paragraph num="A."> <text>An insurer marketing long-term care insurance coverage in Maryland, either directly or through its producers, shall:</text> <paragraph num="(1)"> <text>Establish marketing procedures and insurance producer requirements to ensure that:</text> <paragraph num="(a)"> <text>Any comparison of policies by its producers is fair and accurate; and</text> </paragraph> <paragraph num="(b)"> <text>Excessive insurance is not sold or issued;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Display prominently by type, stamp, or other appropriate means, on the first page of the outline of coverage and of the policy, the following: “Notice to Buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.”;</text> </paragraph> <paragraph num="(3)"> <text>Provide copies of the disclosure forms required by COMAR 31.14.02.03, .08, and .09 to the applicant;</text> </paragraph> <paragraph num="(4)"> <text>Inquire, and otherwise make every reasonable effort to identify, whether a prospective applicant or enrollee for long-term care insurance already has long-term care insurance and the types and amounts of the existing insurance;</text> </paragraph> <paragraph num="(5)"> <text>Establish written procedures for verifying compliance with this regulation, with a record of the procedures implemented by the insurer being maintained in the home office of the insurer for at least 3 years following the procedures' introduction; and</text> </paragraph> <paragraph num="(6)"> <text>Provide an explanation of contingent benefit upon lapse provided for in Regulation .13E(3)—(5) of this chapter and, if applicable, the additional contingent benefit upon lapse provided to policies with fixed or limited premium periods provided for in Regulation .13E(6) of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>In soliciting long-term care coverage the insurer, at the time of solicitation, shall:</text> <paragraph num="(1)"> <text>Provide written notice to the prospective policyholders and certificate holders that senior insurance counselling programs are available in the State; and</text> </paragraph> <paragraph num="(2)"> <text>Give prospective applicants the name, address, and telephone number of an available counselling program.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Prohibited Practices.</text> <paragraph num="(1)"> <text>In addition to the practices prohibited in Insurance Article, Title 27 and §14-136, Annotated Code of Maryland, the acts and practices described in §C(2)—(4) of this regulation are prohibited.</text> </paragraph> <paragraph num="(2)"> <text>Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer is prohibited.</text> </paragraph> <paragraph num="(3)"> <text>High Pressure Tactics. Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance is prohibited.</text> </paragraph> <paragraph num="(4)"> <text>Cold Lead Advertising. Making use, directly or indirectly, of any method of marketing which fails to disclose in a conspicuous manner that the purpose of the marketing is solicitation of insurance, and that contact will be made by an insurance agent or insurance company, is prohibited.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Associations.</text> <paragraph num="(1)"> <text>The primary responsibility of an association, as defined in Regulation .02B(6) of this chapter, when endorsing long-term care insurance, shall be to educate its members concerning long-term care issues in general so that its members can make informed decisions.</text> </paragraph> <paragraph num="(2)"> <text>An association shall provide objective information regarding long-term care insurance policies or certificates endorsed by the association to ensure that members of the association receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed.</text> </paragraph> <paragraph num="(3)"> <text>An insurer intending to issue association long-term care coverage shall file with the Commissioner the following material:</text> <paragraph num="(a)"> <text>The policy and certificate;</text> </paragraph> <paragraph num="(b)"> <text>An outline of coverage that corresponds to the policy and certificate described in §D(3)(a) of this regulation; and</text> </paragraph> <paragraph num="(c)"> <text>All advertisements used to solicit members of the association.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>The association shall disclose in any long-term care insurance solicitation:</text> <paragraph num="(a)"> <text>The specific nature and amount of the compensation arrangements that the association receives from endorsement or sale of the policy or certificate to its members; and</text> </paragraph> <paragraph num="(b)"> <text>A brief description of the process under which the policies and the insurer issuing the policies were selected.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>The compensation arrangements discussed in §D(4)(a) of this regulation include all fees, commissions, administrative fees, and other forms of financial support.</text> </paragraph> <paragraph num="(6)"> <text>If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members.</text> </paragraph> <paragraph num="(7)"> <text>The board of directors of associations endorsing long-term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the insurer.</text> </paragraph> <paragraph num="(8)"> <text>An association endorsing long-term care insurance to its members shall:</text> <paragraph num="(a)"> <text>Engage the services of a person with expertise in long-term care insurance not affiliated with the insurer to:</text> <paragraph num="(i)"> <text>Conduct an examination of the policies, including their benefits, features, and rates at the time of the association's decision to endorse particular long-term care insurance; and</text> </paragraph> <paragraph num="(ii)"> <text>Update the examination described in §D(8)(a)(i) of this regulation in the event of material change in a policy's benefits, features, or rates;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Actively monitor the marketing efforts of the insurer and its agents; and</text> </paragraph> <paragraph num="(c)"> <text>Review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>The requirements set forth in §D(8) of this regulation do not apply to qualified long-term care insurance contracts.</text> </paragraph> <paragraph num="(10)"> <text>An insurer may not issue a group long-term care insurance policy or certificate to an association unless the insurer files with the Commissioner the information required in this section.</text> </paragraph> <paragraph num="(11)"> <text>The insurer may not issue a long-term care policy or certificate to an association or continue to market a long-term care policy or certificate to an association unless the insurer certifies annually that the association has complied with the requirements set forth in this section.</text> </paragraph> <paragraph num="(12)"> <text>Failure to comply with the filing and certification requirements of this section is an unfair trade practice in violation of Insurance Article, Title 27, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Appropriateness of Recommended Purchase."> <paragraph num="A."> <text>In recommending the purchase or replacement of any long-term care insurance policy or certificate, an agent shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.</text> </paragraph> <paragraph num="B."> <text>In recommending the purchase or replacement of any long-term care insurance policy or certificate, the insurer or its agent shall make a reasonable effort to identify whether a prospective applicant for long-term care insurance:</text> <paragraph num="(1)"> <text>Already has long-term care insurance, and the types and amounts of insurance;</text> </paragraph> <paragraph num="(2)"> <text>Had long-term care insurance in force during the last 12 months;</text> </paragraph> <paragraph num="(3)"> <text>Is covered or is eligible for coverage under the Medical Assistance Program (Medicaid); or</text> </paragraph> <paragraph num="(4)"> <text>Intends to replace an existing hospital, medical, surgical, or other health insurance coverage with long-term care insurance.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Outline of Coverage."> <paragraph num="A."> <text>An insurer or the agent soliciting long-term care coverage shall deliver to a prospective applicant, at the time of the initial solicitation, an outline of coverage in a manner which prominently directs the attention of the recipient to the document and its purpose.</text> </paragraph> <paragraph num="B."> <text>Time of Delivery. In the case of:</text> <paragraph num="(1)"> <text>Solicitation by an agent, the agent shall deliver the outline of coverage before presenting an applicant or enrollment form to the prospective applicant;</text> </paragraph> <paragraph num="(2)"> <text>Direct response solicitations, the insurer shall deliver the outline of coverage in conjunction with any application or enrollment form.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The outline of coverage shall include:</text> <paragraph num="(1)"> <text>A description of the principal benefits and coverage provided under the policy or certificate;</text> </paragraph> <paragraph num="(2)"> <text>A statement of the principle exclusions, reductions, and limitations under the policy or certificate;</text> </paragraph> <paragraph num="(3)"> <text>A statement of the renewal provisions, including any reservation of the insurer's right to change the schedule of premiums;</text> </paragraph> <paragraph num="(4)"> <text>A statement of probable or expected premium increases, or additional premiums to pay for automatic or optional benefit increases, with these being presented in tabular form together with a graphic demonstration of the magnitude of potential premiums the applicant will need to pay from the effective date of the coverage up to age 75;</text> </paragraph> <paragraph num="(5)"> <text>A statement that the outline of coverage is a summary of the coverage applied for and that the individual policy or the group master policy should be consulted to determine the governing contractual provisions;</text> </paragraph> <paragraph num="(6)"> <text>A statement of the terms under which the policy or certificate may be returned for a refund of the premium;</text> </paragraph> <paragraph num="(7)"> <text>A brief description of the relationship of cost of care and benefits; and</text> </paragraph> <paragraph num="(8)"> <text>A statement that discloses to the policyholder or certificate holder whether the policy is intended to be a federally tax-qualified long-term care insurance contract under §7702B(b) of the Internal Revenue Code of 1986, as amended.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The format of the outline of coverage shall comply with the following:</text> <paragraph num="(1)"> <text>The outline of coverage shall be a free-standing document printed in at least 12-point or larger type;</text> </paragraph> <paragraph num="(2)"> <text>The outline of coverage may not contain any material of an advertising nature;</text> </paragraph> <paragraph num="(3)"> <text>Text which is capitalized or underscored in the standard format outline of coverage may be emphasized by other means which provide prominence equivalent to capitalization or underscoring;</text> </paragraph> <paragraph num="(4)"> <text>Use of the text and sequence of the standard format outline of coverage is mandatory, unless otherwise specifically indicated.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The insurer shall use the standard format and the required text of the outline of coverage shown in Regulation .21 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Requirement To Deliver Buyer's Guide."> <paragraph num="A."> <text>An insurer or agent shall deliver a long-term care insurance buyer's guide to prospective applicants of long-term care coverage in a format developed by the National Association of Insurance Commissioners or in a format approved by the Commissioner.</text> </paragraph> <paragraph num="B."> <text>The insurer shall include in the buyer's guide information regarding the purchase of a long-term care insurance policy, including a reference of the right of the purchaser to return the policy for a refund during the first 30 days after the policy is delivered.</text> </paragraph> <paragraph num="C."> <text>In the case of solicitation by an agent, the agent shall deliver the buyer's guide before presenting an application or enrollment form to the prospective applicant.</text> </paragraph> <paragraph num="D."> <text>In the case of direct response solicitations, the insurer shall provide the buyer's guide to the applicant in conjunction with any application or enrollment form.</text> </paragraph> <paragraph num="E."> <text>Life insurance policies or riders containing accelerated death benefits for long-term care are not required to furnish the long-term care insurance buyer's guide required by §A of this regulation, but shall furnish the policy summary required under Insurance Article, §18-108, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Waivers."> <text>The Commissioner may issue, upon written request and after an administrative hearing, an order to modify or suspend a specific provision or provisions of this chapter with respect to a specific long-term care insurance policy or certificate upon a written finding that:</text> <paragraph num="A."> <text>The modification or suspension would be in the best interest of the insureds;</text> </paragraph> <paragraph num="B."> <text>The purposes to be achieved could not be effectively or efficiently achieved without the modification or suspension; and</text> </paragraph> <paragraph num="C."> <text>Either the:</text> <paragraph num="(1)"> <text>Modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care,</text> </paragraph> <paragraph num="(2)"> <text>Policy or certificate is to be issued to residents of a life-care or continuing-care retirement community or some other residential community for the elderly, and the modification or suspension is reasonably related to the special needs or nature of that community, or</text> </paragraph> <paragraph num="(3)"> <text>Modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".21" heading="Form of Outline of Coverage."> <text>The format and the required text of the outline of coverage referred to in Regulation .18E of this chapter shall read as follows:</text> <text>[COMPANY NAME]</text> <text>[ADDRESS—CITY AND STATE]</text> <text>[TELEPHONE NUMBER]</text> <text>LONG-TERM CARE INSURANCE</text> <text>OUTLINE OF COVERAGE</text> <text>(Policy Number or Group Master Policy and Certificate Number)</text> <text>[Except for policies or certificates which are guaranteed issue, the following caution statement, or language substantially similar, must appear as follows in the outline of coverage.]</text> <text>CAUTION: The issuance of this long-term care insurance[policy][certificate] is based upon your responses to the questions on your application. A copy of your [application][enrollment form][is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company may have the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address:[insert address]</text> <paragraph num="1."> <text>This policy is [an individual policy of insurance] [a group policy] which was issued in the [indicate jurisdiction in which group policy was issued].</text> </paragraph> <paragraph num="2."> <text>PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy contains governing contractual provisions. This means that the policy or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR POLICY (OR CERTIFICATE) CAREFULLY!</text> </paragraph> <paragraph num="3."> <text>FEDERAL TAX CONSEQUENCES. This [policy][certificate] is intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.</text> </paragraph> <text>Federal Tax Implications of this [policy] [certificate] This [policy] [certificate] is not intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended. Benefits received under the [policy] [certificate] may be taxable as income.</text> <paragraph num="4."> <text>TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE CONTINUED IN FORCE OR DISCONTINUED.</text> <paragraph num="(a)"> <text>[For long-term care health insurance policies or certificates, describe one of the following permissible policy renewability provision.]</text> <paragraph num="(i)"> <text>[Policies and certificates that are guaranteed renewable shall contain the following statement:] RENEWABILITY: THIS [POLICY] [CERTIFICATE] IS GUARANTEED RENEWABLE. (This means you have the right, subject to the terms of your [policy] [certificate] to continue this policy as long as you pay your premiums on time.) [Company name] cannot change any terms of your policy on its own except that in the future [the company] it may increase the premium you pay.</text> </paragraph> <paragraph num="(ii)"> <text>[Policies and certificates that are noncancellable shall contain the following statement:] RENEWABILITY: THIS (POLICY) (CERTIFICATE) IS NONCANCELLABLE. This means that you have the right, subject to the terms of your policy, to continue this policy as long as you pay your premiums on time.[Company name] cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy contains an inflation protection feature where you choose to increase your benefits, the company may increase your premium at that time for those additional benefits.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>For group coverage, specifically describe continuation/conversion provisions applicable to the certificate and group policy;</text> </paragraph> <paragraph num="(c)"> <text>Describe waiver of premium provisions or state that there are no such provisions;</text> </paragraph> </paragraph> <paragraph num="5."> <text>TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS.[In bold type larger than the maximum type required to be used for the other provisions of the outline of coverage, state whether or not the company has a right to change the premium, and if a right exists, describe clearly and concisely each circumstance under which the premium may change.]</text> </paragraph> <paragraph num="6."> <text>TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.</text> <paragraph num="(a)"> <text>[Provide a brief description of the right to return—“free look” provision of the policy.]</text> </paragraph> <paragraph num="(b)"> <text>[Include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include a description of them.]</text> </paragraph> </paragraph> <paragraph num="7."> <text>THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the Medicare Supplement Buyer's Guide available from the insurance company.</text> <paragraph num="(a)"> <text>[For agents] Neither [insert company name] nor its agents represent Medicare, the federal government or any state government.</text> </paragraph> <paragraph num="(b)"> <text>[For direct response] [insert company name] is not representing Medicare, the federal government or any state government.</text> </paragraph> </paragraph> <paragraph num="8."> <text>LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital, as in a nursing home, in the community or in the home. This policy provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy (limitations) (waiting periods) and (coinsurance) requirements.</text> </paragraph> <paragraph num="9."> <text>BENEFITS PROVIDED BY THIS POLICY.</text> <paragraph num="(a)"> <text>[Covered services, related deductibles, waiting periods, elimination periods and benefit maximums.]</text> </paragraph> <paragraph num="(b)"> <text>[Institutional benefits, by skill level.]</text> </paragraph> <paragraph num="(c)"> <text>[Noninstitutional benefits, by skill level.]</text> </paragraph> <paragraph num="(d)"> <text>Eligibility for Payment of Benefits.</text> </paragraph> </paragraph> <text>[Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and must be defined and described as part of the outline of coverage.]</text> <text>[Any additional benefit triggers must also be explained. If these triggers differ for different benefits, explanation of the triggers should accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too must be specified.]</text> <paragraph num="10."> <text>LIMITATIONS AND EXCLUSIONS.[Describe:</text> <paragraph num="(a)"> <text>Preexisting conditions;</text> </paragraph> <paragraph num="(b)"> <text>Noneligible facilities/providers;</text> </paragraph> <paragraph num="(c)"> <text>Noneligible levels of care (for example, unlicensed providers, care or treatment provided by a family member, etc.);</text> </paragraph> <paragraph num="(d)"> <text>Exclusions/exceptions;</text> </paragraph> <paragraph num="(e)"> <text>Limitations.][This section should provide a brief specific description of any policy provisions which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify payment of the benefits described in 9. above.] THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.</text> </paragraph> </paragraph> <paragraph num="11."> <text>RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted.[As applicable, indicate the following:]</text> <paragraph num="(a)"> <text>[That the benefit level will not increase over time;]</text> </paragraph> <paragraph num="(b)"> <text>[Any automatic benefit adjustment provisions;]</text> </paragraph> <paragraph num="(c)"> <text>[Whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage;]</text> </paragraph> <paragraph num="(d)"> <text>[If there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations;]</text> </paragraph> <paragraph num="(e)"> <text>[Describe whether there will be any additional premium charge imposed, and how that is to be calculated.]</text> </paragraph> </paragraph> <paragraph num="12."> <text>ALZHEIMER'S DISEASE AND OTHER ORGANIC BRAIN DISORDERS.[State that the policy provides coverage for insureds clinically diagnosed as having Alzheimer's disease or related degenerative and dementing illnesses. Specifically describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.]</text> </paragraph> <paragraph num="13."> <text>PREMIUM.</text> <paragraph num="(b)"> <text>If the premium varies with an applicant's choice among benefit options, indicate the portion of annual premium which corresponds to each benefit option.]</text> </paragraph> </paragraph> <paragraph num="14."> <text>ADDITIONAL FEATURES.</text> <paragraph num="(b)"> <text>Describe other important features.]</text> </paragraph> </paragraph> <paragraph num="15."> <text>CONTACT THE STATE SENIOR HEALTH INSURANCE ASSISTANCE PROGRAM IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR CERTIFICATE.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".22" heading="Replacement Notice."> <text>The notice to an applicant regarding replacement of individual long-term care policies or other health insurance referred to in Regulation .06E of this chapter shall read as follows:</text> <text>NOTICE TO APPLICANT REGARDING REPLACEMENT</text> <text>OF INDIVIDUAL LONG-TERM CARE OR HEALTH INSURANCE</text> <text>(Insurance company's name and address)</text> <text>SAVE THIS NOTICE!</text> <text>IT MAY BE IMPORTANT TO YOU IN THE FUTURE.</text> <text>According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing long-term care or health insurance and replace it with an individual long-term care insurance policy to be issued by [company name] Insurance Company. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.</text> <text>You should review this new coverage carefully, comparing it with all long-term care or health insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.</text> <text>STATEMENT TO APPLICANT BY AGENT [BROKER OR OTHER REPRESENTATIVE]: (Use additional sheets, as necessary.)</text> <text>I have reviewed your current medical or health insurance coverage. I believe the replacement of insurance involved in this transaction materially improves your position. My conclusion has taken into account the following considerations, which I call to your attention:</text> <paragraph num="1."> <text>Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.</text> </paragraph> <paragraph num="2."> <text>The law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent of time elapsed under the original policy or certificate.</text> </paragraph> <paragraph num="3."> <text>If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand everything that is involved in replacing your present coverage.</text> </paragraph> <paragraph num="4."> <text>If, after you have thought about it, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information in an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all information has been properly recorded.</text> </paragraph> <text>______________________________________________________________________________________________________</text> <text>(Signature of Agent, Broker or Other Representative)</text> <text>______________________________________________________________________________________________________</text> <text>(Typed Name and Address of Agent or Broker)</text> <text>The above Notice to Applicant was delivered to me on: __________________________________________________________</text> <text>(Date)</text> <text>______________________________________________________________________________________________________</text> <text>(Applicant's Signature)</text> </regulation> <regulation prefix="Regulation" num=".23" heading="Replacement Notice for Direct Response Business."> <text>The notice to an applicant with respect to direct response solicitation of individual long-term care policies or other health insurance referred to in Regulation .06F of this chapter shall read as follows:</text> <text>NOTICE TO APPLICANT REGARDING REPLACEMENT</text> <text>OF LONG-TERM CARE OR HEALTH INSURANCE</text> <text>(Insurance company's name and address)</text> <text>SAVE THIS NOTICE!</text> <text>IT MAY BE IMPORTANT TO YOU IN THE FUTURE</text> <text>According to [your application] [information you have furnished], you intend to lapse or otherwise terminate existing long-term care or health insurance and replace it with the long-term care insurance policy issued by [company name] Insurance Company and delivered with this notice. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.</text> <text>You should review this new coverage carefully, comparing it with all long-term care and health insurance coverage you now have, and terminate your present policy only if, after you have thought about it, you find that purchase of this long-term care coverage is a wise decision.</text> <text>1. Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.</text> <text>2. The law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. Your new insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent of time elapsed under the original policy or certificate.</text> <text>3. If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand everything that is involved in replacing your present coverage.</text> <text>4. If, after due consideration and more thought to the matter, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application delivered with this notice and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to [company name and address] within thirty (30) days if any information is not correct and complete, or if any relevant matters and particularly any past medical history have been left out of the application.</text> <text>______________________________________________________________________________________________________</text> <text>(Company Name)</text> </regulation> <regulation prefix="Regulation" num=".24" heading="Reporting Requirements."> <paragraph num="A."> <text>Every insurer shall maintain records for each insurance producer of the:</text> <paragraph num="(1)"> <text>Insurance producer's amount of replacement sales as a percent of the insurance producer's total annual sales; and</text> </paragraph> <paragraph num="(2)"> <text>Amount of lapses of long-term care insurance policies sold by the insurance producer as a percent of the insurance producer's total annual sales.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Each insurer shall report annually by June 30 the 10 percent of its insurance producers with the greatest percentages of lapses and replacements as measured by §A of this regulation.</text> </paragraph> <paragraph num="C."> <text>Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing.</text> </paragraph> <paragraph num="D."> <text>The reports required under §§C, E, and F of this regulation are for the purpose of reviewing more closely insurance producer activities regarding the sale of long-term care insurance.</text> </paragraph> <paragraph num="E."> <text>Every insurer shall report annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year.</text> </paragraph> <paragraph num="F."> <text>Every insurer shall report annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year.</text> </paragraph> <paragraph num="G."> <text>Qualified Long-Term Care Contracts.</text> <paragraph num="(1)"> <text>Every insurer shall report annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied.</text> </paragraph> <paragraph num="(2)"> <text>The report required in §G(1) of this regulation shall be in the format specified in Regulation .32 of this chapter.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Annual Rate Certification Requirements for Rate Schedules Currently Marketed.</text> <paragraph num="(1)"> <text>This section applies to any long-term care policy issued in Maryland on or after September 1, 2017 that is currently marketed.</text> </paragraph> <paragraph num="(2)"> <text>An insurer shall submit an annual actuarial certification to the Commissioner in accordance with the following conditions:</text> <paragraph num="(a)"> <text>The certification shall be prepared, dated, and signed by a member of the American Academy of Actuaries;</text> </paragraph> <paragraph num="(b)"> <text>The certification shall contain one of the following conclusions:</text> <paragraph num="(i)"> <text>The premium rate schedule continues to be sufficient to cover anticipated costs under moderately adverse experience, and is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated; or</text> </paragraph> <paragraph num="(ii)"> <text>Margins for moderately adverse experience may no longer be sufficient;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The certification shall be based on calendar year data;</text> </paragraph> <paragraph num="(d)"> <text>The certification shall be submitted annually not later than May 1 of each year starting in the second year following the year in which the initial rate schedules are first used;</text> </paragraph> <paragraph num="(e)"> <text>The certification shall contain a description of the review performed that led to the applicable conclusion in §H(2)(b) of this regulation; and</text> </paragraph> <paragraph num="(f)"> <text>If the certification contains the conclusion set forth in §H(2)(b)(ii) of this regulation, the insurer shall provide to the Commissioner a plan of action subject to the following conditions:</text> <paragraph num="(i)"> <text>The plan shall be submitted within 60 days of the date the actuarial certification is submitted; and</text> </paragraph> <paragraph num="(ii)"> <text>The plan shall include a time frame for the reestablishment of adequate margins for moderately adverse experience such that the ultimate premium rate schedule would be reasonably expected to be sustainable over the future life of the form with no future premium increases anticipated.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>Failure to comply with §H(2)(f) of this regulation constitutes grounds for the Commissioner to withdraw or modify approval of a form for future sales under Insurance Article, §12-205, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Annual Rate Certification Requirements for Rate Schedules That are No Longer Marketed.</text> <paragraph num="(1)"> <text>This section applies to any long-term care policy issued in Maryland on or after September 1, 2017 that is no longer marketed.</text> </paragraph> <paragraph num="(2)"> <text>An insurer shall submit an annual actuarial certification to the Commissioner in accordance with the following conditions:</text> <paragraph num="(a)"> <text>The certification shall be prepared, dated, and signed by a member of the American Academy of Actuaries;</text> </paragraph> <paragraph num="(b)"> <text>The certification shall contain one of the following conclusions:</text> <paragraph num="(i)"> <text>The premium rate schedule continues to be sufficient to cover anticipated costs under best estimate assumptions; or</text> </paragraph> <paragraph num="(ii)"> <text>The premium rate schedule may no longer be sufficient;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The certification shall be based on calendar year data;</text> </paragraph> <paragraph num="(d)"> <text>The certification shall be submitted annually not later than May 1 of each year starting in the second year following the year in which the initial rate schedules are first used;</text> </paragraph> <paragraph num="(e)"> <text>The certification shall contain a description of the review performed that led to the applicable certification or statement in §I(2)(b) of this regulation.</text> </paragraph> <paragraph num="(f)"> <text>If the certification contains the conclusion set forth in §I(2)(b)(ii) if this regulation, the insurer shall provide to the Commissioner a plan of action subject to the following conditions:</text> <paragraph num="(i)"> <text>The plan shall be submitted within 60 days of the date the actuarial certification is submitted; and</text> </paragraph> <paragraph num="(ii)"> <text>The plan shall include a time frame for the reestablishment of adequate margins for moderately adverse experience.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="J."> <text>Actuarial Memorandum.</text> <paragraph num="(1)"> <text>An actuarial memorandum to support the actuarial certifications required by §§H and I of this regulation shall be submitted as follows:</text> <paragraph num="(a)"> <text>The actuarial memorandum shall be dated and signed by the member of the American Academy of Actuaries who prepares the actuarial certification;</text> </paragraph> <paragraph num="(b)"> <text>The actuarial memorandum shall be submitted at least once every 3 years with the certification;</text> </paragraph> <paragraph num="(c)"> <text>The actuarial memorandum shall contain at least the following information:</text> <paragraph num="(i)"> <text>A detailed explanation of the data sources and review performed by the actuary before drawing the appropriate conclusion in §H(2)(b) or I(2)(b) of this regulation;</text> </paragraph> <paragraph num="(ii)"> <text>A complete description of experience assumptions and their relationship to the initial pricing assumptions;</text> </paragraph> <paragraph num="(iii)"> <text>A description of the credibility of the experience data; and</text> </paragraph> <paragraph num="(iv)"> <text>An explanation of the analysis and testing performed in determining the current presence of margins.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".25" heading="Suitability."> <paragraph num="A."> <text>This regulation does not apply to life insurance policies that accelerate the death benefits for long-term care.</text> </paragraph> <paragraph num="B."> <text>Each insurer shall:</text> <paragraph num="(1)"> <text>Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;</text> </paragraph> <paragraph num="(2)"> <text>Train its insurance producers in the use of its suitability standards; and</text> </paragraph> <paragraph num="(3)"> <text>Maintain a copy of its suitability standards and make them available for inspection upon request by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Procedures.</text> <paragraph num="(1)"> <text>To determine whether the applicant meets the standards developed by the insurer, the insurance producer and insurer shall develop procedures that take the following into consideration:</text> <paragraph num="(a)"> <text>The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;</text> </paragraph> <paragraph num="(b)"> <text>The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and</text> </paragraph> <paragraph num="(c)"> <text>The values, benefits, and costs of the applicant's existing insurance, if any, compared to the values, benefits, and costs of the recommended purchase or replacement.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Collection of Information from Applicant.</text> <paragraph num="(a)"> <text>The insurer, and if an insurance producer is involved, the insurance producer shall make reasonable efforts to obtain the information described in §C(1) of this regulation.</text> </paragraph> <paragraph num="(b)"> <text>The efforts to obtain the information described in §C(1) of this regulation shall include presentation to the applicant, at or prior to application, the “Long-Term Care Insurance Personal Worksheet”.</text> </paragraph> <paragraph num="(c)"> <text>The personal worksheet used by the insurer shall contain, at a minimum, the information in the format contained in COMAR 31.14.02.08, in not less than 12-point type.</text> </paragraph> <paragraph num="(d)"> <text>The insurer may request the applicant to provide additional information to comply with its suitability standards.</text> </paragraph> <paragraph num="(e)"> <text>A copy of the insurer's personal worksheet shall be filed with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A completed personal worksheet shall be returned to the insurer prior to the insurer's consideration of the applicant for coverage, except the personal worksheet is not required to be returned for sales of employer group long-term care insurance to employees and their spouses.</text> </paragraph> <paragraph num="(4)"> <text>An insurer or insurance producer may not sell or disseminate outside the company or agency any information obtained through the personal worksheet set forth in COMAR 31.14.02.08.</text> </paragraph> </paragraph> <paragraph num="D."> <text>The insurer shall use the suitability standards it has developed under this regulation in determining whether issuing long-term care insurance coverage to an applicant is appropriate.</text> </paragraph> <paragraph num="E."> <text>Insurance producers shall use the suitability standards developed by the insurer in marketing long-term care insurance.</text> </paragraph> <paragraph num="F."> <text>Disclosure Form.</text> <paragraph num="(1)"> <text>At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled “Things You Should Know Before You Buy Long-Term Care Insurance” shall be provided.</text> </paragraph> <paragraph num="(2)"> <text>The form described in §F(1) of this regulation shall be in the format contained in Regulation .30 of this chapter, in not less than 12-point type.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Procedure to Follow if Applicant Does Not Meet Suitability Standards.</text> <paragraph num="(1)"> <text>If the insurer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the insurer may reject the application.</text> </paragraph> <paragraph num="(2)"> <text>As an alternative to rejecting the application as described in §G(1) of this regulation, the insurer shall send the applicant a letter similar to that found in Regulation .31 of this chapter.</text> </paragraph> <paragraph num="(3)"> <text>If the applicant has declined to provide financial information, the insurer may use some other method than the method described in this regulation to verify the applicant's intent.</text> </paragraph> <paragraph num="(4)"> <text>The insurer shall make either the applicant's returned letter or a record of the alternative method of verification a part of the applicant's file.</text> </paragraph> </paragraph> <paragraph num="H."> <text>The insurer shall report annually by March 31 to the Commissioner the:</text> <paragraph num="(1)"> <text>Total number of applications received from residents of this State;</text> </paragraph> <paragraph num="(2)"> <text>Number of those who declined to provide information on the personal worksheet;</text> </paragraph> <paragraph num="(3)"> <text>Number of applicants who did not meet the suitability standards; and</text> </paragraph> <paragraph num="(4)"> <text>Number of those who chose to confirm after receiving a suitability letter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".26" heading="Standards for Benefit Triggers."> <paragraph num="A."> <text>Conditions for Payment of Benefits.</text> <paragraph num="(1)"> <text>A long-term care insurance policy shall condition the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment.</text> </paragraph> <paragraph num="(2)"> <text>An insurer may not establish the eligibility criteria for the payment of benefits on a more restrictive basis than:</text> <paragraph num="(a)"> <text>A deficiency in the ability to perform not more than three of the activities of daily living; or</text> </paragraph> <paragraph num="(b)"> <text>The presence of cognitive impairment.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Activities of Daily Living.</text> <paragraph num="(1)"> <text>Activities of daily living shall include at least the following as defined in Regulation .02 of this chapter and in the policy:</text> <paragraph num="(a)"> <text>Bathing;</text> </paragraph> <paragraph num="(b)"> <text>Continence;</text> </paragraph> <paragraph num="(c)"> <text>Dressing;</text> </paragraph> <paragraph num="(d)"> <text>Eating;</text> </paragraph> <paragraph num="(e)"> <text>Toileting; and</text> </paragraph> <paragraph num="(f)"> <text>Transferring.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Insurers may use activities of daily living in addition to those contained in §B(1) of this regulation to trigger covered benefits as long as they are defined in the policy.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Additional Provisions for Benefit Determination.</text> <paragraph num="(1)"> <text>An insurer may use provisions in addition to those described in §§A and B of this regulation for the determination of when benefits are payable under a policy or certificate.</text> </paragraph> <paragraph num="(2)"> <text>The provisions permitted by §C(1) of this regulation may not restrict, and are not in place of, the requirements contained in §§A and B of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>For purposes of this regulation, the determination of a deficiency may not be more restrictive than:</text> <paragraph num="(1)"> <text>Requiring the hands-on assistance of another person to perform the prescribed activities of daily living; or</text> </paragraph> <paragraph num="(2)"> <text>If the deficiency is due to the presence of a cognitive impairment, supervision or verbal cuing by another person is needed in order to protect the insured or others.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Assessments of activities of daily living and cognitive impairment shall be performed by licensed or certified professionals, such as physicians, nurses, or social workers.</text> </paragraph> <paragraph num="F."> <text>Long-term care insurance policies shall include a clear description of the process for appealing and resolving benefit determinations.</text> </paragraph> <paragraph num="G."> <text>The requirements set forth in this regulation are effective April 1, 2003, and apply as follows:</text> <paragraph num="(1)"> <text>Except as provided in §G(2) of this regulation, the provisions of this regulation apply to a long-term care policy issued in Maryland on or after April 1, 2003; and</text> </paragraph> <paragraph num="(2)"> <text>The provisions of this regulation do not apply to certificates issued on or after April 1, 2003, if the certificates are issued under an employer group long-term care insurance policy that was in force before April 1, 2003.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".27" heading="Additional Standards for Benefit Triggers for Qualified Long-Term Care Insurance Contracts."> <paragraph num="A."> <text>In this regulation, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>Chronically Ill Individual.</text> <paragraph num="(a)"> <text>“Chronically ill individual” means any individual who has been certified by a licensed health care practitioner as:</text> <paragraph num="(i)"> <text>Being unable to perform, without substantial assistance from another individual, at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity; or</text> </paragraph> <paragraph num="(ii)"> <text>Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Chronically ill individual” does not include an individual otherwise meeting the requirements in §B(1)(a) of this regulation unless within the preceding 12-month period a licensed health care practitioner has certified that the individual meets the requirements of §B(1)(a) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Licensed health care practitioner” means a physician, as defined in §1861(r)(1) of the Social Security Act, a registered professional nurse, a licensed social worker, or other individual who meets requirements prescribed by the United States Secretary of the Treasury.</text> </paragraph> <paragraph num="(3)"> <text>Maintenance or Personal Care Services.</text> <paragraph num="(a)"> <text>“Maintenance or personal care services” means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual.</text> </paragraph> <paragraph num="(b)"> <text>“Maintenance or personal care services” includes care that provides protection from threats to health and safety due to severe cognitive impairment.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Qualified Long-Term Care Services.</text> <paragraph num="(a)"> <text>“Qualified long-term care services” means services that meet the requirements of §7702(c)(1) of the Internal Revenue Code of 1986, as amended.</text> </paragraph> <paragraph num="(b)"> <text>“Qualified long-term care services” includes the following necessary services that are required by a chronically ill individual, and are provided under a plan of care prescribed by a licensed health care practitioner:</text> <paragraph num="(i)"> <text>Diagnostic services;</text> </paragraph> <paragraph num="(ii)"> <text>Preventive services;</text> </paragraph> <paragraph num="(iii)"> <text>Therapeutic services,</text> </paragraph> <paragraph num="(iv)"> <text>Curative services;</text> </paragraph> <paragraph num="(v)"> <text>Treatment services;</text> </paragraph> <paragraph num="(vi)"> <text>Mitigation services;</text> </paragraph> <paragraph num="(vii)"> <text>Rehabilitative services; and</text> </paragraph> <paragraph num="(viii)"> <text>Maintenance or personal care services.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>A qualified long-term care insurance contract shall pay only for qualified long-term care services received by a chronically ill individual provided under a plan of care prescribed by a licensed health care practitioner.</text> </paragraph> <paragraph num="D."> <text>A qualified long-term care insurance contract shall condition the payment of benefits on a determination of the insured's inability to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity or to severe cognitive impairment.</text> </paragraph> <paragraph num="E."> <text>Certifications regarding activities of daily living and cognitive impairment required under §D of this regulation shall be performed by the following licensed or certified professionals:</text> <paragraph num="(1)"> <text>Physicians;</text> </paragraph> <paragraph num="(2)"> <text>Registered professional nurses;</text> </paragraph> <paragraph num="(3)"> <text>Licensed social workers; or</text> </paragraph> <paragraph num="(4)"> <text>Other individuals who meet requirements prescribed by the United States Secretary of the Treasury.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Permissible Frequency of Certifications.</text> <paragraph num="(1)"> <text>Certifications required under §D of this regulation may be performed by a licensed health care professional at the direction of the carrier as is reasonably necessary with respect to a specific claim, except as described in §F(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>If a licensed health care practitioner has certified that the insured is unable to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity and if the insured is in claim status, an insurer may not rescind a certification or require that additional certifications be performed until the 90-day period under §F(1) of this regulation expires.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Qualified long-term care insurance contracts shall include a clear description of the process for appealing and resolving disputes with respect to benefit determinations.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".28" heading="Penalties."> <text>In addition to any other penalties provided by the laws of this State, any insurer and any insurance producer found to have violated any requirement of this State relating to the regulation of long-term care insurance or the marketing of long-term care insurance shall be subject to a penalty of up to three times the amount of any commissions paid for each policy involved in the violation or up to $10,000, whichever is greater.</text> </regulation> <regulation prefix="Regulation" num=".29" heading="Rescission."> <text>Reporting Form for Long-Term Care Policies. The following form is to be used for reporting rescissions made by each insurer as required by Regulation .09C of this chapter:</text> <text>RESCISSION REPORTING FORM FOR LONG-TERM CARE POLICIES FOR THE STATE OF FOR THE REPORTING YEAR 20[ ]</text> <text>Company Name: _____________________</text> <text>Address: _________________</text> <text>Phone Number: _____________________</text> <text>Due: March 1 annually</text> <text>Instructions:</text> <text>The purpose of this form is to report all rescissions of long-term care insurance policies or certificates. Those rescissions voluntarily effectuated by an insured are not required to be included in this report. Please furnish one form per rescission.</text> <text>Policy Form# Policy andCertificate # Name of Insured Date of Policy Issuance Date/sClaim/sSubmitted Date of Rescission</text> <text>Detailed reason for rescission: _______________________________ ______________________________________________________ ___________________________Signature ___________________________Name and Title (please type) ___________________________Date</text> </regulation> <regulation prefix="Regulation" num=".30" heading="Things You Should Know Before You Buy Long-Term Care Insurance."> <text>The following form is to be used for providing the disclosure required by Regulation .25F of this chapter:</text> <text>Things You Should Know Before You Buy Long-Term Care Insurance</text> <text>Long-Term Care Insurance • A long-term care insurance policy may pay most of the costs for your care in a nursing home. Many policies also pay for care at home or other community settings. Since policies can vary in coverage, you should read this policy and make sure you understand what it covers before you buy it. • [You should not buy this insurance policy unless you can afford to pay the premiums every year.] [Remember that the company can increase premiums in the future.] Drafting Note: For single premium policies, delete bracketed bullet above; for noncancellable policies, delete the second sentence only. • The personal worksheet includes questions designed to help you and the company determine whether this policy is suitable for your needs. Medicare • Medicare does not pay for most long-term care. Medicaid • Medicaid will generally pay for long-term care if you have very little income and few assets. You probably should not buy this policy if you are now eligible for Medicaid. • Many people become eligible for Medicaid after they have used up their own financial resources by paying for long-term care services. • When Medicaid pays your spouse's nursing home bills, you are allowed to keep your house and furniture, a living allowance, and some of your joint assets. • Your choice of long-term care services may be limited if you are receiving Medicaid. To learn more about Medicaid, contact your local or state Medicaid agency. Shopper's Guide • Make sure the insurance company or agent gives you a copy of a book called the National Association of Insurance Commissioners' “Shopper's Guide to Long-Term Care Insurance.” Read it carefully. If you have decided to apply for long-term care insurance, you have the right to return the policy within 30 days and get back any premium you have paid if you are dissatisfied for any reason or choose not to purchase the policy. Counseling • Free counseling and additional information about long-term care insurance are available through your state's insurance counseling program. Contact your state insurance department or department on aging for more information about the senior health insurance counseling program in your state. Facilities • Some long term care insurance contracts provide for benefit payments in certain facilities only if they are licensed or certified, such as in assisted living centers. However, not all states regulate these facilities in the same way. Also, many people move to a different state from where they purchased their long term care insurance policy. Read the policy carefully to determine what types of facilities qualify for benefit payments, and to determine that payment for a covered service will be made if you move to a state that has a different licensing scheme for facilities than the one in which you purchased the policy.</text> </regulation> <regulation prefix="Regulation" num=".31" heading="Long-Term Care Insurance Suitability Letter."> <text>The following form is to be used for providing the disclosure required by Regulation .25G of this chapter:</text> <text>Long-Term Care Insurance Suitability Letter</text> <text>Dear [Applicant]:</text> <text>Your recent application for long-term care insurance included a “personal worksheet,” which asked questions about your finances and your reasons for buying long-term care insurance. For your protection, State law requires us to consider this information when we review your application, to avoid selling a policy to those who may not need coverage.</text> <text>[Your answers indicate that long-term care insurance may not meet your financial needs. We suggest that you review the information provided along with your application, including the booklet “Shopper's Guide to Long-Term Care Insurance” and the page titled “Things You Should Know Before Buying Long-Term Care Insurance.” Your state insurance department also has information about long-term care insurance and may be able to refer you to a counselor free of charge who can help you decide whether to buy this policy.]</text> <text>[You chose not to provide any financial information for us to review.]</text> <text>Drafting Note: Choose the paragraph that applies.</text> <text>We have suspended our final review of your application. If, after careful consideration, you still believe this policy is what you want, check the appropriate box below and return this letter to us within the next 60 days. We will then continue reviewing your application and issue a policy if you meet our medical standards.</text> <text>If we do not hear from you within the next 60 days, we will close your file and not issue you a policy. You should understand that you will not have any coverage until we hear back from you, approve your application and issue you a policy.</text> <text>Please check one box and return in the enclosed envelope.</text> <text>[] Yes, [although my worksheet indicates that long-term care insurance may not be a suitable purchase,] I wish to purchase this coverage. Please resume review of my application.</text> <text>income.</text> <text>[] No. I have decided not to buy a policy at this time.</text> <text>___________________________________APPLICANT'S SIGNATURE _____________________DATE</text> <text>Please return to [issuer] at [address] by [date].</text> </regulation> <regulation prefix="Regulation" num=".32" heading="Claims Denial Reporting Form."> <text>The following form is to be used for reporting claim denials made by each insurer as required by Regulation .24G of this chapter:</text> <text>For the State of</text> <text>Company Name: __________________________ Due: June 30 annually Company Address: _________________________________________ Company NAIC Number: ____________________________________ Contact Person: _________________ Phone Number: ______________ Line of Business: _____________ Individual ________ Group</text> <text>Instructions</text> <text>The purpose of this form is to report all long-term care claim denials under in force long-term care insurance policies. “Denied” means a claim that is not paid for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition.</text> <text>StateData NationwideData1 1 Total Number of Long-Term Care Claims Reported 2 Total Number of Long-Term Care Claims Denied/Not Paid 3 Number of Claims Not Paid due to Preexisting Condition Exclusion 4 Number of Claims Not Paid due to Waiting (Elimination) Period Not Met 5 Net Number of Long-Term Care Claims Denied for Reporting Purposes (Line 2 Minus Line 3 Minus Line 4) 6 Percentage of Long-Term Care Claims Denied of Those Reported (Line 5 Divided By Line 1) 7 Number of Long-Term Care Claim Denied due to: 8 • Long-Term Care Services Not Covered under the Policy2 9 • Provider/Facility Not Qualified under the Policy3 10 • Benefit Eligibility Criteria Not Met4 11 • Other</text> <text>1 The nationwide data may be viewed as a more representative and credible indicator where the data for claims reported and denied for your state are small in number.</text> <text>2 Example — home health care claim filed under a nursing home only policy.</text> <text>3 Example — a facility that does not meet the minimum level of care requirements or the licensing requirements as outlined in the policy.</text> <text>4 Examples — a benefit trigger not met, certification by a licensed health care practitioner not provided, no plan of care.</text> </regulation> <regulation prefix="Regulation" num=".33" heading="Incontestability Period."> <paragraph num="A."> <text>Except as provided in §G of this regulation, §§B—F of this regulation apply to each qualified long-term care insurance policy.</text> </paragraph> <paragraph num="B."> <text>Policies In Force Less Than 6 Months.</text> <paragraph num="(1)"> <text>This section applies to a long-term care insurance policy that has been in force for less than 6 months.</text> </paragraph> <paragraph num="(2)"> <text>Unless the insurer demonstrates that the applicant misrepresented information on the application for the long-term insurance policy that is material to the acceptance for coverage, an insurer may not:</text> <paragraph num="(a)"> <text>Rescind the policy described in §B(1) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>Deny an otherwise valid long-term care insurance claim under the policy described in §B(1) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Policies in Force at Least 6 Months, but Less than 2 Years.</text> <paragraph num="(1)"> <text>This section applies to a long-term care insurance policy that has been in force for at least 6 months, but less than 2 years.</text> </paragraph> <paragraph num="(2)"> <text>Unless the insurer demonstrates that the applicant misrepresented information on the application for the long-term insurance policy that is material to the acceptance for coverage and that pertains to the condition for which benefits are sought, an insurer may not:</text> <paragraph num="(a)"> <text>Rescind a long-term care insurance policy described in §C(1) of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>Deny an otherwise valid long-term care insurance claim under a policy described in §C(1) of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Policies In Force 2 Years or More.</text> <paragraph num="(1)"> <text>After a long-term care insurance policy has been in force for 2 years it is not contestable upon the grounds of misrepresentation alone.</text> </paragraph> <paragraph num="(2)"> <text>An insurer may not contest a policy described in §D(1) of this regulation, unless the insurer can demonstrate that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A long-term care insurance policy may be field issued, if the compensation to the field issuer is not based on the number of policies or certificates issued.</text> </paragraph> <paragraph num="F."> <text>If an insurer has paid benefits under the long-term care insurance policy, the insurer may not recover the benefit payments if the policy is rescinded.</text> </paragraph> <paragraph num="G."> <text>Life Insurance Policy That Accelerates Benefits for Long-Term Care.</text> <paragraph num="(1)"> <text>In the event of the death of the insured, this regulation may not be applied to the remaining death benefit of a life insurance policy that accelerates benefits for long-term care.</text> </paragraph> <paragraph num="(2)"> <text>In the situation described in §G(1) of this regulation, the remaining death benefits under the life insurance policy that accelerates the benefits for long-term care shall be governed by Insurance Article, §16-203, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Except as described in §G(1)—(2) of this regulation, this regulation shall apply to life insurance policies that accelerate benefits for long-term care.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".34" heading="Producer Training Requirements."> <paragraph num="A."> <text>An insurance producer is not authorized to sell, solicit, or negotiate with respect to long-term care insurance except as authorized by Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>An individual may not sell, solicit, or negotiate long-term care insurance unless the individual is licensed as an insurance producer for health insurance or life insurance and complies with the following training requirements:</text> <paragraph num="(1)"> <text>Completes a one-time training course before:</text> <paragraph num="(a)"> <text>The date the individual sells, solicits, or negotiates long-term care insurance in Maryland, if the individual is not licensed and selling, soliciting, or negotiating long-term care insurance on the effective date of this regulation; or</text> </paragraph> <paragraph num="(b)"> <text>September 10, 2008, if the individual is already licensed and selling, soliciting, or negotiating long-term care insurance on the effective date of this regulation; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Completes ongoing training every 24 months after completing the one-time training course described in §B(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The training required by §B of this regulation shall meet the requirements set forth in §E of this regulation.</text> </paragraph> <paragraph num="D."> <text>The training requirements of §E of this regulation may be approved as continuing education courses under Insurance Article, §10-116, Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>Specific Training Requirements for Solicitation of Long-Term Care Insurance.</text> <paragraph num="(1)"> <text>Required Length of Training.</text> <paragraph num="(a)"> <text>The one-time training required by §B(1) of this regulation may not be less than 8 hours.</text> </paragraph> <paragraph num="(b)"> <text>The ongoing training required by §B(2) of this regulation may not be less than 4 hours.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The training required under §E(1) of this regulation shall consist of topics related to long-term care insurance, long-term care services, and qualified long-term care insurance Partnership programs, including, but not limited to:</text> <paragraph num="(a)"> <text>State and federal regulations and requirements and the relationship between qualified State long-term care insurance Partnership programs and other public and private coverage of long-term care services, including Medicaid;</text> </paragraph> <paragraph num="(b)"> <text>Available long-term care services and providers;</text> </paragraph> <paragraph num="(c)"> <text>Changes or improvements in long-term care services or providers;</text> </paragraph> <paragraph num="(d)"> <text>Alternatives to the purchase of private long-term care insurance;</text> </paragraph> <paragraph num="(e)"> <text>The effect of inflation on benefits and the importance of inflation protection; and</text> </paragraph> <paragraph num="(f)"> <text>Consumer suitability standards and guidelines.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The training required by this regulation may not include training that:</text> <paragraph num="(a)"> <text>Is insurer or company product specific; or</text> </paragraph> <paragraph num="(b)"> <text>Includes any sales or marketing information, materials, or training, other than those required by State or federal law.</text> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>Insurers subject to this chapter shall:</text> <paragraph num="(1)"> <text>Obtain verification that an insurance producer receives training required by §B of this regulation before an insurance producer is permitted to sell, solicit, or negotiate the insurer's long-term care insurance products;</text> </paragraph> <paragraph num="(2)"> <text>Maintain records subject to the State's record retention requirements; and</text> </paragraph> <paragraph num="(3)"> <text>Make the verification described in §F(1) of this regulation available to the Commissioner upon request.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Maintenance of Records.</text> <paragraph num="(1)"> <text>Insurers subject to this chapter shall maintain records with respect to the training of its insurance producers concerning the distribution of its Partnership policies that will allow the Maryland Insurance Administration to provide assurance to the State Medicaid agency that insurance producers have:</text> <paragraph num="(a)"> <text>Received the training contained in §E(2)(a) of this regulation as required by §B of this regulation; and</text> </paragraph> <paragraph num="(b)"> <text>Demonstrated an understanding of the Partnership policies and their relationship to public and private coverage of long term care, including Medicaid, in Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The records required by §G(1) of this regulation shall be:</text> <paragraph num="(a)"> <text>Maintained in accordance with the State's record retention requirements; and</text> </paragraph> <paragraph num="(b)"> <text>Made available to the Commissioner upon request.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>The satisfaction of the training requirements described in this regulation in any state shall be deemed to satisfy the training requirements in Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".35" heading="Availability of New Services or Providers."> <paragraph num="A."> <text>Notice Requirement.</text> <paragraph num="(1)"> <text>Except as provided in §B of this regulation, an insurer shall notify policyholders and certificate holders of the availability of a new long-term care insurance policy series that provides coverage for new long-term care services or providers, material in nature, and not previously available through the insurer to the general public.</text> </paragraph> <paragraph num="(2)"> <text>The notice required by §A(1) of this regulation shall be provided within 12 months of the date the new policy series is made available for sale in Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The notification described in §A of this regulation is not required to be provided:</text> <paragraph num="(1)"> <text>For any policy issued prior to the effective date of this regulation; or</text> </paragraph> <paragraph num="(2)"> <text>To any policyholder or certificate holder who:</text> <paragraph num="(a)"> <text>Is currently eligible for benefits within an elimination period or on a claim;</text> </paragraph> <paragraph num="(b)"> <text>Previously had been in claim status; or</text> </paragraph> <paragraph num="(c)"> <text>Would not be eligible to apply for coverage due to issue age limitations under the new policy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The insurer may require that policyholders or certificate holders meet all eligibility requirements, including underwriting and payment of the required premium, to add the new services or providers described in §A of this regulation.</text> </paragraph> <paragraph num="D."> <text>The insurer shall make the new coverage available in one of the following ways:</text> <paragraph num="(1)"> <text>By adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age;</text> </paragraph> <paragraph num="(2)"> <text>By exchanging the existing policy or certificate for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate;</text> </paragraph> <paragraph num="(3)"> <text>By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status shall be recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged; or</text> </paragraph> <paragraph num="(4)"> <text>By an alternative program developed by the insurer that meets the intent of this regulation, if the program is filed with and approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The premium credits described in §D(2) of this regulation shall be based on premiums paid or reserves held for the prior policy or certificate.</text> </paragraph> <paragraph num="F."> <text>The cost for the new policy or certificate described in §D(3) of this regulation may recognize the difference in reserves between the new policy or certificate and the original policy or certificate.</text> </paragraph> <paragraph num="G."> <text>Notification When New Policies Used in Limited Distribution Channels.</text> <paragraph num="(1)"> <text>An insurer is not required to notify policyholders or certificate holders of a new proprietary policy series created and filed for use in a limited distribution channel.</text> </paragraph> <paragraph num="(2)"> <text>Policyholders or certificate holders that purchased the new proprietary policy described in §G(1) of this regulation shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers, material in nature, is made available to that limited distribution channel.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Exchanges.</text> <paragraph num="(1)"> <text>Policies issued pursuant to this regulation shall be considered exchanges and not replacements.</text> </paragraph> <paragraph num="(2)"> <text>Exchanges made under this regulation are not subject to:</text> <paragraph num="(a)"> <text>The requirements of Regulations .06 and .25 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>The reporting requirements of §§A—F of Regulation .24 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Notices for Group Policies.</text> <paragraph num="(1)"> <text>Except as provided in §I(2) of this regulation, if the policy is offered through an employer, labor organization, professional, trade or occupational association, the required notification in §A of this regulation shall be made to the offering entity.</text> </paragraph> <paragraph num="(2)"> <text>If the policy is issued to a group not listed in Insurance Article, §15-302(b)(2), (c)(2), or (d)(2), Annotated Code of Maryland, the notification required by §A of this regulation shall be provided to each certificate holder.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Right to Purchase New Benefits.</text> <paragraph num="(1)"> <text>This regulation does not prohibit an insurer from offering any policy, rider, certificate, or coverage change to any policyholder or certificate holder.</text> </paragraph> <paragraph num="(2)"> <text>Upon request, any policyholder or certificate holder may apply for currently available coverage that includes the new services or providers.</text> </paragraph> <paragraph num="(3)"> <text>The insurer may require that policyholders or certificate holders meet all eligibility requirements, including underwriting and payment of the required premium to add the new services or providers.</text> </paragraph> </paragraph> <paragraph num="K."> <text>This regulation does not apply to life insurance policies or riders containing accelerated death benefit long-term care benefits.</text> </paragraph> <paragraph num="L."> <text>This regulation shall become effective on September 10, 2007.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".36" heading="Right to Reduce Coverage and Lower Premiums."> <paragraph num="A."> <text>Unless otherwise specified, the requirements of this regulation shall apply to any long-term care policy issued in Maryland on or after September 10, 2008.</text> </paragraph> <paragraph num="B."> <text>Required Provision in Long-Term Care Insurance Policies and Certificates.</text> <paragraph num="(1)"> <text>Every long-term care insurance policy and certificate shall include a provision that allows the policyholder or certificate holder to reduce coverage and lower the policy or certificate premium in at least one of the following ways:</text> <paragraph num="(a)"> <text>Reducing the maximum benefit; or</text> </paragraph> <paragraph num="(b)"> <text>Reducing the daily, weekly, or monthly benefit amount.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer may also offer reduction options other than those described in §B(1) of this regulation, if the reduction options are consistent with the policy or certificate design or the insurer’s administrative processes.</text> </paragraph> <paragraph num="(3)"> <text>For any long-term care policy issued in Maryland on or after March 1, 2018, if the reduction in coverage involves the reduction or elimination of the inflation protection provision, the insurer shall allow the policyholder to continue the benefit amount in effect at the time of the reduction.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The provision required by §B of this regulation shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.</text> </paragraph> <paragraph num="D."> <text>Premium for Reduced Coverage.</text> <paragraph num="(1)"> <text>The age used to determine the premium for the reduced coverage shall be based on the age used to determine the premiums for the coverage currently in force.</text> <paragraph num="(a)"> <text>Be based on the same age and underwriting class used to determine the premium for the coverage currently in force; and</text> </paragraph> <paragraph num="(b)"> <text>Be consistent with the approved rate table.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>The insurer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable.</text> </paragraph> <paragraph num="F."> <text>If a policy or certificate is about to lapse, the insurer shall provide a written reminder to the policyholder or certificate holder of his or her right to reduce coverage and premiums in the notice required by Regulation .07F of this chapter.</text> </paragraph> <paragraph num="G."> <text>This regulation does not apply to life insurance policies or riders containing accelerated death benefit long-term care benefits.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §19-705; Insurance Article, §§2-109, 14-124, Title 18, Subtitle 1, and Title 27; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 1, 1994 (21:13 Md. R. 1156)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.88 to COMAR 31.14.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 1, 2002 (29:6 Md. R. 570)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective September 10, 2007 (34:18 Md. R. 1581)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective September 1, 2014 (41:17 Md. R. 972)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13E amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .24H—J adopted effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .36 amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="02" heading="Long-Term Care Insurance — Premium Rates and Reserves"> <regulation prefix="Regulation" num=".01" heading="Applicability and Scope."> <text>This chapter applies to all long-term care insurance delivered or issued for delivery in this State by insurers, nonprofit health service plans, and health maintenance organizations. This chapter is not intended to supersede other applicable insurance laws or regulations which do not conflict with this chapter.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Employer group long-term care insurance” means a long-term care insurance policy that is:</text> <paragraph num="(a)"> <text>Issued or delivered in Maryland to:</text> <paragraph num="(i)"> <text>One or more employers or labor organizations; or</text> </paragraph> <paragraph num="(ii)"> <text>A trust or the trustees of a fund established by one or more employers or labor organizations, or by a combination of employers or labor organizations; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Designed for:</text> <paragraph num="(i)"> <text>Employees or former employees, or a combination of employees and former employees, of the employer or employers; or</text> </paragraph> <paragraph num="(ii)"> <text>Members or former members, or a combination of members and former members, of the labor organization or labor organizations.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Exceptional increase” means only those increases filed by an insurer as exceptional for which the Commissioner determines that the need for a premium rate increase is justified due to:</text> <paragraph num="(a)"> <text>Changes in laws or regulations applicable to long-term care coverage in the State; or</text> </paragraph> <paragraph num="(b)"> <text>Increased and unexpected utilization that affects the majority of insurers of similar products.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Incidental” means that the value of the long-term care benefits provided, as of the date of issue, is less than 10 percent of the total value of the benefits provided over the life of the policy.</text> </paragraph> <paragraph num="(4)"> <text>Long-Term Care Insurance.</text> <paragraph num="(a)"> <text>“Long-term care insurance” means any group or individual insurance policy, contract, certificate, or rider issued, delivered, or offered by an insurer that:</text> <paragraph num="(i)"> <text>Is advertised, marketed, offered, or designed to provide coverage for not less than 24 consecutive months for covered persons on an expense incurred, indemnity, prepaid, or insured basis; and</text> </paragraph> <paragraph num="(ii)"> <text>Provides one or more necessary or appropriate diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a situation other than an acute care unit of a hospital.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Long-term care insurance includes any product that is advertised, marketed, or offered as long-term care insurance.</text> </paragraph> <paragraph num="(c)"> <text>“Long-term care insurance” does not include any insurance policy, contract, certificate, or rider which is offered primarily to provide:</text> <paragraph num="(i)"> <text>Basic Medicare supplement coverage;</text> </paragraph> <paragraph num="(ii)"> <text>Hospital confinement indemnity coverage;</text> </paragraph> <paragraph num="(iii)"> <text>Basic hospital expense or medical-surgical expense coverage;</text> </paragraph> <paragraph num="(iv)"> <text>Disability income protection coverage;</text> </paragraph> <paragraph num="(v)"> <text>Accident-only coverage;</text> </paragraph> <paragraph num="(vi)"> <text>Specified disease or specified accident coverage; or</text> </paragraph> <paragraph num="(vii)"> <text>Skilled nursing care.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Long-term care insurance” does not include benefits provided under any life insurance policy, contract, or rider:</text> <paragraph num="(i)"> <text>That accelerates the death benefit specifically for one or more of the qualifying events of terminal illness, a medical condition requiring extraordinary medical intervention, permanent institutional confinement, or institutional confinement for a lengthy confinement;</text> </paragraph> <paragraph num="(ii)"> <text>That provides the option of a lump-sum payment for one or more of the benefits in §B(4)(d)(i) of this regulation; or</text> </paragraph> <paragraph num="(iii)"> <text>In which neither benefits nor eligibility for benefits is conditioned on receipt of long-term care.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>“Long-term care insurance” does not include any certificate issued under an out-of-State employer group contract.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Loss ratio” means the ratio of losses incurred to premiums earned on policies issued, delivered, or renewed in the State.</text> </paragraph> <paragraph num="(6)"> <text>“Out-of-State employer group contract” means a group contract that is:</text> <paragraph num="(a)"> <text>Entered into with an employer in a state other than Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Issued directly to an employer under the laws of that employer's state.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Policy” means any group or individual policy, contract, subscriber agreement, rider, certificate, or endorsement delivered or issued for delivery in the State by an insurer, a nonprofit health service plan, health maintenance organization, or a preferred provider organization.</text> </paragraph> <paragraph num="(8)"> <text>“Qualified actuary” means a member in good standing of the American Academy of Actuaries.</text> </paragraph> <paragraph num="(9)"> <text>Similar Policy Forms.</text> <paragraph num="(a)"> <text>“Similar policy forms” means all of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered.</text> </paragraph> <paragraph num="(b)"> <text>With respect to certificates issued under employer group long-term care insurance policies, “similar policy forms” includes other certificates issued under employer group long-term care insurance policies with the same long-term care benefit classifications.</text> </paragraph> <paragraph num="(c)"> <text>With respect to certificates issued under employer group long-term care insurance policies, “similar policy forms” does not include certificates or policies issued as long-term care insurance, except those certificates described in §B(9)(b) of this regulation.</text> </paragraph> <paragraph num="(d)"> <text>For purposes of determining similar policy forms, long-term care policies and certificates shall be considered in the following three separate long-term care benefit classifications:</text> <paragraph num="(i)"> <text>Institutional long-term care benefits only;</text> </paragraph> <paragraph num="(ii)"> <text>Noninstitutional long-term care benefits only; or</text> </paragraph> <paragraph num="(iii)"> <text>Comprehensive long-term care benefits.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Required Disclosure of Rating Practices to Consumers."> <paragraph num="A."> <text>Applicability.</text> <paragraph num="(1)"> <text>Except as provided in §A(2) and (3) of this regulation, the provisions of this regulation apply to any long-term care policy or certificate issued in this State on or after October 1, 2002.</text> </paragraph> <paragraph num="(2)"> <text>For certificates issued on or after April 1, 2002, under an employer group long-term care insurance policy that was in force on April 1, 2002, the provisions of this regulation apply on the policy anniversary following April 1, 2003.</text> </paragraph> <paragraph num="(3)"> <text>The requirements of §K(2)(ii)—(iv) of this regulation shall apply to any rate increase implemented in Maryland on or after March 1, 2018.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed in §D of this regulation to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time.</text> </paragraph> <paragraph num="C."> <text>If the method of application does not allow for delivery at the time of application or enrollment, an insurer shall provide all of the information listed in §D of this regulation to the applicant no later than the time of delivery of the policy or certificate.</text> </paragraph> <paragraph num="D."> <text>The insurer shall provide the following information to the applicant in accordance with §§B and C of this regulation:</text> <paragraph num="(1)"> <text>A statement that the policy may be subject to rate increases in the future;</text> </paragraph> <paragraph num="(2)"> <text>An explanation of potential future premium rate revisions, and the policyholder’s or certificate holder’s options in the event of a premium rate revision, including the options described in §B of COMAR 31.14.01.36; and applicable disclosures described in §K(2)(iii) and (iv) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;</text> </paragraph> <paragraph num="(4)"> <text>A general explanation for applying premium rate or rate schedule adjustments that shall include:</text> <paragraph num="(a)"> <text>A description of when premium rate or rate schedule adjustments will be effective (for example, next anniversary date or next billing date); and</text> </paragraph> <paragraph num="(b)"> <text>The right to a revised premium rate or rate schedule as provided in §D(2) of this regulation if the premium rate or rate schedule is changed; and</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Information regarding each premium rate increase on the policy form or similar policy forms over the past 10 years for Maryland or any other state that, at a minimum, identifies:</text> <paragraph num="(a)"> <text>The policy forms for which premium rates have been increased;</text> </paragraph> <paragraph num="(b)"> <text>The calendar years when the form was available for purchase; and</text> </paragraph> <paragraph num="(c)"> <text>The amount or percent of each increase, expressed as a percentage of the premium rate before the increase, or as minimum and maximum percentages if the rate increase is variable by rating characteristics.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>The insurer may, in a fair manner, provide explanatory information related to the rate increases in addition to the information required in §D(5) of this regulation.</text> </paragraph> <paragraph num="F."> <text>An insurer may exclude premium rate increases from the disclosure required by §D(5) of this regulation, if the premium rate increases only apply to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred before the acquisition.</text> </paragraph> <paragraph num="G."> <text>Disclosure Required for Initial Rate Increases on Acquired Insurance.</text> <paragraph num="(1)"> <text>If an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before the later of April 1, 2002, or the end of a 24-month period following the acquisition of the block or policies, the acquiring insurer may exclude that rate increase from the disclosure required by §D(5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The nonaffiliated selling company shall include the disclosure of the rate increase referenced in §G(1) of this regulation in accordance with §D(5) of this regulation.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Disclosure Required for Subsequent Rate Increases on Acquired Insurance.</text> <paragraph num="(1)"> <text>This section applies if the acquiring insurer referenced in §G of this regulation files for a rate increase after the rate increase described in §G of this regulation on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers referenced in §G of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The acquiring insurer described in §H(1) of this regulation shall make all disclosures required by §D(5) of this regulation.</text> </paragraph> <paragraph num="(3)"> <text>The disclosures required under §H(2) of this regulation apply to all rate increases after the initial rate increase described in §G of this regulation, including subsequent rate increases within the 24-month period referenced in §G of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>The disclosure required by this section shall include the disclosure of the earlier rate increase referenced in §G of this regulation.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Acknowledgement.</text> <paragraph num="(1)"> <text>Unless the method of application does not allow for signature at the time of application, an applicant shall sign an acknowledgement at the time of application that the insurer made the disclosure required under §D(1) and (5) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>If, due to the method of application, the applicant cannot sign an acknowledgement at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate.</text> </paragraph> </paragraph> <paragraph num="J."> <text>An insurer shall use the forms set forth in Regulations .08 and .09 of this chapter to comply with the requirements of §D of this regulation.</text> </paragraph> <paragraph num="K."> <text>Notice of Premium Rate Schedule Increase.</text> <paragraph num="(1)"> <text>An insurer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificate holders, if applicable, at least 45 days before the implementation of a premium rate schedule increase by the insurer.</text> </paragraph> <paragraph num="(2)"> <text>A notice shall include:</text> <paragraph num="(i)"> <text>The information required by §D of this regulation when a rate increase is implemented;</text> </paragraph> <paragraph num="(ii)"> <text>An offer to reduce policy benefits provided by the current coverage consistent with the requirements of COMAR 31.14.01.36;</text> </paragraph> <paragraph num="(iii)"> <text>A disclosure stating that all options available to the policyholder may not be of equal value; and</text> </paragraph> <paragraph num="(iv)"> <text>In the case of a partnership policy, a disclosure that some benefit reduction options may result in a loss in partnership status that may reduce policyholder protections.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Initial Filing Requirements."> <paragraph num="A."> <text>Applicability.</text> <paragraph num="(1)"> <text>Sections B.—D. of this regulation apply to any long-term care policy issued in Maryland on or after October 1, 2002 and before September 1, 2017.</text> </paragraph> <paragraph num="(2)"> <text>Sections E.—H. of this regulation apply to any to any long-term care policy issued in Maryland on or after September 1, 2017.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An insurer shall provide the following information to the Commissioner at least 60 days before making a long-term care insurance form available for sale:</text> <paragraph num="(1)"> <text>A copy of the disclosure documents required by Regulation .03 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>An actuarial certification consisting of at least the following:</text> <paragraph num="(a)"> <text>A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;</text> </paragraph> <paragraph num="(b)"> <text>A statement that the policy design and coverage provided have been reviewed and taken into consideration;</text> </paragraph> <paragraph num="(c)"> <text>A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;</text> </paragraph> <paragraph num="(d)"> <text>A complete description of the basis for contract reserves that are anticipated to be held under the form, to include:</text> <paragraph num="(i)"> <text>Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amount to be held;</text> </paragraph> <paragraph num="(ii)"> <text>A statement that the assumptions used for reserves contain reasonable margins for adverse experience;</text> </paragraph> <paragraph num="(iii)"> <text>A statement that the net valuation premium for renewal years does not increase; and</text> </paragraph> <paragraph num="(iv)"> <text>A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses or, if such a statement cannot be made, a complete description of the situations where this does not occur; and</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>One of the following:</text> <paragraph num="(i)"> <text>A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or</text> </paragraph> <paragraph num="(ii)"> <text>A comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>In providing the statement required by §B(2)(d)(iv) of this regulation, the insurer may base this statement on the following:</text> <paragraph num="(1)"> <text>An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship; or</text> </paragraph> <paragraph num="(2)"> <text>If the gross premiums for certain age groups appear to be inconsistent with the requirement in §B(2)(d)(iv) of this regulation, the Commissioner may request a demonstration under §D of this regulation based on a standard age distribution.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Additional Information.</text> <paragraph num="(1)"> <text>The Commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums.</text> </paragraph> <paragraph num="(2)"> <text>The actuarial demonstration shall include:</text> <paragraph num="(a)"> <text>Premium and claim experience on similar policy forms, adjusted for any premium or benefit differences;</text> </paragraph> <paragraph num="(b)"> <text>Relevant and credible data from other studies; or</text> </paragraph> <paragraph num="(c)"> <text>Information described in §D(2)(a) and (b) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the Commissioner asks for additional information under this section, the period in §B of this regulation does not include the period during which the insurer is preparing the requested information.</text> </paragraph> </paragraph> <paragraph num="E."> <text>An insurer shall provide the following information to the Commissioner at least 60 days before making a long-term care insurance form available for sale:</text> <paragraph num="(1)"> <text>A copy of the disclosure documents required by Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>An actuarial certification consisting of at least the following:</text> <paragraph num="(a)"> <text>A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;</text> </paragraph> <paragraph num="(b)"> <text>A statement that the policy design and coverage provided have been reviewed and taken into consideration;</text> </paragraph> <paragraph num="(c)"> <text>A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;</text> </paragraph> <paragraph num="(d)"> <text>A statement that the premiums contain one of the following:</text> <paragraph num="(i)"> <text>At least the minimum composite margin for moderately adverse experience as specified in §G(1) of this regulation; or</text> </paragraph> <paragraph num="(ii)"> <text>The specification of and justification for a lower margin as required by §G(2) of this regulation; and</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>One of the following:</text> <paragraph num="(i)"> <text>A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or</text> </paragraph> <paragraph num="(ii)"> <text>A comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>A statement that reserve requirements have been reviewed and considered. Support for this statement shall include:</text> <paragraph num="(i)"> <text>Sufficient detail or sample calculations to provide a complete depiction of the reserve amounts to be held; and</text> </paragraph> <paragraph num="(ii)"> <text>A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; and</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>If the statement required in §E(2)(f)(ii) of this regulation cannot be made, a complete description of the circumstances under which this does not occur; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An actuarial memorandum prepared, dated and signed by a member of the American Academy of Actuaries that:</text> <paragraph num="(a)"> <text>Addresses and supports each specific item required as part of the actuarial certification;</text> </paragraph> <paragraph num="(b)"> <text>Provides at least the following information:</text> <paragraph num="(i)"> <text>An explanation of the review performed by the actuary before making the statements in §E(2)(b) and (c) of this regulation;</text> </paragraph> <paragraph num="(ii)"> <text>A complete description of pricing assumptions;</text> </paragraph> <paragraph num="(iii)"> <text>Sources and levels of margins incorporated into the gross premiums that are the basis for the statement made in the actuarial certification under §E(2)(a) of this regulation;</text> </paragraph> <paragraph num="(iv)"> <text>An explanation of the analysis and testing performed in determining the sufficiency of the margins provided for in §E(2)(d) of this regulation, to include a clear description of the deviations in margins between ages, sexes, plans or states other than those produced utilizing generally accepted actuarial methods for smoothing and interpolating gross premium scales; and</text> </paragraph> <paragraph num="(v)"> <text>A demonstration that the gross premiums include the minimum composite margin specified in §E(2)(d) of this regulation.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="F."> <text>In providing the statement required by §E(2)(f)(ii) of this regulation, the insurer may base this statement on the following:</text> <paragraph num="(1)"> <text>An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship; or</text> </paragraph> <paragraph num="(2)"> <text>If the gross premiums for certain age groups appear to be inconsistent with the requirement in §E(2)(f)(ii) of this regulation, the Commissioner may request a demonstration under §H of this regulation based on a standard age distribution.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The following provisions apply to the statement required under §E(2)(d) of this regulation:</text> <paragraph num="(1)"> <text>For the purposes of the actuarial certification under §E(2)(d)(i) of this regulation, a composite margin may not be less than 10 percent of lifetime claims;</text> </paragraph> <paragraph num="(2)"> <text>For the purposes of the actuarial certification under §E(2)(d)(ii) of this regulation, a composite margin less than 10 percent may be justified in uncommon circumstances, if the following is submitted:</text> <paragraph num="(a)"> <text>Full justification of the proposed amount; and</text> </paragraph> <paragraph num="(b)"> <text>Methods to monitor developing experience that would be the basis for withdrawal of approval for the lower margins;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A composite margin lower than otherwise considered appropriate for the standalone long-term care policy may be justified for long-term care benefits if it is:</text> <paragraph num="(a)"> <text>Provided through a life insurance policy or an annuity contract; and</text> </paragraph> <paragraph num="(b)"> <text>The lower composite margin is justified by appropriate actuarial demonstration addressing margins and volatility when considering the entirety of the product; and</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A greater margin may be appropriate if the insurer has less credible experience to support its assumptions used to determine the premium rates.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Additional Information.</text> <paragraph num="(1)"> <text>In any review of the actuarial certification and actuarial memorandum required by §E of this regulation, the Commissioner may request review by an independent actuary with experience in long-term care pricing.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner asks for additional information under this section, the period in §E of this regulation does not include the period during which the insurer is preparing the requested information.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Loss Ratio."> <paragraph num="A."> <text>This regulation applies to all long-term care insurance policies or certificates except those covered under Regulations .04, .06, and, .06-1 of this chapter.</text> </paragraph> <paragraph num="B."> <text>Minimum Loss Ratios.</text> <paragraph num="(1)"> <text>Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums if the expected loss ratio is at least 60 percent, calculated in a manner which provides for adequate reserving of the long-term care insurance risk.</text> </paragraph> <paragraph num="(2)"> <text>In evaluating the expected loss ratio described in §B(1) of this regulation, due consideration shall be given to all relevant factors, including:</text> <paragraph num="(a)"> <text>Statistical credibility of incurred claims experience and earned premiums;</text> </paragraph> <paragraph num="(b)"> <text>The period for which rates are computed to provide coverage;</text> </paragraph> <paragraph num="(c)"> <text>Experienced and projected trends;</text> </paragraph> <paragraph num="(d)"> <text>Concentration of experience within early policy duration;</text> </paragraph> <paragraph num="(e)"> <text>Expected claim fluctuation;</text> </paragraph> <paragraph num="(f)"> <text>Experience refunds, adjustments, or dividends;</text> </paragraph> <paragraph num="(g)"> <text>Renewability features;</text> </paragraph> <paragraph num="(h)"> <text>All appropriate expense factors;</text> </paragraph> <paragraph num="(i)"> <text>Interest;</text> </paragraph> <paragraph num="(j)"> <text>Experimental nature of the coverage;</text> </paragraph> <paragraph num="(k)"> <text>Policy reserves;</text> </paragraph> <paragraph num="(l)"> <text>Mix of business by risk classification; and</text> </paragraph> <paragraph num="(m)"> <text>Product features such as long elimination periods, high deductibles, and high maximum limits.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Life Insurance Policies that Accelerate Benefits for Long-Term Care.</text> <paragraph num="(1)"> <text>Section B of this regulation does not apply to life insurance policies that accelerate benefits for long-term care.</text> </paragraph> <paragraph num="(2)"> <text>A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if all of the following requirements are met:</text> <paragraph num="(a)"> <text>The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;</text> </paragraph> <paragraph num="(b)"> <text>The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of Insurance Article, Title 16, Subtitle 3, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(c)"> <text>The policy meets the disclosure requirements of Insurance Article, §§18-108 and 18-117, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>Any policy illustration used for the policy meets the applicable requirements of COMAR 31.09.09; and</text> </paragraph> <paragraph num="(e)"> <text>An actuarial memorandum is filed with the Commissioner that includes:</text> <paragraph num="(i)"> <text>A description of the basis on which the long-term care rates were determined;</text> </paragraph> <paragraph num="(ii)"> <text>A description of the basis for the reserves;</text> </paragraph> <paragraph num="(iii)"> <text>A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;</text> </paragraph> <paragraph num="(iv)"> <text>A description and a table of each actuarial assumption used;</text> </paragraph> <paragraph num="(v)"> <text>A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;</text> </paragraph> <paragraph num="(vi)"> <text>The estimated average annual premium per policy and the average issue age;</text> </paragraph> <paragraph num="(vii)"> <text>A statement as to whether underwriting is performed at the time of application; and</text> </paragraph> <paragraph num="(viii)"> <text>A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>For the expense assumptions under §C(2)(e)(iv) of this regulation, an insurer shall include the percent of premium dollars per policy and the dollars per unit of benefits, if any.</text> </paragraph> <paragraph num="(4)"> <text>The statement required by §C(2)(e)(vii) of this regulation shall indicate whether underwriting is used. If underwriting is used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. If coverage is under a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Premium Rate Schedule Increases."> <paragraph num="A."> <text>Applicability.</text> <paragraph num="(1)"> <text>Except as provided in §A(2) of this regulation, the provisions of this regulation apply to any long-term care policy or certificate issued in Maryland on or after October 1, 2002 and before September 1, 2017.</text> </paragraph> <paragraph num="(2)"> <text>For certificates issued on or after April 1, 2002, under an employer group long-term care insurance policy that was in force on April 1, 2002, the provisions of this regulation apply on the policy anniversary following April 1, 2003.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Premium Rate Increase Filing Requirements.</text> <paragraph num="(1)"> <text>An insurer shall request approval of a pending premium rate schedule increase, including an exceptional increase, to the Commissioner at least 45 days before the notice to the policyholders.</text> </paragraph> <paragraph num="(2)"> <text>The notice to the Commissioner required by §B(1) of this regulation shall include:</text> <paragraph num="(a)"> <text>Information required by Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Certification by a qualified actuary that:</text> <paragraph num="(i)"> <text>If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated; and</text> </paragraph> <paragraph num="(ii)"> <text>The premium rate filing is in compliance with the provisions of this regulation;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>An actuarial memorandum justifying the rate schedule change request that includes:</text> <paragraph num="(i)"> <text>Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase;</text> </paragraph> <paragraph num="(ii)"> <text>The method and assumptions used in determining the lifetime projections described in §B(2)(c)(i) of this regulation, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;</text> </paragraph> <paragraph num="(iii)"> <text>Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;</text> </paragraph> <paragraph num="(iv)"> <text>Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;</text> </paragraph> <paragraph num="(v)"> <text>A statement that policy design, underwriting, and claims adjudication practices have been taken into consideration;</text> </paragraph> <paragraph num="(vi)"> <text>If it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, composite rates reflecting projections of new certificates; and</text> </paragraph> <paragraph num="(vii)"> <text>A demonstration that actual and projected costs exceed costs anticipated at the time of initial pricing under moderately adverse experience and that the composite margin specified in Regulation .04B(2)(d) or .04E(2)(d) of this chapter is projected to be exhausted.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the Commissioner; and</text> </paragraph> <paragraph num="(e)"> <text>Sufficient information for review and approval of the premium rate schedule increase by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The lifetime projection and assumptions required to be filed under §B(2)(c)(i) and (ii) of this regulation shall comply with the following requirements:</text> <paragraph num="(a)"> <text>Annual values for the 5 years preceding and the 3 years following the valuation date shall be provided separately;</text> </paragraph> <paragraph num="(b)"> <text>The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;</text> </paragraph> <paragraph num="(c)"> <text>The projections shall demonstrate compliance with §C of this regulation; and</text> </paragraph> <paragraph num="(d)"> <text>For exceptional increases:</text> <paragraph num="(i)"> <text>The projected experience shall be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and</text> </paragraph> <paragraph num="(ii)"> <text>If the Commissioner determines as provided in Regulation .07C of this chapter that offsets may exist, the insurer shall use appropriate net projected experience.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>An insurer may request a premium rate schedule increase less than what is required under this regulation and the Commissioner may approve this premium rate schedule increase, without submission of the certification required under §B(2)(b)(i)of this regulation, if:</text> <paragraph num="(1)"> <text>The actuarial memorandum discloses the premium rate schedule increase necessary to make the certification required under §B(2)(b) of this regulation;</text> </paragraph> <paragraph num="(2)"> <text>The premium rate schedule increase filing satisfies all other requirements of §B of this regulation; and</text> </paragraph> <paragraph num="(3)"> <text>The premium rate schedule increase filing is, in the opinion of the Commissioner, in the best interest of policyholders.</text> </paragraph> </paragraph> <paragraph num="D."> <text>All premium rate schedule increases shall be determined in accordance with the following requirements:</text> <paragraph num="(1)"> <text>Exceptional increases shall provide that 70 percent of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;</text> </paragraph> <paragraph num="(2)"> <text>Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, is not less than the sum of the following:</text> <paragraph num="(a)"> <text>The accumulated value of the initial earned premium times 58 percent;</text> </paragraph> <paragraph num="(b)"> <text>85 percent of the accumulated value of prior premium rate schedule increases on an earned basis;</text> </paragraph> <paragraph num="(c)"> <text>The present value of future projected initial earned premiums times 58 percent; and</text> </paragraph> <paragraph num="(d)"> <text>85 percent of the present value of future projected premiums not in §C(2)(c) of this regulation on an earned basis;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If a policy form has both exceptional and other increases, the values in §C(2)(b) and (d) shall also include 70 percent for exceptional rate increase amounts;</text> </paragraph> <paragraph num="(4)"> <text>All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in Regulation .13 of this chapter; and</text> </paragraph> <paragraph num="(5)"> <text>The actuary shall disclose as a part of the actuarial memorandum the use of any appropriate averages.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Updated Projections.</text> <paragraph num="(1)"> <text>For each rate increase that is implemented, the insurer shall file for approval by the Commissioner updated projections, as described in §B(2)(c)(i) and (ii) of this regulation, annually for the next 3 years and include a comparison of actual results to projected values.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may extend the period to greater than 3 years if actual results are not consistent with projected values from prior projections.</text> </paragraph> <paragraph num="(3)"> <text>For group insurance policies that meet the conditions in §K of this regulation, the projections required by this section shall be provided to the policyholder instead of filing with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Lifetime Projections.</text> <paragraph num="(1)"> <text>If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as described in §B(2)(c)(i) and (ii) of this regulation, shall be filed for approval by the Commissioner every 5 years following the end of the required period in §D of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>For group insurance policies that meet the conditions in §K of this regulation, the projections required by this section shall be provided to the policyholder instead of filing with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Commissioner's Authority if Actual Experience Does Not Match Projected Experience.</text> <paragraph num="(1)"> <text>If the Commissioner has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in §C of this regulation, the Commissioner may require the insurer to implement any of the following:</text> <paragraph num="(a)"> <text>Premium rate schedule adjustments; or</text> </paragraph> <paragraph num="(b)"> <text>Other measures to reduce the difference between the projected and actual experience.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In determining whether the actual experience adequately matches the projected experience, consideration shall be given to §B(2)(c)(vi) of this regulation, if applicable.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Filing Required if Rate Increase Causes Eligibility for Contingent Benefit.</text> <paragraph num="(1)"> <text>If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file:</text> <paragraph num="(a)"> <text>A plan, subject to Commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; and</text> </paragraph> <paragraph num="(b)"> <text>The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to §C of this regulation had the greater of the original anticipated lifetime loss ratio or 58 percent been used in the calculations described in §C(2)(a) and (c) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the insurer fails to file the plan required by §G(1)(a) of this regulation or fails to receive approval from the Commissioner of the plan filed under §G(1)(a) of this regulation, the Commissioner may impose the condition in §H of this regulation.</text> </paragraph> </paragraph> <paragraph num="I."> <text>Lapse Rates.</text> <paragraph num="(1)"> <text>The Commissioner shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the 12 months following each increase to determine if significant adverse lapsation has occurred or is anticipated, if a rate increase filing meets the following criteria:</text> <paragraph num="(a)"> <text>The rate increase is not the first rate increase requested for the specific policy form or forms;</text> </paragraph> <paragraph num="(b)"> <text>The rate increase is not an exceptional increase; and</text> </paragraph> <paragraph num="(c)"> <text>The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the Commissioner determines during the review described in §H(1) of this regulation that significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the Commissioner may determine that a rate spiral exists.</text> </paragraph> <paragraph num="(3)"> <text>If the Commissioner determines that a rate spiral exists as described in §H(2) of this regulation, the Commissioner may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates.</text> </paragraph> <paragraph num="(4)"> <text>The offer required by §H(3) of this regulation shall:</text> <paragraph num="(a)"> <text>Be subject to the approval of the Commissioner;</text> </paragraph> <paragraph num="(b)"> <text>Be based on actuarially sound principles, but not be based on attained age; and</text> </paragraph> <paragraph num="(c)"> <text>Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Maintenance of Experience. The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:</text> <paragraph num="(a)"> <text>The maximum rate increase determined based on the combined experience; and</text> </paragraph> <paragraph num="(b)"> <text>The maximum rate increase determined based only on the experience of insureds originally issued the form plus 10 percent.</text> </paragraph> </paragraph> </paragraph> <paragraph num="J."> <text>If the Commissioner determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the Commissioner may, in addition to the provisions of §H of this regulation, prohibit the insurer from either of the following:</text> <paragraph num="(1)"> <text>Filing and marketing comparable coverage for a period of up to 5 years; or</text> </paragraph> <paragraph num="(2)"> <text>Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Exemption for Incidental Coverage.</text> <paragraph num="(1)"> <text>Sections A—I of this regulation do not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in Regulation .02B(3) of this chapter, if the policy complies with all of the following requirements:</text> <paragraph num="(a)"> <text>The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;</text> </paragraph> <paragraph num="(b)"> <text>The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following:</text> <paragraph num="(i)"> <text>The standard nonforfeiture requirements for life insurance found in Insurance Article, Title 16, Subtitle 3, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>The standard nonforfeiture requirements for individual deferred annuities found in Insurance Article, Title 16, Subtitle 5, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(iii)"> <text>The requirements for variable annuities found in COMAR 31.09.04;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The policy meets the disclosure requirements of Insurance Article, §§18-108 and 18-117, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:</text> <paragraph num="(i)"> <text>Policy illustrations for life insurance as required by COMAR 31.09.09;</text> </paragraph> <paragraph num="(ii)"> <text>Disclosure requirements for annuities as required by COMAR 31.15.04; and</text> </paragraph> <paragraph num="(iii)"> <text>Disclosure requirements for variable annuities as required by COMAR 31.09.04;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>An actuarial memorandum is filed with the Commissioner that includes:</text> <paragraph num="(i)"> <text>A description of the basis on which the long-term care rates were determined;</text> </paragraph> <paragraph num="(ii)"> <text>A description of the basis for the reserves;</text> </paragraph> <paragraph num="(iii)"> <text>A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;</text> </paragraph> <paragraph num="(iv)"> <text>A description and a table of each actuarial assumption used;</text> </paragraph> <paragraph num="(v)"> <text>A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;</text> </paragraph> <paragraph num="(vi)"> <text>The estimated average annual premium per policy and the average issue age;</text> </paragraph> <paragraph num="(vii)"> <text>A statement as to whether underwriting is performed at the time of application; and</text> </paragraph> <paragraph num="(viii)"> <text>A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For the expense assumptions used in §J(1)(e)(iv) of this regulation, an insurer shall include percent of premium dollars per policy and dollars per unit, if any.</text> </paragraph> <paragraph num="(3)"> <text>Contents of Statement on Underwriting.</text> <paragraph num="(a)"> <text>The statement required by §J(1)(e)(vii) of this regulation shall indicate whether underwriting is used.</text> </paragraph> <paragraph num="(b)"> <text>If underwriting is used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting.</text> </paragraph> <paragraph num="(c)"> <text>If coverage is under a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs.</text> </paragraph> </paragraph> </paragraph> <paragraph num="L."> <text>Sections F and H of this regulation do not apply to employer group long-term care insurance if:</text> <paragraph num="(1)"> <text>The policies insure 250 or more individuals and the policyholder has 5,000 or more eligible employees of a single employer; or</text> </paragraph> <paragraph num="(2)"> <text>The policyholder, and not the certificate holders, pays a material portion of the premium, which may not be less than 20 percent of the total premium for the group in the calendar year before the year a rate increase is filed.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06-1" heading="Premium Rate Schedule Increases for Policies Subject to Loss Ratio Limits Related to Original Filings."> <paragraph num="A."> <text>Applicability.</text> <paragraph num="(1)"> <text>Except as provided in §A(2) of this regulation, this regulation applies to any long-term care policy or certificate issued in Maryland on or after September 1, 2017.</text> </paragraph> <paragraph num="(2)"> <text>For certificates issued on or after the effective date of this amended regulation under an employer group long-term care insurance policy as defined in Regulation .02B(1) of this chapter if the policy was in force at the time this amended regulation became effective, the provisions of this regulation shall apply on the policy anniversary following March 1, 2018.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Premium Rate Increase Filing Requirements.</text> <paragraph num="(1)"> <text>An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the Commissioner at least 30 days before issuing the notice to the policyholders.</text> </paragraph> <paragraph num="(2)"> <text>The notice to the Commissioner required by §B(1) of this regulation shall include:</text> <paragraph num="(a)"> <text>Information required by Regulation .03 of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>Certification by a qualified actuary that:</text> <paragraph num="(i)"> <text>If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated; and</text> </paragraph> <paragraph num="(ii)"> <text>The premium rate filing is in compliance with the provisions of this regulation;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>An actuarial memorandum justifying the rate schedule change request that includes:</text> <paragraph num="(i)"> <text>Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase;</text> </paragraph> <paragraph num="(ii)"> <text>The method and assumptions used in determining the lifetime projections described in §B(2)(c)(i) of this regulation, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;</text> </paragraph> <paragraph num="(iii)"> <text>Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit on lapse;</text> </paragraph> <paragraph num="(iv)"> <text>Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the insurer have been relied on by the actuary;</text> </paragraph> <paragraph num="(v)"> <text>A statement that policy design, underwriting and claims adjudication practices have been taken into consideration; and</text> </paragraph> <paragraph num="(vi)"> <text>If it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the Commissioner; and</text> </paragraph> <paragraph num="(e)"> <text>Sufficient information for review and approval of the premium rate schedule increase by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The lifetime projection and assumptions required to be filed under §B(2)(c)(i) and (ii) of this regulation shall comply with the following requirements:</text> <paragraph num="(a)"> <text>Annual values for the 5 years preceding and the 3 years following the valuation date shall be provided separately;</text> </paragraph> <paragraph num="(b)"> <text>The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;</text> </paragraph> <paragraph num="(c)"> <text>The projections shall demonstrate compliance with §C of this regulation; and</text> </paragraph> <paragraph num="(d)"> <text>For exceptional increases:</text> <paragraph num="(i)"> <text>The projected experience shall be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and</text> </paragraph> <paragraph num="(ii)"> <text>If the Commissioner determines as provided in Regulation .07C of this chapter that offsets may exist, the insurer shall use appropriate net projected experience.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>The insurer may request and the Commissioner may approve a premium rate schedule increase less than what is required under this regulation without submission of the certification in §B(2)(b)(i) of this regulation, if:</text> <paragraph num="(a)"> <text>The actuarial memorandum discloses the premium rate schedule increase necessary to make the certification required under §B(2)(b) of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>The premium rate schedule increase filing satisfies all other requirements of this regulation; and</text> </paragraph> <paragraph num="(c)"> <text>The premium rate schedule is, in the opinion of the Commissioner, in the best interest of policyholders.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>All premium rate schedule increases shall be determined in accordance with the following requirements:</text> <paragraph num="(1)"> <text>Exceptional increases shall provide that 70 percent of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;</text> </paragraph> <paragraph num="(2)"> <text>Premium rate schedule increases shall be calculated such that the sum of the lesser of the accumulated value of actual incurred claims, without the inclusion of active life reserves, or the accumulated value of historic expected claims, with the inclusion of active life reserves, plus the present value of the future expected incurred claims, projected without the inclusion of active life reserves, will not be less than the sum of the following:</text> <paragraph num="(a)"> <text>The accumulated value of the initial earned premium times 58 percent;</text> </paragraph> <paragraph num="(b)"> <text>85 percent of the accumulated value of prior premium rate schedule increases on an earned basis;</text> </paragraph> <paragraph num="(c)"> <text>The present value of future projected initial earned premiums times 58 percent; and</text> </paragraph> <paragraph num="(d)"> <text>85 percent of the present value of future projected premiums not in §C(2)(c) of this regulation on an earned basis;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Expected claims shall be calculated as follows:</text> <paragraph num="(a)"> <text>Original filing assumptions shall be assumed until new assumptions are filed as part of a rate increase;</text> </paragraph> <paragraph num="(b)"> <text>New assumptions shall be used for all periods beyond each requested effective date of a rate increase;</text> </paragraph> <paragraph num="(c)"> <text>For each calendar year, expected claims shall be based on in-force business at the beginning of the calendar year;</text> </paragraph> <paragraph num="(d)"> <text>Expected claims shall include margins for moderately adverse experience that are:</text> <paragraph num="(i)"> <text>Amounts included in the claims that were used to determine the lifetime loss ratio consistent with the original filing; or</text> </paragraph> <paragraph num="(ii)"> <text>Amounts as modified in any rate increase filing.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>If a policy form has both exceptional and other increases, the values in §C(2)(b) and (d) shall also include 70 percent for exceptional rate increase amounts;</text> </paragraph> <paragraph num="(5)"> <text>All present and accumulated values used to determine rate increases, including the lifetime loss ratio consistent with the original filing reflecting margins for moderately adverse experience, shall use the maximum valuation interest rate for contract reserves as specified in Regulation .13 of this chapter; and</text> </paragraph> <paragraph num="(6)"> <text>The actuary shall disclose as a part of the actuarial memorandum the use of any appropriate averages.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Updated Projections.</text> <paragraph num="(1)"> <text>For each rate increase that is implemented, the insurer shall file for approval by the Commissioner updated projections, as described in §B(2)(c)(i) and (ii) of this regulation, annually for the next 3 years and include a comparison of actual results to projected values.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may extend the period to greater than 3 years if actual results are not consistent with projected values from prior projections.</text> </paragraph> <paragraph num="(3)"> <text>For group insurance policies that meet the conditions in §K of this regulation, the projections required by this section shall be provided to the policyholder instead of filing with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Lifetime Projections.</text> <paragraph num="(1)"> <text>If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as described in §B(2)(c)(i) and (ii) of this regulation, shall be filed for approval by the Commissioner every 5 years following the end of the required period in §D of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>For group insurance policies that meet the conditions in §L of this regulation, the projections required by this section shall be provided to the policyholder instead of filing with the Commissioner.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Commissioner’s Authority if Actual Experience Does Not Match Projected Experience.</text> <paragraph num="(1)"> <text>If the Commissioner has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in §C of this regulation, the Commissioner may require the insurer to implement any of the following:</text> <paragraph num="(a)"> <text>Premium rate schedule adjustments; or</text> </paragraph> <paragraph num="(b)"> <text>Other measures to reduce the difference between the projected and actual experience.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>In determining whether the actual experience adequately matches the projected experience, consideration shall be given to §B(2)(c)(vi) of this regulation, if applicable.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Filing Required if Rate Increase Causes Eligibility for Contingent Benefit.</text> <paragraph num="(1)"> <text>If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file:</text> <paragraph num="(a)"> <text>A plan, subject to the Commissioner’s approval, for improved administration;</text> </paragraph> <paragraph num="(b)"> <text>A plan, subject to the Commissioner’s approval, for improved claims processing; or</text> </paragraph> <paragraph num="(c)"> <text>Both plans, if applicable.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A plan filed in accordance with §G(1) of this regulation shall:</text> <paragraph num="(a)"> <text>Demonstrate that it is designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases; or</text> </paragraph> <paragraph num="(b)"> <text>Demonstrate that appropriate administration or claims processing, or both, has been implemented or is in effect.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the insurer fails to file a plan required by §G(1) of this regulation or fails to receive approval from the Commissioner of the plan filed under §G(1) of this regulation, the Commissioner may impose the requirements in §H of this regulation.</text> </paragraph> </paragraph> <paragraph num="H."> <text>Lapse Rates.</text> <paragraph num="(1)"> <text>The Commissioner shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the 12 months following each increase to determine if significant adverse lapsation has occurred or is anticipated, if a rate increase filing meets the following criteria:</text> <paragraph num="(a)"> <text>The rate increase is not the first rate increase requested for the specific policy form or forms;</text> </paragraph> <paragraph num="(b)"> <text>The rate increase is not an exceptional increase; and</text> </paragraph> <paragraph num="(c)"> <text>The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the Commissioner determines during the review described in §H(1) of this regulation that significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the Commissioner may determine that a rate spiral exists.</text> </paragraph> <paragraph num="(3)"> <text>If the Commissioner determines that a rate spiral exists as described in §H(2) of this regulation, the Commissioner may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates.</text> </paragraph> <paragraph num="(4)"> <text>The offer required by §H(3) of this regulation shall:</text> <paragraph num="(a)"> <text>Be subject to the approval of the Commissioner;</text> </paragraph> <paragraph num="(b)"> <text>Be based on actuarially sound principles, but not be based on attained age; and</text> </paragraph> <paragraph num="(c)"> <text>Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>Maintenance of Experience. The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:</text> <paragraph num="(a)"> <text>The maximum rate increase determined based on the combined experience; and</text> </paragraph> <paragraph num="(b)"> <text>The maximum rate increase determined based only on the experience of insureds originally issued the form plus 10 percent.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>If the Commissioner determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the Commissioner may, in addition to the provisions of §H of this regulation, prohibit the insurer from:</text> <paragraph num="(1)"> <text>Filing and marketing comparable coverage for a period of up to 5 years;</text> </paragraph> <paragraph num="(2)"> <text>Offering all other similar coverages; or</text> </paragraph> <paragraph num="(3)"> <text>Limiting marketing of new applications to the products subject to recent premium rate schedule increases.</text> </paragraph> </paragraph> <paragraph num="J."> <text>Exemption for Incidental Coverage.</text> <paragraph num="(1)"> <text>Sections A—I of this regulation do not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in Regulation .02B(3) of this chapter, if the policy complies with all of the following requirements:</text> <paragraph num="(a)"> <text>The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;</text> </paragraph> <paragraph num="(b)"> <text>The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following:</text> <paragraph num="(i)"> <text>The standard nonforfeiture requirements for life insurance found in Insurance Article, Title 16, Subtitle 3, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>The standard nonforfeiture requirements for individual deferred annuities found in Insurance Article, Title 16, Subtitle 5, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(iii)"> <text>The requirements for variable annuities found in COMAR 31.09.04;</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The policy meets the disclosure requirements of Insurance Article, §§18-108 and 18-117, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(d)"> <text>The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:</text> <paragraph num="(i)"> <text>Policy illustrations for life insurance as required by COMAR 31.09.09;</text> </paragraph> <paragraph num="(ii)"> <text>Disclosure requirements for annuities as required by COMAR 31.15.04; and</text> </paragraph> <paragraph num="(iii)"> <text>Disclosure requirements for variable annuities as required by COMAR 31.09.04;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>An actuarial memorandum is filed with the Commissioner that includes:</text> <paragraph num="(i)"> <text>A description of the basis on which the long-term care rates were determined;</text> </paragraph> <paragraph num="(ii)"> <text>A description of the basis for the reserves;</text> </paragraph> <paragraph num="(iii)"> <text>A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;</text> </paragraph> <paragraph num="(iv)"> <text>A description and a table of each actuarial assumption used;</text> </paragraph> <paragraph num="(v)"> <text>A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;</text> </paragraph> <paragraph num="(vi)"> <text>The estimated average annual premium per policy and the average issue age;</text> </paragraph> <paragraph num="(vii)"> <text>A statement as to whether underwriting is performed at the time of application; and</text> </paragraph> <paragraph num="(viii)"> <text>A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values, and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For the expense assumptions used in §J(1)(e)(iv) of this regulation, an insurer shall include percent of premium dollars per policy and dollars per unit, if any.</text> </paragraph> <paragraph num="(3)"> <text>Contents of Statement on Underwriting.</text> <paragraph num="(a)"> <text>The statement required by §J(1)(e)(vii) of this regulation shall indicate whether underwriting is used.</text> </paragraph> <paragraph num="(b)"> <text>If underwriting is used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting.</text> </paragraph> <paragraph num="(c)"> <text>If coverage is under a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs.</text> </paragraph> </paragraph> </paragraph> <paragraph num="K."> <text>Sections F and H of this regulation do not apply to employer group long-term care insurance if:</text> <paragraph num="(1)"> <text>The policies insure 250 or more individuals and the policyholder has 5,000 or more eligible employees of a single employer; or</text> </paragraph> <paragraph num="(2)"> <text>The policyholder, and not the certificate holders, pays a material portion of the premium, which may not be less than 20 percent of the total premium for the group in the calendar year before the year a rate increase is filed.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Exceptional Premium Rate Increases."> <paragraph num="A."> <text>Except as provided in Regulation .06 of this chapter, exceptional increases are subject to the same requirements as other premium rate schedule increases.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase.</text> </paragraph> <paragraph num="C."> <text>The Commissioner, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Long-Term Care Personal Worksheet."> <text>The disclosure required by Regulation .03J of this chapter shall read as follows:</text> <text>Long-Term Care Insurance</text> <text>Personal Worksheet</text> <text>People buy long-term care insurance for many reasons. Some don't want to use their own assets to pay for long-term care. Some buy insurance to make sure they can choose the type of care they get. Others don't want their family to have to pay for care or don't want to go on Medicaid. But long-term care insurance may be expensive, and may not be right for everyone.</text> <text>By state law, the insurance company must fill out part of the information on this worksheet and ask you to fill out the rest to help you and the company decide if you should buy this policy.</text> <text>Premium Information</text> <text>Policy Form Numbers ________________________</text> <text>The premium for the coverage you are considering will be [$_____ per month, or $_____ per year,] [a one-time single premium of $_____.]</text> <text>Type of Policy (noncancellable/guaranteed renewable):</text> <text>The Company's Right to Increase Premiums:</text> <text>[The company cannot raise your rates on this policy.] [The company has a right to increase premiums on this policy form in the future, provided it raises rates for all policies in the same class in this state.] [Insurers shall use appropriate bracketed statement. Rate guarantees shall not be shown on this form.]</text> <text>Rate Increase History</text> <text>The company has sold long-term care insurance since [year] and has sold this policy since [year]. [The company has never raised its rates for any long-term care policy it has sold in this state or any other state.] [The company has not raised its rates for this policy form or similar policy forms in this state or any other state in the last 10 years.] [The company has raised its premium rates on this policy form or similar policy forms in the last 10 years. Following is a summary of the rate increases.]</text> <text>Drafting Note: A company may use the first bracketed sentence above only if it has never increased rates under any prior policy forms in this state or any other state. The issuer shall list each premium increase it has instituted on this or similar policy forms in this state or any other state during the last 10 years. The list shall provide the policy form, the calendar years the form was available for sale, and the calendar year and the amount (percentage) of each increase. The insurer shall provide minimum and maximum percentages if the rate increase is variable by rating characteristics. The insurer may provide, in a fair manner, additional explanatory information as appropriate.</text> <text>Questions Related to Your Income</text> <text>How will you pay each year's premium?</text> <text>[ ] From my Income</text> <text>[ ] From my Savings/Investments</text> <text>[ ] My Family will Pay</text> <text>[[ ] Have you considered whether you could afford to keep this policy if the premiums went up, for example, by 20%?]</text> <text>Drafting Note: The issuer is not required to use the bracketed sentence if the policy is fully paid up or is a noncancellable policy.</text> <text>What is your annual income? (check one)</text> <text>[ ] Under $10,000</text> <text>[ ] $[10-20,000]</text> <text>[ ] $[20-30,000]</text> <text>[ ] $[30-50,000]</text> <text>[ ] Over $50,000</text> <text>Drafting Note: The issuer may choose the numbers to put in the brackets to fit its suitability standards.</text> <text>How do you expect your income to change over the next 10 years? (check one)</text> <text>[ ] No change</text> <text>[ ] Increase</text> <text>[ ] Decrease</text> <text>If you will be paying premiums with money received only from your own income, a rule of thumb is that you may not be able to afford this policy if the premiums will be more than 7% of your income.</text> <text>Will you buy inflation protection? (check one) [ ] Yes [ ] No</text> <text>If not, have you considered how you will pay for the difference between future costs and your daily benefit amount?</text> <text>[] From my Income</text> <text>[ ] From my Savings/Investments</text> <text>[ ] My Family will Pay</text> <text>The national average annual cost of care in [insert year] was [insert $ amount], but this figure varies across the country. In 10 years the national average annual cost would be about [insert $ amount] if costs increase 5% annually.</text> <text>Drafting Note: The projected cost can be based on federal estimates in a current year. In the above statement, the second figure equals 163% of the first figure.</text> <text>What elimination period are you considering? Number of days ____ Approximate cost $_____ for that period of care.</text> <text>How are you planning to pay for your care during the elimination period? (check one)</text> <text>[ ] From my Income</text> <text>[ ] From my Savings/Investments</text> <text>[ ] My Family will Pay</text> <text>Questions Related to Your Savings and Investments</text> <text>Not counting your home, about how much are all of your assets (your savings and investments) worth? (check one)</text> <text>[ ] Under $20,000</text> <text>[ ] $20,000-$30,000</text> <text>[ ] $30,000-$50,000</text> <text>[ ] Over $50,000</text> <text>How do you expect your assets to change over the next 10 years? (check one)</text> <text>[ ] Stay about the same</text> <text>[ ] Increase</text> <text>[ ] Decrease</text> <text>If you are buying this policy to protect your assets and your assets are less than $30,000, you may wish to consider other options for financing your long-term care.</text> <text>If you are buying this policy to protect your assets and your assets are less than $30,000, you may wish to consider other options for financing your long-term care.</text> <text>Disclosure Statement</text> <text>[ ] The answers to the questions above describe my financial situation.</text> <text>Or</text> <text>[ ] I choose not to complete this information.</text> <text>(Check one.)</text> <text>[ ] I acknowledge that the carrier and/or its agent (below) has reviewed this form with me including the premium, premium rate increase history, and potential for premium increases in the future. [For direct mail situations, use the following: I acknowledge that I have reviewed this form including the premium, premium rate increase history, and potential for premium increases in the future.] I understand the above disclosures. I understand that the rates for this policy may increase in the future. (This box must be checked).</text> <text>Signed: ______________________________________________________________________________________________</text> <text>(Applicant) (Date)</text> <text>( [ ] I explained to the applicant the importance of completing this information.</text> <text>Signed: _______________________________________________________________________________________________</text> <text>(Agent) (Date)</text> <text>Agent's Printed Name: __________________________________________________________________________________ )</text> <text>[In order for us to process your application, please return this signed statement to [name of company], along with your application.]</text> <text>[My agent has advised me that this policy does not seem to be suitable for me. However, I still want the company to consider my application.</text> <text>Signed: ______________________________________________________________________________________________ ]</text> <text>(Applicant) (Date)</text> <text>Drafting Note: Choose the appropriate sentences depending on whether this is a direct mail or agent sale.</text> <text>The company may contact you to verify your answers.</text> <text>Drafting Note: When the Long-Term Care Insurance Personal Worksheet is furnished to employees and their spouses under employer group policies, the text from the heading “Disclosure Statement” to the end of the page may be removed.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Potential Rate Increase Disclosure Form."> <text>The disclosure required by Regulation .03J of this chapter shall read as follows:</text> <text>Long-Term Care Insurance</text> <text>Potential Rate Increase Disclosure Form</text> <paragraph num="1."> <text>[Premium Rate] [Premium Rate Schedules]: [Premium rate] [Premium rate schedules] that [is] [are] applicable to you and that will be in effect until a request is made and [filed] [approved] for an increase [is] [are] [on the application] [$ ])</text> </paragraph> <paragraph num="2."> <text>The [premium] [premium rate schedule] for this policy [will be shown on the schedule page of] [will be attached to] your policy.</text> </paragraph> <paragraph num="3."> <text>Rate Schedule Adjustments:</text> </paragraph> <paragraph num="4."> <text>Potential Rate Revisions:</text> </paragraph> <text>Issue Age Percent Increase Over Initial Premium</text> <text>55—59 90%</text> <text>60 70%</text> <text>61 66%</text> <text>62 62%</text> <text>63 58%</text> <text>64 54%</text> <text>65 50%</text> <text>66 48%</text> <text>67 46%</text> <text>68 44%</text> <text>69 42%</text> <text>70 40%</text> <text>71 38%</text> <text>72 36%</text> <text>73 34%</text> <text>74 32%</text> <text>75 30%</text> <text>76 28%</text> <text>77 26%</text> <text>78 24%</text> <text>79 22%</text> <text>80 20%</text> <text>81 19%</text> <text>82 18%</text> <text>83 17%</text> <text>84 16%</text> <text>85 15%</text> <text>86 14%</text> <text>87 13%</text> <text>88 12%</text> <text>89 11%</text> <text>90 and over 10%</text> <text>{The following contingent nonforfeiture disclosure need only be included for those limited pay policies to which COMAR 31.14.01.13E(6) and (9) are applicable.} In addition to the contingent nonforfeiture benefits described above, the following reduced “paid-up” contingent nonforfeiture benefit is an option in all policies that have a fixed or limited premium payment period, even if you selected a nonforfeiture benefit when you bought your policy. If both the reduced “paid up” benefit AND the contingent benefit described above are triggered by the same rate increase, you can choose either of the two benefits. You are eligible for the reduced “paid up” contingent nonforfeiture benefit when all three conditions shown below are met:</text> <paragraph num="1."> <text>The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below;</text> </paragraph> <paragraph num="2."> <text>You stop paying your premiums within 120 days of when the premium increase took effect; AND</text> </paragraph> <paragraph num="3."> <text>The ratio of the number of months you already paid premiums is 40% or more than the number of months you originally agreed to pay.</text> <paragraph num="a."> <text>The total lifetime amount of benefits your reduced paid up policy will provide can be determined by multiplying 90% of the lifetime benefit amount at the time the policy becomes paid up by the ratio of the number of months you already paid premiums to the number of months you agreed to pay them.</text> </paragraph> <paragraph num="b."> <text>The daily benefit amounts you purchased will also be adjusted by the same ratio.</text> </paragraph> <aftertext>If you purchased lifetime benefits, only the daily benefit amounts you purchased will be adjusted by the applicable ratio.</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Reserve Standards."> <paragraph num="A."> <text>Life Insurance Policies That Accelerate Benefits for Long-Term Care.</text> <paragraph num="(1)"> <text>This section applies to long-term care benefits that are provided through the acceleration of benefits under group or individual life insurance policies or riders to group or individual life insurance policies.</text> </paragraph> <paragraph num="(2)"> <text>Policy reserves for the benefits for the policies and riders subject to this section shall be determined in accordance with Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>Claim reserves for the policies and riders subject to this section shall be established in the case when the policy or rider is in claim status.</text> </paragraph> <paragraph num="(4)"> <text>Except as permitted in §A(5) of this regulation, reserves for policies and riders subject to this section shall be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates.</text> </paragraph> <paragraph num="(5)"> <text>An insurer may determine the reserves based on single decrement approximations, if:</text> <paragraph num="(a)"> <text>The calculation produces essentially similar reserves as the calculation described in §A(4) of this regulation;</text> </paragraph> <paragraph num="(b)"> <text>The calculation produces a reserve that is clearly more conservative than the calculation described in §A(4) of this regulation; or</text> </paragraph> <paragraph num="(c)"> <text>The reserve is immaterial.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The calculations described in §A(4) and (5):</text> <paragraph num="(a)"> <text>May take into account the reduction in life insurance benefits due to the payment of long-term care benefits; and</text> </paragraph> <paragraph num="(b)"> <text>May not result in a reserve that is less than the reserve for the life insurance benefit under the policy, without a long-term care benefit.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>In the development and calculation of reserves for policies and riders subject to this section, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including, but not limited to the following:</text> <paragraph num="(a)"> <text>Definition of insured events;</text> </paragraph> <paragraph num="(b)"> <text>Covered long-term care facilities;</text> </paragraph> <paragraph num="(c)"> <text>Existence of home convalescence care coverage;</text> </paragraph> <paragraph num="(d)"> <text>Definition of facilities;</text> </paragraph> <paragraph num="(e)"> <text>Existence or absence of barriers to eligibility;</text> </paragraph> <paragraph num="(f)"> <text>Premium waiver provision;</text> </paragraph> <paragraph num="(g)"> <text>Renewability;</text> </paragraph> <paragraph num="(h)"> <text>Ability to raise premiums;</text> </paragraph> <paragraph num="(i)"> <text>Marketing method;</text> </paragraph> <paragraph num="(j)"> <text>Underwriting procedures;</text> </paragraph> <paragraph num="(k)"> <text>Claims adjustment procedures;</text> </paragraph> <paragraph num="(l)"> <text>Waiting period;</text> </paragraph> <paragraph num="(m)"> <text>Maximum benefit;</text> </paragraph> <paragraph num="(n)"> <text>Availability of eligible facilities;</text> </paragraph> <paragraph num="(o)"> <text>Margins in claim costs;</text> </paragraph> <paragraph num="(p)"> <text>Optional nature of benefit;</text> </paragraph> <paragraph num="(q)"> <text>Delay in eligibility for benefit;</text> </paragraph> <paragraph num="(r)"> <text>Inflation protection provisions; and</text> </paragraph> <paragraph num="(s)"> <text>Guaranteed insurability option.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Any applicable valuation morbidity table used by the insurer shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.</text> </paragraph> </paragraph> <paragraph num="B."> <text>When long-term care benefits are provided other than as described in §A of this regulation, reserves shall be determined in accordance with Regulations .11—.14 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Claim Reserves."> <paragraph num="A."> <text>General Claim Reserve Requirements.</text> <paragraph num="(1)"> <text>An insurer shall establish a claim reserve for all incurred but unpaid claims on all long-term care insurance.</text> </paragraph> <paragraph num="(2)"> <text>An insurer shall establish an appropriate claim expense reserve with respect to the estimated expense of settlement of all incurred but unpaid claims under long-term care insurance.</text> </paragraph> <paragraph num="(3)"> <text>An insurer shall test the long-term care claim reserve and claim expense reserve for prior valuation years for adequacy and reasonableness along the lines of claim runoff schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability.</text> </paragraph> <paragraph num="(4)"> <text>In establishing claim reserve for long-term care insurance, an insurer shall include reserves for premiums expected to be waived, valuing as a minimum the valuation net premium being waived.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minimum Standards for Claim Reserves.</text> <paragraph num="(1)"> <text>The maximum interest rate for claim reserves for long-term care insurance is the maximum rate permitted by Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland, in the valuation of whole life insurance issued on the same date as the claim incurral date.</text> </paragraph> <paragraph num="(2)"> <text>An insurer's long-term care insurance claim reserve shall be based on the insurer's experience, if the experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Claim Reserve Methods Generally.</text> <paragraph num="(1)"> <text>An insurer may use a generally accepted or reasonable actuarial reserving method or a combination of methods to estimate all claim liabilities for long-term care insurance.</text> </paragraph> <paragraph num="(2)"> <text>The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued.</text> </paragraph> <paragraph num="(3)"> <text>Approximations based on groupings and averages may also be employed.</text> </paragraph> <paragraph num="(4)"> <text>Adequacy of the claim reserves, however, shall be determined in the aggregate.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Premium Reserves."> <paragraph num="A."> <text>General Premium Reserve Requirements.</text> <paragraph num="(1)"> <text>An insurer shall establish an unearned premium reserve for all long-term care insurance with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation.</text> </paragraph> <paragraph num="(2)"> <text>If long-term care insurance premiums due and unpaid are carried as an asset, the insurer shall treat the premiums that are due and unpaid as premiums in force, subject to unearned premium reserve determination.</text> </paragraph> <paragraph num="(3)"> <text>The insurer shall carry the value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums as an offsetting liability.</text> </paragraph> <paragraph num="(4)"> <text>An insurer may appropriately discount to the valuation date the long-term care gross premiums paid in advance for a period of coverage beginning after the next premium due date that follows the date of valuation.</text> </paragraph> <paragraph num="(5)"> <text>An insurer shall hold the amount described in §A(4) of this regulation as one of the following:</text> <paragraph num="(a)"> <text>A separate liability; or</text> </paragraph> <paragraph num="(b)"> <text>An addition to the unearned premium reserve which would otherwise be required as a minimum.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>An insurer shall consider long-term care insurance contracts on premium waiver as in-force contracts when calculating the premium reserve. The insurer shall value the premium reserve for the contracts on premium waiver, as a minimum amount, at the unearned modal valuation net premium being waived.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minimum Standards for Unearned Premium Reserves.</text> <paragraph num="(1)"> <text>Subject to §B(2) of this regulation, the minimum unearned premium reserve with respect to a long-term care insurance contract is the pro rata gross modal unearned premium that applies to the premium period beyond the valuation date.</text> </paragraph> <paragraph num="(2)"> <text>The sum of the unearned premium and contract reserves for all long-term care insurance contracts may not be less than the gross modal unearned premium reserve on all long-term care insurance contracts, as of the date of valuation.</text> </paragraph> <paragraph num="(3)"> <text>The reserve may not be less than the expected claims for the period beyond the valuation date represented by the unearned premium reserve, to the extent not provided for elsewhere.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Premium Reserve Methods Generally.</text> <paragraph num="(1)"> <text>The insurer may employ suitable approximations and estimates, including, but not limited to groupings, averages, and aggregate estimation, in computing long-term care insurance premium reserves.</text> </paragraph> <paragraph num="(2)"> <text>Approximations or estimates should be tested periodically to determine their continuing adequacy and reliability.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Contract Reserves."> <paragraph num="A."> <text>General Contract Reserve Requirements.</text> <paragraph num="(1)"> <text>The insurer shall establish a contract reserve in addition to claim reserves and premium reserves for long-term care insurance.</text> </paragraph> <paragraph num="(2)"> <text>An insurer shall:</text> <paragraph num="(a)"> <text>Use methods and procedures for long-term care contract reserves that are consistent with those for claim reserves for a long-term care contract; or</text> </paragraph> <paragraph num="(b)"> <text>If the insurer uses different methods and procedures for long-term care contract reserves than are used for long-term care claim reserves, make appropriate adjustment when necessary to assure provision for the aggregate liability.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The insurer shall use the same definition of date of incurral when determining contract reserves for long-term care insurance as when determining claim reserves for long-term care insurance.</text> </paragraph> <paragraph num="(4)"> <text>When determining contract reserves for long-term care insurance, the insurer shall include recognition of the waiver of premium benefit in addition to other contract benefits provided for, valuing as a minimum the valuation net premium to be waived.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Minimum Standards for Contract Reserves.</text> <paragraph num="(1)"> <text>Basis of Contract Reserves.</text> <paragraph num="(a)"> <text>Valuation net premiums used under each long-term care insurance contract shall have a structure consistent with the gross premium structure at issuance of the contract as this relates to advancing age of insured, contract duration, and the period for which gross premiums have been calculated.</text> </paragraph> <paragraph num="(b)"> <text>An insurer shall value long-term care insurance contracts using tables which are:</text> <paragraph num="(i)"> <text>Established for reserve purposes by a qualified actuary; and</text> </paragraph> <paragraph num="(ii)"> <text>Acceptable to the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The morbidity tables used by the insurer shall contain a pattern of incurred claims cost that reflects the underlying morbidity and may not be constructed for the primary purpose of minimizing reserves.</text> </paragraph> <paragraph num="(d)"> <text>The maximum interest rate used in developing long-term care insurance contract reserves is the same maximum rate permitted by Insurance Article, Title 5, Subtitle 3, Annotated Code of Maryland, in the valuation of whole life insurance:</text> <paragraph num="(i)"> <text>Issued on the same date as the long-term care insurance contract; and</text> </paragraph> <paragraph num="(ii)"> <text>With guarantee duration of more than 20 years.</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Termination rates used in the computation of contract reserves for long-term care insurance shall be on the basis specified in §B(1)(f), (h), and(i) of this regulation.</text> </paragraph> <paragraph num="(f)"> <text>The termination rates used in the computation of contract reserves for terminations due to mortality shall be on the basis of:</text> <paragraph num="(i)"> <text>For policies or group certificates issued before January 1, 2015, the 1983 Group Annuity Mortality Table, as found in COMAR 31.05.05, without projection;</text> </paragraph> <paragraph num="(ii)"> <text>For policies or group certificates issued on or after January 1, 2015, the 1994 Group Annuity Reserving Table, as found in COMAR 31.05.05, without the projection found in COMAR 31.05.06; or</text> </paragraph> <paragraph num="(iii)"> <text>Mortality tables that are adopted by the National Association of Insurance Commissioners (NAIC) if the mortality tables are appropriate for the type of benefits and approved by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>The insurer shall request approval to use a table described in §B(1)(f)(iii) of this regulation and shall include in the request for approval the reason that the table specified in §B(1)(f)(i) or (ii) of this regulation is inappropriate.</text> </paragraph> <paragraph num="(h)"> <text>For policies or group certificates issued before January 1, 2015, the termination rates used in the computation of contract reserves for terminations due to other than mortality may not exceed:</text> <paragraph num="(i)"> <text>For policy years one through four, the lesser of 80 percent of the voluntary lapse rate used in the calculation of gross premiums and 8 percent; and</text> </paragraph> <paragraph num="(ii)"> <text>For policy years five and later, the lesser of 100 percent of the voluntary lapse rate used in the calculation of gross premiums and 4 percent.</text> </paragraph> </paragraph> <paragraph num="(i)"> <text>For policies or group certificates issued on or after January 1, 2015, the termination rates used in the computation of contract reserves for terminations due to other than mortality may not exceed:</text> <paragraph num="(i)"> <text>For policy year one, the lesser of 80 percent of the voluntary lapse rate used in the calculation of gross premiums and 6 percent;</text> </paragraph> <paragraph num="(ii)"> <text>For policy years two through four, the lesser of 80 percent of the voluntary lapse rate used in the calculation of gross premiums and 4 percent; and</text> </paragraph> <paragraph num="(iii)"> <text>For policy years five and later, the lesser of 100 percent of the voluntary lapse rate used in the calculation of gross premiums and 2 percent, except that for employer group long-term care insurance as defined in Regulation .02B(1) of this chapter, 3 percent shall be used in place of 2 percent.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>Reserve Method.</text> <paragraph num="(a)"> <text>For long-term care insurance, the minimum reserve is the reserve calculated on the 1-year full preliminary term method.</text> </paragraph> <paragraph num="(b)"> <text>For return of premium or other deferred cash benefits in long-term care insurance contracts, the minimum reserve is the reserve calculated as follows:</text> <paragraph num="(i)"> <text>On the 1-year preliminary term method if the benefits are provided at any time before the 20th anniversary; or</text> </paragraph> <paragraph num="(ii)"> <text>On the 2-year preliminary term method if the benefits are only provided on or after the 20th anniversary.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The preliminary term method may be applied only in relation to the date of issue of a contract. Reserve adjustments introduced later, as a result of rate increases, revisions in assumptions, or for other reasons, shall be applied immediately as of the effective date of adoption of the adjusted basis.</text> </paragraph> <paragraph num="(d)"> <text>An example of a revision in assumption described in §B(2)(c) of this regulation is projected inflation rates.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Negative Reserves. Negative reserves on any benefit may be offset against positive reserves for other benefits in the same contract, but the total contract reserve with respect to all benefits combined may not be less than zero.</text> </paragraph> <paragraph num="(4)"> <text>Nonforfeiture Benefits. The contract reserve for long-term care insurance established by an insurer on a policy basis may not be less than the net single premium for the nonforfeiture benefits at the appropriate policy duration, where the net single premium is computed according to the specifications found in §B(1) and (2) of this regulation.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Alternative Valuation Methods and Assumptions Generally. If the contract reserve on all contracts to which an alternative method or basis is applied is not less in the aggregate than the amount determined according to the applicable standards specified in §B of this regulation, an insurer may use, subject to approval by the Commissioner, any reasonable assumptions as to interest rates, termination and mortality rates, and rates of morbidity or other contingency.</text> </paragraph> <paragraph num="D."> <text>Tests for Adequacy and Reasonableness of Contract Reserves. If future gross premiums for an insurer's long-term care insurance reduced by expenses for administration, commissions, and taxes will be insufficient to cover future claims, the insurer shall establish contract reserves for the shortfall in the aggregate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Reinsurance Effect on Reserves."> <text>Increases to, or credits against reserves carried, arising because of reinsurance assumed or reinsurance ceded, shall be determined in a manner consistent with the minimum reserve standards set forth in Regulations .11, .12, and .13 of this chapter and with all applicable provisions of the reinsurance contracts which affect the insurer's liabilities.</text> </regulation> <annotations> <annotation type="Authority">Health-General Article, §19-705; Insurance Article, §§2-109, 14-124, Title 18, Subtitle 1, and Title 27; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 8, 1993 (20:22 Md. R. 1707)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.89 to COMAR 31.14.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective April 1, 2002 (29:6 Md. R. 572)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective September 1, 2014 (41:17 Md. R. 972)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04A amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E—H adopted effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05A amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06-1 adopted effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective September 10, 2007 (34:18 Md. R. 1581)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11B amended effective September 1, 2014 (41:17 Md. R. 972)</annotation> <annotation type="History" subtype="Administrative History">Regulation .13B amended effective September 1, 2014 (41:17 Md. R. 972)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective September 1, 2014 (41:17 Md. R. 972)</annotation> </annotations> </chapter> <chapter num="03" heading="Long-Term Care Partnership"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to carriers that issue or deliver partnership policies to Maryland residents.</text> </paragraph> <paragraph num="B."> <text>The certification process described in this chapter is not a replacement for, and may not impact the form approval process set forth in, COMAR 31.04.17.</text> </paragraph> <paragraph num="C."> <text>Nothing in this chapter exempts carriers from complying with the requirements found in COMAR 31.14.01 and .02.</text> </paragraph> <paragraph num="D."> <text>Nothing in this chapter exempts insurance producers from complying with the training requirements found in COMAR 31.14.01.34.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Applicant” means:</text> <paragraph num="(a)"> <text>In the case of an individual long-term care insurance policy, the person who seeks to contract for benefits; and</text> </paragraph> <paragraph num="(b)"> <text>In the case of a group long-term care insurance policy, the proposed certificate holder.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Carrier” means an insurer or a nonprofit health service plan.</text> </paragraph> <paragraph num="(3)"> <text>“Certificate” means any certificate issued under a group long-term care insurance policy, if the certificate is delivered or issued for delivery in Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Commissioner” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Department” has the meaning stated in Health-General Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Insured” means an individual who is covered under a partnership policy.</text> </paragraph> <paragraph num="(7)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>Long-Term Care Insurance.</text> <paragraph num="(a)"> <text>“Long-term care insurance” means any group or individual insurance policy, contract, certificate, or rider issued, delivered, or offered by a carrier that:</text> <paragraph num="(i)"> <text>Is advertised, marketed, offered, or designed to provide coverage for not less than 24 consecutive months for covered persons on an expense incurred, indemnity, prepaid, or insured basis; and</text> </paragraph> <paragraph num="(ii)"> <text>Provides one or more necessary or appropriate diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services furnished in a situation other than an acute care unit of a hospital.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Long-term care insurance” includes any product that is advertised, marketed, or offered as long-term care insurance.</text> </paragraph> <paragraph num="(c)"> <text>“Long-term care insurance” does not include any insurance policy, contract, certificate, or rider which is offered primarily to provide:</text> <paragraph num="(i)"> <text>Basic Medicare supplement coverage;</text> </paragraph> <paragraph num="(ii)"> <text>Hospital confinement indemnity coverage;</text> </paragraph> <paragraph num="(iii)"> <text>Basic hospital expense or medical-surgical expense coverage;</text> </paragraph> <paragraph num="(iv)"> <text>Disability income protection coverage;</text> </paragraph> <paragraph num="(v)"> <text>Accident only coverage;</text> </paragraph> <paragraph num="(vi)"> <text>Specified disease or specified accident coverage; or</text> </paragraph> <paragraph num="(vii)"> <text>Skilled nursing care.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Long-term care insurance” does not include a life insurance policy:</text> <paragraph num="(i)"> <text>That accelerates the death benefit specifically for one or more of the qualifying events of terminal illness, a medical condition requiring extraordinary medical intervention, or permanent institutional confinement;</text> </paragraph> <paragraph num="(ii)"> <text>That provides a lump sum payment for any of the events in §B(8)(d)(i) of this regulation; or</text> </paragraph> <paragraph num="(iii)"> <text>In which neither benefits nor eligibility for benefits is conditioned on receipt of long-term care.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Medicaid” means the Maryland Medical Assistance Program.</text> </paragraph> <paragraph num="(10)"> <text>“Nonprofit health service plan” means an entity that holds a certificate of authority from the Commissioner to act as a nonprofit health service plan in Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Partnership policy” or “partnership coverage” means a long-term care insurance policy that is:</text> <paragraph num="(a)"> <text>Certified by the Commissioner to meet the requirements under §1917(b) of the Social Security Act; and</text> </paragraph> <paragraph num="(b)"> <text>Issued on or after the effective date of the State plan amendment.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Policy.</text> <paragraph num="(a)"> <text>“Policy” means any policy, contract, individual certificate, subscriber agreement, rider, or endorsement delivered or issued for delivery in this State by a carrier.</text> </paragraph> <paragraph num="(b)"> <text>“Policy” does not include a life insurance policy that contains an optional provision for acceleration of payment of all or a portion of the face amount under stated conditions relating to the medical condition, the disability, or the need for long-term care of the insured.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Qualified long-term care insurance” has the meaning stated in COMAR 31.14.01.02C.</text> </paragraph> <paragraph num="(14)"> <text>“State plan amendment” means an amendment filed by the Department with the Centers for Medicare and Medicaid Services under Title 42, U.S.C., which provides for the disregard of any assets or resources by the Department in an amount equal to the insurance benefit payments that are made to, or on behalf of, the individual who is covered under a partnership policy.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Commissioner Certification."> <paragraph num="A."> <text>A carrier may not solicit a partnership policy in Maryland until the Commissioner has notified the carrier in writing that the Commissioner has certified the policy to be a partnership policy.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall notify the Department in writing within 30 days after the date the Commissioner certifies a new partnership policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Filing Requirements for Certification."> <text>A carrier seeking certification of a long-term care insurance policy to a partnership policy status shall file the following with the Commissioner:</text> <paragraph num="A."> <text>Proof of prior approval of the long-term care insurance policy in accordance with COMAR 31.04.17, provided in the following manner:</text> <paragraph num="(1)"> <text>If the long-term care insurance policy that the carrier intends to use or market as a partnership policy in Maryland was approved by the Commissioner within 3 years before the date the carrier files for its certification as a partnership policy, the carrier shall provide the form number and date of approval of the previously approved long-term care insurance policy; or</text> </paragraph> <paragraph num="(2)"> <text>If the long-term care insurance policy that the carrier intends to use or market as a partnership policy was approved by the Commissioner more than 3 years before the date the carrier files for its certification as a partnership policy, the carrier shall provide a copy of the previously approved long-term care insurance policy, including the date of its approval;</text> </paragraph> </paragraph> <paragraph num="B."> <text>A copy of the previously approved long-term care insurance policy schedule page or certificate schedule page with the disclosure notice required by Regulation .05B of this chapter;</text> </paragraph> <paragraph num="C."> <text>The form number and date of approval of the application that the carrier intends to use with the partnership policy in Maryland, which meets the requirements of Regulation .06 of this chapter;</text> </paragraph> <paragraph num="D."> <text>A copy of the disclosure notice that the carrier intends to use to satisfy the requirements of Regulation .05C of this chapter; and</text> </paragraph> <paragraph num="E."> <text>A copy of the policy summary that the carrier intends to use to satisfy the requirements of Regulation .08 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Long-Term Care Insurance Policy Requirements for Partnership Policies."> <paragraph num="A."> <text>The partnership policy shall comply with the requirements for long-term care insurance under Insurance Article, Title 18, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Schedule Page Disclosure.</text> <paragraph num="(1)"> <text>Each long-term care insurance policy that is designed or marketed as a partnership policy shall prominently disclose in at least 12-point type, on the individual long-term care insurance policy schedule page or group certificate schedule page, the notice set forth in §B(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>The notice required by §B(1) of this regulation shall read as follows: “This {long-term care insurance policy, certificate, or contract} is intended to meet the standards for the Qualified State Long-Term Care Insurance Partnership program in Maryland. Nothing in this {long-term care insurance policy, certificate, or contract} is a guarantee of Medicaid eligibility nor is it a guarantee of any ability to disregard assets for purposes of Medicaid eligibility.”</text> </paragraph> <paragraph num="(3)"> <text>If the only change to a previously approved schedule page is the addition of the disclosure notice required by §B(1) and (2) of this regulation, the previously approved schedule page revised to comply with §B(1) and (2) of this regulation is not required to be refiled for approval by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Disclosure Requirement Regarding Partnership Coverage.</text> <paragraph num="(1)"> <text>A carrier issuing or marketing long-term care insurance policies that qualify as partnership policies in Maryland, shall provide a disclosure notice, on the carrier's letterhead, indicating that at the time of its issuance, the long-term care insurance policy is intended to qualify as a long-term care insurance partnership policy.</text> </paragraph> <paragraph num="(2)"> <text>The disclosure notice required by §C(1) of this regulation shall:</text> <paragraph num="(a)"> <text>Explain the benefits associated with a partnership policy; and</text> </paragraph> <paragraph num="(b)"> <text>Disclose that the partnership policy status may be lost if:</text> <paragraph num="(i)"> <text>The insured moves to a different state;</text> </paragraph> <paragraph num="(ii)"> <text>The coverage is modified after issue; or</text> </paragraph> <paragraph num="(iii)"> <text>Changes in federal or state laws occur.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>The carrier may use the Partnership Policy Status Disclosure Notice set forth in Regulation .09 of this chapter to satisfy the disclosure notice requirement found in §C(1) of this regulation.</text> </paragraph> <paragraph num="(4)"> <text>If the carrier uses the Partnership Policy Status Disclosure Notice set forth in Regulation .09 of this chapter, without modification, the carrier is not required to file the form for approval with the Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>If the carrier chooses to modify the Partnership Policy Status Disclosure Notice set forth in Regulation .09 of this chapter, the carrier may not use the modified Partnership Policy Status Disclosure Notice in Maryland until the Commissioner approves the modified Partnership Policy Status Disclosure Notice.</text> </paragraph> <paragraph num="(6)"> <text>The disclosure notice required by §C(1) of this regulation shall be provided to the insured not later than:</text> <paragraph num="(a)"> <text>The time of partnership policy delivery, for individual partnership policies; and</text> </paragraph> <paragraph num="(b)"> <text>The time of certificate delivery, for certificates issued under group partnership policies.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>The partnership policy shall comply with all the requirements for a qualified long-term care insurance policy found in COMAR 31.14.01.</text> </paragraph> <paragraph num="E."> <text>The premiums and reserves for a partnership policy shall be developed in compliance with the requirements found in COMAR 31.14.02.</text> </paragraph> <paragraph num="F."> <text>Inflation Protection.</text> <paragraph num="(1)"> <text>Each partnership policy issued to an individual who is younger than 76 years old shall contain the following minimum inflation protection benefit:</text> <paragraph num="(a)"> <text>If the applicant, at the time the partnership policy is issued, is younger than 61 years old, the partnership policy shall provide, at a minimum, one of the following:</text> <paragraph num="(i)"> <text>A 1 percent compound annual inflation protection benefit; or</text> </paragraph> <paragraph num="(ii)"> <text>A compound annual inflation protection benefit at an interest rate equal to the annual increase in the Consumer Price Index — All Urban Consumers, U.S. City Average, All Items; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the applicant, at the time the partnership policy is issued, is at least 61 years old, but younger than 76 years old, the partnership policy is required to provide inflation protection, but the applicant is permitted to reject the level of inflation protection required by COMAR 31.14.01.12A.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Subject to Regulation .06B(4) of this chapter, if the applicant, at the time the partnership policy is issued, is 76 years old or older, the partnership policy is not required to provide inflation protection.</text> </paragraph> <paragraph num="(3)"> <text>The inflation protection benefit required by §F(1) of this regulation may not be the alternative inflation protection option permitted under COMAR 31.14.01.12B.</text> </paragraph> <paragraph num="(4)"> <text>The provisions of §F(1)(b) and (2) of this regulation do not eliminate the requirement found in COMAR 31.14.01.12A that each applicant be offered a minimum inflation protection benefit.</text> </paragraph> <paragraph num="(5)"> <text>Inflation Protection Based on Changes in the Consumer Price Index.</text> <paragraph num="(a)"> <text>If the Consumer Price Index described in §F(1)(a)(ii) of this regulation is discontinued, or if the calculation of the Consumer Price Index described in §F(1)(a)(ii) of this regulation is changed substantially, the carrier may substitute a comparable index, subject to prior approval by the Commissioner.</text> </paragraph> <paragraph num="(b)"> <text>If the inflation protection benefit selected is based on increases in the Consumer Price Index as described in §F(1)(a)(ii) of this regulation, the carrier shall:</text> <paragraph num="(i)"> <text>Increase the benefit payable under the partnership policy each policy anniversary; and</text> </paragraph> <paragraph num="(ii)"> <text>Calculate the increased benefit based on the percentage change in the Consumer Price Index described in §F(1)(a)(ii) of this regulation on the date 3 months before the anniversary date of the individual's partnership policy as compared to the same month's Consumer Price Index 1 year earlier.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>If the change in the Consumer Price Index described in §F(1)(a)(ii) of this regulation is a negative number for the time period in question, the carrier may not apply the change in the index to reduce the benefit payable under the partnership policy.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Applications."> <paragraph num="A."> <text>Identification of Partnership Policy Application.</text> <paragraph num="(1)"> <text>Except as provided in §A(2) and (3) of this regulation, the first page of each application for a partnership policy shall clearly indicate that the application is for a partnership policy.</text> </paragraph> <paragraph num="(2)"> <text>If the application is designed to be used with both partnership policies and nonpartnership long-term care insurance policies, the application shall contain a separate section that identifies the inflation protection options required for a partnership policy.</text> </paragraph> <paragraph num="(3)"> <text>If the partnership policy is provided by means of a rider or endorsement to a life insurance policy, the application shall contain a separate section that clearly identifies that the long-term care insurance coverage provided by the listed rider or endorsement qualifies as partnership coverage.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Inflation Protection Option.</text> <paragraph num="(1)"> <text>Unless the application requires all applicants, regardless of age, to purchase an inflation protection benefit of at least 5 percent compounded annually, the application shall have separate inflation protection options for applicants to elect, depending on the age of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>The application shall indicate that for applicants who are younger than 61 years of age, the applicant is required to purchase an inflation protection benefit:</text> <paragraph num="(a)"> <text>Of at least 1 percent compounded annually; or</text> </paragraph> <paragraph num="(b)"> <text>That is a compound annual inflation protection benefit at an interest rate equal to the annual increase in the Consumer Price Index—All Urban Consumers, U.S. City Average, All Items.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The application shall indicate that for applicants who are at least 61 years old, but who are younger than 76 years old, the applicant is required to purchase an inflation protection option.</text> </paragraph> <paragraph num="(4)"> <text>The application for each applicant shall include the option to purchase the inflation protection benefit of 5 percent compounded annually as required by COMAR 31.14.01.12A.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Repealed." /> <regulation prefix="Regulation" num=".08" heading="Required Provision of Information Regarding A Partnership Policy."> <paragraph num="A."> <text>Except as provided in §C of this regulation, at the request of the insured or a representative of the Department on behalf of an insured, a carrier shall provide a completed Long-Term Care Partnership Program Policy Summary in the form set forth in §D of this regulation.</text> </paragraph> <paragraph num="B."> <text>The completed Long-Term Care Partnership Program Policy Summary required by §A of this regulation shall be:</text> <paragraph num="(1)"> <text>Provided within 14 days after the date the carrier receives the request from the insured or the representative of the Department on behalf of the insured; and</text> </paragraph> <paragraph num="(2)"> <text>Given to:</text> <paragraph num="(a)"> <text>The insured, if the request for the Long-Term Care Partnership Program Policy Summary was received from the insured; or</text> </paragraph> <paragraph num="(b)"> <text>The insured and the representative of the Department, if the request for the Long-Term Care Partnership Program Policy Summary was received from a representative of the Department on behalf of the insured.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>A carrier may develop its own partnership policy summary to provide the information found in the Long-Term Care Partnership Program Policy Summary form in §D of this regulation, if the carrier's policy summary includes all of the information and content found in the Long-Term Care Partnership Program Policy Summary form in §D of this regulation.</text> </paragraph> <paragraph num="D."> <text>The format and required text of the Long-Term Care Partnership Program Policy Summary referred to in §A of this regulation shall read as follows:</text> <paragraph num="1."> <text>Name of insured __________________________</text> </paragraph> <paragraph num="2."> <text>Insured's Social Security # ______________</text> </paragraph> <paragraph num="3."> <text>Insured's Date of Birth __________________</text> </paragraph> <paragraph num="4."> <text>Policy/certificate number _______________</text> </paragraph> <paragraph num="5."> <text>Effective date of coverage ______________</text> </paragraph> <paragraph num="6."> <text>The policy/certificate was issued in the state of: _______________</text> </paragraph> <paragraph num="7."> <text>Issue age of the insured at the time the coverage was issued _______________</text> </paragraph> <paragraph num="8."> <text>The policy/certificate was issued ? With ? Without inflation coverage</text> </paragraph> <paragraph num="9."> <text>The inflation coverage is:</text> </paragraph> <paragraph num="10."> <text>The inflation coverage is currently in effect [ ] Yes [ ] No</text> </paragraph> <paragraph num="11."> <text>If the answer to item 10 is no, the date inflation coverage ceased:__________</text> </paragraph> <paragraph num="12."> <text>The policy meets the standards of a tax qualified long-term care insurance policy [ ] Yes [ ] No</text> </paragraph> <paragraph num="13."> <text>The cumulative dollar amount of long-term care insurance benefits paid: $__________</text> </paragraph> <paragraph num="14."> <text>The total dollar amount of long-term care insurance benefits remaining available under the policy $ __________ as of the date this form was completed __________.</text> </paragraph> <paragraph num="15."> <text>The name, phone number, and email address of the person completing this form</text> </paragraph> </paragraph> <paragraph num="E."> <text>A carrier shall provide to the Department within 45 days after issuance of a partnership policy, the following information:</text> <paragraph num="(1)"> <text>Name of the insured;</text> </paragraph> <paragraph num="(2)"> <text>Insured's Social Security number;</text> </paragraph> <paragraph num="(3)"> <text>Insured's date of birth; and</text> </paragraph> <paragraph num="(4)"> <text>Policy or certificate number.</text> </paragraph> </paragraph> <paragraph num="F."> <text>A carrier shall provide reports to the Centers for Medicare and Medicaid Services in accordance with federal regulations developed, including any information that is deemed appropriate according to federal requirements.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Partnership Policy Status Disclosure Notice."> <text>The format and required text of the Partnership Policy Status Disclosure Notice referred to in Regulation .05C(3) of this chapter shall read as follows:</text> <text>[Carrier letterhead]</text> <text>Important Notice Regarding Your Policy's Long-Term Care Insurance Partnership Policy Status</text> <text>(Please keep this Notice with Your Policy or Certificate)</text> <text>Qualified State Long-Term Care Insurance Partnership. The Qualified State Long-Term Care Insurance Partnership is an innovative partnership between Maryland and private insurers of long-term care insurance policies. The Qualified State Long-Term Care Insurance Partnership is established in accordance with the Deficit Reduction Act of 2005 (P.L. 109—171).</text> <text>Notice of Partnership Policy Status. Your long-term care insurance {policy} {certificate} is intended to qualify as a Partnership {policy} {certificate} under the {insert state} Long-Term Care Partnership Program as of your {policy's} {certificate's} effective date.</text> <text>Medicaid Asset Protection Provided. Long-term care insurance is an important tool that helps individuals prepare for future long-term care needs. Partnership Policies provide an additional level of protection. In particular, such policies permit individuals to protect additional assets from spend-down requirements under a Medicaid program if assistance under this program is ever needed and you otherwise qualify for Medicaid.</text> <text>Specifically, the asset eligibility and recovery provisions of the Medicaid program of Maryland are applied by disregarding an additional amount of assets which is equal to the amount of long-term care insurance benefits you have received from your Partnership Policy. For example, if you receive $200,000 of insurance benefits from your Partnership Policy, you generally would be able to retain $200,000 of assets above and beyond the amount of assets normally permitted for Medicaid eligibility.</text> <text>Other Medicaid eligibility requirements apart from permissible assets must be met, including special rules that may apply if the equity in your home exceeds $500,000. This equity value limit may change over time based on Federal standards. In addition, you must meet the Medicaid program's income requirements and may be required to contribute some of your income to the costs of your care once you become eligible for Medicaid.</text> <text>Additional Consumer Protections. In addition to providing Medicaid asset protection, your Partnership Policy has other important features. Under the rules governing the Qualified State Long-Term Care Insurance Partnership, your Partnership Policy must be a qualified long-term care insurance contract under Federal tax law, and as such the insurance benefits you receive from the policy generally will be subject to beneficial income tax treatment. (Please note that a policy can be a qualified long-term care insurance contract under Federal tax law, with the same beneficial income tax treatment, even if it is not a Partnership Policy.) In addition, if you were under age 76 when you purchased your Partnership Policy, it must provide inflation protection to help protect against potential future increases in the cost of long-term care. (For older purchasers, an offer of inflation protection is required.)</text> <text>What Could Disqualify Your Policy as a Partnership Policy. If you make any changes to your Partnership Policy or certificate, such changes could affect whether your policy or certificate continues to qualify as a Partnership Policy. Before you make any changes, you should consult with the issuer of your Partnership Policy to determine the effect of a proposed change. In addition, if you move to a state that does not maintain a Qualified Partnership or does not recognize your policy as a Partnership Policy, you would not receive Medicaid asset protection in that state. Also, changes in Federal or State law could affect the Medicaid asset protection available with respect to your Partnership Policy.</text> </regulation> <regulation prefix="Regulation" num=".10" heading="Reporting Requirements."> <paragraph num="A."> <text>Beginning October 1, 2009, and on or before October 1 of each year after October 1, 2009, each carrier that is certified to issue partnership policies in Maryland shall file a report with the Commissioner that includes the information required by §B of this regulation.</text> </paragraph> <paragraph num="B."> <text>The report required by §A of this regulation shall include the following information:</text> <paragraph num="(1)"> <text>The number of insureds the carrier covers under partnership policies issued or delivered in Maryland, as of the July 1 immediately preceding the date of the report;</text> </paragraph> <paragraph num="(2)"> <text>The number of partnership policies the carrier has issued or delivered in Maryland for the 12 month period ending on the July 1 immediately preceding the date of the report;</text> </paragraph> <paragraph num="(3)"> <text>A list, by form number and date of approval, of the partnership policies that the carrier made available in Maryland as of the July 1 immediately preceding the date of the report; and</text> </paragraph> <paragraph num="(4)"> <text>The number of licensed insurance producers who were appointed by the carrier in Maryland and who met the training requirements found in COMAR 31.14.01.34 for any portion of the 12 month period ending on the July 1 immediately preceding the date of the report.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §15-407; Insurance Article, §§18-102, 18-106, and 18-107; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 15, 2008 (35:25 Md. R. 2152)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04 amended effective March 22, 2010 (37:6 Md. R. 481)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05B, C amended effective March 22, 2010 (37:6 Md. R. 481)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05F amended effective June 6, 2016 (43:11 Md. R. 635)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 repealed effective March 22, 2010 (37:6 Md. R. 481)</annotation> <annotation type="History" subtype="Administrative History">Regulation .09 amended effective March 22, 2010 (37:6 Md. R. 481)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective December 26, 2011 (38:26 Md. R. 1697)</annotation> </annotations> </chapter> </subtitle> <subtitle num="15" heading="Unfair Trade Practices"> <chapter num="01" heading="Special Policies and Misleading Advertising"> <regulation prefix="Regulation" num=".01" heading="Authority."> <text>This chapter is deemed necessary for the effectuation of Insurance Article, Title 27, Annotated Code of Maryland (as amended to date); Insurance Article, §§8-467 and 8-468, Annotated Code of Maryland, which concern prohibited practices regarding the sale of insurance in fraternal benefit societies, which practices are hereby defined to be unfair methods of competition and unfair or deceptive acts or practices prohibited under Title 27; Insurance Article, §16-112, Annotated Code of Maryland, regarding prohibited policy plans; and Insurance Article, §§12-203, 12-204, and 12-205, Annotated Code of Maryland, concerning the filing and approval of policy forms and grounds for disapproval of these forms.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose."> <text>The purpose of this chapter is to assure fair disclosure of relevant facts in the sale of life insurance and annuity contracts. This chapter is also designed to protect citizens of Maryland as purchasers and prospective purchasers of life insurance policies or annuity contracts against the use of sales methods which are misleading because of:</text> <paragraph num="A."> <text>The omission of facts fairly describing the subject matter as a life insurance policy or annuity contract and the benefits obtainable thereunder;</text> </paragraph> <paragraph num="B."> <text>An undue emphasis upon facts which, however true, are not relevant to the sale of life insurance or annuities; or</text> </paragraph> <paragraph num="C."> <text>An undue emphasis upon features which are of incidental or secondary importance to the life insurance aspects of a policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Applicability."> <text>This chapter is applicable to all insurers, including fraternal benefit societies, doing a life insurance business in this State and to all persons licensed to sell life insurance under Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland, and to persons licensed under Insurance Article, §§8-449(a) and 8-455, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".04" heading="Guaranteed Annual Endowments."> <paragraph num="A."> <text>Because of the inherently confusing nature of a guaranteed annual endowment type of policy, a life insurance policy or annuity contract containing a series of guaranteed annual endowments evidenced by coupons, passbooks, or similar devices generally identified with investment or banking operations may not be approved for use, and any such policy or contract heretofore approved may not be issued or delivered in this State on or after September 1, 1970.</text> </paragraph> <paragraph num="B."> <text>No other life insurance policy or annuity contract containing a series of guaranteed annual endowments may be approved for use and no such policy or contract heretofore approved may be issued or delivered in this State on or after September 1, 1970, unless the following requirements are satisfied:</text> <paragraph num="(1)"> <text>The gross premium for the guaranteed annual endowment benefit shall be shown prominently and separately in the policy, distinct from the gross premium for the life insurance benefit;</text> </paragraph> <paragraph num="(2)"> <text>The insured shall be entitled to withdraw the guaranteed annual endowments not less frequently than at the end of the second policy year and at the end of each policy year thereafter, the amount of the endowments available for withdrawal not to be less than the aggregate premium paid for the endowments less any prior withdrawals;</text> </paragraph> <paragraph num="(3)"> <text>Payment of any guaranteed annual endowment may not be made contingent upon the payment of premiums falling due on or after the time the guaranteed annual endowment benefit has matured;</text> </paragraph> <paragraph num="(4)"> <text>The separately stated gross premium for the series of guaranteed annual endowments shall be based on reasonable assumptions and shall be consistent with the basic policy form as to interest, mortality, and expense;</text> </paragraph> <paragraph num="(5)"> <text>The amount of each of the guaranteed annual endowments shall be expressed in dollars, both in the policy and in any sales or advertising material relating to the policy, and not as a percentage of any premium or benefit;</text> </paragraph> <paragraph num="(6)"> <text>A guaranteed annual endowment may not be described, either in the policy or in any sales or advertising material, as anything other than a guaranteed benefit for which a premium is being paid by the policyholder; and</text> </paragraph> <paragraph num="(7)"> <text>At the time the policy form is filed with the Insurance Administration for approval, it shall be accompanied by the materials, including any sales presentation kit, which the insurer proposes to use in connection with the policy.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Nothing in this regulation applies to any policy in which the amount of any endowment or periodic benefit or benefits payable during any policy year is greater than the total annual premium for that year.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Charter or Founders' Policies."> <paragraph num="A."> <text>A charter policy or founders' policy is that form of life insurance policy or annuity contract usually issued by a newly organized insurer, which is sold on the basis that its availability will be limited to a specific predetermined number of units of a fixed dollar amount and which generally provides that the policyholder shall participate in the earnings resulting from either the participating policies or the nonparticipating policies sold by the insurer, or perhaps both. The prospective purchaser may be led to believe that he will receive a special advantage in any future distribution of earnings, profits, or dividends not available to those persons holding other types of policies issued by the insurer.</text> </paragraph> <paragraph num="B."> <text>The sale of charter policies and founders' policies represents an unfair method of competition. They purport to offer certain benefits which are not authorized by statute and are without reasonable expectation of achievement. These policies misrepresent the responsibility and obligation of an insurer for equitable distribution of dividends. Therefore, a charter policy or founders' policy may not be approved for use and a charter policy or founders' policy heretofore approved may not be issued or delivered in this State on or after September 1, 1970.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Profit-Sharing Policies."> <paragraph num="A."> <text>A profit-sharing policy is that form of life insurance policy or annuity contract which contains provisions representing or tending to create the understanding that the policyholder will be eligible to participate in any future distribution of general corporate profits, with special advantages not available to persons holding other types of policies issued by the insurer to individuals of the same class and equal expectation of life.</text> </paragraph> <paragraph num="B."> <text>Profit-sharing policies are not permitted by Insurance Article, §§16-112 and 27-207, Annotated Code of Maryland, and, therefore, a profit-sharing policy may not be approved for use, and a profit-sharing policy heretofore approved may not be issued or delivered in this State on or after September 1, 1970.</text> </paragraph> <paragraph num="C."> <text>Nothing contained in this regulation is intended to prohibit the sale of variable annuity contracts or variable life insurance policies to the extent that these contracts or policies may otherwise be permitted under the laws of this State.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Participating Policies."> <text>No illustration of projected dividends under a participating individual life insurance policy or annuity contract may be used in conjunction with the sale or solicitation of the policy or contract in this State unless the projected dividend scale or the basis of the formula for determining the projected dividend scale has been filed with the Insurance Administration, either in the insurer's annual statement or otherwise, and unless the filing is based upon a reasonable classification of risks which is not unfairly discriminatory.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Policy Names or Titles."> <paragraph num="A."> <text>An insurer, agent, or broker, may not deliver within this State, or issue for delivery within this State, any policy of life insurance or annuity contract without the use of the words “life insurance” or “annuity contract” in its name or title or the use of other language clearly indicating that the policy is a policy of life insurance or an annuity contract.</text> </paragraph> <paragraph num="B."> <text>The use of the terms “investment”, “investment plan”, “expansion plan”, “profit”, “profits”, “profit-sharing”, and other similar terms in connection with a policy of life insurance or an annuity contract in a context or under such circumstances or conditions as to have the capacity or tendency to mislead a purchaser or prospective purchaser of the policy or contract to believe that he will receive, or that it is possible that he will receive, something other than a life insurance policy or annuity contract or some benefit not provided in the policy or contract or some benefit not available to other persons of the same class and equal expectation of life is unlawful and is prohibited.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Misleading Sales Practices."> <paragraph num="A."> <text>An insurer, agent, or broker may not within this State:</text> <paragraph num="(1)"> <text>Make any statement or reference relating to the growth of the life insurance industry or to the tax status of life insurers in connection with any solicitation of an application for life insurance or annuity contract in a context which could reasonably be understood to interest a prospect in the purchase of shares of stock in an insurer rather than in the purchase of a life insurance policy or annuity contract;</text> </paragraph> <paragraph num="(2)"> <text>Make any statement which reasonably gives rise to the inference that an insured or a prospective insured, by virtue of purchasing a policy of life insurance or an annuity contract, will enjoy a status common to a stockholder or will acquire a stock ownership interest in the insurer (nothing in this section is intended to prohibit the practice of pointing out those aspects in which the status of a policyholder in a mutual life insurer is similar to that of a stockholder in a stock life insurer);</text> </paragraph> <paragraph num="(3)"> <text>Make any reference to or statement concerning an insurer's “investment department”, “insured investment department”, or similar terminology in such a manner as to imply that the policy was sold or issued by the investment department of the life insurer;</text> </paragraph> <paragraph num="(4)"> <text>Make any statement or reference which would reasonably tend to imply that by purchasing a policy, the purchaser or prospective purchaser will become a member of a limited group of persons who may receive special advantages, or favored treatment in the payment of dividends unless the benefits are specifically provided in the insurance contract (this clause has no relation or applicability to policies under which insured persons of one class of risk may receive dividends at a higher rate than persons of another class of risk);</text> </paragraph> <paragraph num="(5)"> <text>State or imply that a particular kind of policy is available for only a limited time or that only a limited number of a particular kind of policy will be offered for sale or that only a limited number of persons, or a limited class of persons, will be eligible to buy a particular kind of policy, unless the limitation is related to recognized underwriting practices and can be verified by the underwriting practices of the insurer;</text> </paragraph> <paragraph num="(6)"> <text>State or imply that policyholders who are said to act as centers of influence or as an advisory board for an insurer will share, because of so acting, in the insurer's surplus earnings in some manner not available to other policyholders who are otherwise in the same class;</text> </paragraph> <paragraph num="(7)"> <text>Describe or refer to premium payments in language which states that the payment is a deposit unless:</text> <paragraph num="(a)"> <text>The payment establishes a debtor-creditor relationship between the life insurer and the policyholder and a showing is made as to when and how the deposit may be withdrawn,</text> </paragraph> <paragraph num="(b)"> <text>The term is used in conjunction with the word premium in such a manner as to indicate clearly the true character of the payment, or</text> </paragraph> <paragraph num="(c)"> <text>The term is used in connection with pension trust or deposit administration plans;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>Provide any illustration or projection of future dividends on a policy unless the illustration or projection:</text> <paragraph num="(a)"> <text>Is based upon the experience currently used by the insurer for dividends or upon a scale adopted by the insurer, and</text> </paragraph> <paragraph num="(b)"> <text>Clearly indicates that the dividends shown are not guaranteed;</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Use the words “dividends”, “cash dividends”, “surplus”, or similar phrases in such a manner as to state or imply that the payment of dividends is guaranteed or certain to occur;</text> </paragraph> <paragraph num="(10)"> <text>State or imply that a purchaser of a policy will share in a stated percentage or portion of the earnings of the insurer (nothing in this section is intended to prohibit a representation that a holder of a participating life insurance policy or annuity contract will participate in the share of the divisible surplus, if any, apportioned to the policy or contract by the insurer);</text> </paragraph> <paragraph num="(11)"> <text>Make any statement or implication that projected dividends under a participating policy will be or can be sufficient at any time to assure the receipt of benefits, such as a paid-up policy, without the further payment of premiums, unless the statement is accompanied by an adequate explanation as to:</text> <paragraph num="(a)"> <text>What benefits or coverage would be provided at that time, and</text> </paragraph> <paragraph num="(b)"> <text>The conditions under which this would occur;</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>State that the insured is guaranteed certain benefits if the policy is allowed to lapse without making an adequate explanation of the nonforfeiture benefits;</text> </paragraph> <paragraph num="(13)"> <text>Describe a life insurance policy or annuity contract or premium payments therefore in terms of “units of participation” unless accompanied by other language clearly indicating the reference to a life insurance policy or annuity contract or to premium payments, as the case may be;</text> </paragraph> <paragraph num="(14)"> <text>Include in sales kits and prepared sales presentations proposed answers, to be used in response to a prospect's questions as to whether life insurance policies or annuity contracts are being sold, which are designed to avoid a clear and unequivocal statement that life insurance or annuities are the subject matter of the solicitation;</text> </paragraph> <paragraph num="(15)"> <text>In connection with the proposed sale of a life insurance policy or annuity contract or guaranteed endowment benefits, display in any manner to a prospective policyholder any sales material which includes monetary illustrations showing dollar amounts unless the material clearly identifies the source and nature of the dollar amounts illustrated and the subject to which the amounts pertain;</text> </paragraph> <paragraph num="(16)"> <text>Make any general statement that insurers make a profit as a result of policy lapses or surrenders;</text> </paragraph> <paragraph num="(17)"> <text>Make unfair or misleading comparisons to the past experience of other life insurers as a means of projecting possible experience of the soliciting insurer when those comparisons are designed to enhance the characteristics of the policy being sold by confining the comparisons to insurers having favorable experience with that type of policy without a fair disclosure of other insurers which have had unfavorable experience with that type of policy;</text> </paragraph> <paragraph num="(18)"> <text>Represent guaranteed annual endowment benefits as earnings on premiums invested, or represent that a guaranteed annual endowment benefit in a policy is anything other than a guaranteed benefit for which a premium is being paid by the policyholder;</text> </paragraph> <paragraph num="(19)"> <text>State that a policy contains certain features which are not found in other life insurance policies or annuity contracts, unless that is true;</text> </paragraph> <paragraph num="(20)"> <text>Represent an option to purchase insurance in the future in such a manner that the policyholder might reasonably infer that he is purchasing term insurance or some other form of life insurance that would result in a payment to the beneficiary in the event of the death of the policyholder; or</text> </paragraph> <paragraph num="(21)"> <text>Make any reference to a policy of life insurance or an annuity contract in such a manner as to misrepresent the true nature of the policy or contract.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The above listing of proscribed acts is not intended to be exhaustive. Other acts, not listed above but otherwise unlawful, will not be condoned.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Existing Policies and Contracts."> <text>This chapter does not affect the validity of any life insurance policy or annuity contract in force on the effective date of this chapter. However, the previous approval by this Division of any form of life insurance policy or annuity contract prohibited by this chapter is hereby withdrawn effective September 1, 1970, and no such policy or contract may be sold after that date.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 8-467, 8-468, 12-203, 12-204, 12-205, 16-112, and 27-202, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 1, 1970</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.25 to COMAR 31.15.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="02" heading="Advertisements of All Insurance Contracts Which Include Any Accident, Sickness, Hospital, Surgical or Medical Coverages"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Advertisement” includes:</text> <paragraph num="(a)"> <text>Printed and published material and descriptive literature of a carrier used in or on newspapers, magazines, or any other publication, radio and TV scripts, matchbooks, blotters, calendars, posters, billboards, and similar displays;</text> </paragraph> <paragraph num="(b)"> <text>Descriptive literature and sales aids of all kinds issued by a carrier for presentation to members of the public, including but not limited to circulars, pamphlets, leaflets, booklets, depictions, illustrations, and form letters; and</text> </paragraph> <paragraph num="(c)"> <text>Prepared sales talks, presentations, and material for use by producers, and representations made by producers in accordance therewith.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Carrier” includes an insurer, a nonprofit health service plan, a health maintenance organization, a dental plan organization, and any other person engaged in the business of insurance.</text> </paragraph> <paragraph num="(3)"> <text>“Policy” includes any policy, plan, certificate, contract, agreement, statement of coverage, rider, or endorsement which provides accident or sickness benefits, or medical, surgical, dental, or hospital expense benefits, whether on a cash indemnity, reimbursement, or service basis, except:</text> <paragraph num="(a)"> <text>When issued in connection with another kind of insurance other than life; and</text> </paragraph> <paragraph num="(b)"> <text>Disability and double indemnity benefits included in life insurance and annuity contracts.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Producer” has the meaning set forth in Insurance Article §1-101(u), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Advertisement in General."> <text>Advertisements shall be truthful and not misleading in fact or in implication. Words or phrases the meaning of which is clear only by implication or by familiarity with insurance terminology may not be used.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Advertisements of Benefits Payable, Losses Covered, or Premiums Payable."> <paragraph num="A."> <text>Deceptive Words, Phrases, or Illustrations. Words, phrases, or illustrations may not be used in a manner which misleads or has the tendency to deceive as to the extent of any policy benefit payable, loss covered, or premium payable. An advertisement relating to any policy benefit payable, loss covered, or premium payable shall be sufficiently complete and clear as to avoid deception or the tendency to deceive.</text> <paragraph num="(1)"> <text>The words and phrases “all”, “full”, “complete”, “comprehensive”, “unlimited”, “up to”, “as high as”, “this policy will pay your hospital and surgical bills”, or “this policy will replace your income”, or similar words and phrases may not be used so as to exaggerate any benefit beyond the terms of the policy, but may be used only in such manner as fairly to describe the benefit.</text> </paragraph> <paragraph num="(2)"> <text>A policy covering only one disease or a list of specified diseases may not be advertised so as to imply coverage beyond the terms of the policy. Synonymous terms may not be used to refer to any disease so as to imply broader coverage than is the fact.</text> </paragraph> <paragraph num="(3)"> <text>The benefits of a policy which pays varying amounts for the same loss occurring under different conditions or which pays benefits only when a loss occurs under certain conditions may not be advertised without disclosing the limited conditions under which the benefits referred to are provided by the policy.</text> </paragraph> <paragraph num="(4)"> <text>Phrases such as “this policy pays $1,800 for hospital room and board expenses” shall be considered incomplete unless the maximum daily benefit and the maximum time limit for hospital room and board expenses are indicated.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Exceptions, Reductions, and Limitations. When an advertisement refers to any dollar amount, period of time for which any benefit is payable, cost of policy, or specific policy benefit or the loss for which the benefit is payable, it shall disclose those exceptions, reductions, and limitations affecting the basic provisions of the policy without which the advertisement would have the tendency to mislead or deceive.</text> <paragraph num="(1)"> <text>The term “exception” means any provision in a policy whereby coverage for a specified hazard is entirely eliminated. It is a statement of a risk not assumed under the policy.</text> </paragraph> <paragraph num="(2)"> <text>The term “reduction” means any provision which reduces the amount of the benefit. A risk of loss is assumed but payment upon the occurrence of the loss is limited to some amount or period less than would be otherwise payable had the reduction clause not been used.</text> </paragraph> <paragraph num="(3)"> <text>The term “limitation” means any provision which restricts coverage under the policy other than an exception or a reduction.</text> </paragraph> <paragraph num="(4)"> <text>Waiting, Elimination, Probationary, or Similar Periods. When a policy contains a time period between the effective date of the policy and the effective date of coverage under the policy or a time period between the date a loss occurs and the date benefits begin to accrue for the loss, an advertisement covered by §B of this regulation shall disclose the existence of these periods.</text> </paragraph> <paragraph num="(5)"> <text>Preexisting Conditions.</text> <paragraph num="(a)"> <text>An advertisement covered by §B of this regulation shall disclose the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing before the effective date of the policy.</text> </paragraph> <paragraph num="(b)"> <text>When a policy does not cover losses traceable to preexisting conditions, an advertisement of the policy may not state or imply that the applicant's physical condition or medical history will not affect the issuance of the policy or payment of a claim under it. This limits the use of the phrase “no medical examination required” and phrases of similar import.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Necessity for Disclosing Policy Provisions Relating to Renewability, Cancellability, and Termination."> <text>An advertisement which refers to renewability, cancellability, or termination of a policy, or which refers to a policy benefit, or which states or illustrates time or age in connection with eligibility of applicants or continuation of the policy, shall disclose the provisions relating to renewability, cancellability, and termination and any modification of benefits, losses covered, or premiums because of age or for other reasons, in a manner which does not minimize or render obscure the qualifying conditions.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Method of Disclosure of Required Information."> <text>All information required to be disclosed by this chapter shall be set out conspicuously and in close conjunction with the statements to which the information relates or under appropriate captions of such prominence that it can not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the context of the advertisement so as to be confusing or misleading.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Testimonials."> <text>Testimonials used in advertisements shall be genuine, represent the current opinion of the author, be applicable to the policy advertised and be accurately reproduced. The carrier or producer, in using a testimonial, makes as its own all of the statements contained in the testimonial, and the advertisement including these statements is subject to all of the provisions of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".07" heading="Use of Statistics."> <text>An advertisement relating to the dollar amounts of claims paid, the number of persons insured, or similar statistical information relating to any carrier or policy may not be used unless it accurately reflects all of the relevant facts. The advertisement may not imply that the statistics are derived from the policy advertised unless that is the fact.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Inspection of Policy."> <text>An offer in an advertisement of free inspection of a policy or offer of a premium refund is not a cure for misleading or deceptive statements contained in the advertisement.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Identification of Plan or Number of Policies."> <paragraph num="A."> <text>When a choice of the amount of benefits is referred to, an advertisement shall disclose that the amount of benefits provided depends upon the plan selected and that the premium will vary with the amount of the benefits.</text> </paragraph> <paragraph num="B."> <text>When an advertisement refers to various benefits which may be contained in two or more policies, other than group master policies, the advertisement shall disclose that the benefits are provided only through a combination of the policies.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Disparaging Comparisons and Statements."> <text>An advertisement may not directly or indirectly make unfair or incomplete comparisons of policies or benefits or otherwise falsely disparage competitors, their policies, services, or business methods.</text> </regulation> <regulation prefix="Regulation" num=".11" heading="Jurisdictional Licensing."> <paragraph num="A."> <text>An advertisement which is intended to be seen or heard beyond the limits of the jurisdiction in which the carrier or producer is licensed may not imply licensing beyond those limits.</text> </paragraph> <paragraph num="B."> <text>Advertisements by direct mail carriers or producers shall indicate that the carrier or producer is licensed in a specified state or states only, or is not licensed in a specific state or states, by use of some language such as “This Company is licensed only in State A” or “This Company is not licensed in State B”.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Identity of Carrier or Producer."> <text>The identity of the carrier or producer shall be made clear in all of its advertisements. An advertisement may not use a trade name, service mark, slogan, symbol, or other device which has the tendency to mislead or deceive as to the true identity of the carrier or producer.</text> </regulation> <regulation prefix="Regulation" num=".13" heading="Group or Quasi-Group Implications."> <text>An advertisement of a particular policy may not state or imply that prospective policyholders become group or quasi-group members and as such enjoy special rates or underwriting privileges unless that is the fact.</text> </regulation> <regulation prefix="Regulation" num=".14" heading="Introductory, Initial, or Special Offers."> <text>An advertisement may not state or imply that a particular policy or combination of policies is an introductory, initial, or special offer and that the applicant will receive advantages by accepting the offer, unless that is the fact.</text> </regulation> <regulation prefix="Regulation" num=".15" heading="Approval or Endorsement by Third Parties."> <paragraph num="A."> <text>An advertisement may not state or imply that a carrier or a policy has been approved or a carrier’s financial condition has been examined and found to be satisfactory by a governmental agency.</text> </paragraph> <paragraph num="B."> <text>An advertisement may not state or imply that a carrier or a policy has been approved or endorsed by any individual, group of individuals, society, association, or other organization, unless that is the fact.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Service Facilities."> <text>An advertisement may not contain untrue statements with respect to the time within which claims are paid or statements which imply that claim settlements will be liberal or generous beyond the terms of the policy.</text> </regulation> <regulation prefix="Regulation" num=".17" heading="Statements About a Carrier."> <text>An advertisement may not contain statements which are untrue in fact or by implication misleading with respect to the carrier's assets, corporate structure, financial standing, age, or relative position in the insurance business.</text> </regulation> <regulation prefix="Regulation" num=".17-1" heading="Discouraging Enrollment."> <text>A carrier or producer may not employ an advertisement that will have the effect of discouraging the enrollment of individuals with significant health needs in health insurance coverage.</text> </regulation> <regulation prefix="Regulation" num=".18" heading="Special Enforcement Procedures."> <paragraph num="A."> <text>Advertising File. Each carrier or producer shall maintain at its home or principal office a complete file containing every printed, published, or prepared advertisement of individual policies and typical printed, published, or prepared advertisements of blanket, franchise, and group policies hereafter disseminated in this or any other state whether or not licensed in the other state, with a notation attached to each advertisement which shall indicate the manner and extent of distribution and the form number of any policy advertised. The file shall be subject to regular and periodical inspection by the Commissioner. These advertisements shall be maintained in this file for a period of not less than 3 years.</text> </paragraph> <paragraph num="B."> <text>Certificate of Compliance. Each carrier or producer required to file an annual statement which is now or which hereafter becomes subject to the provisions of this chapter shall file with the Commissioner together with its annual statement, a certificate executed by an authorized officer of the carrier or producer in which it is stated that to the best of the officer's knowledge, information, and belief the advertisements which were disseminated by the carrier or producer during the preceding statement year complied or were made to comply in all respects with the provisions of the Insurance Laws of Maryland and the regulations issued thereunder by the State Insurance Commissioner.</text> </paragraph> <paragraph num="C."> <text>The chief executive officer of each carrier or producer to which this chapter is addressed, shall acknowledge its receipt and indicate the carrier’s or producer’s intention to comply.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-203, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 1, 1956</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.26 to COMAR 31.15.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .11 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .15 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .17-1 adopted as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); adopted permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> <annotation type="History" subtype="Administrative History">Regulation .18 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)</annotation> </annotations> </chapter> <chapter num="03" heading="Life Insurance Disclosure"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>The purpose of this chapter is to require carriers to deliver to purchasers of life insurance information which will improve the purchaser's:</text> <paragraph num="(1)"> <text>Ability to select the most appropriate plan of life insurance for the purchaser's needs; and</text> </paragraph> <paragraph num="(2)"> <text>Understanding of the basic features of the policy which has been purchased or which is under consideration.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter does not prohibit the use of additional material which is not in violation of this chapter or any other Maryland regulation or statute.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Buyer's guide” means the most current version of the Life Insurance Buyer's Guide adopted by the National Association of Insurance Commissioners (NAIC).</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer; or</text> </paragraph> <paragraph num="(b)"> <text>A fraternal benefit society.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Current scale of nonguaranteed elements” means a formula or other mechanism that produces values for an illustration as if there is no change in the basis of those values after the time of illustration.</text> </paragraph> <paragraph num="(4)"> <text>“Element” means any of the following:</text> <paragraph num="(a)"> <text>A premium;</text> </paragraph> <paragraph num="(b)"> <text>A credited interest rate, including any bonus;</text> </paragraph> <paragraph num="(c)"> <text>A benefit;</text> </paragraph> <paragraph num="(d)"> <text>A value;</text> </paragraph> <paragraph num="(e)"> <text>A non-interest-based credit;</text> </paragraph> <paragraph num="(f)"> <text>A charge; and</text> </paragraph> <paragraph num="(g)"> <text>Any item in a formula used to determine any of the items listed in §B(4)(a)—(f) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Generic name” means a short title that is descriptive of the premium and benefit patterns of a policy or a rider.</text> </paragraph> <paragraph num="(6)"> <text>Nonguaranteed Element.</text> <paragraph num="(a)"> <text>“Nonguaranteed element” means an element that is subject to carrier discretion and not guaranteed at issue.</text> </paragraph> <paragraph num="(b)"> <text>“Nonguaranteed element” includes any element calculated using a nonguaranteed element.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Policy data” means a display or schedule of numerical values, both guaranteed and nonguaranteed for each policy year, or a series of designated policy years, of the following information:</text> <paragraph num="(a)"> <text>Illustrated annual, other periodic, and terminal dividends;</text> </paragraph> <paragraph num="(b)"> <text>Premiums;</text> </paragraph> <paragraph num="(c)"> <text>Death benefits;</text> </paragraph> <paragraph num="(d)"> <text>Cash surrender values; and</text> </paragraph> <paragraph num="(e)"> <text>Endowment benefits.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Policy summary” means a written statement describing the elements of the policy.</text> </paragraph> <paragraph num="(9)"> <text>“Preneed funeral contract or prearrangement” means an agreement by or for an individual before that individual's death relating to the purchase or provision of specific funeral or cemetery merchandise or services.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Scope."> <paragraph num="A."> <text>With the exception of §C of this regulation, this chapter applies to a solicitation, negotiation, or procurement of life insurance occurring within this State.</text> </paragraph> <paragraph num="B."> <text>Regulation .05D of this chapter applies only to an existing nonexempt policy held by a policyowner residing in Maryland.</text> </paragraph> <paragraph num="C."> <text>Unless otherwise specifically included, this chapter does not apply to:</text> <paragraph num="(1)"> <text>Individual and group annuity contracts;</text> </paragraph> <paragraph num="(2)"> <text>Credit life insurance;</text> </paragraph> <paragraph num="(3)"> <text>Group life insurance, except for disclosures relating to preneed funeral contracts or prearrangements;</text> </paragraph> <paragraph num="(4)"> <text>Life insurance policies issued in connection with pension and welfare plans as defined by and subject to the federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §1001 et seq., as amended; or</text> </paragraph> <paragraph num="(5)"> <text>Variable life insurance under which the amount or duration of the life insurance varies according to the investment experience of a separate account.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Policy Summary."> <paragraph num="A."> <text>A carrier shall include in a policy summary all of the following:</text> <paragraph num="(1)"> <text>A prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION;</text> </paragraph> <paragraph num="(2)"> <text>The name and address of the insurance producer, or, if an insurance producer is not involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the policy summary;</text> </paragraph> <paragraph num="(3)"> <text>The full name and home office or administrative office address of the carrier in which the life insurance policy is to be or has been written;</text> </paragraph> <paragraph num="(4)"> <text>The generic name of the basic policy and each rider;</text> </paragraph> <paragraph num="(5)"> <text>The following amounts, when applicable, for the first 5 policy years and representative policy years thereafter sufficient to clearly illustrate the premium and benefit patterns, including at least one age from 60 years old through 65 years old and policy maturity:</text> <paragraph num="(a)"> <text>The annual premium for the basic policy;</text> </paragraph> <paragraph num="(b)"> <text>The annual premium for each optional rider;</text> </paragraph> <paragraph num="(c)"> <text>The amount payable upon death at the beginning of the policy year regardless of the cause of death, other than suicide or other specifically enumerated exclusions, which is provided by the basic policy and each optional rider, with benefits provided under the basic policy and each rider shown separately;</text> </paragraph> <paragraph num="(d)"> <text>The total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider; and</text> </paragraph> <paragraph num="(e)"> <text>Any endowment amounts payable under the policy which are not included under cash surrender values above; and</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The date on which the policy summary is prepared.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The policy summary shall include the effective policy loan annual interest rate, if the policy contains a policy loan provision, specifying whether the effective policy loan annual interest rate is applied in advance or in arrears.</text> </paragraph> <paragraph num="C."> <text>If the policy loan interest rate is adjustable, the policy summary shall also indicate that the annual percentage rate will be determined by the carrier in accordance with the provisions of the policy and the applicable law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Duties of Carriers."> <paragraph num="A."> <text>Except as provided in §B of this regulation, the carrier shall provide a buyer's guide to all prospective purchasers before accepting the applicant's initial premium or premium deposit.</text> </paragraph> <paragraph num="B."> <text>If the policy for which application is made contains an unconditional refund provision of at least 10 days, the carrier shall provide the buyer's guide with the policy or before delivery of the policy.</text> </paragraph> <paragraph num="C."> <text>Policy Forms Not Marketed with an Illustration.</text> <paragraph num="(1)"> <text>When a carrier issues a form not marketed with an illustration, the carrier shall comply with the requirements in §C(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Requirements for Forms Not Marketed with an Illustration.</text> <paragraph num="(a)"> <text>The carrier shall provide a policy summary, showing guarantees only, to prospective purchasers.</text> </paragraph> <paragraph num="(b)"> <text>The policy summary shall consist of a separate document with all required information set out in a manner that does not minimize or render any portion of the summary obscure.</text> </paragraph> <paragraph num="(c)"> <text>Any amounts that remain level for 2 or more years of the policy may be represented by a single number if it is clearly indicated what amounts are applicable for each policy year.</text> </paragraph> <paragraph num="(d)"> <text>The amounts listed in Regulation .04A(5) of this chapter shall be listed in total, not on a per thousand or per unit basis.</text> </paragraph> <paragraph num="(e)"> <text>If more than one insured is covered under one policy or rider, death benefits shall be displayed separately:</text> <paragraph num="(i)"> <text>For each insured; or</text> </paragraph> <paragraph num="(ii)"> <text>For each class of insureds if death benefits do not differ within the class.</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Zero amounts shall be displayed numerically or as a blank space.</text> </paragraph> <paragraph num="(g)"> <text>Delivery of the policy summary shall be consistent with the time for delivery of the buyer's guide as specified in §§A and B of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Requirements Applicable to Existing Policies.</text> <paragraph num="(1)"> <text>Upon request by the policyowner, the carrier shall furnish either policy data or an in-force illustration as follows:</text> <paragraph num="(a)"> <text>For policies issued prior to the effective date of COMAR 31.09.09, the carrier shall furnish, at the carrier's option, policy data, or an in-force illustration which meets the requirements of COMAR 31.09.09;</text> </paragraph> <paragraph num="(b)"> <text>For policies issued after the effective date of COMAR 31.09.09, which were declared not to be used with an illustration, the carrier shall furnish policy data limited to guaranteed values if the carrier has chosen not to furnish an in-force illustration meeting the requirements of COMAR 31.09.09;</text> </paragraph> <paragraph num="(c)"> <text>If the policy was issued after the effective date of COMAR 31.09.09 and declared to be used with an illustration, an in-force illustration shall be provided;</text> </paragraph> <paragraph num="(d)"> <text>The policy data shall be provided for 20 consecutive years beginning with the previous policy anniversary, unless otherwise requested;</text> </paragraph> <paragraph num="(e)"> <text>The statement of the policy data shall include:</text> <paragraph num="(i)"> <text>Nonguaranteed elements according to the current scale;</text> </paragraph> <paragraph num="(ii)"> <text>The amount of outstanding policy loans; and</text> </paragraph> <paragraph num="(iii)"> <text>The current policy loan interest rate; and</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>Policy values shown on the statement of the policy data shall be based on the current application of nonguaranteed elements in effect at the time of the request.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The carrier may charge a reasonable fee, not to exceed $50, for preparation of the statement.</text> </paragraph> <paragraph num="(3)"> <text>When a carrier changes its method of determining scales of nonguaranteed elements on existing policies, it shall, not later than when first payment is made on the new basis, advise each affected policy owner residing in Maryland of this change and of its implication for affected policies.</text> </paragraph> <paragraph num="(4)"> <text>The requirement in §D(3) of this regulation does not apply to policies for which the amount payable upon death under the basic policy as of the date when advice would otherwise be required does not exceed $5,000.</text> </paragraph> <paragraph num="(5)"> <text>If the carrier makes a material revision in the terms and conditions under which it will limit its right to change any nonguaranteed factor, it shall, not later than the first policy anniversary following the material revision, advise each affected policy owner residing in Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Preneed Funeral Contracts or Prearrangements."> <paragraph num="A."> <text>At the time an application is made for a preneed funeral contract or prearrangement that is funded by a life insurance policy, and before accepting the applicant's initial premium or deposit, the carrier shall adequately disclose to the applicant, in writing, the following information:</text> <paragraph num="(1)"> <text>The fact that a life insurance policy is involved or being used to fund a prearrangement;</text> </paragraph> <paragraph num="(2)"> <text>The nature of the relationship among the soliciting insurance producer or insurance producers, the provider of the funeral or cemetery merchandise or services, the administrator, and any other individual;</text> </paragraph> <paragraph num="(3)"> <text>The relationship of the life insurance policy to the funding of the prearrangement, and the nature and existence of any guarantees relating to the prearrangement;</text> </paragraph> <paragraph num="(4)"> <text>The impact of the prearrangement on any:</text> <paragraph num="(a)"> <text>Changes in the life insurance policy, including but not limited to changes in the assignment, beneficiary designation, or use of the proceeds;</text> </paragraph> <paragraph num="(b)"> <text>Penalties to be incurred by the policyholder as a result of failure to make premium payments; and</text> </paragraph> <paragraph num="(c)"> <text>Penalties to be incurred by the policyholder or monies to be received as a result of cancellation, or surrender of the life insurance policy;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A list of all merchandise and services which are applied or contracted for in the prearrangement and all relevant information concerning the price of the funeral services, including an indication that the purchase price is either guaranteed at the time of purchase or to be determined at the time of need;</text> </paragraph> <paragraph num="(6)"> <text>All relevant information concerning what occurs and whether any entitlements or obligations arise if there is a difference between the proceeds of the life insurance policy and the amount actually needed to fund the prearrangement;</text> </paragraph> <paragraph num="(7)"> <text>Any penalties or restrictions, including but not limited to:</text> <paragraph num="(a)"> <text>Geographic restrictions; or</text> </paragraph> <paragraph num="(b)"> <text>The inability of the provider to perform on the delivery of merchandise, services or the prearrangement guarantee; and</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>If a sales commission or other form of compensation is being paid:</text> <paragraph num="(a)"> <text>The fact that a sales commission or other form of compensation is being paid; and</text> </paragraph> <paragraph num="(b)"> <text>The identity of the individuals or entities to whom the sales commission or other form of compensation is paid.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The disclosure requirements of this regulation apply to the issuance or delivery of certificates, as well as to the master policy.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="General Rules."> <paragraph num="A."> <text>Each carrier shall maintain at its home office or principal office a complete file containing one copy of each document authorized by the carrier for use pursuant to this chapter.</text> </paragraph> <paragraph num="B."> <text>The file described in §A of this regulation shall contain one copy of each authorized form for a period of 3 years following the date of its last authorized use unless otherwise provided by this chapter.</text> </paragraph> <paragraph num="C."> <text>An insurance producer shall inform the prospective purchaser, before commencing a life insurance sales presentation, that the insurance producer is acting as a life insurance producer and shall inform the prospective purchaser of the full name of carrier which the insurance producer is representing to the buyer.</text> </paragraph> <paragraph num="D."> <text>In sales situations in which an insurance producer is not involved, the carrier shall identify its full name.</text> </paragraph> <paragraph num="E."> <text>Unless an insurance producer's compensation is unrelated to insurance sales, the terms “financial planner”, “investment advisor”, “financial consultant”, “financial analyst”, “financial counselor”, and other similar terms may not be used by the insurance producer in such a way as to imply that the insurance producer's compensation is unrelated to insurance sales in any of the following:</text> <paragraph num="(1)"> <text>The name of the insurance producer's agency;</text> </paragraph> <paragraph num="(2)"> <text>Letterheads;</text> </paragraph> <paragraph num="(3)"> <text>Logos;</text> </paragraph> <paragraph num="(4)"> <text>Advertising or solicitation material; or</text> </paragraph> <paragraph num="(5)"> <text>Any sales presentation soliciting insurance.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Section E of this regulation is not intended to preclude individuals who hold a formal recognized financial planning or consultant designation from using this designation even when they are only selling insurance.</text> </paragraph> <paragraph num="G."> <text>Section E of this regulation is not intended to preclude individuals from citing membership in a recognized trade or professional association which has terms listed in §E of this regulation as part of its name.</text> </paragraph> <paragraph num="H."> <text>An individual citing membership in a recognized trade or professional association, if authorized only to sell insurance products, shall disclose that fact.</text> </paragraph> <paragraph num="I."> <text>An insurance producer may not charge an additional fee for services that are customarily associated with the solicitation, negotiation, or servicing of policies.</text> </paragraph> <paragraph num="J."> <text>Any reference to nonguaranteed elements shall include a statement that the element is not guaranteed and is based on the carrier's current scale of nonguaranteed elements.</text> </paragraph> <paragraph num="K."> <text>If a nonguaranteed element would be reduced by the existence of a policy loan, a statement to that effect shall be included in any reference to nonguaranteed elements.</text> </paragraph> <paragraph num="L."> <text>A presentation or depiction of a policy issued after the effective date of COMAR 31.09.09 that includes nonguaranteed elements over a period of years shall be governed by COMAR 31.09.09.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Failure to Comply."> <paragraph num="A."> <text>Failure of a carrier to provide or deliver a buyer's guide or a policy summary as provided in Regulation .04 of this chapter shall constitute an omission that misrepresents the benefits, advantages, conditions, or terms of an insurance policy.</text> </paragraph> <paragraph num="B."> <text>An insurance producer shall be held accountable for any policy summary, comparison statement, or other materials which the insurance producer uses in connection with the solicitation of insurance.</text> </paragraph> <paragraph num="C."> <text>If any material in §B of this regulation is prepared by a consulting firm, the insurance producer shall personally review and sign the material before presenting it to the insurance producer's prospect.</text> </paragraph> <paragraph num="D."> <text>A carrier is charged with the duty of supervising every insurance producer for whom the carrier has applied for a license and shall be held accountable for the actions of the carrier's insurance producers unless the carrier proves to the satisfaction of the Commissioner that the carrier exercised appropriate supervision and the insurance producer acted contrary to the carrier's instructions.</text> </paragraph> <paragraph num="E."> <text>If the Commissioner determines that a carrier, insurance producer, representative, officer, or employee of a carrier failed to comply with the requirements of this chapter, the Commissioner shall impose penalties as authorized under the Insurance Article, Annotated Code of Maryland, including:</text> <paragraph num="(1)"> <text>Suspending or revoking the license of the carrier, insurance producer, or both;</text> </paragraph> <paragraph num="(2)"> <text>Assessing a penalty of not less than $100, but not more than $125,000, on a carrier and not less than $100, but not more than $500, on an insurance producer for each offense; and</text> </paragraph> <paragraph num="(3)"> <text>Requiring the carrier or insurance producer to make restitution to an individual who has suffered financial injury or damage as a result of a violation of this chapter by the carrier or insurance producer.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 27-202, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1980 (6:15 Md. R. 1271)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.27 to COMAR 31.15.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08, Solicitation of Life Insurance, repealed and new Regulations .01—.08, Life Insurance Disclosure, adopted effective May 18, 2009 (36:10 Md. R. 719)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05C amended effective December 6, 2018 (45:24 Md. R. 1164)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective June 19, 2017 (44:12 Md. R. 589)</annotation> </annotations> </chapter> <chapter num="04" heading="Solicitation of Annuity and Deposit Fund Contracts"> <regulation prefix="Regulation" num=".01" heading="Unfair Trade Practice."> <text>The solicitation or sale of annuities or deposit fund contracts not in conformity with this chapter shall be deemed an Unfair Trade Practice in violation of Insurance Article, Title 27, Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose."> <paragraph num="A."> <text>The purpose of this chapter is to require insurers to deliver to prospects for annuity contracts or for deposit funds accepted in conjunction with life insurance policies or annuity contracts, information which helps the prospect select an annuity or deposit fund, or both, appropriate to the prospect's needs, improves the prospect's understanding of the basic features of the plan under consideration and improves the prospect's ability to evaluate the relative benefits of similar plans.</text> </paragraph> <paragraph num="B."> <text>This chapter does not prohibit the use of additional material which is not in violation of this chapter or any other regulation or statute.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Scope."> <paragraph num="A."> <text>To the extent provided here, this chapter shall apply to any solicitation, negotiation, or procurement of annuity contracts or deposit funds accepted in conjunction with individual life insurance policies or with annuity contracts which are subject to this chapter, occurring within this State. The chapter shall apply to an issuer of life insurance policies or annuity contracts including fraternal benefit societies.</text> </paragraph> <paragraph num="B."> <text>This chapter shall apply to:</text> <paragraph num="(1)"> <text>Individual deferred annuities other than:</text> <paragraph num="(a)"> <text>Variable annuities,</text> </paragraph> <paragraph num="(b)"> <text>Investment annuities; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Deposit funds (that is, arrangements under which amounts to accumulate at interest are paid in addition to life insurance premiums or annuity considerations under provisions of individual life insurance policies or annuity contracts).</text> </paragraph> </paragraph> <paragraph num="C."> <text>This chapter does not apply to:</text> <paragraph num="(1)"> <text>Group annuity contracts whose cost is borne in whole or in part by the annuitant's employer or by an association of which the annuitant is a member, provided the employer or the association bears all or part of the cost of the same or similar contracts insuring not less than ten employees or members. The cost of a contract may not be deemed to be borne by an annuitant's employer to the extent the annuitant's salary is reduced or the annuitant foregoes a salary increase.</text> </paragraph> <paragraph num="(2)"> <text>Immediate annuity contracts.</text> </paragraph> <paragraph num="(3)"> <text>A single advance payment of specific premiums equal to the discounted value of these premiums.</text> </paragraph> <paragraph num="(4)"> <text>A policyholder's deposit account established primarily to facilitate payment of regular premiums and when the anticipated balance of this account does not exceed twice the sum of the premiums payable in 1 year on all policies for which premiums are being paid from this account.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Contract Summary."> <paragraph num="A."> <text>For the purposes of this chapter, “contract summary” means a written statement describing the elements of the annuity contract and deposit fund, including but not limited to:</text> <paragraph num="(1)"> <text>A prominently placed title as follows: STATEMENT OF BENEFIT INFORMATION. (This shall be followed by an identification of the annuity contract or deposit fund, or both, to which the statement applies.)</text> </paragraph> <paragraph num="(2)"> <text>The name and address of the insurance agent or, if no agent is involved, a statement of the procedure to be followed in order to receive responses to inquiries regarding the contract summary.</text> </paragraph> <paragraph num="(3)"> <text>The full name and home office or administrative office address of the insurer which will issue the annuity contract or administer the deposit fund.</text> </paragraph> <paragraph num="(4)"> <text>The death benefits for the deposit fund, and for the annuity contract during the deferred period, and the form of the annuity payout. In the case where a choice of annuity payout form is provided, this item shall show the payout options guaranteed and the form of annuity payout selected in §A(6), (7), and (9) of this regulation.</text> </paragraph> <paragraph num="(5)"> <text>A prominent statement that the contract does not provide cash surrender values if that is the case.</text> </paragraph> <paragraph num="(6)"> <text>The amount of the guaranteed annuity payments at the scheduled commencement of the annuity, based on the assumption that all scheduled considerations are paid and there are no prior withdrawals from or partial surrenders of the contract and no indebtedness to the insurer on the contract.</text> </paragraph> <paragraph num="(7)"> <text>Illustrative Annuity Payments.</text> <paragraph num="(a)"> <text>On the same basis as §A(6) of this regulation except for guarantees, illustrative annuity payments not greater in amount than those based on(i) the current dividend scale and the interest rate currently used to accumulate dividends under these contracts, or the current excess interest rate credited by the insurer, and (ii) current annuity purchase rates.</text> </paragraph> <paragraph num="(b)"> <text>A dividend scale or excess interest rate which has been publicly declared by the insurer with an effective date not more than 2 months after the date of declaration shall be considered a current dividend scale or current excess interest rate.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>For annuity contracts or deposit funds for which guaranteed cash surrender values at any duration are less than the total considerations paid, a prominent statement that this contract or fund may result in loss if kept for only a few years, together with a reference to the schedule of guaranteed cash surrender values required by §A(9)(c) of this regulation.</text> </paragraph> <paragraph num="(9)"> <text>The following amounts, when applicable, for the first 5 contract years and representative contract years thereafter sufficient to clearly illustrate the patterns of considerations and benefits, including but not limited to the 10th and 20th contract years and at least one age from 60 through 65 or the scheduled commencement of annuity payments, if any, whichever is earlier:</text> <paragraph num="(a)"> <text>The gross annual or single consideration for the annuity contract.</text> </paragraph> <paragraph num="(b)"> <text>Scheduled annual or single deposit for the deposit fund, if any.</text> </paragraph> <paragraph num="(c)"> <text>The total guaranteed cash surrender value at the end of the year or, if no guaranteed cash surrender values are provided, the total guaranteed paid-up annuity at the end of the year. Values for a deposit fund shall be shown separately from those for a basic contract.</text> </paragraph> <paragraph num="(d)"> <text>Total Illustrative Cash Value.</text> <paragraph num="(i)"> <text>The total illustrative cash value or paid-up annuity at the end of the year, not greater in amount than that based on (aa) the current dividend scale and the interest rate currently used to accumulate dividends under these contracts or the current excess interest rate credited by the insurer, and (bb) current annuity purchase rates.</text> </paragraph> <paragraph num="(ii)"> <text>A dividend scale or excess interest rate which has been publicly declared by the insurer with an effective date not more than 2 months after the date of declaration shall be considered a current dividend scale or current excess interest rate.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(10)"> <text>For a contract summary which includes values based on the current dividend scale or the current dividend accumulation or excess interest rate, a statement that these values are illustrations and are not guaranteed.</text> </paragraph> <paragraph num="(11)"> <text>The date on which the contract summary is prepared.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The contract summary shall be a separate document. All information required to be disclosed shall be set out in such a manner as not to minimize or render any portion obscure. Any amounts which remain level for 2 or more contract years may be represented by a single number if it is clearly indicated what amounts are applicable for each contract year. Amounts in §A(4), (6), (7), and (9) of this regulation shall, in the case of flexible premium annuity contracts, be determined either according to an anticipated pattern of consideration payments or on the assumption that considerations payable will be $1,000 per year. If not specified in the contract, annuity payments shall be assumed to commence at age 65 or 10 years from issue, whichever is later. Zero amounts shall be displayed as zero and may not be displayed as blank spaces.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Disclosure Requirements."> <paragraph num="A."> <text>The insurer shall provide to all prospective purchasers a contract summary before accepting the applicant's initial consideration for the annuity contract, or in the case of a deposit fund, before acceptance of the applicant's initial consideration for the associated life insurance policy or annuity contract, unless the annuity contract or associated life insurance policy for which the application is made provides for an unconditional refund period of at least 10 days or unless the contract summary contains such an unconditional refund offer, in which event the contract summary shall be delivered with or before the delivery of the annuity contract or associated life insurance policy.</text> </paragraph> <paragraph num="B."> <text>The insurer shall provide a contract summary to a prospective purchaser upon request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="General Regulations."> <paragraph num="A."> <text>Each insurer shall maintain at its home office or principal office, a complete file containing one copy of each document authorized by the insurer for use pursuant to this chapter. This file shall contain one copy of each authorized form for a period of at least 3 years following the date of its last authorized use.</text> </paragraph> <paragraph num="B."> <text>An agent shall inform the prospective purchaser, before commencing a sales presentation, that the agent is acting as a life insurance agent and shall inform the prospective purchaser of the full name of the insurance company which the agent is representing to the buyer. In sales situations in which an agent is not involved, the insurer shall identify its full name.</text> </paragraph> <paragraph num="C."> <text>Terms such as “financial planner”, “investment advisor”, “financial consultant”, “financial analyst”, “financial counsellor”, and the like, may not be used by the agent in the name of his agency, in letterheads, logos, or in advertising or solicitation material, or in sales presentations soliciting insurance to mislead or in any way that implies that his compensation is unrelated to insurance sales, unless this is actually the case.</text> </paragraph> <paragraph num="D."> <text>A reference to dividends or to excess interest credits shall include a statement that these dividends or credits are not guaranteed.</text> </paragraph> <paragraph num="E."> <text>A presentation of benefits may not display guaranteed and non-guaranteed benefits as a single sum unless guaranteed benefits are shown separately in proximity and with equal prominence.</text> </paragraph> <paragraph num="F."> <text>Sales promotion literature and contract forms may not state or imply that annuity contracts or deposit funds are the same as savings accounts or deposits in banking or savings institutions. The use of passbooks which resemble savings bank passbooks is prohibited.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Failure to Comply."> <paragraph num="A."> <text>Failure of an insurer to provide or deliver a contract summary as provided in Regulation .05 of this chapter shall constitute an omission which misrepresents the benefits, advantages, conditions, or terms of an annuity contract or of an insurance policy.</text> </paragraph> <paragraph num="B."> <text>An agent shall be held accountable for any contract summary or other materials which he used in connection with the solicitation. If any of these materials is prepared by a consulting computer firm, the agent shall personally review and sign it before presenting it to his prospect.</text> </paragraph> <paragraph num="C."> <text>An insurer is charged with the duty of supervising every agent for whom it has applied for a license and shall be held accountable for the actions of its agents unless it proves to the satisfaction of the Commissioner that it exercised appropriate supervision and the agent acted contrary to its instructions.</text> </paragraph> <paragraph num="D."> <text>Any insurer, agent, representative, officer, or employee of an insurer who fails to comply with the requirements of this chapter shall be subject to such disciplinary action and penalties as may be appropriate under Insurance Article, Annotated Code of Maryland. This action may include the suspension or revocation of the license of the insurer or of the agent or both. The Commissioner may also impose monetary fines of $100 to $50,000 on an insurer and of $25 to $500 on an agent for each offense. In addition, the Commissioner may order the insurer or the agent, or both, to make restitution to any person who has suffered financial injury or damage as a result of any violation of this chapter by the insurer or agent.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-202, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 1, 1980 (6:15 Md. R. 1271)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.28 to COMAR 31.15.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="05" heading="Insurer's Financial Statements"> <regulation prefix="Regulation" num=".01" heading="Authority."> <text>This chapter is deemed necessary for, and as an aid to the effectuation of, the provisions of Insurance Article, §§27-203 and 27-205(a), Annotated Code of Maryland, as amended.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose and Applicability."> <text>The purpose of this chapter is to protect the public from untrue, deceptive, misleading, or false statements of financial condition of an insurer. It is applicable to all persons licensed to conduct the business of insurance in Maryland.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Procedure."> <text>The following shall govern the contents of advertisements and public announcements concerning financial condition of insurers:</text> <paragraph num="A."> <text>Domestic and Foreign Insurers. Except as provided elsewhere in this chapter, or as may be permitted by order of the Commissioner, every advertisement, sign, pamphlet, circular, card, or other public announcement, issued or distributed in this State by any domestic or foreign insurer, a subsidiary thereof, a holding company or controlled person as defined in Insurance Article, §7-101, Annotated Code of Maryland, or by any agent of any of the foregoing, purporting to make known the separate financial condition of the insurer, shall show the amount of its admitted assets, its liabilities and reserves required or permitted by law, and the amount of its surplus as regards policyholders, and the same may not materially conflict with the true annual statement filed by it with the Commissioner next preceding the publication of the advertisement or the public distribution of the announcement. The surplus as regards policyholders shall show therein the amount of the paid up capital stock, if any, of the insurer. The foregoing does not apply to an advertisement, sign, pamphlet, circular, card, or other public announcement concerning an insurer showing only the amount of its capital paid up, or the surplus of the insurer and its capital, if any, separately or combined, but these items may not be in excess of the corresponding item shown on the true annual statement filed by the insurer with the Commissioner next preceding the making or issuing of the advertisement.</text> </paragraph> <paragraph num="B."> <text>Alien Insurers. Every advertisement, sign, pamphlet, circular, card, or other public announcement, issued or distributed in this State by any alien insurer doing business in this State, a subsidiary thereof, a holding company or controlled person as defined in Insurance Article, §7-101, Annotated Code of Maryland, as amended, or by any agent of any of the foregoing, purporting to make known the separate financial condition of the insurer, shall show as assets only its admitted assets held by its United States branch, its liabilities and reserves required by law, and the amount of its surplus as regards policyholders in the United States, and may not materially conflict with the true annual statement filed by it with the Commissioner next preceding the publication of the advertisement or the public distribution of the announcement. The surplus as regards policyholders shall show therein the amount of the statutory deposits of the United States branch, if any. Notwithstanding the foregoing requirement, any authorized life insurance company or fraternal society organized under the laws of Canada or any province of Canada may use in its advertising in this State a statement of its complete financial condition, in addition to its statement showing the amount of its total admitted assets and liabilities in the United States if a similar domestic insurer is permitted by the laws of Canada or any province of Canada to advertise therein its complete financial condition on a corresponding basis.</text> </paragraph> <paragraph num="C."> <text>Pledged Securities. A published statement of separate financial condition may not be issued or distributed as provided in §A or B of this regulation concerning any such insurer unless there shall be clearly shown in the statement, or as a footnote to the statement, the amount of any of its securities, included in its admitted assets, which are pledged as collateral for any loan or loans or financial guarantees, or which, being neither in its possession nor under its control, are not available for the payment of losses and claims or are not held for the protection of its policyholders or of its policyholders and creditors.</text> </paragraph> <paragraph num="D."> <text>Reinsurance. No insurer authorized or accepted to do business in this State or any subsidiary thereof, or any holding company or controlled person as defined in Insurance Article, §7-101, Annotated Code of Maryland, as amended, or any agent of any one of the foregoing, may, in any advertisement or other public announcement make any statement or communication to the effect that the insurer has, or expects to have, reinsurance, or to the effect that the insurer's policies are guaranteed, wholly or partly by any other person, insurer, or institution.</text> </paragraph> <paragraph num="E."> <text>Reports to Government and Stockholders. Nothing in this chapter shall apply to reports issued to stockholders or government agencies or instrumentalities by a holding company or a controlled person as defined in Insurance Article, §7-101, Annotated Code of Maryland, as amended. This regulation does not prohibit any supplemental reference concerning the separate financial condition of an insurer on the basis of actual market value of its securities or the inclusion of supplemental factual information with respect to the separate financial condition of the insurer in a report issued by the insurer to its stockholders or policyholders.</text> </paragraph> <paragraph num="F."> <text>Holding Companies. Advertisements and other public announcements which are primarily directed at calling the attention of policyholders or prospective policyholders to an insurer and which contain a statement of the separate financial condition of the holding company system shall also contain a statement of the separate financial condition of the insurer which shall comply with this chapter.</text> </paragraph> <paragraph num="G."> <text>Consolidated Statements. Consolidated financial statements of any authorized insurer and one or more of its subsidiaries may be used only to the extent authorized by the Commissioner or required by any government agency or instrumentality.</text> </paragraph> <paragraph num="H."> <text>Exception for SEC Filings. Disclosures of financial condition contained in registration statements, prospectuses, and proxy statements filed with the Securities and Exchange Commission shall be deemed to meet the requirements of the provisions of this chapter with regard to their content so long as the disclosures are in conformity with the Securities Act of 1933 and the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.</text> </paragraph> <paragraph num="I."> <text>Waiver. Any person affected by this chapter may apply for a waiver from its provisions, or a modification of its provisions. The Commissioner may grant waiver or modification if he deems it to be justified and not adverse to the public interest.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 7-103, 7-104, and 27-205(a), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: April 10, 1970</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.29 to COMAR 31.15.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="06" heading="Filing or Service Fees in Connection with Certificates of Financial Responsibility"> <regulation prefix="Regulation" num=".01" heading="Prohibited Practice."> <text>Any charge in addition to the established premium as filed with the Maryland Insurance Administration by the writing company, as a so-called filing or service fee in connection with the writing of any motor vehicle liability or property damage policy, or both, or the filing of any certificate of financial responsibility with the Motor Vehicle Administration in connection with any policy, is forbidden.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-216(b), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: June 6, 1940</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.33 to COMAR 31.15.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective February 1, 2016 (43:2 Md. R. 129)</annotation> </annotations> </chapter> <chapter num="07" heading="Payment of Claims Under Property and Casualty and Title Insurance Policies"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter is applicable to all property and casualty and title insurers, but does not include reinsurance, workers' compensation, or surety.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Application” means an initial application for the issuance of an insurance policy.</text> </paragraph> <paragraph num="(2)"> <text>“Claim” means a demand for payment or an inquiry regarding the possibility of payment for a loss incurred under one or more coverages provided by the policy.</text> </paragraph> <paragraph num="(3)"> <text>“Claimant” means either a first-party claimant or a third-party claimant and may include, in a particular case, the claimant's designated legal representative or a member of the claimant's immediate family designated by the claimant.</text> </paragraph> <paragraph num="(4)"> <text>“First-party claimant” means any person asserting a right to payment under an insurance policy pursuant to which the person is insured, which right arises out of the occurrence of a contingency or loss covered by the policy.</text> </paragraph> <paragraph num="(5)"> <text>“Investigation” means all activities of an insurer directly or indirectly related to the determination of the insurer's liabilities under coverages afforded by an insurance policy.</text> </paragraph> <paragraph num="(6)"> <text>“Licensed producer” means a person issued a license in accordance with the provisions of Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Notification of a claim” means notification by a claimant, in writing or by other means acceptable under the terms of the insurance policy, which reasonably apprises the insurer of the facts pertinent to the claim and which is made:</text> <paragraph num="(a)"> <text>Directly to the insurer in the case of a title insurance policy;</text> </paragraph> <paragraph num="(b)"> <text>Directly to the Maryland Automobile Insurance Fund in the case of a policy issued by the Fund; or</text> </paragraph> <paragraph num="(c)"> <text>To an insurer or its producer who has an appointment from that insurer as defined in Insurance Article, §1-101(f), Annotated Code of Maryland, in all other cases.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Policy” means an individual or group policy, contract, or certificate issued by an insurer.</text> </paragraph> <paragraph num="(9)"> <text>“Producer” means any person authorized to represent an insurer with respect to a claim, or a licensed producer.</text> </paragraph> <paragraph num="(10)"> <text>“Proof of loss” means the submission to an insurer of all factual information necessary for an insurer to determine the nature of the loss, the applicable coverage, and the amount due under that applicable coverage.</text> </paragraph> <paragraph num="(11)"> <text>“Third-party claimant” means any person asserting a claim against a person insured under an insurance policy.</text> </paragraph> <paragraph num="(12)"> <text>“Unreasonable delay” means, except with respect to claims for personal injury protection benefits made pursuant to Insurance Article, §19-505, Annotated Code of Maryland, the failure to make payment to claimants of amounts properly due them within 15 working days after receipt of a properly completed claim form or other proof of loss unless a longer period of time is provided for in the insurance contract or unless otherwise provided for by law, when there is no significant dispute as to coverage, liability, and amount of damages.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Unfair Claim Settlement Practices."> <paragraph num="A."> <text>A prohibited unfair claim settlement practice occurs if an insurer commits one or more of the following acts:</text> <paragraph num="(1)"> <text>Misrepresents pertinent facts or policy provisions relating to the claim at issue. For the purposes of this regulation, misrepresentation includes, but is not limited to, the following acts:</text> <paragraph num="(a)"> <text>Providing incomplete or misleading disclosure of pertinent facts or policy provisions relating to the claim at issue;</text> </paragraph> <paragraph num="(b)"> <text>Concealing from a first-party claimant benefits, coverages, or other provisions of a policy when these benefits, coverages, or other provisions are pertinent to the claim at issue;</text> </paragraph> <paragraph num="(c)"> <text>Failing, upon written request, to disclose to a first-party claimant all benefits, coverages, or other provisions of an insurance policy under which a claim is presented;</text> </paragraph> <paragraph num="(d)"> <text>Except when there is a time limit specified in the policy or provided by law, making oral or written statements to any claimant that:</text> <paragraph num="(i)"> <text>There is a requirement that the claimant give written notice of loss or proof of loss within a specified time, and</text> </paragraph> <paragraph num="(ii)"> <text>The company is relieved of its obligations under the policy if the time limit is not complied with;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Making oral or written statements to any claimant that there is a requirement that the claimant sign a release that extends beyond the subject matter that gave rise to the claim payment; or</text> </paragraph> <paragraph num="(f)"> <text>Issuing a check or draft in partial settlement of a loss or claim under a specific coverage or coverages, which check or draft contains language releasing the insurer or its insured from their total liability.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Attempts to settle a claim on the basis of an application which has been altered without notice to, or the knowledge or consent of, the insured. An insurer may not be found to have violated this regulation unless the:</text> <paragraph num="(a)"> <text>Insurer knew or had reason to know of the alteration; and</text> </paragraph> <paragraph num="(b)"> <text>Alteration is material to settlement of the claim at issue.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Refuses to pay a claim for an arbitrary or capricious reason based on all available information.</text> </paragraph> <paragraph num="(4)"> <text>Fails to include, in any claim paid to an insured or beneficiary, a statement or other identification setting forth the specific policy coverage under which the payment is made.</text> </paragraph> <paragraph num="(5)"> <text>Fails to make a good faith attempt to settle a claim promptly under one portion of a policy, whenever liability is reasonably clear, in order to influence settlements under other portions of the policy.</text> </paragraph> <paragraph num="(6)"> <text>Fails to promptly provide a reasonable explanation of the basis for denial of a claim when requested to do so.</text> </paragraph> <paragraph num="(7)"> <text>Fails to act in good faith in settling a first party claim under a policy of property and casualty insurance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A prohibited unfair claim settlement practice occurs if an insurer commits one or more of the following acts with such frequency as to indicate a general business practice:</text> <paragraph num="(1)"> <text>Misrepresents pertinent facts or policy provisions relating to the coverages at issue. For the purposes of this regulation, misrepresentation includes, but is not limited to, the following acts:</text> <paragraph num="(a)"> <text>Providing incomplete or misleading disclosure of pertinent facts or policy provisions related to the coverages at issue;</text> </paragraph> <paragraph num="(b)"> <text>Concealing from a first-party claimant benefits, coverages, or other provisions of a policy when these benefits, coverages, or other provisions are pertinent to the claim at issue;</text> </paragraph> <paragraph num="(c)"> <text>Failing, upon written request, to disclose to a first-party claimant all benefits, coverages, or other provisions of an insurance policy under which a claim is presented;</text> </paragraph> <paragraph num="(d)"> <text>Except when there is a time limit specified in the policy or provided by law, making oral or written statements to any claimant that:</text> <paragraph num="(i)"> <text>There is a requirement that the claimant give written notice of loss or proof of loss within a specified time, and</text> </paragraph> <paragraph num="(ii)"> <text>The company is relieved of its obligations under the policy if the time limit is not complied with;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>Making oral or written statements by any claimant that there is a requirement that the claimant sign a release that extends beyond the subject matter that gave rise to the claim payment; or</text> </paragraph> <paragraph num="(f)"> <text>Issuing a check or draft in partial settlement of a loss or claim under a specific coverage or coverages, which check or draft contains language releasing the insurer or its insured from total liability.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Fails to include, in claims paid to insureds or beneficiaries, statements or other identification setting forth the specific policy coverage under which the payments are made.</text> </paragraph> <paragraph num="(3)"> <text>Fails to promptly provide to any claimants reasonable explanations of the basis for denial of claims or the offer of compromise settlements.</text> </paragraph> <paragraph num="(4)"> <text>Fails to adopt and implement reasonable standards for the prompt investigation of claims arising under policies.</text> </paragraph> <paragraph num="(5)"> <text>Refuses to pay claims without conducting reasonable investigations based on all available information.</text> </paragraph> <paragraph num="(6)"> <text>Fails to make good faith attempts to settle claims promptly, fairly, or equitably once liability has become reasonably clear.</text> </paragraph> <paragraph num="(7)"> <text>Compels insureds to institute litigation to recover amounts due them under policies by offering substantially less than the amounts ultimately recovered in actions brought by the insureds.</text> </paragraph> <paragraph num="(8)"> <text>Attempts to settle claims on the basis of applications which have been altered without notice to, or the knowledge or consent of, insureds. An insurer may not be found to have violated this regulation unless the:</text> <paragraph num="(a)"> <text>Insurer knew or had reason to know of the alterations; and</text> </paragraph> <paragraph num="(b)"> <text>Alterations are material to settlement of the claims at issue.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>Fails to make good faith attempts to settle claims promptly under one portion of a policy, whenever liability is reasonably clear, in order to influence settlements under other portions of the policy.</text> </paragraph> <paragraph num="(10)"> <text>Fails, upon receipt of notification of claims, to acknowledge receipt of the notification within 15 working days, unless payment is made within that period of time.</text> </paragraph> <paragraph num="(11)"> <text>Fails, upon receipt of inquiries from the Maryland Insurance Administration regarding claims, to furnish the Maryland Insurance Administration with adequate responses to the inquiries within 15 working days or within the time period specified by the Maryland Insurance Administration in correspondence to the insurer, whichever is greater.</text> </paragraph> <paragraph num="(12)"> <text>Fails to affirm or deny coverage of claims within 15 working days after receiving properly completed claim forms or other proofs of loss, unless the provisions of Regulation .04B of this chapter apply or unless there is a time limit specified in the policy.</text> </paragraph> <paragraph num="(13)"> <text>Refuses to fully satisfy claims for arbitrary or capricious reasons.</text> </paragraph> <paragraph num="(14)"> <text>Refuses or unreasonably delays payment to claimants of amounts due them when coverage, liability, and amount of damages are reasonably clear.</text> </paragraph> <paragraph num="(15)"> <text>Fails to provide appropriate replies to claimants or their representatives within 15 working days of receiving written communications from claimants or their representatives which suggest that a response is expected.</text> </paragraph> <paragraph num="(16)"> <text>Fails to act in good faith in settling a first party claim under a policy of property and casualty insurance.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The provision of any claim forms required by the insurer, instructions, and reasonable assistance, in order that first-party claimants can comply with policy conditions and the insurer's reasonable requirements for filing claims, shall satisfy the requirement that insurers acknowledge receipt of notification of claims within 15 working days.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Standards for Prompt Investigation of Claims."> <paragraph num="A."> <text>Insurers shall, for at least 3 years, make available for inspection by the Maryland Insurance Administration records of denials of claims and supporting documentation.</text> </paragraph> <paragraph num="B."> <text>If an insurer has not completed its investigation of a first party claim within 45 days of notification, the insurer shall promptly notify the first-party claimant, in writing, of the actual reason that additional time is necessary to complete the investigation. Notice shall be sent to the first-party claimant after each additional 45-day period until the insurer either affirms or denies coverage and damages.</text> </paragraph> <paragraph num="C."> <text>In any case in which a first-party claimant is neither an attorney nor represented by an attorney, the insurer shall, upon receipt of a written claim, inform that claimant in writing that there may be an applicable statute of limitations which may bar that claimant's rights in the future.</text> </paragraph> <paragraph num="D."> <text>An insurer that denies a claim on the grounds of a specific policy provision, condition, or exclusion shall advise the claimant as to the provision, condition, or exclusion on which the denial is based.</text> </paragraph> <paragraph num="E."> <text>When there is a reasonable basis, supported by specific information available for review by the Commissioner, that the first-party claimant has fraudulently caused or contributed to the loss, the insurer is relieved of the requirement contained in §§B and C of this regulation that the insurer state the reason that more time is required.</text> </paragraph> <paragraph num="F."> <text>If a claim is denied for reasons other than those described in §D or E of this regulation, an appropriate notation shall be made in the claim file of the insurer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Time for Filing Claim for Personal Injury Protection Benefits."> <text>Upon receipt of written notice from an insured of the occurrence of an accident, each insurer providing benefits required under Insurance Article, §19-505, Annotated Code of Maryland, shall notify the insured of the latest date on which an original claim for benefits may be presented to the insurer, as provided in Insurance Article, §19-508(a), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Payment of Interest on Personal Injury Protection Benefits."> <text>Whenever a claim for benefits under Insurance Article, §19-505, Annotated Code of Maryland, is paid more than 30 days after receipt of a properly completed claim form or other proof of loss and satisfactory proof verifying the claim, the insurer shall:</text> <paragraph num="A."> <text>Make a notation in the insurer's claim file stating the reason for the delay; and</text> </paragraph> <paragraph num="B."> <text>Add to the amount otherwise payable 1-1/2 percent simple interest per month for those days in excess of the 30 days.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Computation of Time."> <text>If an insurer requires additional information in order to properly consider a claim, the number of days which elapse between the date the insurer requests additional information and the date the insurer receives a response to the request may not be counted whenever these regulations require action by an insurer within a stated period of time.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Claims Registers."> <paragraph num="A."> <text>Each insurer shall maintain claims registers separately for:</text> <paragraph num="(1)"> <text>Private passenger automobile insurance;</text> </paragraph> <paragraph num="(2)"> <text>All other liability insurance;</text> </paragraph> <paragraph num="(3)"> <text>Homeowner's insurance;</text> </paragraph> <paragraph num="(4)"> <text>All other property insurance; and</text> </paragraph> <paragraph num="(5)"> <text>Title insurance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Claims registers may be maintained manually or on computer-generated tapes from which hard copy can be supplied.</text> </paragraph> <paragraph num="C."> <text>Claims registers shall list chronologically, by date of report, each claim received, if a Maryland-domiciled insurer, and each claim received from a Maryland resident, if a foreign insurer doing business in Maryland, showing the:</text> <paragraph num="(1)"> <text>Date of loss;</text> </paragraph> <paragraph num="(2)"> <text>Policy or contract number;</text> </paragraph> <paragraph num="(3)"> <text>Name of the insured; and</text> </paragraph> <paragraph num="(4)"> <text>General nature of the claim.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Claims registers shall be available for inspection by the Insurance Commissioner or by persons designated by the Commissioner for a period of at least 3 years following the date of the filing of the claim.</text> </paragraph> <paragraph num="E."> <text>Insurers shall have 6 months from the effective date of this chapter to establish the claims registers required by this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="General Business Practices."> <paragraph num="A."> <text>The methodology of §B of this regulation shall be used to determine whether an insurer has engaged in unfair claim settlement practices with such frequency as to constitute a general business practice within the meaning of Insurance Article, §27-304, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>It shall be considered prima facie evidence of a general business practice of committing unfair claim settlement practices if, in any 12-month period, it is found that the number of unfair claim settlement practices with respect to claims handling by foreign insurers of claims of Maryland residents, or by domestic insurers of all claims of the insurer, equals or exceeds the following, if the total number of claims during any 12-month period is:</text> <paragraph num="(1)"> <text>Less than 10,000, three claims with the same unfair claim settlement practice out of a random sampling of 50 claims; or</text> </paragraph> <paragraph num="(2)"> <text>Ten thousand or more, six claims with the same unfair claim settlement practice out of a random sampling of 100 claims.</text> </paragraph> </paragraph> <paragraph num="C."> <text>An insurer may overcome the presumption that a general business practice violation has occurred by presenting evidence to the Commissioner relating to the harm to claimants caused by the violation, the nature of the violation, the insurer's intent, and other relevant factors.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Penalties."> <text>Penalties for violations of these regulations shall be assessed in accordance with Insurance Article, §§4-113, 27-301, 27-305, and 27-306, Annotated Code of Maryland.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§1-301, 2-109, 2-205, 2-207, 4-113, 10-126, 10-410, 19-505, 19-506, 19-508, and 27-301—27-306, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 23, 1990 (17:14 Md. R. 1758)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04G adopted effective April 1, 1991 (18:6 Md. R. 685)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04G repealed as an emergency provision effective April 6, 1991 (18:9 Md. R. 1004); emergency status expired August 6, 1991; repealed permanently effective August 19, 1991 (18:16 Md. R. 1811)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.75 to COMAR 31.15.07 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 14, 2010 (37:1 Md. R. 17); February 1, 2016 (43:2 Md. R. 129)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03A, B amended effective January 26, 2009 (36:2 Md. R. 103)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10 amended effective January 14, 2010 (37:1 Md. R. 17)</annotation> </annotations> </chapter> <chapter num="08" heading="Payment of Claims Under Life and Health Policies and Annuity Contracts"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>These regulations are applicable to all life, health, and annuity insurers, including nonprofit health service plans, fraternal benefit societies, health maintenance organizations, and dental plan organizations, issuing life and health policies and annuity contracts.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Agent” means any person authorized to represent an insurer with respect to a claim, and includes a licensed agent.</text> </paragraph> <paragraph num="(2)"> <text>“Claimant” means the insured or a beneficiary under an insurance policy or contract, or an assignee of the insured or the beneficiary, and includes the claimant's designated legal representative and members of the immediate family of the insured or beneficiary designated by the claimant.</text> </paragraph> <paragraph num="(3)"> <text>“Insurer” means a person licensed to issue, or who issues, any insurance policy in this State, including a nonprofit health service plan, fraternal benefit society, health maintenance organization, or dental plan organization.</text> </paragraph> <paragraph num="(4)"> <text>“Investigation” means all activities of an insurer directly or indirectly related to the determination of the insurer's liabilities under coverage afforded by an insurance policy.</text> </paragraph> <paragraph num="(5)"> <text>“Licensed agent” means a person licensed in accordance with the provisions of Insurance Article, Title 8, Subtitle 4, or Title 10, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Notification of a claim” means notification by a claimant, to an insurer or its agent, in writing or by other means acceptable under the terms of the policy, which reasonably apprises the insurer of the facts pertinent to the claim.</text> </paragraph> <paragraph num="(7)"> <text>“Policy” means an individual or group policy, contract, or certificate issued by an insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Unfair Claim Settlement Practices."> <paragraph num="A."> <text>A prohibited unfair claim settlement practice occurs if an insurer commits any of the following acts:</text> <paragraph num="(1)"> <text>Misrepresents or provides incomplete or misleading disclosures of pertinent facts or policy provisions relating to the claim at issue;</text> </paragraph> <paragraph num="(2)"> <text>Conceals benefits, coverages, or other provisions of a policy when those benefits, coverages, or other provisions are pertinent to a claim;</text> </paragraph> <paragraph num="(3)"> <text>Attempts to settle a claim on the basis of an application which has been altered without notice to, or the knowledge or consent of, the insured;</text> </paragraph> <paragraph num="(4)"> <text>Refuses to satisfy a claim for an arbitrary or capricious reason based on all available information;</text> </paragraph> <paragraph num="(5)"> <text>Fails to include, in any claim paid to an insured or beneficiary, a statement setting forth the coverage under which the payment is made;</text> </paragraph> <paragraph num="(6)"> <text>Fails to settle a claim promptly whenever liability is reasonably clear under one portion of a policy in order to influence settlements under other portions of the policy; or</text> </paragraph> <paragraph num="(7)"> <text>Fails to promptly provide a reasonable explanation of the basis for denial of a claim when requested to do so.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A prohibited unfair claim settlement practice occurs if an insurer commits any of the following acts with such frequency as to indicate a general business practice:</text> <paragraph num="(1)"> <text>Misrepresents or provides incomplete or misleading disclosure of pertinent facts or policy provisions relating to the coverages at issue;</text> </paragraph> <paragraph num="(2)"> <text>Fails to include, in claims paid to insureds or beneficiaries, statements setting forth the coverage under which the payments are made;</text> </paragraph> <paragraph num="(3)"> <text>Fails to promptly provide reasonable explanations of the basis for denial of claims or the offer of compromise settlements;</text> </paragraph> <paragraph num="(4)"> <text>Fails to adopt and implement reasonable standards for the prompt investigation of claims arising under policies;</text> </paragraph> <paragraph num="(5)"> <text>Refuses to pay claims without conducting reasonable investigations based on all available information;</text> </paragraph> <paragraph num="(6)"> <text>Fails to make good faith attempts to settle claims promptly, fairly, and equitably once liability has become reasonably clear;</text> </paragraph> <paragraph num="(7)"> <text>Compels claimants to institute litigation to recover amounts due them under policies by offering substantially less than the amounts ultimately recovered in actions brought by the claimants;</text> </paragraph> <paragraph num="(8)"> <text>Attempts to settle claims for less than the amount to which a reasonable person would expect to be entitled after studying written or printed advertising material accompanying, or made a part of, applications or solicitations for insurance;</text> </paragraph> <paragraph num="(9)"> <text>Attempts to settle claims on the basis of applications which have been altered without notice to, or the knowledge or consent of, insureds;</text> </paragraph> <paragraph num="(10)"> <text>Fails to settle claims promptly whenever liability is reasonably clear under one portion of a policy in order to influence settlements under other portions of the policy;</text> </paragraph> <paragraph num="(11)"> <text>Delays investigations or payments of claims by requiring claimants, or claimants' licensed health care providers, to submit formal claims reports if all necessary information has been provided to the insurer in preliminary claims reports;</text> </paragraph> <paragraph num="(12)"> <text>Fails, within 30 days after receipt of a claim that contains all necessary information and documentation, to:</text> <paragraph num="(a)"> <text>Make payment of the claim,</text> </paragraph> <paragraph num="(b)"> <text>Notify the claimant that reimbursement for the claim, or a portion of the claim, is refused, providing specific reasons for the refusal, or</text> </paragraph> <paragraph num="(c)"> <text>Inform the claimant of the reason it was not reasonably practicable to process the claim within that period, stating what specific additional information is needed before a decision on the claim can be made;</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>Fails, upon receipt of inquiries from state insurance departments regarding claims, to furnish the departments with adequate responses to the inquiries within 10 working days or within the time period specified by the Maryland Insurance Administration in correspondence to the insurer, whichever is greater;</text> </paragraph> <paragraph num="(14)"> <text>Induces or requires claimants to surrender policies as a condition of paying claims if the policies would normally continue in force beyond the date of payment of the claim; or</text> </paragraph> <paragraph num="(15)"> <text>Fails to provide claimants, within 10 working days after receiving notification of claims, with any necessary claim forms, instructions, and reasonable assistance in order that claimants can comply with the policy conditions and the insurer's reasonable requirements for filing claims.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The provision of any necessary claim forms and reasonable assistance in order that claimants can comply with the policy provisions and the insurer's reasonable requirements for filing claims shall satisfy the requirement that insurers acknowledge receipt of notification of claims, or pay claims, within 10 working days.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Computation of Time."> <text>If an insurer requires additional information in order to properly consider a claim, the number of days which elapse between the date the insurer mails a request for additional information and the date the insurer receives a response to the request may not be counted whenever these regulations require action by an insurer within a stated period of time.</text> </regulation> <regulation prefix="Regulation" num=".05" heading="Claims Registers."> <paragraph num="A."> <text>Each insurer shall maintain claims registers separated for:</text> <paragraph num="(1)"> <text>Annuity contracts and life insurance policies, excluding credit life insurance;</text> </paragraph> <paragraph num="(2)"> <text>Health insurance policies, excluding credit health insurance; and</text> </paragraph> <paragraph num="(3)"> <text>Credit life insurance and credit health insurance policies.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Claims registers may be maintained manually or on computer-generated tapes from which hard copy can be supplied.</text> </paragraph> <paragraph num="C."> <text>Claims registers shall list each claim received, showing the:</text> <paragraph num="(1)"> <text>Date of receipt;</text> </paragraph> <paragraph num="(2)"> <text>Policy or contract number;</text> </paragraph> <paragraph num="(3)"> <text>Name of the insured;</text> </paragraph> <paragraph num="(4)"> <text>General nature of the claim; and</text> </paragraph> <paragraph num="(5)"> <text>State of residence of the claimant.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Each claim shall be assigned a unique claim number.</text> </paragraph> <paragraph num="E."> <text>If a claim is closed but subsequently reopened, the original claim number shall continue to be used.</text> </paragraph> <paragraph num="F."> <text>Each claim shall be considered a single claim regardless of the number of times it has been closed and reopened.</text> </paragraph> <paragraph num="G."> <text>Payments made to a claimant on an ongoing basis shall be recorded under the original claim number and considered a single claim for purposes of these regulations.</text> </paragraph> <paragraph num="H."> <text>The Commissioner may grant permission to an insurer to use an alternate claim numbering system upon submission by the insurer of proof satisfactory to the Commissioner that the requirements of §§E, F, and G of this regulation are impracticable or unduly burdensome to the insured.</text> </paragraph> <paragraph num="I."> <text>Claims registers, in original form or reproduced from computer data, shall be available for inspection by the Insurance Commissioner or by persons designated by the Commissioner for a period of at least 5 years following the date of filing of a claim.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="General Business Practices."> <paragraph num="A."> <text>The methodology of §B of this regulation shall be used to determine whether an insurer, nonprofit health service plan, or health maintenance organization has engaged in unfair claim settlement practices with such frequency as to constitute a general business practice within the meaning of Insurance Article, §27-304, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>Engaging in unfair claim settlement practices shall be regarded as prima facie evidence of a general business practice if, in any 12-month period, it is found that the number of unfair claim settlement practices with respect to claims handling by foreign insurers of claims by Maryland residents, or by domestic insurers of all claims of the insurer, equals or exceeds the following:</text> <paragraph num="(1)"> <text>If the total number of annuity and life insurance claims, excluding credit life insurance claims, during any 12-month period is:</text> <paragraph num="(a)"> <text>Less than 100, five claims;</text> </paragraph> <paragraph num="(b)"> <text>At least 100, but less than 10,000, five claims out of a sampling of 100 claims;</text> </paragraph> <paragraph num="(c)"> <text>At least 10,000, but less than 50,000, ten claims out of a sampling of 200 claims; or</text> </paragraph> <paragraph num="(d)"> <text>50,000 or more, 15 claims out of a sampling of 300 claims;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the total number of health insurance claims, excluding credit health insurance claims, during any 12-month period is:</text> <paragraph num="(a)"> <text>Less than 100, ten claims;</text> </paragraph> <paragraph num="(b)"> <text>At least 100, but less than 10,000, ten claims out of a sampling of 100 claims;</text> </paragraph> <paragraph num="(c)"> <text>At least 10,000, but less than 50,000, 15 claims out of a sampling of 200 claims; or</text> </paragraph> <paragraph num="(d)"> <text>50,000 or more, 20 claims out of a sampling of 300 claims.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Penalties."> <paragraph num="A."> <text>For each violation of Regulation .03A of this chapter, the Commissioner may impose a penalty of up to $500.</text> </paragraph> <paragraph num="B."> <text>For each violation of Regulation .03B of this chapter, the Commissioner may impose a penalty, or require restitution, as provided in Insurance Article, §1-301, 4-113, 4-114, or 27-103, Annotated Code of Maryland, as may be appropriate under the circumstances.</text> </paragraph> <paragraph num="C."> <text>The penalties prescribed in these regulations are not exclusive, and are in addition to any other powers afforded the Commissioner under Insurance Article, Annotated Code of Maryland.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Health-General Article, §19-706(g); Insurance Article, §§1-301, 2-109, 2-205, 2-207, 4-113, 4-114, 10-102, 10-103, 10-126, 10-131, 10-401—10-406, 10-410, 14-112, 14-407, 14-408, 14-409, 15-1005, 27-102, Title 15, Subtitle 7, and Title 27, Subtitle 3, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: September 4, 1989 (16:17 Md. R. 1884)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective September 13, 1993 (20:18 Md. R. 1429)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.76 to COMAR 31.15.08 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective October 1, 2012 (39:19 Md. R. 1238)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective October 1, 2012 (39:19 Md. R. 1238)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective January 26, 2009 (36:2 Md. R. 103)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06A amended effective October 13, 2014 (41:20 Md. R. 1114)</annotation> </annotations> </chapter> <chapter num="09" heading="Automobile Liability Insurance" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: March 1, 1957</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.19 to COMAR 31.15.09 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01 and .02 repealed effective October 8, 2018 (45:20 Md. R. 921)</annotation> </annotations> </chapter> <chapter num="10" heading="Homeowner's Insurance and Private Passenger Motor Vehicle Insurance — Standards for Cancellation and Nonrenewal"> <regulation prefix="Regulation" num=".01" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Business purposes standard” means the standard required by Insurance Article, §27-501(a)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Claim” means a reported loss that is covered or coverable under a policy.</text> </paragraph> <paragraph num="(3)"> <text>“Loss” means damage or injury to body, person, or property.</text> </paragraph> <paragraph num="(4)"> <text>“Remediation” means repair of the premises or dwelling of an insured or replacement of part of the premises or dwelling of an insured that:</text> <paragraph num="(a)"> <text>Eliminates or significantly diminishes the condition of the premises or dwelling that gave rise to a claim; and</text> </paragraph> <paragraph num="(b)"> <text>Makes it reasonably unlikely that the same type of claim will arise again.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Repair notice” means written notice that:</text> <paragraph num="(a)"> <text>An insurer provides to an insured pursuant to Insurance Article, §27-501(i)(2), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Requests the insured to make reasonable or customary repairs or replacement specific to the insured's premises or dwelling.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Homeowner's Insurance."> <paragraph num="A."> <text>Scope. This regulation applies to homeowner's insurance.</text> </paragraph> <paragraph num="B."> <text>Weather-Related Claims—Presumption. A claim is presumed to be a weather-related claim if the loss was caused by snow, rain, sleet, hail, lightning, freezing, thawing, change in barometric pressure, or a similar condition.</text> </paragraph> <paragraph num="C."> <text>Weather-Related Claims—Standard for Cancellation or Nonrenewal.</text> <paragraph num="(1)"> <text>An insurer may not combine a weather-related claim that is excepted from the business purposes standard by Insurance Article, §27-501(i)(1), Annotated Code of Maryland, with any other factor for the purpose of canceling or refusing to renew coverage unless there were three or more weather-related claims within the preceding 3 years.</text> </paragraph> <paragraph num="(2)"> <text>For purposes of cancellation of, or refusal to renew, coverage based on weather-related claims pursuant to Insurance Article, §27-501(i)(1), Annotated Code of Maryland, an insurer may consider a weather-related claim notwithstanding any remediation by the insured that may prevent a similar weather-related claim from arising in the future.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Weather-Related Claims—Repair Notice.</text> <paragraph num="(1)"> <text>An insurer may consider claims for weather-related events for the purpose of canceling, or refusing to renew, coverage after providing a repair notice to an insured pursuant to Insurance Article §27-501(i)(2), Annotated Code of Maryland, only if the repair was sent following:</text> <paragraph num="(a)"> <text>An inspection of the insured's premises or dwelling; or</text> </paragraph> <paragraph num="(b)"> <text>The filing of a claim by the insured where the insurer's adjuster recognized the need for the repair after inspecting the premises or dwelling where the claim arose.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An insurer that provides a repair notice to an insured may satisfy the requirements of Insurance Article, §27-501(i)(2), Annotated Code of Maryland, by sending the repair notice to the insured by first class mail, in accordance with the insurer's regular business practices.</text> </paragraph> <paragraph num="(3)"> <text>An insurer may not consider a weather-related claim for the purpose of canceling, or refusing to renew, coverage due to the insured's failure to make repairs or replacement after mailing of a repair notice unless the repair notice was mailed at least 60 days before the weather-related event that gave rise to the loss for which a claim was made.</text> </paragraph> <paragraph num="(4)"> <text>Insurance Article, §27-501(i)(2), Annotated Code of Maryland, does not allow an insurer to cancel, or refuse to renew, coverage based wholly or partly on an insured's failure to make repair or replacement after mailing of a repair notice unless the insurer meets the business purposes standard, which may be met by meeting one of the standards listed in Insurance Article, §27-501(j), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Material Misrepresentation.</text> <paragraph num="(1)"> <text>For purposes of Insurance Article, §27-501(j)(1)(i), Annotated Code of Maryland, a material misrepresentation is a misrepresentation but for which an insurer would:</text> <paragraph num="(a)"> <text>Not have provided coverage; or</text> </paragraph> <paragraph num="(b)"> <text>Have denied a claim or any part of a claim.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For purposes of Insurance Article, §27-501(j)(1)(i), Annotated Code of Maryland, a material misrepresentation does not include a good faith representation of the value of a claim or any part of a claim.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Private Passenger Motor Vehicle Insurance."> <paragraph num="A."> <text>Scope. This regulation applies to private passenger motor vehicle insurance.</text> </paragraph> <paragraph num="B."> <text>Determining Number of Claims.</text> <paragraph num="(1)"> <text>For the purpose of determining the number of not-at-fault claims under Insurance Article, §27-501(k), Annotated Code of Maryland, claims under the following types of coverage shall be presumed to be not-at-fault:</text> <paragraph num="(a)"> <text>Uninsured motorist coverage; and</text> </paragraph> <paragraph num="(b)"> <text>Comprehensive coverage.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The presumption in §B(1) of this regulation may be overcome if the carrier demonstrates that the claim was an at-fault claim.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Complaint Proceeding Based on Accident—Determination of Fault.</text> <paragraph num="(1)"> <text>In a consumer complaint proceeding for cancellation or refusal to renew coverage under Insurance Article, §27-501(k) or (l)(iv), Annotated Code of Maryland, based wholly or partly on an accident, the Insurance Administration may:</text> <paragraph num="(a)"> <text>Review the insurer's determination of fault for the accident; and</text> </paragraph> <paragraph num="(b)"> <text>Decide whether the insurer's determination of fault was arbitrary or capricious.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Payment of a settlement by an insurer for an accident is evidence of the insured's fault for the accident, but is not conclusive proof of fault.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Material Misrepresentation.</text> <paragraph num="(1)"> <text>For purposes of Insurance Article, §27-501(l)(1)(i), Annotated Code of Maryland, a material misrepresentation is a misrepresentation:</text> <paragraph num="(a)"> <text>About an insured's driving record made on an initial or underwriting renewal application; or</text> </paragraph> <paragraph num="(b)"> <text>But for which an insurer would:</text> <paragraph num="(i)"> <text>Not have provided coverage; or</text> </paragraph> <paragraph num="(ii)"> <text>Have denied a claim or any part of a claim.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(2)"> <text>For purposes of Insurance Article, §27-501(l)(1)(i), Annotated Code of Maryland, a material misrepresentation does not include a good faith representation of the value of a claim or any part of a claim.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Action Based on Criminal Conduct.</text> <paragraph num="(1)"> <text>In the case of private passenger motor vehicle insurance, standards that meet the business purposes standard and do not require statistical validation include a standard that allows cancellation or nonrenewal of coverage if the named insured or a covered driver under the policy is convicted of:</text> <paragraph num="(a)"> <text>Operating the motor vehicle while intoxicated, or impaired by drugs;</text> </paragraph> <paragraph num="(b)"> <text>Committing homicide, reckless endangerment, or criminal negligence arising out of the operation of the motor vehicle; or</text> </paragraph> <paragraph num="(c)"> <text>Using the motor vehicle to participate in a felony.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If a named insured or covered driver is found guilty of a crime listed in §E(1) of this regulation, and the guilty finding subsequently is struck, and the final disposition of the matter is probation before judgment, the guilty finding:</text> <paragraph num="(a)"> <text>May be used as evidence that the named insured or covered driver committed the conduct listed in §E(1) of this regulation; but</text> </paragraph> <paragraph num="(b)"> <text>Is not conclusive proof that the named insured or covered driver committed the conduct listed in §E(1) of this regulation and may be rebutted by evidence showing that the insured or covered driver did not commit the conduct.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Action Based on Claims History."> <paragraph num="A."> <text>Factors in Mitigation. With respect to cancellation of, or refusal to renew, coverage based on claims history, an insurer may not consider factors in mitigation of a proposed cancellation of, or refusal to renew, coverage as provided by Insurance Article, §27-501(n)(1), Annotated Code of Maryland, unless the:</text> <paragraph num="(1)"> <text>Insurer applies the factors uniformly within a given classification to each proposed cancellation of, or refusal to renew, coverage for all insureds; and</text> </paragraph> <paragraph num="(2)"> <text>Factors considered are included in the insurer's underwriting guidelines or rating plan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Disclosure of Practice of Considering Claims History. An insurer that is required by Insurance Article, §27-501(n)(2), Annotated Code of Maryland, to disclose the practice of considering claims history for purposes of canceling, or refusing to renew, coverage shall provide notice to the insured at the issuance of the policy and at each renewal by using the following language, or substantially similar language, in a least 12-point type: (Name of Insurer) will consider your claims history for purposes of determining whether to cancel or refuse to renew your policy.</text> </paragraph> <paragraph num="C."> <text>Providing Disclosure Notice at Inception of Policy. An insurer shall provide the disclosure notice required by §B of this regulation to an insured at the inception of a policy by:</text> <paragraph num="(1)"> <text>Including the disclosure notice in a conspicuous location on a binder, the policy, or another form; and</text> </paragraph> <paragraph num="(2)"> <text>Mailing or delivering the binder, policy, or other form to the insured.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Providing Disclosure Notice at Renewal. An insurer shall provide the disclosure notice required by §B of this regulation to an insured at each renewal of a policy by including the disclosure notice in a conspicuous location on the notice of renewal premium required by Insurance Article, §§27-607 and 27-610, Annotated Code of Maryland.</text> </paragraph> <paragraph num="E."> <text>The disclosure required by §§B and D of this regulation may be met by using the form under COMAR 31.08.18.02.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Measurement of Time Periods."> <text>For the purpose of measuring any time period within which a certain number of claims, or events giving rise to claims, shall have occurred in order to cancel or refuse to renew coverage under Insurance Article, §27-501, Annotated Code of Maryland, the time period is measured from the effective date of the coverage or renewal.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Prohibition on Cancellation or Nonrenewal When Filed Rate Exists."> <paragraph num="A."> <text>Scope. This regulation does not apply to cancellation of a risk due to nonpayment of a premium.</text> </paragraph> <paragraph num="B."> <text>Prohibition. Notwithstanding any provision of Insurance Article, §27-501, Annotated Code of Maryland, or of this chapter, an insurer may not cancel, or refuse to renew, a risk if the insurer has a filed rate that is applicable to that risk.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Umbrella Coverage."> <text>Insurance Article, §27-501, Annotated Code of Maryland, or this chapter does not allow an insurer to cancel or refuse to renew personal umbrella or personal excess coverage without meeting the business purposes standard.</text> </regulation> <regulation prefix="Regulation" num=".08" heading="Effective Date of Standards."> <paragraph num="A."> <text>If an insurer proposes to cancel, or refuse to renew, insurance coverage in accordance with Insurance Article, §27-501, Annotated Code of Maryland, and the cancellation or refusal to renew will take effect on or after October 1, 1998, the insurer shall comply with the standards of Insurance Article, §27-501(i)—(n), Annotated Code of Maryland, to the extent that the standards are applicable.</text> </paragraph> <paragraph num="B."> <text>The disclosure requirements of Regulation .04B of this chapter apply only to a policy that is issued or renewed on or after January 28, 2000.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 19-216(d), and 27-501, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted as an emergency provision effective February 4, 1999 (26:5 Md. R. 389); emergency status expired August 4, 1999; emergency status reinstated effective August 26, 1999 (26:19 Md. R. 1446); emergency status expired December 29, 1999</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted effective March 6, 2000 (27:4 Md. R. 455)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04D amended effective February 1, 2016 (43:2 Md. R. 129)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04E adopted effective November 6, 2017 (44:22 Md. R. 1038)</annotation> </annotations> </chapter> <chapter num="11" heading="Use of Credit History in Underwriting and Rate Making"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>Enactment of Legislation on Use of Credit History.</text> <paragraph num="(1)"> <text>During the 2002 Session, the General Assembly enacted House Bill 521 which became Ch. 580, Acts 2002.</text> </paragraph> <paragraph num="(2)"> <text>With respect to homeowner's insurance, Ch. 580, Acts of 2002 prohibits an insurer from using credit history to underwrite or rate a risk or require a particular payment plan.</text> </paragraph> <paragraph num="(3)"> <text>With respect to private passenger motor vehicle insurance, Ch. 580, Acts of 2002, prohibits an insurer from using credit history to underwrite a risk, increase a renewal premium, or require a particular payment plan and restricts the manner in which an insurer may use credit history to rate a new private passenger motor vehicle policy.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Purpose of Chapter. The purpose of this chapter is to:</text> <paragraph num="(1)"> <text>Implement Ch. 580, Acts of 2002;</text> </paragraph> <paragraph num="(2)"> <text>Clarify the steps an insurer or insurance producer is required to take to determine if an applicant or insured has credit history after an initial inquiry fails to generate a credit report, credit score, or other credit history;</text> </paragraph> <paragraph num="(3)"> <text>Codify the best price rule with respect to the use of credit criteria or a credit score in an insurer's rate-making standards; and</text> </paragraph> <paragraph num="(4)"> <text>Require insurers that use credit history for rating purposes, with respect to private passenger motor vehicle insurance, to provide the Insurance Commissioner with the underlying information that the Insurance Commissioner needs to ensure that the insurers use the credit history in accordance with the standards for rating that currently exist in Maryland law.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Scope."> <paragraph num="A."> <text>In General. This chapter applies to insurers that sell or offer to sell homeowner's insurance or private passenger motor vehicle insurance.</text> </paragraph> <paragraph num="B."> <text>Insurance Transaction Not Initiated by a Consumer.</text> <paragraph num="(1)"> <text>This chapter does not apply to the use of a credit report or a credit score derived from a credit report, by an insurer in an insurance transaction that:</text> <paragraph num="(a)"> <text>Is not initiated by a consumer; and</text> </paragraph> <paragraph num="(b)"> <text>Consists of a firm offer of insurance.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an insurer refuses to underwrite after a consumer submits an application in response to a firm offer of insurance made in accordance with §B(1) of this regulation, the refusal to underwrite:</text> <paragraph num="(a)"> <text>Is not part of a transaction that is not initiated by a consumer; and</text> </paragraph> <paragraph num="(b)"> <text>Is subject to this chapter and any provisions of the Annotated Code of Maryland that are applicable to underwriting, including Insurance Article, §27-501, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Accuracy or Completeness of Information in Credit Report. This chapter does not apply to a dispute regarding the accuracy or completeness of information in a credit report.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following items have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affiliated insurer” means an insurer that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another insurer.</text> </paragraph> <paragraph num="(2)"> <text>“Consumer reporting agency” includes an insurer and any affiliate of an insurer that collects information that:</text> <paragraph num="(a)"> <text>Bears on a consumer's credit worthiness, credit standing, or credit capacity; and</text> </paragraph> <paragraph num="(b)"> <text>Is used or expected to be used wholly or partly to serve as a factor in establishing the consumer's eligibility or pricing for personal lines of property and casualty insurance to be used primarily for personal, family, or household purposes.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Control” means the direct or indirect possession of the power to direct, or cause the direction of, the management and policies of an insurer, regardless of whether the power is exercised, by:</text> <paragraph num="(a)"> <text>Ownership of voting securities or of securities convertible into voting securities;</text> </paragraph> <paragraph num="(b)"> <text>Contract, other than a commercial contract for goods or nonmanagement services; or</text> </paragraph> <paragraph num="(c)"> <text>Any other means.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Credit-based discount” means the application of a rate modification factor that is:</text> <paragraph num="(a)"> <text>Based on an applicant's credit history; and</text> </paragraph> <paragraph num="(b)"> <text>Less than 1.0 but greater than or equal to 0.6.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Credit-based surcharge” means the application of a rate modification factor that is:</text> <paragraph num="(a)"> <text>Based on an applicant's credit history; and</text> </paragraph> <paragraph num="(b)"> <text>Greater than 1.0 but less than or equal to 1.4.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Credit criterion” means information bearing on a particular aspect of an individual's credit history.</text> </paragraph> <paragraph num="(7)"> <text>Credit History.</text> <paragraph num="(a)"> <text>“Credit history” means a written, oral, or other communication of any information by a consumer reporting agency that:</text> <paragraph num="(i)"> <text>Bears on a consumer's credit worthiness, credit standing, or credit capacity; and</text> </paragraph> <paragraph num="(ii)"> <text>Is used or collected, or expected to be used or collected, wholly or partly to serve as a factor in establishing the consumer's eligibility or pricing for personal lines of property and casualty insurance to be used primarily for personal, family, or household purposes.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Credit history” includes:</text> <paragraph num="(i)"> <text>A credit criterion;</text> </paragraph> <paragraph num="(ii)"> <text>A credit report; and</text> </paragraph> <paragraph num="(iii)"> <text>A credit score.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Credit history” does not include:</text> <paragraph num="(i)"> <text>An accident history report as defined in Insurance Article, §27-216(e), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(ii)"> <text>An accident history report or record of motor vehicle violations kept by the Motor Vehicle Administration pursuant to Transportation Article, §16-117, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(iii)"> <text>A property loss report or claims history that does not include information that bears on a consumer's credit worthiness, credit standing, or credit capacity; or</text> </paragraph> <paragraph num="(iv)"> <text>Any report containing information solely as to transactions or experiences between the consumer and the person making the report.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Credit report” means credit history obtained from a consumer reporting agency other than an insurer or affiliate of an insurer described in §B(2) of this regulation.</text> </paragraph> <paragraph num="(9)"> <text>“Credit score” means a score that is derived by utilizing data from an individual's credit history in an algorithm, computer program, model, or other process that reduces the data to a number or rating.</text> </paragraph> <paragraph num="(10)"> <text>“Firm offer of insurance” has the meaning stated in §C of this regulation.</text> </paragraph> <paragraph num="(11)"> <text>Homeowner's Insurance.</text> <paragraph num="(a)"> <text>“Homeowner's insurance” means insurance for residential property that provides one or more of the following coverages:</text> <paragraph num="(i)"> <text>Fire;</text> </paragraph> <paragraph num="(ii)"> <text>Extended coverage;</text> </paragraph> <paragraph num="(iii)"> <text>Vandalism and malicious mischief;</text> </paragraph> <paragraph num="(iv)"> <text>Burglary;</text> </paragraph> <paragraph num="(v)"> <text>Theft; or</text> </paragraph> <paragraph num="(vi)"> <text>Personal liability.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Homeowner's insurance” does not include an umbrella policy.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Motor Vehicle.</text> <paragraph num="(a)"> <text>“Motor vehicle” means a vehicle that is operated or designed for operation on a public road by a power other than animal or muscular power.</text> </paragraph> <paragraph num="(b)"> <text>“Motor vehicle” includes:</text> <paragraph num="(i)"> <text>A motorcycle;</text> </paragraph> <paragraph num="(ii)"> <text>A motor home; and</text> </paragraph> <paragraph num="(iii)"> <text>A trailer.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Motor vehicle” does not include:</text> <paragraph num="(i)"> <text>A bus as defined by Transportation Article, §11-105, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(ii)"> <text>A taxicab as defined by Transportation Article, §11-165, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Private passenger motor vehicle” means a motor vehicle that is used primarily for personal, family, or household purposes.</text> </paragraph> <paragraph num="(14)"> <text>“Rate” includes:</text> <paragraph num="(a)"> <text>To provide or remove a discount or impose or remove a surcharge;</text> </paragraph> <paragraph num="(b)"> <text>To assign an applicant to a tier; or</text> </paragraph> <paragraph num="(c)"> <text>To place an applicant with an affiliated insurer.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>Residential Property.</text> <paragraph num="(a)"> <text>“Residential property” means property that is used primarily as a residence.</text> </paragraph> <paragraph num="(b)"> <text>“Residential property” includes:</text> <paragraph num="(i)"> <text>An apartment unit;</text> </paragraph> <paragraph num="(ii)"> <text>A condominium unit;</text> </paragraph> <paragraph num="(iii)"> <text>A mobile home; and</text> </paragraph> <paragraph num="(iv)"> <text>A multiunit building if one of the units is occupied by the owner of the building and not more than three units are occupied by tenants.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Residential property” does not include a boat.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Tier” means a category within a single insurer into which insureds with similar risk characteristics are placed for purposes of determining a premium rate.</text> </paragraph> </paragraph> <paragraph num="C."> <text>“Firm offer of insurance” means an offer of insurance to a consumer that:</text> <paragraph num="(1)"> <text>Will be honored if the consumer is determined, based on information in a credit report on the consumer, to meet the specific criteria used to select the consumer for the offer; and</text> </paragraph> <paragraph num="(2)"> <text>May be further conditioned on one or more of the following:</text> <paragraph num="(a)"> <text>A determination, based on information in the consumer's application for insurance, that the consumer meets specific criteria that:</text> <paragraph num="(i)"> <text>Bear on insurability, and</text> </paragraph> <paragraph num="(ii)"> <text>Were established before selection of the consumer for the offer and for the purpose of determining whether to extend insurance pursuant to the offer;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Verification:</text> <paragraph num="(i)"> <text>That the consumer continues to meet the specific criteria used to select the consumer for the offer, by using information in a credit report on the consumer, information in the consumer's application for the insurance, or other information bearing on the insurability of the consumer, or</text> </paragraph> <paragraph num="(ii)"> <text>Of the information in the consumer's application for insurance, to determine that the consumer meets the specific criteria bearing on credit worthiness or insurability; or</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>Provision by the consumer of any collateral that is a requirement for the extension of the insurance that was:</text> <paragraph num="(i)"> <text>Established before selection of the consumer for the offer of insurance, and</text> </paragraph> <paragraph num="(ii)"> <text>Disclosed to the consumer in the offer of insurance.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Homeowner's Insurance — Prohibition on Use of Credit History."> <text>With respect to homeowner's insurance, an insurer may not:</text> <paragraph num="A."> <text>Refuse to underwrite, cancel, or refuse to renew a risk based wholly or partly on the credit history of an applicant or insured, including the absence of or inability to determine credit history;</text> </paragraph> <paragraph num="B."> <text>Rate a risk based wholly or partly on the credit history of an applicant or insured, including the absence of or inability to determine credit history, in any manner, including:</text> <paragraph num="(1)"> <text>Providing or removing a discount or imposing or removing a surcharge;</text> </paragraph> <paragraph num="(2)"> <text>Assigning the insured or applicant to a tier; or</text> </paragraph> <paragraph num="(3)"> <text>Placing an applicant or insured with an affiliated insurer; or</text> </paragraph> </paragraph> <paragraph num="C."> <text>Require a particular payment plan based wholly or partly on the credit history of an applicant or insured, including the absence of or inability to determine credit history.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Private Passenger Motor Vehicle Insurance — Uses of Credit History."> <paragraph num="A."> <text>Prohibited Use of Credit History. With respect to private passenger motor vehicle insurance, an insurer may not:</text> <paragraph num="(1)"> <text>Refuse to underwrite, cancel, refuse to renew, or increase the renewal premium based wholly or partly on the credit history of the applicant or insured, including the absence of or inability to determine credit history; or</text> </paragraph> <paragraph num="(2)"> <text>Require a particular payment plan based wholly or partly on the credit history of the applicant or insured, including the absence of or inability to determine credit history.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Permissible Use of Credit History. Subject to Regulations .06, .09, and .10 of this chapter, an insurer may use the credit history of an applicant to rate a new policy of private passenger motor vehicle insurance.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Private Passenger Motor Vehicle Insurance — Credit History Use Disclosure — Premium Quotation."> <paragraph num="A."> <text>Contents of Disclosure. An insurer that rates a new policy of private passenger motor vehicle insurance based wholly or partly on the credit history of an applicant shall, at the time of application, advise the applicant in writing on the application form that:</text> <paragraph num="(1)"> <text>The insurer uses credit history to rate new policies; and</text> </paragraph> <paragraph num="(2)"> <text>The applicant may request a premium quotation that separately identifies the portion of the premium attributable to the applicant's credit history.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Premium Quotation. On request of an applicant, an insurer shall provide to the applicant in writing a premium quotation that separately identifies the portion of the premium attributable to the applicant's credit history.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Private Passenger Motor Vehicle Insurance—Obtaining Credit History."> <paragraph num="A."> <text>In General. With respect to private passenger motor vehicle insurance, an insurer or an insurance producer of an insurer may not obtain a credit report, credit score, or other credit history for an applicant unless the insurer or insurance producer obtains a credit report, credit score, or other credit history:</text> <paragraph num="(1)"> <text>For each applicant of the insurer; or</text> </paragraph> <paragraph num="(2)"> <text>In accordance with a written standard for determining when to obtain a credit report, credit score, or other credit history that meets the requirements of §B of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Written Standard. A written standard for determining when to obtain a credit report, credit score, or other credit history shall:</text> <paragraph num="(1)"> <text>Prohibit obtaining a credit report, credit score, or other credit history based wholly or partly on race, color, creed, sex, religion, national origin, place of residency, blindness, or any other physical handicap or disability of an applicant;</text> </paragraph> <paragraph num="(2)"> <text>Prohibit obtaining a credit report, credit score, or other credit history for any arbitrary, capricious, or unfairly discriminatory reason;</text> </paragraph> <paragraph num="(3)"> <text>Require the decision to obtain a credit report, credit score, or other credit history to be reasonably related to the insurer's economic and business purposes; and</text> </paragraph> <paragraph num="(4)"> <text>Otherwise comply with Insurance Article, §27-501, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Filing Information with the Commissioner. At the request of the Commissioner, an insurer shall file with the Commissioner a copy of the insurer's written standard pursuant to Insurance Article, §27-501(h)(2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="D."> <text>Confidentiality of Information.</text> <paragraph num="(1)"> <text>An insurer that submits a written standard to the Commissioner under §C of this regulation may, under Insurance Article, §27-501(h)(4), Annotated Code of Maryland, request a finding by the Commissioner that its written standard be considered a trade secret or confidential commercial information under General Provisions Article, §4-335, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>A written standard that is the subject of a confidentiality request shall be considered confidential pending review by the Commissioner.</text> </paragraph> <paragraph num="(3)"> <text>A finding that information submitted to the Commissioner under this chapter is a trade secret or confidential commercial information under General Provisions Article, §4-335, Annotated Code of Maryland:</text> <paragraph num="(a)"> <text>Applies only to an application for inspection of a public record under General Provisions Article, Title 4, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Does not apply to a hearing to determine whether an insurer has violated Insurance Article, §27-501, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(c)"> <text>Does not excuse an insurer from providing any information necessary to meet its burden of persuasion at the hearing in accordance with Insurance Article, §27-501(g), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the Commissioner finds that a written standard is not a trade secret or confidential commercial information, the insurer that submitted the written standard may:</text> <paragraph num="(a)"> <text>Withdraw the written standard; or</text> </paragraph> <paragraph num="(b)"> <text>Request a hearing on the Commissioner's finding pursuant to Insurance Article, §2-210(a)(2)(ii), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>An insurer may not use a written standard that has been withdrawn.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Private Passenger Motor Vehicle Insurance — Inability to Obtain Credit History."> <paragraph num="A."> <text>With respect to private passenger motor vehicle insurance, if an initial inquiry by an insurer or insurance producer fails to generate a credit report, credit score, or other credit history, the insurer or insurance producer shall:</text> <paragraph num="(1)"> <text>Notify the applicant or insured that the initial inquiry failed to generate a credit report, credit score, or other credit history;</text> </paragraph> <paragraph num="(2)"> <text>Verify the accuracy of:</text> <paragraph num="(a)"> <text>The name of the applicant or insured, to ensure that the insurer or insurance producer has the full name of the applicant or insured, including any middle initial, and that the name is spelled correctly;</text> </paragraph> <paragraph num="(b)"> <text>The address of the applicant or insured; and</text> </paragraph> <paragraph num="(c)"> <text>Any other information that the insurer or insurance producer obtained from an applicant or insured in order to obtain a credit report, credit score, or other credit history for the applicant or insured;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Document in the appropriate file the notice to the applicant or insured and any response from the applicant or insured; and</text> </paragraph> <paragraph num="(4)"> <text>Retain the documentation for at least 3 years after the date that the notice was provided.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If any of the information that the insurer or insurance producer used in order to obtain a credit report, credit score, or other credit history for an applicant or insured was inaccurate or incomplete, the insurer or insurance producer shall:</text> <paragraph num="(1)"> <text>Make a second attempt to obtain a credit report, credit score, or other credit history for the applicant or insured;</text> </paragraph> <paragraph num="(2)"> <text>Document in the appropriate file the second attempt to obtain a credit report, credit score, or other credit history for the applicant or insured; and</text> </paragraph> <paragraph num="(3)"> <text>Retain the documentation for at least 3 years after the date of the second attempt to obtain a credit report, credit score, or other credit history for the applicant or insured.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Intentional Misrepresentation.</text> <paragraph num="(1)"> <text>An insurer may cancel a policy if an applicant intentionally misrepresented information on an application to prevent the insurer from obtaining a credit report, credit score, or other credit history of the applicant.</text> </paragraph> <paragraph num="(2)"> <text>It is prima facie evidence of an intentional misrepresentation if an applicant:</text> <paragraph num="(a)"> <text>Provided inaccurate information on an application; and</text> </paragraph> <paragraph num="(b)"> <text>Verified the accuracy of the information in response to a request from an insurer or insurance producer following an initial inquiry that failed to generate a credit report, credit score, or any other credit history.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Private Passenger Motor Vehicle Insurance — Use of Credit History for Rating."> <paragraph num="A."> <text>Scope. This regulation applies to an insurer that rates a new policy of private passenger motor vehicle insurance based wholly or partly on the credit history of an applicant.</text> </paragraph> <paragraph num="B."> <text>In General.</text> <paragraph num="(1)"> <text>If an insurer uses credit criteria or a credit score as part of the insurer's rate-making standards, the credit criteria or credit score shall be established and used in a manner that:</text> <paragraph num="(a)"> <text>Does not result in rates that are excessive, inadequate, or unfairly discriminatory;</text> </paragraph> <paragraph num="(b)"> <text>Results in application of the most favorable rate modification for which an applicant qualifies;</text> </paragraph> <paragraph num="(c)"> <text>Results in placement of an applicant in the most favorably priced tier or other classification for which the applicant qualifies;</text> </paragraph> <paragraph num="(d)"> <text>Results in placement of an applicant in the most favorably priced insurer within a group of affiliated insurers for which the applicant qualifies; and</text> </paragraph> <paragraph num="(e)"> <text>Otherwise complies with Insurance Article, §11-306, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If an insurer calculates a premium based wholly or partly on information contained in a credit report, credit score, or other credit history that the insurer knows is inaccurate or incomplete, the resulting rate is deemed to be:</text> <paragraph num="(a)"> <text>Excessive, inadequate, or unfairly discriminatory; and</text> </paragraph> <paragraph num="(b)"> <text>In violation of this regulation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Prohibited Factors.</text> <paragraph num="(1)"> <text>An insurer that rates a new policy wholly or partly on the credit history of an applicant may not use the following factors in rating the policy:</text> <paragraph num="(a)"> <text>A factor on the credit history of the applicant that occurred more than 5 years prior to the issuance of the new policy;</text> </paragraph> <paragraph num="(b)"> <text>The absence of credit history or the inability to determine the applicant's credit history; or</text> </paragraph> <paragraph num="(c)"> <text>The number, age, or other characteristics of credit inquiries about an applicant's credit history.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>With respect to a new policy, the 5-year limit under §C(1)(a) of this regulation shall be measured from the date of issuance of the policy, and may not be measured from the date that the insurer checks the credit history of the applicant.</text> </paragraph> <paragraph num="(3)"> <text>After the initial rating of a policy, the 5-year limit under §C(1)(a) of this regulation shall be measured from the next renewal date of the policy, and may not be measured from the date that the insurer checks the credit history of the insured.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Limitation on Rating Based on Credit History.</text> <paragraph num="(1)"> <text>An insurer that rates a new policy based wholly or partly on the credit history of an applicant may, if actuarially justified, provide a credit-based discount or impose a credit-based surcharge.</text> </paragraph> <paragraph num="(2)"> <text>If a group of affiliated insurers uses credit history wholly or partly as an eligibility factor for placement of an applicant with a particular affiliated insurer:</text> <paragraph num="(a)"> <text>The refusal of an affiliated insurer to accept an applicant based wholly or partly on credit history may not be considered a refusal to underwrite based wholly or partly on credit history if at least one affiliated insurer within the group accepts the applicant; and</text> </paragraph> <paragraph num="(b)"> <text>The group of affiliated insurers is deemed a single insurer for purposes of measuring whether a credit-based discount or credit-based surcharge is within the 40 percent limitation on rate modifications under Insurance Article, §27-501(e-1)(5), Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Notice of Adverse Action. If an insurer does not give an applicant the best available rate or discount due wholly or partly to information from the credit report of the applicant, the insurer shall:</text> <paragraph num="(1)"> <text>Provide to the applicant orally, in writing, or electronically:</text> <paragraph num="(a)"> <text>The name, address, and telephone number of the consumer reporting agency that furnished the credit report to the insurer;</text> </paragraph> <paragraph num="(b)"> <text>If the consumer reporting agency compiles and maintains files on consumers on a nationwide basis, a toll-free telephone number established by the consumer reporting agency; and</text> </paragraph> <paragraph num="(c)"> <text>A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the applicant the specific reasons why the adverse action was taken; and</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Provide to the applicant an oral, written, or electronic notice of the applicant's right:</text> <paragraph num="(a)"> <text>To obtain, under §1681j of the federal Fair Credit Reporting Act, a free copy of a credit report on the applicant from the consumer reporting agency within 60 days after receipt of the notice; and</text> </paragraph> <paragraph num="(b)"> <text>To dispute, under §1681i of the federal Fair Credit Reporting Act, with a consumer reporting agency the accuracy or completeness of any information in a credit report furnished by the agency.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Private Passenger Motor Vehicle Insurance — Review of Credit History"> <paragraph num="A."> <text>Review and Disclosure Required. With respect to private passenger motor vehicle insurance, an insurer that rates a new policy based wholly or partly on the credit history of an applicant shall:</text> <paragraph num="(1)"> <text>Review the credit history of an insured who was adversely impacted by the use of the insured's credit history at the initial rating of the policy:</text> <paragraph num="(a)"> <text>On request of the insured; or</text> </paragraph> <paragraph num="(b)"> <text>If not requested earlier by the insured, every 2 years;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Adjust the premium of an insured whose credit history was reviewed under §A(1) of this regulation to reflect any improvement in the insured's credit history; and</text> </paragraph> <paragraph num="(3)"> <text>Disclose to the applicant at the time of issuance of a policy that the insurer is required to:</text> <paragraph num="(a)"> <text>Review the credit history of an insured who was adversely impacted by the use of the insured's credit history at the initial rating of the policy:</text> <paragraph num="(i)"> <text>On request of the insured; or</text> </paragraph> <paragraph num="(ii)"> <text>If not requested earlier by the insured, every 2 years; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Adjust the premium of an insured whose credit history was reviewed to reflect any improvement in the insured's credit history.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Request for Review. An insured may request a review of the insured's credit history not more than once per term of a policy.</text> </paragraph> <paragraph num="C."> <text>Adjustment of Premium.</text> <paragraph num="(1)"> <text>Except as provided in §C(2)(a) of this regulation, any adjustment to a premium required by a review of an insured's credit history shall take effect at the first renewal following the review of the insured's credit history.</text> </paragraph> <paragraph num="(2)"> <text>If the improvement in the insured's credit history was due to the correction of inaccurate or incomplete information in the insured's credit report, the adjustment as a result of the improvement in the insured's credit history shall be retroactive to the previous renewal.</text> </paragraph> <paragraph num="(3)"> <text>An insurer that is required to review an insured's credit history shall review the credit history prior to the expiration of the current term of the policy and in time for any improvement in the insured's credit history to be reflected in the renewal premium for the subsequent term of the policy.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Private Passenger Motor Vehicle Insurance — Inclusion of Information in Rate Filing."> <paragraph num="A."> <text>In General. With respect to private passenger motor vehicle insurance, an insurer that uses credit history to rate a new policy or another person authorized by the Commissioner to act on behalf of the insurer shall file with the Commissioner as part of the insurer's rate filing under Insurance Article, §11-307, Annotated Code of Maryland:</text> <paragraph num="(1)"> <text>In the insurer's filed rating manual, the rate-related underwriting rule that:</text> <paragraph num="(a)"> <text>Is included in the definition of supplementary rate information in Insurance Article, §11-101(e), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>Defines the credit criteria or ranges of credit scores used to determine application of the rating factor;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The underlying information, including statistical validation, that the insurer relied on for determining the credit criteria or ranges of credit scores that will result in:</text> <paragraph num="(a)"> <text>Provision or removal of a discount or imposition or removal of a surcharge;</text> </paragraph> <paragraph num="(b)"> <text>Placement of an applicant within a particular tier; or</text> </paragraph> <paragraph num="(c)"> <text>Placement of an applicant with an affiliated insurer;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The rating factor that will be applied to an insured who is placed in a particular tier, placed with a particular affiliated insurer, or provided a particular discount or surcharge;</text> </paragraph> <paragraph num="(4)"> <text>The underlying information, including statistical validation, that the insurer relied on for determining the rating factor;</text> </paragraph> <paragraph num="(5)"> <text>In the use of credit scoring, and at the request of the Commissioner, the algorithm, computer program, model, or other process that is used in determining a credit score; and</text> </paragraph> <paragraph num="(6)"> <text>At the request of the Commissioner, the underlying information, including statistical validation, that was relied on to develop the algorithm, computer program, model, or other process that is used in determining a credit score.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Use of Information Not Filed Prohibited. An insurer may not use any credit criteria or credit score wholly or partly as a basis for rating a policy if:</text> <paragraph num="(1)"> <text>The credit criteria or credit score is directly or indirectly derived from any information that the insurer is required to file with the Commissioner under §A of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>The insurer fails to file the information with the Commissioner.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 11-101, 11-306, 11-307, 27-212(d), 27-406, 27-501, and 27-605, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: May 15, 2000 (27:9 Md. R. 861)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 14, 2002 (29:20 Md. R. 1594)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07D amended effective February 1, 2016 (43:2 Md. R. 129)</annotation> </annotations> </chapter> <chapter num="12" heading="Valuation of Motor Vehicles"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>Except as provided in §B of this regulation, this chapter applies to each claim for property damage to a private passenger motor vehicle arising under a policy of insurance, including a claim arising under:</text> <paragraph num="(1)"> <text>Collision coverage;</text> </paragraph> <paragraph num="(2)"> <text>Liability property damage coverage;</text> </paragraph> <paragraph num="(3)"> <text>Comprehensive property damage coverage; or</text> </paragraph> <paragraph num="(4)"> <text>Uninsured motorist property damage coverage.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter does not apply to a claim for property damage to a private passenger motor vehicle insurance that does not involve a total loss as defined in Regulation .02B(9) of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Business day” means a day other than Saturday, Sunday, a federal holiday, or a State holiday as designated by State Personnel and Pensions Article, §9-201, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Claim” means a demand for payment or reimbursement for a loss incurred under one or more coverages provided by an insurance policy.</text> </paragraph> <paragraph num="(3)"> <text>“Claimant” includes a first-party claimant and a third-party claimant.</text> </paragraph> <paragraph num="(4)"> <text>“First-party claimant” means a person asserting a right to payment:</text> <paragraph num="(a)"> <text>Under an insurance policy pursuant to which the person is insured; and</text> </paragraph> <paragraph num="(b)"> <text>That arises out of a loss that is covered by the insurance policy.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Motor vehicle” has the meaning stated in Insurance Article, §19-501(b), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Notification of a claim” means notification by a claimant that:</text> <paragraph num="(a)"> <text>Is made in writing or by other means acceptable under the terms of an insurance policy;</text> </paragraph> <paragraph num="(b)"> <text>Reasonably informs the insurer of the facts pertinent to the claim; and</text> </paragraph> <paragraph num="(c)"> <text>Is made:</text> <paragraph num="(i)"> <text>Directly to the Maryland Automobile Insurance Fund, in the case of a policy issued by the Fund; or</text> </paragraph> <paragraph num="(ii)"> <text>To an insurer or its insurance producer who has an appointment from that insurer as defined in Insurance Article, §1-101(f), Annotated Code of Maryland, in all other cases.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Substantially similar motor vehicle” means a motor vehicle that, in comparison to a damaged motor vehicle:</text> <paragraph num="(a)"> <text>Is the same make and model as the damaged motor vehicle;</text> </paragraph> <paragraph num="(b)"> <text>Is the same year as, or a more recent year than, the damaged motor vehicle;</text> </paragraph> <paragraph num="(c)"> <text>Contains at least the same major options as the damaged motor vehicle;</text> </paragraph> <paragraph num="(d)"> <text>Is in a condition substantially similar to or better than the condition of the damaged motor vehicle immediately before the damage occurred; and</text> </paragraph> <paragraph num="(e)"> <text>Has mileage that is within the greater of 4,000 miles or 10 percent of the mileage on the damaged motor vehicle at the time that the damage occurred unless the vehicle is limited in production, specialty in nature, or older than 10 model years at the time of total loss.</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Third-party claimant” means any person asserting a claim against a person insured under an insurance policy.</text> </paragraph> <paragraph num="(9)"> <text>“Total loss” means the condition of a motor vehicle for which:</text> <paragraph num="(a)"> <text>The cost of repairs equals or exceeds:</text> <paragraph num="(i)"> <text>The actual cash value of the motor vehicle as calculated in accordance with Regulation .04 of this chapter; or</text> </paragraph> <paragraph num="(ii)"> <text>A percentage of the actual cash value of the motor vehicle established by the insurer and calculated in accordance with Regulation .04 of this chapter; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The total cost to repair the motor vehicle, plus the estimated cost of potential repairs from hidden damage, plus any anticipated rental coverage, may equal or exceed:</text> <paragraph num="(i)"> <text>The actual cash value of the motor vehicle as calculated in accordance with Regulation .04 of this chapter; or</text> </paragraph> <paragraph num="(ii)"> <text>A percentage of the actual cash value of the motor vehicle established by the insurer and calculated in accordance with Regulation .04 of this chapter.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Duties of Insurer Following Determination of Total Loss of Motor Vehicle."> <paragraph num="A."> <text>Scope. The deadlines set by §§B—D of this regulation do not apply to a claim for damage that results in the total loss of a motor vehicle if:</text> <paragraph num="(1)"> <text>There is a good faith dispute as to the obligation of the insurer under the contract; or</text> </paragraph> <paragraph num="(2)"> <text>There are factors beyond the control of the insurer that prevent the insurer from complying with the deadlines set by §§B—D of this regulation, including a vehicle that is limited in production, specialty in nature, or older than 10 model years at the time of the total loss.</text> </paragraph> </paragraph> <paragraph num="B."> <text>First-Party Claimants—In General. Except as provided in §C of this regulation, within 10 business days after an insurer determines that a motor vehicle of a first-party claimant is a total loss, the insurer shall:</text> <paragraph num="(1)"> <text>Make an offer of a cash settlement pursuant to Regulation .04 of this chapter; or</text> </paragraph> <paragraph num="(2)"> <text>If authorized by the policy, replace the motor vehicle pursuant to Regulation .07 of this chapter.</text> </paragraph> </paragraph> <paragraph num="C."> <text>First-Party Claimants—Unrecovered Theft Loss. In the case of an unrecovered theft loss of the motor vehicle of a first-party claimant, an insurer shall make an offer for the total loss within the later of:</text> <paragraph num="(1)"> <text>30 days after receipt of notification of a claim; or</text> </paragraph> <paragraph num="(2)"> <text>The time provided in the policy.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Third-Party Claimants. Within 10 days after an insurer determines that a motor vehicle of a third-party is a total loss, the insurer shall make an offer of a cash settlement pursuant to Regulation .04 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Cash Settlement."> <text>If an insurer elects to make a cash settlement for the total loss of a motor vehicle pursuant to Regulation .03 of this chapter, the insurer's minimum offer, subject to applicable deductions, shall be:</text> <paragraph num="A."> <text>The total of:</text> <paragraph num="(1)"> <text>The retail value for a substantially similar motor vehicle from a nationally recognized valuation manual or from a computerized data base that produces statistically valid fair market values for a substantially similar vehicle as defined in Regulation .02B(7) of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Regardless of whether the claimant retains salvage rights, the applicable taxes and transfer fees pursuant to COMAR 11.11.05; or</text> </paragraph> </paragraph> <paragraph num="B."> <text>The total of:</text> <paragraph num="(1)"> <text>A quotation for a substantially similar motor vehicle obtained by or on behalf of the insurer from a qualified dealer at a location reasonably convenient to the claimant; and</text> </paragraph> <paragraph num="(2)"> <text>Regardless of whether the claimant retains salvage rights, the applicable taxes and transfer fees pursuant to COMAR 11.11.05.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Contents of Settlement Offer."> <paragraph num="A."> <text>In General. A settlement offer made by an insurer pursuant to Regulation .04 of this chapter shall:</text> <paragraph num="(1)"> <text>State the amount being offered;</text> </paragraph> <paragraph num="(2)"> <text>Inform the claimant that, on request from the claimant, the insurer shall provide the claimant in writing:</text> <paragraph num="(a)"> <text>A copy of the settlement offer;</text> </paragraph> <paragraph num="(b)"> <text>The method used to arrive at the value of the motor vehicle, including identification of any books, manuals, or databases used;</text> </paragraph> <paragraph num="(c)"> <text>A detailed explanation of the insurer's calculation of the motor vehicle's total loss value, including the calculation of any value added to the motor vehicle by options;</text> </paragraph> <paragraph num="(d)"> <text>A list of all deductions that will be made from the value of the motor vehicle; and</text> </paragraph> <paragraph num="(e)"> <text>A copy of the inspection guidelines relied on by the insurer to determine the condition of the vehicle at the time of the loss; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Inform the claimant that the claimant may, in writing, reject the settlement offer and make a counteroffer in accordance with Regulation .06 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a claimant makes a request under §A(2) of this regulation, the insurer shall provide a response within 7 business days of the date of the request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Response by Claimant to Settlement Offer."> <paragraph num="A."> <text>In General. After receipt of a settlement offer, a claimant may:</text> <paragraph num="(1)"> <text>Accept the offer; or</text> </paragraph> <paragraph num="(2)"> <text>In writing, reject the offer and make a counteroffer based on:</text> <paragraph num="(a)"> <text>Dealer quotations for a substantially similar motor vehicle;</text> </paragraph> <paragraph num="(b)"> <text>Advertisements for a substantially similar motor vehicle; or</text> </paragraph> <paragraph num="(c)"> <text>Any other source of valuation for a substantially similar motor vehicle.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Duty of Insurer. If an insurer rejects a claimant's counteroffer made pursuant to §A(2) of this regulation, the insurer shall, within 5 business days, send to the claimant a written explanation in clear and understandable language of why the information relied on by the claimant in the counteroffer does not provide a more accurate valuation than the information relied on by the insurer in its offer.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Replacement of Motor Vehicle."> <text>If an insurer elects to replace a motor vehicle pursuant to Regulation .03B(2) of this chapter and the insurance policy provides authority for the replacement as an acceptable method of settlement, the insurer shall provide the claimant with a motor vehicle that is:</text> <paragraph num="A."> <text>A substantially similar motor vehicle;</text> </paragraph> <paragraph num="B."> <text>Immediately available; and</text> </paragraph> <paragraph num="C."> <text>Subject to any deductible, paid for by the insurer.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §27-304.1, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: July 5, 2004 (31:13 Md. R. 996)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective March 24, 2008 (35:6 Md. R. 702)</annotation> </annotations> </chapter> <chapter num="13" heading="Notice of Premium Increase for Commercial Insurance"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to:</text> <paragraph num="(1)"> <text>Commercial insurance as defined in Insurance Article, §27-601(b), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Workers’ compensation insurance for employers’ liability as set forth in Labor and Employment Article, Title 9, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter does not apply to policies:</text> <paragraph num="(1)"> <text>Issued to exempt commercial policyholders, as defined in Insurance Article, §11-206(j), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(2)"> <text>For which the renewal premium is:</text> <paragraph num="(a)"> <text>In excess of $1,000; and</text> </paragraph> <paragraph num="(b)"> <text>An increase over the expiring policy premium of the lesser of 3 percent or $300; or</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Of surplus lines insurance procured from a nonadmitted insurer under Insurance Article, Title 3, Subtitle 3, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Notice Requirement for Commercial Lines Policies."> <paragraph num="A."> <text>Exceptions.</text> <paragraph num="(1)"> <text>The notice required by Insurance Article, §27-608, Annotated Code of Maryland, does not apply to an insurer that intends to increase a premium for a commercial lines policy if the insurer satisfies the Commissioner that it cannot reasonably comply with the notice requirement for any risk, category of risk, or line of business involved.</text> </paragraph> <paragraph num="(2)"> <text>An insurer is deemed unable to reasonably comply with the notice required by Insurance Article, §27-608, Annotated Code of Maryland:</text> <paragraph num="(a)"> <text>With respect to any portion of a premium increase that results from:</text> <paragraph num="(i)"> <text>An increase in the units of exposure;</text> </paragraph> <paragraph num="(ii)"> <text>Application of an experience rating plan;</text> </paragraph> <paragraph num="(iii)"> <text>Application of a retrospective rating plan;</text> </paragraph> <paragraph num="(iv)"> <text>A premium audit performed in accordance with the terms of the policy;</text> </paragraph> <paragraph num="(v)"> <text>Any change made by the insured to the risk that increases insurer's exposure on the risk;</text> </paragraph> <paragraph num="(vi)"> <text>A request made by the insured to change coverage under the policy; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>If the insurer:</text> <paragraph num="(i)"> <text>Has given notice of its intent not to renew the policy;</text> </paragraph> <paragraph num="(ii)"> <text>Is required to hold coverage in effect past the expiration date and into the renewal period, by operation of Insurance Article, §27-501(f), Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(iii)"> <text>Does not receive the hold-in-effect directive of the Commissioner far enough in advance of the renewal date to calculate the premium and provide the notice of premium increase at least 45 days before the effective date of the proposed premium increase.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Calculation of Amount of Premium Increase. In determining whether an insurer is required to provide a notice of increase in premium for a commercial lines policy under Insurance Article, §27-608, Annotated Code of Maryland, the insurer shall deduct from the total amount of the premium increase any portion of the premium increase that is exempted from the notice requirement under §A(2)(a) of this regulation.</text> </paragraph> <paragraph num="C."> <text>Content of Notice.</text> <paragraph num="(1)"> <text>For a commercial lines policy, an insurer shall include on a notice of premium increase required by Insurance Article, §27-608, Annotated Code of Maryland, the following:</text> <paragraph num="(a)"> <text>The expiring policy premium and the renewal policy premium; and</text> </paragraph> <paragraph num="(b)"> <text>The telephone number for the insurer or insurance producer, if any, together with a statement that the insured may call to request additional information about the premium increase.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Notwithstanding §C(1) of this regulation, the insurer shall provide a reasonable estimate of the premium increase or range of the premium increase based on the information available to the insurer at the time that the notice is sent if:</text> <paragraph num="(a)"> <text>The insurer's rating methodology requires the insured to provide information to the insurer for the insurer to calculate the premium;</text> </paragraph> <paragraph num="(b)"> <text>The insurer requests the information from the insured far enough in advance of the renewal date for:</text> <paragraph num="(i)"> <text>The insured to provide the information to the insurer; and</text> </paragraph> <paragraph num="(ii)"> <text>The insurer to calculate the premium and provide the notice of premium increase at least 45 days before the effective date of the proposed premium increase; and</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>The insured fails to provide the information to the insurer far enough in advance of the renewal date for the insurer to calculate the premium and provide the notice of premium increase at least 45 days before the effective date of the proposed premium increase.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Request for Exception."> <paragraph num="A."> <text>For a situation not expressly exempted by Regulation .02A(2) of this chapter from the notice required by Insurance Article, §27-608, Annotated Code of Maryland, an insurer may apply for an exception to the notice requirement by submitting to the Commissioner at least 60 days before the date the notice is required to be sent:</text> <paragraph num="(1)"> <text>A written request for an exception to the notice requirement;</text> </paragraph> <paragraph num="(2)"> <text>A written explanation of why the insurer cannot reasonably comply with the notice requirement for any risk, category of risk, or line of business involved; and</text> </paragraph> <paragraph num="(3)"> <text>Any information that supports the insurer's contention that it cannot reasonably comply with the notice requirement.</text> </paragraph> </paragraph> <paragraph num="B."> <text>On receipt of a request for an exception to the notice requirement, the Commissioner shall:</text> <paragraph num="(1)"> <text>Review the request for an exception to the notice requirement, the explanation of why the insurer cannot reasonably comply with the notice requirement, and any information accompanying the request; and</text> </paragraph> <paragraph num="(2)"> <text>Determine whether the insurer can reasonably comply with the notice requirement for any risk, category of risk, or line of business involved.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the Commissioner determines that an insurer cannot reasonably comply with the notice requirement for any risk, category of risk, or line of business involved, the Commissioner shall:</text> <paragraph num="(1)"> <text>Grant the insurer's request for an exception to the notice requirement; and</text> </paragraph> <paragraph num="(2)"> <text>Send to the insurer a notice that:</text> <paragraph num="(a)"> <text>States that the insurer's request for an exception to the notice requirement has been granted;</text> </paragraph> <paragraph num="(b)"> <text>Identifies the risk, category of risk, or line of business to which the exception applies; and</text> </paragraph> <paragraph num="(c)"> <text>States the duration of the exception to the notice requirement.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>If the Commissioner determines that an insurer can reasonably comply with the notice requirement, the Commissioner shall:</text> <paragraph num="(1)"> <text>Deny the insurer's request for an exception to the notice requirement; and</text> </paragraph> <paragraph num="(2)"> <text>Send to the insurer a notice that states that the insurer's request for an exception to the notice requirement has been denied.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-608, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 27, 2006 (33:6 Md. R. 580)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective January 1, 2015 (41:21 Md. R. 1261)</annotation> </annotations> </chapter> <chapter num="14" heading="Administrative Service Fees"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to establish the standards applicable to insurance producers authorized to sell health insurance when providing administrative services to an employer, and to adopt the disclosure form required by Insurance Article, §27-216(g)(3), Annotated Code of Maryland.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administrative service” has the meaning stated in Insurance Article, §27-216(g), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Administrative service fee” means a fee that is:</text> <paragraph num="(a)"> <text>Charged to an employer by an insurance producer for providing an administrative service to the employer; and</text> </paragraph> <paragraph num="(b)"> <text>A reasonable amount for the administrative services provided to the employer after consideration of:</text> <paragraph num="(i)"> <text>The fee customarily charged to a similarly situated employer for the same or similar services in the employer’s location,</text> </paragraph> <paragraph num="(ii)"> <text>The time the producer spent providing the service, and</text> </paragraph> <paragraph num="(iii)"> <text>The expenses the producer incurred to provide the administrative service to the employer, including the cost of the product or service.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Disclosure form” means the form set forth in Regulation .06 of this chapter that shall be used by an insurance producer when charging a fee for an administrative service.</text> </paragraph> <paragraph num="(4)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §2-112.2, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(5)"> <text>“Health insurance” has the meaning stated in Insurance Article, §1-101(p), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Insurance producer” has the meaning stated in Insurance Article, §1-101(u), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Administrative Service Fee."> <paragraph num="A."> <text>An insurance producer who is licensed under Insurance Article, Title 10, Annotated Code of Maryland to sell health insurance may not charge an administrative service fee for providing an administrative service to an employer unless the insurance producer:</text> <paragraph num="(1)"> <text>Clearly and accurately completes the disclosure form set forth in Regulation .06 of this chapter in accordance with this chapter and the instructions provided in the disclosure form;</text> </paragraph> <paragraph num="(2)"> <text>Lists on the disclosure form each of the administrative services to be provided and the fee for each administrative service to be provided;</text> </paragraph> <paragraph num="(3)"> <text>If the insurance producer sells a health benefit plan to the employer, discloses the amount of commission or other compensation that the insurance producer will receive from an insurer, nonprofit health service plan, or health maintenance organization related to the sale of the health benefit plan on the disclosure form;</text> </paragraph> <paragraph num="(4)"> <text>Signs the completed disclosure form and obtains the signature of the authorized representative of the employer on the completed disclosure form; and</text> </paragraph> <paragraph num="(5)"> <text>Provides the employer with a signed copy of the completed disclosure form prior to charging an administrative service fee.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An insurance producer may not charge an administrative service fee:</text> <paragraph num="(1)"> <text>For services related to the sale, solicitation, negotiation, or servicing of a health benefit plan of an employer that are compensated by commissions or other compensation paid to the insurance producer by an insurer, nonprofit health service plan, or health maintenance organization; or</text> </paragraph> <paragraph num="(2)"> <text>For services provided when an insurance producer acts as an administrator under Insurance Article, Title 8, Subtitle 3, Annotated Code of Maryland or an Adviser under Insurance Article, Title 10, Subtitle 2, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Records."> <paragraph num="A."> <text>An insurance producer shall retain a copy of the signed disclosure form for a period of 5 years.</text> </paragraph> <paragraph num="B."> <text>An insurance producer shall retain documentation of the actual costs associated with providing the administrative service to an employer for a period of 5 years.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Rebating, Inducement, Coerced, or Tie-in Sales."> <paragraph num="A."> <text>An insurance producer may not provide an administrative service to an employer unless an administrative service fee is charged for the administrative service.</text> </paragraph> <paragraph num="B."> <text>An insurance producer who provides an administrative service without charging an administrative service fee shall be subject to disciplinary action under the Insurance Article, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Disclosure Form."> <text>The disclosure form required by Regulation .03 shall read as follows:</text> <text>FORM AT END OF CHAPTER</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 27-216, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 12, 2013 (40:24 Md. R. 2018)</annotation> </annotations> </chapter> <chapter num="15" heading="Liability of Insurer — Failure to Act in Good Faith"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>The purpose of this chapter is to:</text> <paragraph num="(1)"> <text>Establish the procedures for filing and processing civil complaints against property and casualty insurers and insurers that offer disability insurance that are required to be filed with the Administration pursuant to Insurance Article, §27-1001, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>Require property and casualty insurers and insurers that offer disability insurance that are the subject of a civil action described in Courts and Judicial Proceedings Article, §3-1701(d), Annotated Code of Maryland, to report to the Administration certain information that the Administration is required to submit to the General Assembly pursuant to Insurance Article, §27-1001(h), Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="B."> <text>This chapter is considered necessary to carry out Insurance Article, Title 27, Subtitle 10, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Applicability and Scope."> <paragraph num="A."> <text>This chapter is applicable to all insurers that issue, sell, or deliver a policy of property and casualty insurance, and insurers that issue, sell, or deliver a policy of individual disability insurance, that includes first-party coverage in this State.</text> </paragraph> <paragraph num="B."> <text>This chapter applies to:</text> <paragraph num="(1)"> <text>All civil complaints purporting to state a cause of action under Courts and Judicial Proceedings Article, §3-1701, Annotated Code of Maryland, that are required to be filed with the Administration pursuant to Insurance Article §27-1001, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(2)"> <text>All civil complaints that are to be reported to the General Assembly pursuant to Insurance Article, §27-1001, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“27-1001 filing” means the complaint and supporting documentation filed by the plaintiff that are submitted to the Administration pursuant to Insurance Article, §27-1001(d)(1) and (2), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Complaint” means a written document that purports to state a cause of action under Courts and Judicial Proceedings Article, §3-1701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(3)"> <text>“Defendant insurer” means the insurer that is the subject of the complaint.</text> </paragraph> <paragraph num="(4)"> <text>“Good cause” means a privilege or doctrine recognized by statute or other law in the State as a basis on which to refuse to produce a document in response to civil discovery requests.</text> </paragraph> <paragraph num="(5)"> <text>“Plaintiff” means the person who is asserting the cause of action set forth in a complaint.</text> </paragraph> <paragraph num="(6)"> <text>“Responsive filing” means the response to the complaint filed by the defendant insurer with the supporting documentation that meets the requirements of Insurance Article, §27-1001(d)(4), Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Filing the Complaint."> <paragraph num="A."> <text>Plaintiff Filing a Complaint.</text> <paragraph num="(1)"> <text>A plaintiff filing a complaint that is required to be filed with the Administration in accordance with Insurance Article, §27-1001, Annotated Code of Maryland, shall submit the complaint to the Administration in accordance with the following procedures:</text> <paragraph num="(a)"> <text>The complaint shall include the information and be accompanied by the documents identified in Insurance Article, §27-1001(d)(2), Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>The plaintiff shall file an original and one copy of the 27-1001 filing; and</text> </paragraph> <paragraph num="(c)"> <text>The 27-1001 filing shall be accompanied by a civil cover sheet.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The form of the civil cover sheet shall be determined by the Administration and published by bulletin. The civil cover sheet shall be available:</text> <paragraph num="(a)"> <text>On the Administration’s website;</text> </paragraph> <paragraph num="(b)"> <text>At the Administration’s offices; and</text> </paragraph> <paragraph num="(c)"> <text>By mail on request of the plaintiff.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>The 27-1001 filing and civil cover sheet shall be filed by sending them by:</text> <paragraph num="(1)"> <text>First-class mail addressed to the Hearing and Appeals Clerk, Maryland Insurance Administration, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202;</text> </paragraph> <paragraph num="(2)"> <text>A commercial overnight delivery service addressed to the Hearing and Appeals Clerk at the Administration’s official street address; or</text> </paragraph> <paragraph num="(3)"> <text>Hand delivery addressed to the Hearing and Appeals Clerk between the hours of 8 a.m. and 4 p.m. at the official street address of the Administration.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The 27-1001 filing and civil cover sheet shall be filed in an envelope marked in bold print in the lower left corner “27-1001 Filing”.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Defendant Insurer’s Responsive Filing."> <paragraph num="A."> <text>Not later than 30 days after the Administration forwards the 27-1001 filing to the defendant insurer, the defendant insurer shall file a responsive filing with the Administration and mail a copy of it to the plaintiff.</text> </paragraph> <paragraph num="B."> <text>The defendant insurer may, for good cause, withhold any document or evidence from its responsive filing that is required to be filed under Insurance Article §27-1001(d)(4), Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>If the defendant insurer elects to withhold any document or evidence from its responsive filing, the defendant insurer shall submit, along with its responsive filing, an index listing each document that is being withheld, in a manner sufficient to identify the document or evidence, and the basis for withholding the document.</text> </paragraph> <paragraph num="D."> <text>In-Camera Inspection.</text> <paragraph num="(1)"> <text>If the defendant insurer elects to withhold any document or evidence from its responsive filing, the defendant insurer shall submit, along with its responsive filing and the index required under §C of this regulation, a copy of each document listed on the index for in-camera inspection by the Administration.</text> </paragraph> <paragraph num="(2)"> <text>Each copy of each document or evidence submitted to the Administration for in-camera inspection shall be clearly stamped “Withheld for Good Cause”.</text> </paragraph> <paragraph num="(3)"> <text>All copies submitted to the Administration for in-camera inspection shall be placed in a separate, sealed envelope that includes the case name and MIA filing number and that is marked “Documents Withheld by Defendant Insurer [Name of Insurer] for Good Cause”.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The defendant insurer shall file an original and one copy of its responsive filing and the index required under §C of this regulation, along with an electronic copy of the responsive filing and the index on a CD-ROM formatted in PDF (Portable Document Format). The CD-ROM submitted by the defendant insurer may not include the documents submitted to the Administration for in-camera inspection under §D of this regulation.</text> </paragraph> <paragraph num="F."> <text>The defendant insurer’s responsive filing and the index and documents required under §§C and D of this regulation shall be filed with the Administration by:</text> <paragraph num="(1)"> <text>First-class mail addressed to the Hearing and Appeals Clerk, Maryland Insurance Administration, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202;</text> </paragraph> <paragraph num="(2)"> <text>A commercial overnight delivery service addressed to the Hearing and Appeals Clerk at the Administration’s official street address; or</text> </paragraph> <paragraph num="(3)"> <text>Hand delivery addressed to the Hearing and Appeals Clerk between the hours of 8 a.m. and 4 p.m. at the official street address of the Administration.</text> </paragraph> </paragraph> <paragraph num="G."> <text>The responsive filing and the index required under §C of this regulation shall be filed in an envelope marked in bold print in the lower corner “27-1001 Responsive Filing”.</text> </paragraph> <paragraph num="H."> <text>The documents submitted to the Administration for in-camera inspection under §D of this regulation are not required to be included in the materials sent to the insured under Insurance Article, §27-1001(d)(4)(ii), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Administration’s Review."> <paragraph num="A."> <text>The Administration shall review each document or other evidence that the defendant insurer has submitted to the Administration for in-camera inspection under Regulation .05D of this chapter.</text> </paragraph> <paragraph num="B."> <text>If the Administration determines that any document or other evidence that the defendant insurer has withheld for good cause is not subject to a privilege or doctrine recognized by statute or other State law and the reason asserted for its withholding is not consistent with Insurance Article, §27-1001, Annotated Code of Maryland, or this regulation, the Administration shall:</text> <paragraph num="(1)"> <text>Find that good cause has not been shown as to that document or evidence; and</text> </paragraph> <paragraph num="(2)"> <text>Require the defendant insurer to:</text> <paragraph num="(a)"> <text>Provide copies of the document or evidence; or</text> </paragraph> <paragraph num="(b)"> <text>Give written notice to the plaintiff of its intent to continue to withhold the documents or evidence.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>The defendant insurer shall reply under §B(2)(a) or (b) of this regulation within 5 business days after the Administration’s determination that the document or evidence is not subject to withholding.</text> </paragraph> <paragraph num="D."> <text>After the Administration makes a determination with regard to any document or other evidence the defendant insurer seeks to withhold for good cause, it shall promptly return the documents or other evidence to the defendant insurer at the address of record.</text> </paragraph> <paragraph num="E."> <text>The defendant insurer shall advise the Administration in writing within 5 business days after the Administration’s determination that the document or evidence is not subject to withholding if it has elected to:</text> <paragraph num="(1)"> <text>Produce the document or evidence to the plaintiff as required; or</text> </paragraph> <paragraph num="(2)"> <text>Maintain its position that the document or evidence is being withheld for good cause.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If the defendant insurer elects to produce some, but not all, of the documents or evidence which the Administration has determined are not subject to withholding, it shall advise the Administration, in writing, as to which documents or evidence it has produced to the plaintiff and which it has not, and its reasons.</text> </paragraph> <paragraph num="G."> <text>The Administration’s final determination will take into consideration a defendant insurer’s failure to disclose documents or evidence which the Administration determined were not being withheld for good cause, and shall consider the defendant insurer’s refusal to produce the documents or evidence to the plaintiff following the in-camera inspection as evidence of the defendant insurer’s failure to act in good faith as required by Insurance Article, §27-1001(e)(4), Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Duties of Defendant Insurers."> <paragraph num="A."> <text>Each property and casualty insurer and insurers that offer individual disability insurance that issue, sell, or deliver a policy that includes first-party coverage in the State shall designate a person authorized to receive 27-1001 filings from the Administration.</text> </paragraph> <paragraph num="B."> <text>Each Insurer to which this chapter applies shall notify the Administration of the name and address of the defendant insurer’s 27-1001 filing designee.</text> </paragraph> <paragraph num="C."> <text>An insurer that fails to notify the Administration of its designee is considered to have appointed the person previously identified by the insurer to receive process that has been served on the Commissioner as attorney-in-fact, as the insurer’s 27-1001 filing designee until the insurer has notified the Administration of its 27-1001 filing designee.</text> </paragraph> <paragraph num="D."> <text>Notice of Disposition.</text> <paragraph num="(1)"> <text>Each defendant insurer shall advise the Administration, in writing, as to a disposition by the Office of Administrative Hearings or any court of law of any complaint filed against the defendant insurer under Courts and Judicial Proceedings Article, §3-1701, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>The notice of disposition shall be on the form determined by the Administration and published by bulletin and shall be sent to the Hearing and Appeals Clerk at the Administration within 30 days of the disposition.</text> </paragraph> <paragraph num="(3)"> <text>The notice of disposition shall identify:</text> <paragraph num="(a)"> <text>The adjudicatory body that issued the disposition;</text> </paragraph> <paragraph num="(b)"> <text>The case name and number before that adjudicatory body, as well as the case name and number of any underlying or prior dispositions with respect to that complaint;</text> </paragraph> <paragraph num="(c)"> <text>Whether the complaint seeks a determination as to:</text> <paragraph num="(i)"> <text>Coverage;</text> </paragraph> <paragraph num="(ii)"> <text>An alleged failure by the defendant insurer to adequately value, pay, or value and pay the underlying insurance claim; or</text> </paragraph> <paragraph num="(iii)"> <text>Both §D(3)(c)(i) and (ii) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>The type of coverage at issue in the complaint, such as auto UM/UIM, homeowner’s, commercial general liability, individual disability, or other;</text> </paragraph> <paragraph num="(e)"> <text>The amount sought as damages in the complaint, itemized by:</text> <paragraph num="(i)"> <text>The amount sought as actual damages; and</text> </paragraph> <paragraph num="(ii)"> <text>The amount sought as expenses and litigation costs, including attorney’s fees;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>The disposition with respect to each count of the complaint;</text> </paragraph> <paragraph num="(g)"> <text>A summary of any determinations made;</text> </paragraph> <paragraph num="(h)"> <text>A listing of any amounts awarded by the adjudicatory body; and</text> </paragraph> <paragraph num="(i)"> <text>Whether any further proceedings before that body or another tribunal have been filed or are expected to be filed.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Notice of Pending Complaint.</text> <paragraph num="(1)"> <text>Each defendant insurer shall advise the Administration, in writing, when it is served with a complaint that was not originally filed with the Administration.</text> </paragraph> <paragraph num="(2)"> <text>The notice of the pending complaint shall be on the form determined by the Administration and published by bulletin and shall be sent to the Hearing and Appeals Clerk at the Administration within 30 days of service of process.</text> </paragraph> <paragraph num="(3)"> <text>The notice of the pending complaint shall identify:</text> <paragraph num="(a)"> <text>The court in which the complaint was filed;</text> </paragraph> <paragraph num="(b)"> <text>The case name and number assigned to the complaint;</text> </paragraph> <paragraph num="(c)"> <text>The parties to the complaint;</text> </paragraph> <paragraph num="(d)"> <text>The reason why the complaint was not required to be filed with the Administration before being filed with the court;</text> </paragraph> <paragraph num="(e)"> <text>Whether the complaint seeks a determination as to:</text> <paragraph num="(i)"> <text>Coverage;</text> </paragraph> <paragraph num="(ii)"> <text>An alleged failure by the defendant insurer to adequately value, pay, or value and pay the underlying insurance claim; or</text> </paragraph> <paragraph num="(iii)"> <text>Both §E(3)(e)(i) and (ii) of this regulation;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>The type of coverage at issue in the complaint, such as auto UM/UIM, homeowner’s, commercial general liability, individual disability, or other; and</text> </paragraph> <paragraph num="(g)"> <text>The amount sought as damages in the complaint; itemized by:</text> <paragraph num="(i)"> <text>The amount sought as actual damages; and</text> </paragraph> <paragraph num="(ii)"> <text>The amount sought as expenses and litigation costs, including attorney’s fees.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Courts and Judicial Proceedings Article, §3-1701; Insurance Article, §§2-109(a)(1) and 27-1001; Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 27, 2017 (44:6 Md. R. 328)</annotation> </annotations> </chapter> </subtitle> <subtitle num="16" heading="Miscellaneous"> <chapter num="01" heading="Disclosure to Policyholders of the Possible Effects of Assessable Insurance Policies"> <regulation prefix="Regulation" num=".01" heading="Disclosure Requirements."> <text>In order to inform and better protect the public, the following regulation is adopted:</text> <paragraph num="A."> <text>Every agent writing insurance business, or broker placing this business, with a mutual insurance company or reciprocal insurer issuing assessable policies shall clearly explain to the prospective policyholder the assessable nature of the policy and its possible effects in the event of insolvency.</text> </paragraph> <paragraph num="B."> <text>Every policy, renewal certificate, bill, statement, invoice, or premium receipt book issued by any agent, broker, mutual company, or reciprocal insurer relating to the sale of an assessable policy shall contain on it the following legend which shall be prominently displayed in bold red type:</text> </paragraph> <paragraph num="C."> <text>Exemption.</text> <paragraph num="(1)"> <text>Section B of this regulation does not apply to any business written or placed in an insurer writing property and casualty insurance other than vehicle liability or vehicle physical damage insurance when the insurer writing the business:</text> <paragraph num="(a)"> <text>Has a surplus of at least $200,000, as shown in its annual statement for the prior year and any examination as of a later date; and</text> </paragraph> <paragraph num="(b)"> <text>Has premium writings during the prior year, net of reinsurance ceded, which do not exceed two times the amount of the insurer's surplus shown on the statement or examination.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>However, whenever the insurer's net premium writings for a current year exceed two times its surplus as shown on the prior year's annual statement or later examination, the legend referred to in §B of this regulation shall be required to be affixed as aforesaid for the remainder of the current calendar year and during the following calendar year.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109; 3-111, and 3-113, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 25, 1966</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.40 to COMAR 31.16.01 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="02" heading="Deposits on New Homes — Surety Bond or Escrow Account Requirements" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: July 15, 1970</annotation> <annotation type="History" subtype="Administrative History">Regulation .03B amended effective March 6, 1989 (16:4 Md. R. 496)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.04 to COMAR 31.16.02 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised and recodified from 31.16.02 Surety Bond or Escrow Account Requirements to COMAR 09.01.11 Deposits on New Homes — Surety Bond and Escrow Account Requirements, as an emergency provision effective October 1, 1998 (25:22 Md. R. 1649); revised and recodified permanently effective December 28, 1998 (25:26 Md. R. 1920)</annotation> </annotations> </chapter> <chapter num="03" heading="Title Insurance Companies — MAHT Account"> <regulation prefix="Regulation" num=".01" heading="General."> <text>The purpose of this chapter is to provide for the implementation and monitoring of accounts to be maintained by title insurers or title insurance producers for the benefit of the Maryland Affordable Housing Trust.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Act” means Insurance Article, §22-103, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Beneficial owner” means a person, other than the buyer in a real estate transaction, for whose benefit a title insurer or title insurance producer is entrusted to hold trust money.</text> </paragraph> <paragraph num="(3)"> <text>“Buyer” means a buyer in a real estate transaction.</text> </paragraph> <paragraph num="(4)"> <text>“Commissioner” means the Maryland State Insurance Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>“Financial institution” means:</text> <paragraph num="(a)"> <text>A financial institution located in the State; or</text> </paragraph> <paragraph num="(b)"> <text>Subject to approval of the Banking Board in the Maryland Department of Labor, a financial institution outside the State that complies with the requirements of Insurance Article, Title 22, Subtitle 1, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>Law Firm.</text> <paragraph num="(a)"> <text>“Law firm” means an association of attorneys who are admitted to practice before the Court of Appeals of the State, and who:</text> <paragraph num="(i)"> <text>Are primarily engaged in the practice of law; and</text> </paragraph> <paragraph num="(ii)"> <text>Solicit, procure, or negotiate title insurance contracts only as an incident of the practice of law.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Law firm” includes a sole practitioner.</text> </paragraph> <paragraph num="(c)"> <text>“Law firm” does not include:</text> <paragraph num="(i)"> <text>An attorney or an association of attorneys who own, operate, or share an interest in a title agency; or</text> </paragraph> <paragraph num="(ii)"> <text>An attorney who is employed by a title agency as a title insurance producer or title insurance broker.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(7)"> <text>“MAHT account” means an account established with a financial institution for the benefit of the Maryland Affordable Housing Trust.</text> </paragraph> <paragraph num="(8)"> <text>“Maryland Affordable Housing Trust (MAHT)” means the fund created under Housing and Community Development Article, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Mortgage” includes a deed of trust.</text> </paragraph> <paragraph num="(10)"> <text>“Person” means an individual, joint venture, partnership, corporation, trust, foundation, association, limited liability company, or any other legal entity.</text> </paragraph> <paragraph num="(11)"> <text>Title Agency.</text> <paragraph num="(a)"> <text>“Title agency” means a business formed for the primary purpose of acting as a title insurance producer.</text> </paragraph> <paragraph num="(b)"> <text>“Title agency” includes a sole proprietor, partnership, corporation, or limited liability company.</text> </paragraph> </paragraph> <paragraph num="(12)"> <text>Title Insurance Producer.</text> <paragraph num="(a)"> <text>“Title insurance producer” means a person who, for compensation, in any manner solicits, procures, or negotiates title insurance contracts.</text> </paragraph> <paragraph num="(b)"> <text>“Title insurance producer” includes a person who provides escrow, closing, or settlement services which may result in the issuance of a title insurance contract.</text> </paragraph> <paragraph num="(c)"> <text>“Title insurance producer” does not include individuals employed and used by title insurance producers for the performance of clerical, stenographic, and similar office duties.</text> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Trust money” means a deposit, payment, or other money that a person entrusts to a title insurer or a title insurance producer to hold for a buyer or beneficial owner in connection with a real estate escrow, settlement, closing, or title indemnification.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Establishment of MAHT Accounts."> <paragraph num="A."> <text>Establishment.</text> <paragraph num="(1)"> <text>Each title insurer or title insurance producer expecting to make trust money deposits, as set forth in §B of this regulation, shall establish one or more MAHT accounts with a financial institution.</text> </paragraph> <paragraph num="(2)"> <text>The MAHT account:</text> <paragraph num="(a)"> <text>May provide all of the financial services which may be required by a title insurer or a title insurance producer;</text> </paragraph> <paragraph num="(b)"> <text>Shall be an interest-bearing account; and</text> </paragraph> <paragraph num="(c)"> <text>Shall be an account which:</text> <paragraph num="(i)"> <text>Is permitted to be held by a title insurer or title insurance producer under federal or State law; and</text> </paragraph> <paragraph num="(ii)"> <text>Charges reasonable and customary service charges for commercial accounts.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Trust Money Deposits.</text> <paragraph num="(1)"> <text>Except as provided in §B(3) of this regulation, a title insurer or title insurance producer shall deposit all trust monies, as defined in Regulation .02B of this chapter, into a MAHT account as provided in §B(2) of this regulation.</text> </paragraph> <paragraph num="(2)"> <text>Trust money from a particular transaction shall be deposited into a MAHT account only if, in the reasonable judgement of the title insurer or the title insurance producer, the money (if deposited into a separate MAHT interest bearing account) would earn:</text> <paragraph num="(a)"> <text>$50 or less in interest; or</text> </paragraph> <paragraph num="(b)"> <text>More than $50 in interest, if the reasonable and customary charges of the financial institution are anticipated to be more than the interest which would be earned on the trust money if separately deposited into a MAHT interest bearing account.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A law firm is not required to deposit trust monies into a MAHT account, but shall deposit those monies as may be required by any other applicable law, including the attorney trust accounts provisions of Business Occupations and Professions Article, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Operation of MAHT Accounts."> <paragraph num="A."> <text>Account Terms. The terms of a MAHT account require that:</text> <paragraph num="(1)"> <text>The financial institution in which the MAHT account is maintained pays the interest earned on the MAHT account, less the reasonable and customary service charges of the financial institution, at least quarterly, to MAHT;</text> </paragraph> <paragraph num="(2)"> <text>At the time of payment of interest earned to MAHT, the financial institution provides an itemized statement for each MAHT account maintained in that financial institution, which statement shall set forth:</text> <paragraph num="(a)"> <text>The interest earned on each MAHT account, and</text> </paragraph> <paragraph num="(b)"> <text>If requested by MAHT, an itemized statement of each service charge assessed against the MAHT account.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>Service Charges.</text> <paragraph num="(1)"> <text>Reasonable and customary charges for commercial accounts may be deducted from interest on the MAHT account, except charges for:</text> <paragraph num="(a)"> <text>Deposits of dishonored items;</text> </paragraph> <paragraph num="(b)"> <text>Presentations against insufficient funds;</text> </paragraph> <paragraph num="(c)"> <text>Overdrafts;</text> </paragraph> <paragraph num="(d)"> <text>Certified checks;</text> </paragraph> <paragraph num="(e)"> <text>Account reconciliations; and</text> </paragraph> <paragraph num="(f)"> <text>Wire transfers.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>If the aggregate service charges assessed against a title insurer or title insurance producer on all of its MAHT accounts held in a single financial institution exceed the aggregate interest earned on those MAHT accounts, the title insurer or title insurance producer is liable for payment of those service charges to the extent they exceed the earned interest.</text> </paragraph> <paragraph num="(3)"> <text>The Commissioner or MAHT may authorize a title insurer or title insurance producer to close all of its MAHT accounts or not open a MAHT account or accounts if the title insurer or title insurance producer:</text> <paragraph num="(a)"> <text>Demonstrates that it will cost or has cost more in reasonable and customary service charges for commercial accounts to maintain a MAHT account than will be or has been generated in interest by the MAHT account; and</text> </paragraph> <paragraph num="(b)"> <text>Agrees to open a MAHT account or accounts if the condition described in §B(3)(a) of this regulation is no longer applicable.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>These regulations do not preclude a financial institution from electing to waive service charges on a MAHT account.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Separate Accounts."> <paragraph num="A."> <text>Trust money which is not required to be deposited into a MAHT account may be deposited into any other deposit or investment vehicle:</text> <paragraph num="(1)"> <text>Specified by the buyer or beneficial owner; or</text> </paragraph> <paragraph num="(2)"> <text>Agreed upon by the buyer or beneficial owner and the title insurer or title insurance producer.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An agreement referred to in §A of this regulation between a buyer or beneficial owner and a title insurer or title insurance producer shall be in writing and either be:</text> <paragraph num="(1)"> <text>In a separate agreement; or</text> </paragraph> <paragraph num="(2)"> <text>If part of another agreement between the parties, in conspicuous type and initialed by the buyer or beneficial owner.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Annual Reports."> <paragraph num="A."> <text>Filing. Each title insurer or title insurance producer who maintains a separate MAHT account shall file an annual report with the Commissioner and MAHT.</text> </paragraph> <paragraph num="B."> <text>Forms. The annual report shall be prepared on a form approved by the Commissioner and shall include the following information:</text> <paragraph num="(1)"> <text>A list of all MAHT accounts and other bank accounts maintained by the title insurer or title insurance producer in which trust money was deposited at any time during the year, which list shall include the:</text> <paragraph num="(a)"> <text>Name of the account holder;</text> </paragraph> <paragraph num="(b)"> <text>Names of all persons who have access to the account;</text> </paragraph> <paragraph num="(c)"> <text>Financial institution in which the account is maintained;</text> </paragraph> <paragraph num="(d)"> <text>Account number; and</text> </paragraph> <paragraph num="(e)"> <text>Purpose of the account;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Gross and net interest earned on each account;</text> </paragraph> <paragraph num="(3)"> <text>A list of the types and amounts charged for services provided to each account, together with the total amount charged for services for each account; and</text> </paragraph> <paragraph num="(4)"> <text>Any other information the Commissioner considers necessary.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Date of Filing. A title insurer or title insurance producer shall file the annual report with the Commissioner and MAHT on or before March 31 for the immediately preceding year ending December 31.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Review and Audit."> <paragraph num="A."> <text>Review. The Commissioner and MAHT shall review the annual reports submitted by a title insurer or title insurance producer that maintains a separate MAHT account.</text> </paragraph> <paragraph num="B."> <text>Audit.</text> <paragraph num="(1)"> <text>The Commissioner may audit a title insurer or title insurance producer for compliance with this chapter.</text> </paragraph> <paragraph num="(2)"> <text>The Commissioner may examine, and a title insurer or title insurance producer shall produce for examination, any record or document of a title insurer or title insurance producer, including:</text> <paragraph num="(a)"> <text>Books;</text> </paragraph> <paragraph num="(b)"> <text>Records;</text> </paragraph> <paragraph num="(c)"> <text>Financial statements;</text> </paragraph> <paragraph num="(d)"> <text>Banking statements; or</text> </paragraph> <paragraph num="(e)"> <text>Documents related to a real estate escrow, settlement, closing, or title indemnification.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Each title insurer or title insurance producer shall permit the Commissioner to investigate, review, and copy records or documents of a financial institution pertaining to an account of a title insurer or title insurance producer.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Delegation.</text> <paragraph num="(1)"> <text>The Commissioner may delegate the authority to audit a title insurer or title insurance producer to MAHT for compliance with this chapter.</text> </paragraph> <paragraph num="(2)"> <text>If the Commissioner delegates its audit authority to MAHT, MAHT may audit the transactional files and related financial records of a title insurer or title insurance producer in connection with the sale or financing of real estate.</text> </paragraph> <paragraph num="(3)"> <text>If the Commissioner delegates its audit authority to MAHT, MAHT shall conduct the audit and report its findings to the Commissioner.</text> </paragraph> <paragraph num="(4)"> <text>The Commissioner may take appropriate action based upon the findings reported in the audit.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Cost. The expense incurred in connection with an audit performed under this chapter shall be paid by MAHT.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Enforcement."> <paragraph num="A."> <text>The Commissioner may impose on a title insurer or title insurance producer any penalty, sanction, or other form of legal enforcement which the Commissioner has the authority to impose for failure to comply with the provisions of this chapter.</text> </paragraph> <paragraph num="B."> <text>The Commissioner may not charge a title insurer or a title insurer's producer with a violation of ethical or legal responsibilities when placing trust funds in accounts where the interest earned is paid to the Maryland Affordable Housing Trust in accordance with this chapter.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 22-103, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 11, 1996 (23:5 Md. R. 379)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06B amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07C, D amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective May 19, 1997 (24:10 Md. R. 709)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.31.06 to COMAR 31.16.03 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> <annotation type="History" subtype="Administrative History">Regulation .03 amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> <annotation type="History" subtype="Administrative History">Regulation .04B amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> <annotation type="History" subtype="Administrative History">Regulation .05 amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> <annotation type="History" subtype="Administrative History">Regulation .07 amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> <annotation type="History" subtype="Administrative History">Regulation .08 amended effective December 14, 2009 (36:25 Md. R. 1957)</annotation> </annotations> </chapter> <chapter num="04" heading="Provision of Completed Premium Finance Agreement to Insured"> <regulation prefix="Regulation" num=".01" heading="When Insured Is Present at Time of Signing."> <text>If the insured is present at the time a premium finance agreement is signed by or on behalf of the insured, the premium finance company, or an agent or producer, if applicable, shall provide the insured with, or cause the insured to be provided with, a legible copy of the fully completed and executed premium finance agreement at the time the agreement is signed.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="When Insured Is Not Present at Time of Signing."> <text>If the insured is not present at the time a premium finance agreement is executed on behalf of the insured, the premium finance company, or an agent or producer, if applicable, within 72 hours after the agreement is executed, shall mail or otherwise cause to be provided to the insured a legible copy of the fully completed and executed premium finance agreement.</text> </regulation> <regulation prefix="Regulation" num=".03" heading="Records."> <text>A premium finance company shall maintain a record of all premium finance agreements provided to insureds in accordance with Regulation .02 of this chapter, and these records shall be open to examination by the Commissioner.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109, 23-103, 23-207, and 23-302(c), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 15, 1993 (20:5 Md. R. 513)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.79 to COMAR 31.16.04 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="05" heading="Cancellation of Insurance Contracts by Premium Finance Companies" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: November 23, 1992 (19:23 Md. R. 2040)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.87 to COMAR 31.16.05 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01 repealed effective February 15, 2016 (43:3 Md. R. 274)</annotation> </annotations> </chapter> <chapter num="06" heading="Bulk Reinsurance, Stock, and Mutual Insurers"> <regulation prefix="Regulation" num=".01" heading="Reinsurance Agreement."> <text>A number of reinsurance treaties, particularly Quota-Share Treaties, provide for provisional commissions on a sliding scale which are adjusted periodically or on final settlement based upon the experience developed on business reinsured under these treaties. It is hereby ordered that when a company enters into such a reinsurance agreement the commission for which credit will be allowed in the preparation of your Annual Statements or any interim statements filed with this Administration will be the minimum guaranteed commission under the sliding scale provision. This, however, does not preclude the allowance as an asset of any commission in excess of the guaranteed minimum which may be due the company on final settlement of the Treaty.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109 and 3-124, and 3-125, Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: March 25, 1966</annotation> <annotation type="History" subtype="Administrative History">Amended effective May 1, 1968</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from COMAR 09.30.41 to COMAR 31.16.06 effective September 7, 1998 (25:18 Md. R. 1439)</annotation> </annotations> </chapter> <chapter num="07" heading="Holocaust Victims Insurance Claims and Reports" reason="Repealed"> <annotations> <annotation type="History" subtype="Administrative History">Effective date: June 25, 2001 (28:12 Md. R. 1118)</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.09 repealed effective February 15, 2016 (43:3 Md. R. 274)</annotation> </annotations> </chapter> <chapter num="08" heading="Privacy of Consumer Financial and Health Information"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to all licensees of the Maryland Insurance Administration who possess nonpublic personal financial information or nonpublic personal health information about consumers.</text> </paragraph> <paragraph num="B."> <text>This chapter does not apply to information about persons who obtain products or services for business, commercial, or agricultural purposes.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Purpose."> <text>This chapter:</text> <paragraph num="A."> <text>Requires a licensee to provide notice to individuals about its privacy policies and practices;</text> </paragraph> <paragraph num="B."> <text>Describes the conditions under which a licensee may disclose nonpublic personal health information and nonpublic personal financial information about individuals to affiliates and nonaffiliated third parties; and</text> </paragraph> <paragraph num="C."> <text>Provides methods for individuals to prevent a licensee from disclosing nonpublic personal financial information and nonpublic personal health information.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Affiliate” means a company that controls, is controlled by, or is under common control with another company.</text> </paragraph> <paragraph num="(2)"> <text>“Clear and conspicuous notice” means a notice that is:</text> <paragraph num="(a)"> <text>Reasonably understandable; and</text> </paragraph> <paragraph num="(b)"> <text>Designed to call attention to the nature and significance of the information in the notice.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Collect” means to obtain information that the licensee organizes or can retrieve by the name of an individual or by identifying number, symbol, or other identifying particular assigned to the individual, irrespective of the source of the underlying information.</text> </paragraph> <paragraph num="(4)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>“Company” means a corporation, limited liability company, business trust, general or limited partnership, association, sole proprietorship, or similar organization.</text> </paragraph> <paragraph num="(6)"> <text>“Consumer” has the meaning stated in §C of this regulation.</text> </paragraph> <paragraph num="(7)"> <text>“Consumer reporting agency” has the meaning stated in §603(f) of the federal Fair Credit Reporting Act, 15 U.S.C. §1681a(f).</text> </paragraph> <paragraph num="(8)"> <text>“Control” means:</text> <paragraph num="(a)"> <text>Ownership, control, or power to vote 25 percent or more of the outstanding shares of any class of voting security of the company, directly or indirectly, or acting through one or more other persons;</text> </paragraph> <paragraph num="(b)"> <text>Control in any manner over the election of a majority of the directors, trustees, general partners, or individuals exercising similar functions of the company; or</text> </paragraph> <paragraph num="(c)"> <text>The power to exercise, directly or indirectly, a controlling influence over the management or policies of the company, as the Commissioner determines.</text> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Customer” means a consumer who has a customer relationship with a licensee.</text> </paragraph> <paragraph num="(10)"> <text>Customer Relationship.</text> <paragraph num="(a)"> <text>“Customer relationship” means a continuing relationship between a consumer and a licensee under which the licensee provides one or more insurance products or insurance services to the consumer that are to be used primarily for personal, family, or household purposes.</text> </paragraph> <paragraph num="(b)"> <text>“Customer relationship” includes a relationship between a licensee and a consumer who:</text> <paragraph num="(i)"> <text>Is a current policyholder of an insurance product issued by or through the licensee; or</text> </paragraph> <paragraph num="(ii)"> <text>Obtains financial, investment, or economic advisory services relating to an insurance product or insurance service from the licensee for a fee.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Customer relationship” does not include a relationship between a licensee and:</text> <paragraph num="(i)"> <text>A consumer who applies for insurance but does not purchase the insurance;</text> </paragraph> <paragraph num="(ii)"> <text>A consumer who purchases from the licensee airline travel insurance in an isolated transaction;</text> </paragraph> <paragraph num="(iii)"> <text>An individual who is no longer a current policyholder of an insurance product or who no longer obtains insurance services with or through the licensee;</text> </paragraph> <paragraph num="(iv)"> <text>A consumer who is a beneficiary or claimant under a policy and who has submitted a claim under a policy choosing a settlement option involving an ongoing relationship with the licensee;</text> </paragraph> <paragraph num="(v)"> <text>A consumer who is a beneficiary or a claimant under a policy and who has submitted a claim under that policy choosing a lump sum settlement option;</text> </paragraph> <paragraph num="(vi)"> <text>A customer whose policy is lapsed, expired, or otherwise inactive or dormant under the licensee's business practices, if the licensee has not communicated with the customer about the relationship for a period of 12 consecutive months, other than annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials;</text> </paragraph> <paragraph num="(vii)"> <text>An individual who is an insured or an annuitant under an insurance policy or annuity, respectively, but is not the policyholder or owner of the insurance policy or annuity;</text> </paragraph> <paragraph num="(viii)"> <text>An individual whose last-known address, according to the licensee's records, is deemed invalid because mail sent by the licensee to that address has been returned by the postal authorities as undeliverable and subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful;</text> </paragraph> <paragraph num="(ix)"> <text>An individual solely because the individual is a participant or a beneficiary of an employee benefit plan that the licensee administers or sponsors or for which the licensee acts as a trustee, insurer, or fiduciary;</text> </paragraph> <paragraph num="(x)"> <text>An individual solely because the individual is covered under a group or blanket insurance policy or group annuity contract issued by the licensee; or</text> </paragraph> <paragraph num="(xi)"> <text>An individual solely because the individual is a beneficiary in a workers' compensation plan underwritten by the licensee.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(11)"> <text>Financial Institution.</text> <paragraph num="(a)"> <text>“Financial institution” means any institution the business of which is engaging in activities that are financial in nature or incidental to the financial activities as described in §4(k) of the Bank Holding Company Act of 1956, 12 U.S.C. §1843(k).</text> </paragraph> <paragraph num="(b)"> <text>“Financial institution” does not include:</text> <paragraph num="(i)"> <text>Any person with respect to any financial activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act, 7 U.S.C. §1 et seq.;</text> </paragraph> <paragraph num="(ii)"> <text>The Federal Agricultural Mortgage Corporation or any person charged and operating under the Farm Credit Act of 1971, 12 U.S.C. §2001 et seq.; or</text> </paragraph> <paragraph num="(iii)"> <text>Institutions chartered by Congress specifically to engage in securitizations, secondary market sales (including sales of servicing rights), or similar transactions related to a transaction of a consumer, as long as the institutions do not sell or transfer nonpublic personal information to a nonaffiliated third party.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(12)"> <text>“Financial product” means a product that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to a financial activity under §4(k) of the Bank Holding Company Act of 1956, 12 U.S.C. §1843(k).</text> </paragraph> <paragraph num="(13)"> <text>Financial Service.</text> <paragraph num="(a)"> <text>“Financial service” means a service that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to a financial activity under §4(k) of the Bank Holding Company Act of 1956, 12 U.S.C. §1843(k).</text> </paragraph> <paragraph num="(b)"> <text>“Financial service” includes a financial institution's evaluation or brokerage of information that the financial institution collects in connection with a request or an application from a consumer for a financial product or financial service.</text> </paragraph> </paragraph> <paragraph num="(14)"> <text>“Health care” means:</text> <paragraph num="(a)"> <text>Providing preventive, diagnostic, therapeutic, rehabilitative, maintenance, or palliative care, services, procedures, tests, or counseling that:</text> <paragraph num="(i)"> <text>Relates to the physical, mental, or behavioral condition of an individual; or</text> </paragraph> <paragraph num="(ii)"> <text>Affects the structure or function of the human body or any part of the human body, including the banking of blood, sperm, organs, or any other tissue; or</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Prescribing, dispensing, or furnishing to an individual drugs or biologicals, or medical devices or health care equipment and supplies.</text> </paragraph> </paragraph> <paragraph num="(15)"> <text>Health Care Provider.</text> <paragraph num="(a)"> <text>“Health care provider” means a health care facility, physician, or other health care practitioner licensed, accredited, certified, or otherwise authorized to perform specified health services consistent with state law.</text> </paragraph> <paragraph num="(b)"> <text>“Health care provider” includes the agents, employees, officers, and directors of a health care provider.</text> </paragraph> </paragraph> <paragraph num="(16)"> <text>“Health information” means any information or data except age or gender, whether oral or recorded in any form or medium, created by or derived from a health care provider or the consumer that relates to:</text> <paragraph num="(a)"> <text>The past, present, or future physical, mental, or behavioral health or condition of an individual;</text> </paragraph> <paragraph num="(b)"> <text>The provision of health care to an individual; or</text> </paragraph> <paragraph num="(c)"> <text>Payment for the provision of health care to an individual.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>“Insurance product” means any product that is offered by a licensee pursuant to the insurance laws of this State.</text> </paragraph> <paragraph num="(18)"> <text>Insurance Service.</text> <paragraph num="(a)"> <text>“Insurance service” means any service that is offered by a licensee pursuant to the insurance laws of this State.</text> </paragraph> <paragraph num="(b)"> <text>“Insurance service” includes a licensee's evaluation, brokerage, or distribution of information that the licensee collects in connection with a request or an application from a consumer for an insurance product or insurance service.</text> </paragraph> </paragraph> <paragraph num="(19)"> <text>Licensee.</text> <paragraph num="(a)"> <text>“Licensee” means a person licensed or required to be licensed, registered or required to be registered, or otherwise authorized or required to be authorized by the Commissioner.</text> </paragraph> <paragraph num="(b)"> <text>“Licensee” includes an unauthorized insurer that accepts business placed through a licensed surplus lines broker in the State, but only in regard to the business placed pursuant to Insurance Article, §3-306, Annotated Code of Maryland.</text> </paragraph> </paragraph> <paragraph num="(20)"> <text>Nonaffiliated Third Party.</text> <paragraph num="(a)"> <text>“Nonaffiliated third party” means any person except:</text> <paragraph num="(i)"> <text>A licensee's affiliate; or</text> </paragraph> <paragraph num="(ii)"> <text>A person employed jointly by a licensee and any company that is not the licensee's affiliate.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Nonaffiliated third party” includes:</text> <paragraph num="(i)"> <text>A company that is not the licensee's affiliate that jointly employs a person with the licensee; and</text> </paragraph> <paragraph num="(ii)"> <text>Any company that is an affiliate solely by virtue of the direct or indirect ownership or control of the company by the licensee or its affiliate in conducting merchant banking or investment banking activities of the type described in §4(k)(4)(H) or insurance company investment activities of the type described in §4(k)(4)(I) of the federal Bank Holding Company Act, 12 U.S.C. §1843(k)(4)(H) and(i).</text> </paragraph> </paragraph> </paragraph> <paragraph num="(21)"> <text>“Nonpublic personal information” means nonpublic personal financial information and nonpublic personal health information.</text> </paragraph> <paragraph num="(22)"> <text>Nonpublic Personal Financial Information.</text> <paragraph num="(a)"> <text>“Nonpublic personal financial information” means:</text> <paragraph num="(i)"> <text>Personally identifiable financial information; and</text> </paragraph> <paragraph num="(ii)"> <text>Any list, description, or other grouping of consumers and publicly available information pertaining to them that is derived using any personally identifiable financial information that is not publicly available.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Nonpublic personal financial information” includes a list of individuals' names and street addresses that is derived in whole or in part using personally identifiable financial information that is not publicly available, such as account numbers.</text> </paragraph> <paragraph num="(c)"> <text>“Nonpublic personal financial information” does not include:</text> <paragraph num="(i)"> <text>Health information;</text> </paragraph> <paragraph num="(ii)"> <text>Publicly available information, except as included on a list described in §B(22)(a)(ii) of this regulation;</text> </paragraph> <paragraph num="(iii)"> <text>Any list, description, or other grouping of consumers and publicly available information pertaining to them that is derived without using any personally identifiable financial information that is not publicly available; or</text> </paragraph> <paragraph num="(iv)"> <text>A list of individuals' names and addresses that contains only publicly available information, is not derived in whole or in part using personally identifiable financial information that is not publicly available, and is not disclosed in a manner that indicates that any of the individuals on the list is a consumer of a financial institution.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(23)"> <text>“Nonpublic personal health information” means health information:</text> <paragraph num="(a)"> <text>That identifies an individual who is the subject of the information; or</text> </paragraph> <paragraph num="(b)"> <text>With respect to which there is a reasonable basis to believe that the information could be used to identify an individual.</text> </paragraph> </paragraph> <paragraph num="(24)"> <text>“Opt out” means a direction by the consumer that the licensee not disclose nonpublic personal financial information about that consumer to a nonaffiliated third party, other than as permitted by Regulations .14, .15, and .16 of this chapter.</text> </paragraph> <paragraph num="(25)"> <text>Personally Identifiable Financial Information.</text> <paragraph num="(a)"> <text>“Personally identifiable financial information” means any information:</text> <paragraph num="(i)"> <text>A consumer provides to a licensee to obtain an insurance product or insurance service from the licensee;</text> </paragraph> <paragraph num="(ii)"> <text>About a consumer resulting from a transaction involving an insurance product or insurance service between a licensee and a consumer; or</text> </paragraph> <paragraph num="(iii)"> <text>The licensee otherwise obtains about a consumer in connection with providing an insurance product or insurance service to that consumer.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Personally identifiable financial information” includes:</text> <paragraph num="(i)"> <text>Information a consumer provides to a licensee on an application to obtain an insurance product or insurance service;</text> </paragraph> <paragraph num="(ii)"> <text>Account balance information and payment history;</text> </paragraph> <paragraph num="(iii)"> <text>The fact that an individual is or has been one of the licensee's customers or has obtained an insurance product or insurance service from the licensee;</text> </paragraph> <paragraph num="(iv)"> <text>Any information about the licensee's consumer if it is disclosed in a manner that indicates that the individual is or has been the licensee's consumer;</text> </paragraph> <paragraph num="(v)"> <text>Any information that a consumer provides to a licensee or that the licensee or its agent otherwise obtains in connection with collecting on a loan or servicing a loan;</text> </paragraph> <paragraph num="(vi)"> <text>Any information the licensee collects through an Internet cookie (an information-collecting device from a web server); and</text> </paragraph> <paragraph num="(vii)"> <text>Information from a consumer report.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Personally identifiable financial information” does not include:</text> <paragraph num="(i)"> <text>Health information;</text> </paragraph> <paragraph num="(ii)"> <text>A list of names and addresses of customers of an entity that is not a financial institution; and</text> </paragraph> <paragraph num="(iii)"> <text>Information that does not identify a consumer, such as aggregate information or blind data that does not contain personal identifiers such as account numbers, names, or addresses.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(26)"> <text>“Publicly available information” means any information for which a licensee:</text> <paragraph num="(a)"> <text>Has a reasonable basis to believe is lawfully made available to the general public from:</text> <paragraph num="(i)"> <text>Federal, state, or local government records;</text> </paragraph> <paragraph num="(ii)"> <text>Widely distributed media; or</text> </paragraph> <paragraph num="(iii)"> <text>Disclosures to the general public that are required to be made by federal, state, or local law; and</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>Has established the reasonable basis required by §B(26)(a) of this regulation by taking steps to determine:</text> <paragraph num="(i)"> <text>That the information is of the type that is available to the general public; and</text> </paragraph> <paragraph num="(ii)"> <text>Whether an individual can direct that the information not be made available to the general public and, if so, that the licensee's consumer has not done so.</text> </paragraph> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>“Consumer” Defined.</text> <paragraph num="(1)"> <text>“Consumer” means an individual:</text> <paragraph num="(a)"> <text>Who seeks to obtain, obtains, or has obtained an insurance product or insurance service from a licensee that is to be used primarily for personal, family, or household purposes; and</text> </paragraph> <paragraph num="(b)"> <text>About whom the licensee has nonpublic personal information.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Consumer” includes:</text> <paragraph num="(a)"> <text>The legal representative of a consumer;</text> </paragraph> <paragraph num="(b)"> <text>An individual who provides nonpublic personal information to a licensee in connection with obtaining or seeking to obtain financial, investment, or economic advisory services relating to an insurance product or insurance service regardless of whether the licensee establishes an ongoing advisory relationship;</text> </paragraph> <paragraph num="(c)"> <text>An applicant for insurance before the inception of insurance coverage;</text> </paragraph> <paragraph num="(d)"> <text>If a licensee discloses nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under Regulations .14, .15, and .16 of this chapter, an individual who is:</text> <paragraph num="(i)"> <text>A beneficiary of a life insurance policy underwritten by the licensee;</text> </paragraph> <paragraph num="(ii)"> <text>A claimant under an insurance policy issued by the licensee;</text> </paragraph> <paragraph num="(iii)"> <text>An insured or annuitant under an insurance policy or annuity issued by the licensee; or</text> </paragraph> <paragraph num="(iv)"> <text>A mortgagor under a mortgage insurance policy issued by the licensee;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>A participant or a beneficiary of an employee benefit plan that a licensee administers or sponsors or for which a licensee acts as a trustee, insurer, or fiduciary if the licensee:</text> <paragraph num="(i)"> <text>Does not provide the initial, annual, and revised notices under Regulations .05, .06, and .09 of this chapter to the plan sponsor; or</text> </paragraph> <paragraph num="(ii)"> <text>Discloses to a nonaffiliated third party nonpublic personal financial information other than as permitted under Regulations .14, .15, and .16 of this chapter;</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>An individual who is covered under a group or blanket insurance policy or group annuity contract issued by the licensee if the licensee:</text> <paragraph num="(i)"> <text>Does not provide the initial, annual, and revised notices under Regulations .05, .06, and .09 of this chapter to the group or blanket insurance policyholder or group annuity contract holder; or</text> </paragraph> <paragraph num="(ii)"> <text>Discloses to a nonaffiliated third party nonpublic personal financial information other than as permitted under Regulations .14, .15, and .16 of this chapter; and</text> </paragraph> </paragraph> <paragraph num="(g)"> <text>An individual who is a beneficiary in a workers' compensation plan underwritten by the licensee if the licensee:</text> <paragraph num="(i)"> <text>Does not provide the initial, annual, and revised notices under Regulations .05, .06, and .09 of this chapter to the workers' compensation plan participant; or</text> </paragraph> <paragraph num="(ii)"> <text>Discloses to a nonaffiliated third party nonpublic personal financial information other than as permitted under Regulations .14, .15, and .16 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Consumer” does not include:</text> <paragraph num="(a)"> <text>An individual who is a consumer of another financial institution solely because the licensee is acting as an agent for, or provides processing or other services to, that financial institution;</text> </paragraph> <paragraph num="(b)"> <text>An individual solely because the individual is a beneficiary of a trust for which a licensee is a trustee;</text> </paragraph> <paragraph num="(c)"> <text>An individual solely because the individual has designated a licensee as trustee for a trust;</text> </paragraph> <paragraph num="(d)"> <text>An individual solely because the individual is a participant or a beneficiary of an employee benefit plan that a licensee administers or sponsors or for which a licensee acts as a trustee, insurer, or fiduciary if the licensee:</text> <paragraph num="(i)"> <text>Provides the initial, annual, and revised notices under Regulations .05, .06, and .09 of this chapter to the plan sponsor; and</text> </paragraph> <paragraph num="(ii)"> <text>Does not disclose to a nonaffiliated third party nonpublic personal financial information about the individual other than as permitted under Regulations .14, .15, and .16 of this chapter;</text> </paragraph> </paragraph> <paragraph num="(e)"> <text>An individual solely because the individual is covered under a group or blanket insurance policy or group annuity contract issued by a licensee if the licensee:</text> <paragraph num="(i)"> <text>Provides the initial, annual, and revised notices under Regulations .05, .06, and .09 of this chapter to the group or blanket insurance policyholder or group annuity contract holder; and</text> </paragraph> <paragraph num="(ii)"> <text>Does not disclose to a nonaffiliated third party nonpublic personal financial information about the individual other than as permitted under Regulations .14, .15, and .16 of this chapter; or</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>An individual solely because the individual is a beneficiary in a workers' compensation plan underwritten by a licensee if the licensee:</text> <paragraph num="(i)"> <text>Provides the initial, annual, and revised notices under Regulations .05, .06, and .09 of this chapter to the workers' compensation plan participant; and</text> </paragraph> <paragraph num="(ii)"> <text>Does not disclose to a nonaffiliated third party nonpublic personal financial information about the individual other than as permitted under Regulations .14, .15, and .16 of this chapter.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Exemption from Notice and Opt Out Requirements for Nonpublic Personal Financial Information."> <paragraph num="A."> <text>A licensee is not subject to the notice and opt out requirements for nonpublic personal financial information of this chapter if:</text> <paragraph num="(1)"> <text>The licensee is an employee, agent, or other representative of another licensee;</text> </paragraph> <paragraph num="(2)"> <text>The other licensee otherwise complies with, and provides the notices required by, the provisions of this chapter; and</text> </paragraph> <paragraph num="(3)"> <text>The licensee does not disclose any nonpublic personal information to any person other than the other licensee or its affiliates in a manner permitted by this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A surplus lines broker or surplus lines insurer shall be deemed to be in compliance with the notice and opt out requirements for nonpublic personal financial information of this chapter if:</text> <paragraph num="(1)"> <text>The broker or insurer does not disclose nonpublic personal information of a consumer or a customer to nonaffiliated third parties for any purpose, including joint servicing or marketing under Regulation .14 of this chapter, except as permitted by Regulations .15 or .16 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>The broker or insurer delivers a notice to the consumer at the time a customer relationship is established on which the following is printed in 16-point type:</text> </paragraph> <aftertext>"PRIVACY NOTICE</aftertext> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Initial Privacy Notice for Financial Information to Consumers Required."> <paragraph num="A."> <text>A licensee shall provide a clear and conspicuous notice that accurately reflects its privacy policies and practices for nonpublic financial information to:</text> <paragraph num="(1)"> <text>An individual who becomes the licensee's customer, not later than when the licensee establishes a customer relationship, except as provided in §E of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>A consumer, before the licensee discloses any nonpublic personal financial information about the consumer to any nonaffiliated third party, if the licensee makes a disclosure other than as authorized by Regulations .15 and .16 of this chapter.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A licensee is not required to provide an initial notice to a consumer under §A(2) of this regulation if:</text> <paragraph num="(1)"> <text>The licensee does not:</text> <paragraph num="(a)"> <text>Disclose any nonpublic personal financial information about the consumer to any nonaffiliated third party, other than as authorized by Regulations .15 and .16 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Have a customer relationship with the consumer; or</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An affiliated licensee has provided a notice to the consumer that:</text> <paragraph num="(a)"> <text>Clearly identifies all licensees to whom the notice applies; and</text> </paragraph> <paragraph num="(b)"> <text>Is accurate with respect to the licensee and the other institutions.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>When Licensee Establishes Customer Relationship.</text> <paragraph num="(1)"> <text>A licensee establishes a customer relationship at the time the licensee and the consumer enter into a continuing relationship, including when the consumer:</text> <paragraph num="(a)"> <text>Becomes a policyholder of a licensee; or</text> </paragraph> <paragraph num="(b)"> <text>Agrees to obtain financial, economic, or investment advisory services relating to insurance products or insurance services for a fee from the licensee.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>For purposes of §C(1) of this regulation, a consumer becomes a policyholder of a licensee:</text> <paragraph num="(a)"> <text>If the licensee is an insurer, when the insurer delivers an insurance policy or contract to the consumer; or</text> </paragraph> <paragraph num="(b)"> <text>If the licensee is an insurance producer or insurance broker, when the consumer obtains insurance through that licensee.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>When an existing customer obtains a new insurance product or insurance service from a licensee that is to be used primarily for personal, family, or household purposes, the licensee satisfies the initial notice requirements of §A of this regulation as follows:</text> <paragraph num="(1)"> <text>The licensee may provide a revised policy notice, under Regulation .09 of this chapter, that covers the customer's new insurance product or insurance service; or</text> </paragraph> <paragraph num="(2)"> <text>If the initial, revised, or annual notice that the licensee most recently provided to that customer was accurate with respect to the new insurance product or insurance service, the licensee does not need to provide a new privacy notice under §A of this regulation.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A licensee may provide the initial notice required by §A(1) of this regulation within a reasonable time after the licensee establishes a customer relationship if:</text> <paragraph num="(1)"> <text>Establishing the customer relationship is not at the customer's election; or</text> </paragraph> <paragraph num="(2)"> <text>Providing notice not later than when the licensee establishes a customer relationship would substantially delay the customer's transaction, and the customer agrees to receive the notice at a later time.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Manner of Delivery.</text> <paragraph num="(1)"> <text>Except as provided in §F(2) of this regulation, a licensee subject to this regulation shall deliver an initial privacy notice in accordance with Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A licensee that uses a short-form initial notice provided for under Regulation .07K of this chapter may deliver its privacy notice in accordance with Regulation .07K(3) of this chapter.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Annual Privacy Notice for Financial Information to Customers Required."> <paragraph num="A."> <text>In General.</text> <paragraph num="(1)"> <text>Except as provided in §B of this regulation, a licensee shall provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices for nonpublic financial information at least once in each annual notice period during the continuation of the customer relationship.</text> </paragraph> <paragraph num="(2)"> <text>A licensee may define the annual notice period as:</text> <paragraph num="(a)"> <text>A calendar year; or</text> </paragraph> <paragraph num="(b)"> <text>Any period of 12 consecutive months.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The licensee shall apply the annual notice period as defined under §A(2) of this regulation to a customer on a consistent basis.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Exceptions.</text> <paragraph num="(1)"> <text>Notwithstanding §A of this regulation, a licensee is not required to provide an annual privacy notice to a current customer if the licensee:</text> <paragraph num="(a)"> <text>Provides nonpublic personal information to nonaffiliated third parties only in accordance with Regulations .14—.16 of this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>Has not changed its policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed in the most recent disclosure sent to consumers in accordance with §A of this regulation or COMAR 31.16.08.05.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A licensee is not required to provide an annual notice to a former customer with whom a licensee no longer has a continuing relationship.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A licensee required by this regulation to deliver an annual privacy notice shall deliver the privacy notice in accordance with Regulation .10 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Information To Be Included in Privacy Notices for Financial Information."> <paragraph num="A."> <text>Privacy notices required to be provided under Regulations .05, .06, and .09 of this chapter shall include the following information:</text> <paragraph num="(1)"> <text>The categories of nonpublic personal financial information that the licensee collects;</text> </paragraph> <paragraph num="(2)"> <text>The categories of nonpublic personal financial information that the licensee discloses;</text> </paragraph> <paragraph num="(3)"> <text>The categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information, other than those parties to whom the licensee discloses information under Regulations .15 and .16 of this chapter;</text> </paragraph> <paragraph num="(4)"> <text>The categories of:</text> <paragraph num="(a)"> <text>Nonpublic personal financial information about the licensee's former customers that the licensee discloses; and</text> </paragraph> <paragraph num="(b)"> <text>Affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information about the licensee's former customers, other than those parties to whom the licensee discloses information under Regulations .15 and .16 of this chapter;</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under Regulation .14 of this chapter and no other exception in Regulations .15 and .16 of this chapter applies to that disclosure, a separate description of the categories of information the licensee discloses and the categories of third parties with whom the licensee has contracted;</text> </paragraph> <paragraph num="(6)"> <text>An explanation of the consumer's right under Regulation .11A of this chapter to opt out of the disclosure of nonpublic personal financial information to nonaffiliated third parties, including the methods by which the consumer may exercise that right at that time;</text> </paragraph> <paragraph num="(7)"> <text>Any disclosures that the licensee makes under §603(d)(2)(A)(iii) of the federal Fair Credit Reporting Act, 15 U.S.C. §1681a(d)(2)(A)(iii) regarding the ability to opt out of disclosures of information among affiliates;</text> </paragraph> <paragraph num="(8)"> <text>The licensee's policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information; and</text> </paragraph> <paragraph num="(9)"> <text>Any disclosure that the licensee makes under §B of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a licensee discloses nonpublic personal financial information as authorized under Regulations .15 and .16 of this chapter:</text> <paragraph num="(1)"> <text>The licensee is not required to list those exceptions in the initial or annual privacy notices required by Regulations .05 and .06 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>When describing the categories of parties to whom disclosure is made, the licensee is required to state only that it makes disclosures to other affiliated or nonaffiliated third parties, as applicable, as permitted by law.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A licensee satisfies the requirement to categorize the nonpublic personal financial information that the licensee collects if the licensee categorizes the information according to the source of the information, including:</text> <paragraph num="(1)"> <text>Information from the consumer;</text> </paragraph> <paragraph num="(2)"> <text>Information about the consumer's transactions with the licensee or its affiliates;</text> </paragraph> <paragraph num="(3)"> <text>Information about the consumer's transactions with nonaffiliated third parties; and</text> </paragraph> <paragraph num="(4)"> <text>Information from a consumer reporting agency.</text> </paragraph> </paragraph> <paragraph num="D."> <text>A licensee satisfies the requirement to categorize the nonpublic personal financial information that the licensee discloses if the licensee:</text> <paragraph num="(1)"> <text>Categorizes the information according to source, as described in §C of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Provides a few examples to illustrate the types of information in each category, such as:</text> <paragraph num="(a)"> <text>Information from the consumer, including application information, such as assets and income and identifying information, such as name, address, and Social Security number;</text> </paragraph> <paragraph num="(b)"> <text>Transaction information, such as information about balances, payment history, and parties to the transaction; and</text> </paragraph> <paragraph num="(c)"> <text>Information from consumer reports, such as a consumer's creditworthiness and credit history.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>A licensee does not adequately categorize the information that it discloses if the licensee uses only general terms, such as transaction information about the consumer.</text> </paragraph> <paragraph num="F."> <text>If a licensee reserves the right to disclose all of the nonpublic personal financial information about consumers that it collects, the licensee may simply state that fact without describing the categories or examples of nonpublic personal financial information that the licensee discloses.</text> </paragraph> <paragraph num="G."> <text>Categories of Affiliates and Nonaffiliated Third Parties to Whom the Licensee Discloses.</text> <paragraph num="(1)"> <text>A licensee satisfies the requirement to categorize the affiliates and nonaffiliated third parties to which the licensee discloses nonpublic personal financial information about consumers if the licensee identifies the types of businesses in which they engage.</text> </paragraph> <paragraph num="(2)"> <text>Types of businesses may be described by general terms only if the licensee uses a few illustrative examples of significant lines of business, including the use by a licensee of the term financial products or services if the licensee includes appropriate examples of significant lines of businesses, such as life insurer, automobile insurer, consumer banking, or securities brokerage.</text> </paragraph> <paragraph num="(3)"> <text>A licensee also may categorize the affiliates and nonaffiliated third parties to which it discloses nonpublic personal financial information about consumers using more detailed categories.</text> </paragraph> </paragraph> <paragraph num="H."> <text>If a licensee discloses nonpublic personal financial information under the exception in Regulation .14 of this chapter to a nonaffiliated third party to market products or services that it offers alone or jointly with another financial institution, the licensee satisfies the disclosure requirement of §A(5) of this regulation if it:</text> <paragraph num="(1)"> <text>Lists the categories of nonpublic personal financial information it discloses, using the same categories and examples the licensee used to meet the requirements of §A(2) of this regulation, as applicable; and</text> </paragraph> <paragraph num="(2)"> <text>States whether the third party is:</text> <paragraph num="(a)"> <text>A service provider that performs marketing services on the licensee's behalf or on behalf of the licensee and another financial institution; or</text> </paragraph> <paragraph num="(b)"> <text>A financial institution with whom the licensee has a joint marketing agreement.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>If a licensee does not disclose, and does not wish to reserve the right to disclose, nonpublic personal financial information about customers or former customers to affiliates or nonaffiliated third parties except as authorized under Regulations .15 and .16 of this chapter, the licensee may simply state that fact, in addition to the information it must provide under §§A(1), (8), and (9) and B of this regulation.</text> </paragraph> <paragraph num="J."> <text>Policies and Practices for Protection of Confidentiality and Security.</text> <paragraph num="(1)"> <text>A licensee shall describe its policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information.</text> </paragraph> <paragraph num="(2)"> <text>A licensee may satisfy §J(1) of this regulation if the licensee:</text> <paragraph num="(a)"> <text>Describes in general terms who is authorized to have access to the information; and</text> </paragraph> <paragraph num="(b)"> <text>States whether the licensee has security practices and procedures in place to ensure the confidentiality of the information in accordance with the licensee's policy.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A licensee is not required to describe technical information about the safeguards it uses.</text> </paragraph> </paragraph> <paragraph num="K."> <text>Short-Form Initial Notice with Opt Out Notice for Noncustomers.</text> <paragraph num="(1)"> <text>A licensee may satisfy the initial notice requirements in Regulations .05A(2) and .08C of this chapter for a consumer who is not a customer by providing a short-form initial notice at the same time the licensee delivers an opt out notice as required in Regulation .08 of this chapter.</text> </paragraph> <paragraph num="(2)"> <text>A short-form initial notice shall:</text> <paragraph num="(a)"> <text>Be clear and conspicuous;</text> </paragraph> <paragraph num="(b)"> <text>State that the licensee's privacy notice is available upon request; and</text> </paragraph> <paragraph num="(c)"> <text>Explain a reasonable means by which the consumer may obtain that notice.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Delivery of Short-Form Initial Notice.</text> <paragraph num="(a)"> <text>A licensee shall deliver its short-form initial notice in accordance with Regulation .10 of this chapter.</text> </paragraph> <paragraph num="(b)"> <text>The licensee is not required to deliver its privacy notice with its short-form initial notice if the licensee provides the consumer a reasonable means to obtain its privacy notice.</text> </paragraph> <paragraph num="(c)"> <text>The licensee provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the licensee:</text> <paragraph num="(i)"> <text>Provides a toll-free telephone number that the consumer may call to request the notice; or</text> </paragraph> <paragraph num="(ii)"> <text>For a consumer who conducts business in person at the licensee's office, maintains copies of the notice on hand that the licensee provides to the consumer immediately upon request.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>Upon the request of a consumer, the licensee shall deliver its privacy notice according to Regulation .10 of this chapter.</text> </paragraph> </paragraph> </paragraph> <paragraph num="L."> <text>The licensee's notice may include:</text> <paragraph num="(1)"> <text>Categories of nonpublic personal financial information that the licensee reserves the right to disclose in the future, but does not currently disclose; and</text> </paragraph> <paragraph num="(2)"> <text>Categories of affiliates or nonaffiliated third parties to whom the licensee reserves the right in the future to disclose, but to whom the licensee does not currently disclose, nonpublic personal financial information.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Form of Opt Out Notice to Consumers and Opt Out Methods."> <paragraph num="A."> <text>Opt Out Notice Requirements.</text> <paragraph num="(1)"> <text>A licensee required to provide an opt out notice under Regulation .11A of this chapter shall provide a clear and conspicuous notice to each of the licensee's consumers that accurately explains the right to opt out under that regulation.</text> </paragraph> <paragraph num="(2)"> <text>A right to opt out notice required to be provided under §A(1) of this regulation shall state:</text> <paragraph num="(a)"> <text>That the licensee discloses or reserves the right to disclose nonpublic personal financial information about its consumer to a nonaffiliated third party;</text> </paragraph> <paragraph num="(b)"> <text>That the consumer has the right to opt out of that disclosure; and</text> </paragraph> <paragraph num="(c)"> <text>A reasonable means by which the consumer may exercise the opt out right.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A licensee provides adequate notice that the consumer can opt out of the disclosure of nonpublic personal financial information to a nonaffiliated third party if the licensee:</text> <paragraph num="(a)"> <text>Identifies all categories of nonpublic personal financial information that it discloses or reserves the right to disclose;</text> </paragraph> <paragraph num="(b)"> <text>Identifies all of the categories of nonaffiliated third parties to which the licensee discloses the information as described in Regulation .07A(2) and (3) of this chapter;</text> </paragraph> <paragraph num="(c)"> <text>States that the consumer can opt out of the disclosure of the nonpublic personal financial information; and</text> </paragraph> <paragraph num="(d)"> <text>Identifies the insurance products or insurance services that the consumer obtains from the licensee to which the opt out would apply.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>A licensee provides a reasonable means to exercise an opt out right if the licensee:</text> <paragraph num="(a)"> <text>Designates check-off boxes in a prominent position on the relevant forms with the opt out notice;</text> </paragraph> <paragraph num="(b)"> <text>Includes a reply form together with the opt out notice;</text> </paragraph> <paragraph num="(c)"> <text>Provides an electronic means to opt out that includes the form required under §A(4)(b) of this regulation that can be sent via electronic mail or a process at the licensee's web site, if the consumer agrees to the electronic delivery of information; or</text> </paragraph> <paragraph num="(d)"> <text>Provides a toll-free telephone number that consumers may call to opt out.</text> </paragraph> </paragraph> <paragraph num="(5)"> <text>A licensee does not provide a reasonable means to exercise an opt out right if:</text> <paragraph num="(a)"> <text>The only means of opting out is for the consumer to write the consumer's own letter to exercise that opt out right; or</text> </paragraph> <paragraph num="(b)"> <text>The only means of opting out as described in any notice subsequent to the initial notice is to use a check-off box that the licensee provided with the initial notice but did not include with the subsequent notice.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>A licensee may require each consumer to opt out through a specific means, as long as that means is reasonable for that consumer.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A licensee may provide the opt out notice together with or on the same written or electronic form as the initial notice the licensee provides in accordance with Regulation .05 of this chapter.</text> </paragraph> <paragraph num="C."> <text>A licensee that provides the opt out notice later than required for the initial notice in accordance with Regulation .05 of this chapter shall also include a copy of the initial notice with the opt out notice in writing or, if the consumer agrees, electronically.</text> </paragraph> <paragraph num="D."> <text>Joint Relationships.</text> <paragraph num="(1)"> <text>If two or more consumers jointly obtain an insurance product or insurance service from a licensee, the licensee may provide a single opt out notice. The licensee's opt out notice shall explain how the licensee will treat an opt out direction by a joint consumer.</text> </paragraph> <paragraph num="(2)"> <text>Any of the joint consumers may exercise the right to opt out.</text> </paragraph> <paragraph num="(3)"> <text>The licensee may either:</text> <paragraph num="(a)"> <text>Treat an opt out direction by a joint consumer as applying to all of the associated joint consumers; or</text> </paragraph> <paragraph num="(b)"> <text>Permit each joint consumer to opt out separately.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If a licensee permits each joint consumer to opt out separately, the licensee shall permit one of the joint consumers to opt out on behalf of all of the joint consumers.</text> </paragraph> <paragraph num="(5)"> <text>A licensee may not require all joint consumers to opt out before it implements any opt out direction.</text> </paragraph> </paragraph> <paragraph num="E."> <text>A licensee shall comply with a consumer's opt out direction as soon as reasonably practicable after the licensee receives it.</text> </paragraph> <paragraph num="F."> <text>A consumer may exercise the right to opt out at any time.</text> </paragraph> <paragraph num="G."> <text>Duration of Opt Out Direction.</text> <paragraph num="(1)"> <text>A consumer's direction to opt out under this regulation is effective until the consumer revokes it in writing or, if the consumer agrees, electronically.</text> </paragraph> <paragraph num="(2)"> <text>When a customer relationship terminates, the customer's opt out direction continues to apply to the nonpublic personal financial information that the licensee collected during or related to that relationship.</text> </paragraph> <paragraph num="(3)"> <text>If an individual subsequently establishes a new customer relationship with the licensee, the opt out direction that applied to the former relationship does not apply to the new relationship.</text> </paragraph> </paragraph> <paragraph num="H."> <text>A licensee required to deliver an opt out notice under this regulation shall deliver it in accordance with Regulation .10 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".09" heading="Revised Privacy Notices for Financial Information."> <paragraph num="A."> <text>Except as otherwise authorized in this chapter, a licensee may not, directly or through an affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party other than as described in the initial notice that the licensee provided to that consumer under Regulation .05 of this chapter, unless:</text> <paragraph num="(1)"> <text>The licensee has provided to the consumer a clear and conspicuous revised notice that accurately describes its policies and practices;</text> </paragraph> <paragraph num="(2)"> <text>The licensee has provided to the consumer a new opt out notice;</text> </paragraph> <paragraph num="(3)"> <text>The licensee has given the consumer a reasonable opportunity, before the licensee discloses the information to the nonaffiliated third party, to opt out of the disclosure; and</text> </paragraph> <paragraph num="(4)"> <text>The consumer does not opt out.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Revised Notice.</text> <paragraph num="(1)"> <text>Except as otherwise permitted by Regulations .14, .15, and .16 of this chapter, a licensee shall provide a revised notice before it discloses:</text> <paragraph num="(a)"> <text>A new category of nonpublic personal financial information to any nonaffiliated third party;</text> </paragraph> <paragraph num="(b)"> <text>Nonpublic personal financial information to a new category of nonaffiliated third party; or</text> </paragraph> <paragraph num="(c)"> <text>Nonpublic personal financial information about a former customer to a nonaffiliated third party, if that former customer has not had the opportunity to exercise an opt out right regarding that disclosure.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A revised notice is not required if the licensee discloses nonpublic personal financial information to a new nonaffiliated third party that the licensee adequately described in its prior notice.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A licensee required to deliver a revised privacy notice under this regulation shall deliver it in accordance with Regulation .10 of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Delivery of Privacy Notices for Financial Information."> <paragraph num="A."> <text>Manner of Delivery.</text> <paragraph num="(1)"> <text>A licensee required to provide a notice under this chapter shall provide any notice required by this chapter so that each consumer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically.</text> </paragraph> <paragraph num="(2)"> <text>A licensee may reasonably expect that a consumer will receive actual notice if the licensee:</text> <paragraph num="(a)"> <text>Hand-delivers a printed copy of the notice to the consumer;</text> </paragraph> <paragraph num="(b)"> <text>Mails a printed copy of the notice to the last-known address of the consumer separately, or in a policy, billing, or other written communication;</text> </paragraph> <paragraph num="(c)"> <text>For a consumer who conducts transactions electronically, posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular insurance product or insurance service; or</text> </paragraph> <paragraph num="(d)"> <text>For an isolated transaction with a consumer, such as the licensee providing an insurance quote or selling the consumer travel insurance, posts the notice and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining the particular insurance product or insurance service.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>A licensee fails to meet the requirements of §A(1) of this regulation if the licensee:</text> <paragraph num="(a)"> <text>Only posts a sign in its office or generally publishes advertisements of its privacy policies and practices; or</text> </paragraph> <paragraph num="(b)"> <text>Sends the notice via electronic mail to a consumer who does not obtain an insurance product or insurance service from the licensee electronically.</text> </paragraph> </paragraph> </paragraph> <paragraph num="B."> <text>A licensee may reasonably expect that a customer will receive actual notice of the licensee's annual privacy notice if the customer:</text> <paragraph num="(1)"> <text>Uses the licensee's web site to access insurance products and insurance services electronically, and agrees to receive notices at the web site and the licensee posts its current privacy notice continuously in a clear and conspicuous manner on the web site; or</text> </paragraph> <paragraph num="(2)"> <text>Has requested that the licensee refrain from sending any information regarding the customer relationship, and the licensee's current privacy notice remains available to the customer upon request.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A licensee may not provide any notice required by this chapter solely by orally explaining the notice, either in person or over the telephone.</text> </paragraph> <paragraph num="D."> <text>Notice for Customers.</text> <paragraph num="(1)"> <text>For customers only, a licensee shall provide the following privacy notices so that the customer can retain the privacy notices or obtain the privacy notices later in writing or, if the customer agrees, electronically:</text> <paragraph num="(a)"> <text>The initial notice required by Regulation .05A(1) of this chapter;</text> </paragraph> <paragraph num="(b)"> <text>The annual notice required by Regulation .06A of this chapter; and</text> </paragraph> <paragraph num="(c)"> <text>The revised notice required by Regulation .09 of this chapter.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A licensee provides a privacy notice to the customer so that the customer can retain it or obtain it later if the licensee:</text> <paragraph num="(a)"> <text>Hand-delivers a printed copy of the notice to the customer;</text> </paragraph> <paragraph num="(b)"> <text>Mails a printed copy of the notice to the last-known address of the customer; or</text> </paragraph> <paragraph num="(c)"> <text>Makes its current privacy notice available on a web site for the customer who obtains an insurance product or insurance service electronically and agrees to receive the notice at the web site.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Joint Notice.</text> <paragraph num="(1)"> <text>A licensee may provide a joint notice from the licensee and one or more of its affiliates or other financial institutions, as identified in the notice, as long as the notice is accurate with respect to the licensee and the other institutions.</text> </paragraph> <paragraph num="(2)"> <text>A licensee also may provide a notice on behalf of another financial institution.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If two or more consumers jointly obtain an insurance product or insurance service from a licensee, the licensee may satisfy the requirements of Regulations .05A, .06A, and .09A of this chapter by providing one notice to those consumers jointly.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Limits on Disclosure of Nonpublic Personal Financial Information to Nonaffiliated Third Parties."> <paragraph num="A."> <text>Except as otherwise authorized in this chapter, a licensee may not, directly or through an affiliate, disclose nonpublic personal financial information about a consumer to a nonaffiliated third party unless:</text> <paragraph num="(1)"> <text>The licensee has provided to the consumer an initial notice as required under Regulation .05 of this chapter;</text> </paragraph> <paragraph num="(2)"> <text>The licensee has provided to the consumer an opt out notice as required in Regulation .08 of this chapter;</text> </paragraph> <paragraph num="(3)"> <text>The licensee has given the consumer a reasonable opportunity, before it discloses the information to the nonaffiliated third party, to opt out of the disclosure; and</text> </paragraph> <paragraph num="(4)"> <text>The consumer does not opt out.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A licensee provides a consumer with a reasonable opportunity to opt out if:</text> <paragraph num="(1)"> <text>The licensee mails the notices required in Regulations .05 and .08 of this chapter to the consumer and allows the consumer to opt out by:</text> <paragraph num="(a)"> <text>Mailing a form within 30 days from the date the licensee mailed the notices;</text> </paragraph> <paragraph num="(b)"> <text>Calling a toll-free telephone number within 30 days from the date the licensee mailed the notices; or</text> </paragraph> <paragraph num="(c)"> <text>Using any other reasonable means within 30 days from the date the licensee mailed the notices;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The following action is taken:</text> <paragraph num="(a)"> <text>A customer opens an on-line account with a licensee and agrees to receive the notices required in Regulations .05 and .08 of this chapter electronically; and</text> </paragraph> <paragraph num="(b)"> <text>The licensee allows the customer to opt out by any reasonable means within 30 days after the date that the customer acknowledges receipt of the notices in conjunction with opening the account; or</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>For an isolated transaction such as providing the consumer with an insurance quote, the licensee provides the notices required in Regulations .05 and .08 of this chapter at the time of the transaction and requests that the consumer decide, as a necessary part of the transaction, whether to opt out before completing the transaction.</text> </paragraph> </paragraph> <paragraph num="C."> <text>A licensee shall comply with this regulation regardless of whether the licensee and the consumer have established a customer relationship. Unless a licensee complies with this regulation, the licensee may not, directly or through an affiliate, disclose nonpublic personal financial information about a consumer that the licensee has collected, regardless of whether the licensee collected it before or after receiving the direction to opt out from the consumer.</text> </paragraph> <paragraph num="D."> <text>A licensee may allow a consumer to select certain nonpublic personal financial information or certain nonaffiliated third parties with respect to which the consumer wishes to opt out.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".12" heading="Limits on Redisclosure and Reuse of Nonpublic Personal Financial Information."> <paragraph num="A."> <text>If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution under an exception in Regulation .15 or .16 of this chapter, the licensee's disclosure and use of that information is limited as follows:</text> <paragraph num="(1)"> <text>The licensee may disclose the information to the affiliates of the financial institution from which the licensee received the information;</text> </paragraph> <paragraph num="(2)"> <text>The licensee may disclose the information to its affiliates, but the licensee's affiliates may, in turn, disclose and use the information only to the extent that the licensee may disclose and use the information; and</text> </paragraph> <paragraph num="(3)"> <text>The licensee may disclose and use the information pursuant to an exception in Regulation .15 or .16 of this chapter, in the ordinary course of business to carry out the activity covered by the exception under which the licensee received the information.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution other than under an exception in Regulation .15 or .16 of this chapter, the licensee may disclose the information only:</text> <paragraph num="(1)"> <text>To the affiliates of the financial institution from which the licensee received the information;</text> </paragraph> <paragraph num="(2)"> <text>To its affiliates, but its affiliates may, in turn, disclose the information only to the extent that the licensee may disclose the information; and</text> </paragraph> <paragraph num="(3)"> <text>To any other person, if the disclosure would be lawful if made directly to that person by the financial institution from which the licensee received the information.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If a licensee receives information from a nonaffiliated financial institution for claims settlement purposes, the licensee may disclose the information for fraud prevention or in response to a properly authorized subpoena.</text> </paragraph> <paragraph num="D."> <text>If a licensee receives information from a nonaffiliated financial institution for claims settlement purposes, the licensee may not:</text> <paragraph num="(1)"> <text>Disclose that information to a third party for marketing purposes; or</text> </paragraph> <paragraph num="(2)"> <text>Use that information for its own marketing purposes.</text> </paragraph> </paragraph> <paragraph num="E."> <text>If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under an exception in Regulation .15 or .16 of this chapter, the third party may disclose and use that information only as follows:</text> <paragraph num="(1)"> <text>The third party may disclose the information to the licensee's affiliates;</text> </paragraph> <paragraph num="(2)"> <text>The third party may disclose the information to its affiliates, but its affiliates may, in turn, disclose and use the information only to the extent that the third party may disclose and use the information; and</text> </paragraph> <paragraph num="(3)"> <text>The third party may disclose and use the information pursuant to an exception in Regulation .15 or .16 of this chapter in the ordinary course of business to carry out the activity covered by the exception under which it received the information.</text> </paragraph> </paragraph> <paragraph num="F."> <text>If a licensee discloses nonpublic personal financial information to a nonaffiliated third party other than under an exception in Regulation .15 or .16 of this chapter, the third party may disclose the information only:</text> <paragraph num="(1)"> <text>To the licensee's affiliates;</text> </paragraph> <paragraph num="(2)"> <text>To the third party's affiliates, but the third party's affiliates may, in turn, disclose the information only to the extent the third party can disclose the information; and</text> </paragraph> <paragraph num="(3)"> <text>To any other person, if the disclosure would be lawful if the licensee made it directly to that person.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Limits on Sharing Account Number Information for Marketing Purposes."> <paragraph num="A."> <text>Scope. This regulation does not apply to the disclosure of a policy number, or similar form of access number or access code, that is in an encrypted form, as long as the licensee does not provide the recipient with a means to decode the number or code.</text> </paragraph> <paragraph num="B."> <text>Policy or Transaction Account Defined.</text> <paragraph num="(1)"> <text>In this regulation, the following term has the meaning indicated.</text> </paragraph> <paragraph num="(2)"> <text>Term Defined.</text> <paragraph num="(a)"> <text>“Policy or transaction account” means an account other than a deposit account or a credit card account.</text> </paragraph> <paragraph num="(b)"> <text>“Policy or transaction account” does not include an account to which third parties cannot initiate charges.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>A licensee may not, directly or through an affiliate, disclose, other than to a consumer reporting agency, a policy number or similar form of access number or access code for a consumer's policy or transaction account to a nonaffiliated third party for use in telemarketing, direct mail marketing, or other marketing through electronic mail to the consumer.</text> </paragraph> <paragraph num="D."> <text>Section C of this regulation does not apply if a licensee discloses a policy number or similar form of access number or access code to:</text> <paragraph num="(1)"> <text>The licensee's service provider solely in order to perform marketing for the licensee's own products or services, as long as the service provider is not authorized to directly initiate charges to the account;</text> </paragraph> <paragraph num="(2)"> <text>A licensee who is a producer solely in order to perform marketing for the licensee's own products or services; or</text> </paragraph> <paragraph num="(3)"> <text>A participant in an affinity or similar program where the participants in the program are identified to the customer when the customer enters into the program.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Exception to Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Service Providers and Joint Marketing."> <paragraph num="A."> <text>In this regulation, “joint agreement” means a written contract pursuant to which a licensee and one or more financial institutions jointly offer, endorse, or sponsor a financial product or financial service.</text> </paragraph> <paragraph num="B."> <text>The opt out requirements in Regulations .08 and .11 of this chapter do not apply when a licensee provides nonpublic personal financial information to a nonaffiliated third party to perform services for the licensee or functions on the licensee's behalf, if the licensee:</text> <paragraph num="(1)"> <text>Provides the initial notice in accordance with Regulation .05 of this chapter; and</text> </paragraph> <paragraph num="(2)"> <text>Enters into a contractual agreement with the third party that prohibits the third party from disclosing or using the information other than to carry out the purposes for which the licensee disclosed the information, including use under an exception in Regulation .15 or .16 of this chapter in the ordinary course of business to carry out those purposes.</text> </paragraph> </paragraph> <paragraph num="C."> <text>The services a nonaffiliated third party performs for a licensee under §B of this regulation may include marketing of the licensee's own products or services or marketing of financial products or financial services offered pursuant to joint agreements between the licensee and one or more financial institutions.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information for Processing and Servicing Transactions."> <paragraph num="A."> <text>The requirements for initial notice in Regulation .05A(2) of this chapter, the opt out in Regulations .08 and .11 of this chapter, and service providers and joint marketing in Regulation .14 of this chapter do not apply if the licensee discloses nonpublic personal financial information as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes, or in connection with:</text> <paragraph num="(1)"> <text>Servicing or processing an insurance product or insurance service that a consumer requests or authorizes;</text> </paragraph> <paragraph num="(2)"> <text>Maintaining or servicing the consumer's account with a licensee, or with another entity as part of a private label credit card program or other extension of credit on behalf of that entity;</text> </paragraph> <paragraph num="(3)"> <text>A proposed or actual securitization, secondary market sale, sales of servicing rights, or similar transaction related to a transaction of the consumer; or</text> </paragraph> <paragraph num="(4)"> <text>Reinsurance or stop loss or excess loss insurance.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Disclosure by a licensee is considered to be necessary to effect, administer, or enforce a transaction if the disclosure is:</text> <paragraph num="(1)"> <text>Required, or is one of the lawful or appropriate methods, to enforce the licensee's rights or the rights of other persons engaged in carrying out the financial transaction or providing the product or service; or</text> </paragraph> <paragraph num="(2)"> <text>Required, or is a usual, appropriate, or acceptable method:</text> <paragraph num="(a)"> <text>To carry out the transaction or the product or service business of which the transaction is a part, and record, service, or maintain the consumer's account in the ordinary course of providing the insurance product or insurance service;</text> </paragraph> <paragraph num="(b)"> <text>To administer or service benefits or claims relating to the transaction or the product or service business of which it is a part;</text> </paragraph> <paragraph num="(c)"> <text>To provide a confirmation, statement, or other record of the transaction, or information on the status or value of the insurance product or insurance service to the consumer or the consumer's insurance producer;</text> </paragraph> <paragraph num="(d)"> <text>To accrue or recognize incentives or bonuses associated with the transaction that are provided by a licensee or any other party;</text> </paragraph> <paragraph num="(e)"> <text>To underwrite insurance at the consumer's request or for any of the following purposes as they relate to a consumer's insurance:</text> <paragraph num="(i)"> <text>Account administration;</text> </paragraph> <paragraph num="(ii)"> <text>Reporting, investigating, or preventing fraud or material misrepresentation;</text> </paragraph> <paragraph num="(iii)"> <text>Processing premium payments;</text> </paragraph> <paragraph num="(iv)"> <text>Processing insurance claims;</text> </paragraph> <paragraph num="(v)"> <text>Administering insurance benefits including utilization review activities;</text> </paragraph> <paragraph num="(vi)"> <text>Participating in research projects; or</text> </paragraph> <paragraph num="(vii)"> <text>As otherwise required or specifically permitted by federal or state law; or</text> </paragraph> </paragraph> <paragraph num="(f)"> <text>In connection with:</text> <paragraph num="(i)"> <text>The authorization, settlement, billing, processing, clearing, transferring, reconciling, or collection of amounts charged, debited, or otherwise paid using a debit, credit, or other payment card, check, or account number, or by other payment means;</text> </paragraph> <paragraph num="(ii)"> <text>The transfer of receivables or accounts, or interests in the receivables or accounts; or</text> </paragraph> <paragraph num="(iii)"> <text>The audit of debit, credit, or other payment information.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Other Exceptions to Notice and Opt Out Requirements for Disclosure of Nonpublic Personal Financial Information."> <paragraph num="A."> <text>The requirements for initial notice to consumers in Regulation .05A(2) of this chapter, the opt out in Regulations .08 and .11 of this chapter, and service providers and joint marketing in Regulation .14 of this chapter do not apply when a licensee discloses nonpublic personal financial information:</text> <paragraph num="(1)"> <text>With the consent or at the direction of the consumer, if the consumer has not revoked the consent or direction;</text> </paragraph> <paragraph num="(2)"> <text>To protect the confidentiality or security of a licensee's records pertaining to the consumer, service, product, or transaction;</text> </paragraph> <paragraph num="(3)"> <text>To protect against or prevent actual or potential fraud or unauthorized transactions;</text> </paragraph> <paragraph num="(4)"> <text>For required institutional risk control or for resolving consumer disputes or inquiries;</text> </paragraph> <paragraph num="(5)"> <text>To persons holding a legal or beneficial interest relating to the consumer;</text> </paragraph> <paragraph num="(6)"> <text>To persons acting in a fiduciary or representative capacity on behalf of the consumer;</text> </paragraph> <paragraph num="(7)"> <text>To provide information to:</text> <paragraph num="(a)"> <text>Insurance rate advisory organizations;</text> </paragraph> <paragraph num="(b)"> <text>Guaranty funds or agencies that are rating a licensee;</text> </paragraph> <paragraph num="(c)"> <text>Persons that are assessing the licensee's compliance with industry standards; and</text> </paragraph> <paragraph num="(d)"> <text>The licensee's attorneys, accountants, and auditors;</text> </paragraph> </paragraph> <paragraph num="(8)"> <text>To the extent specifically permitted or required under other provisions of law and in accordance with the federal Right to Financial Privacy Act of 1978 (12 U.S.C. §3401 et seq.), to law enforcement agencies (including the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration, the Securities and Exchange Commission, the Secretary of the Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records and Reports on Monetary Instruments and Transactions) and 12 U.S.C. Chapter 21 (Financial Recordkeeping), a state insurance authority, and the Federal Trade Commission), self-regulatory organizations, or for an investigation on a matter related to public safety;</text> </paragraph> <paragraph num="(9)"> <text>To a consumer reporting agency in accordance with the federal Fair Credit Reporting Act, 15 U.S.C. §1681 et seq.;</text> </paragraph> <paragraph num="(10)"> <text>From a consumer report reported by a consumer reporting agency;</text> </paragraph> <paragraph num="(11)"> <text>In connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal financial information concerns solely consumers of the business or unit;</text> </paragraph> <paragraph num="(12)"> <text>To comply with federal, state, or local laws, rules, and other applicable legal requirements;</text> </paragraph> <paragraph num="(13)"> <text>To comply with a properly authorized civil, criminal, or regulatory investigation, or subpoena or summons by federal, state, or local authorities;</text> </paragraph> <paragraph num="(14)"> <text>To respond to judicial process or government regulatory authorities having jurisdiction over a licensee for examination, compliance, or other purposes as authorized by law; or</text> </paragraph> <paragraph num="(15)"> <text>For purposes related to the replacement of a group benefit plan, a group health plan, a group welfare plan, or a workers' compensation plan.</text> </paragraph> </paragraph> <paragraph num="B."> <text>A consumer may revoke consent by subsequently exercising the right to opt out of future disclosures of nonpublic personal information as permitted under Regulation .08F of this chapter.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may exempt a licensee from any of the notice requirements of this chapter if:</text> <paragraph num="(1)"> <text>The licensee is in liquidation or receivership; and</text> </paragraph> <paragraph num="(2)"> <text>The notice requirements could:</text> <paragraph num="(a)"> <text>Negatively impact the ability of the liquidator or receiver to pay claims; and</text> </paragraph> <paragraph num="(b)"> <text>Impose a financial burden on the licensee in liquidation or receivership.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="When Authorization Required for Disclosure of Nonpublic Personal Health Information."> <paragraph num="A."> <text>A licensee may not disclose nonpublic personal health information about a consumer or customer unless an authorization is obtained from the consumer or customer whose nonpublic personal health information is sought to be disclosed.</text> </paragraph> <paragraph num="B."> <text>This regulation does not prohibit, restrict, or require an authorization for the disclosure of nonpublic personal health information by a licensee for the performance of the following insurance functions by or on behalf of the licensee:</text> <paragraph num="(1)"> <text>Claims administration;</text> </paragraph> <paragraph num="(2)"> <text>Claims adjustment and management;</text> </paragraph> <paragraph num="(3)"> <text>Detection, investigation, or reporting of actual or potential fraud, misrepresentation, or criminal activity;</text> </paragraph> <paragraph num="(4)"> <text>Underwriting;</text> </paragraph> <paragraph num="(5)"> <text>Policy placement or issuance;</text> </paragraph> <paragraph num="(6)"> <text>Loss control;</text> </paragraph> <paragraph num="(7)"> <text>Rate-making and guaranty fund functions;</text> </paragraph> <paragraph num="(8)"> <text>Reinsurance and excess loss insurance;</text> </paragraph> <paragraph num="(9)"> <text>Risk management;</text> </paragraph> <paragraph num="(10)"> <text>Case management;</text> </paragraph> <paragraph num="(11)"> <text>Disease management;</text> </paragraph> <paragraph num="(12)"> <text>Quality assurance;</text> </paragraph> <paragraph num="(13)"> <text>Quality improvement;</text> </paragraph> <paragraph num="(14)"> <text>Performance evaluation;</text> </paragraph> <paragraph num="(15)"> <text>Provider credentialing verification;</text> </paragraph> <paragraph num="(16)"> <text>Utilization review;</text> </paragraph> <paragraph num="(17)"> <text>Peer review activities;</text> </paragraph> <paragraph num="(18)"> <text>Actuarial, scientific, medical, or public policy research;</text> </paragraph> <paragraph num="(19)"> <text>Grievance procedures;</text> </paragraph> <paragraph num="(20)"> <text>Internal administration of compliance, managerial, and information systems;</text> </paragraph> <paragraph num="(21)"> <text>Policyholder service functions;</text> </paragraph> <paragraph num="(22)"> <text>Auditing;</text> </paragraph> <paragraph num="(23)"> <text>Reporting;</text> </paragraph> <paragraph num="(24)"> <text>Database security;</text> </paragraph> <paragraph num="(25)"> <text>Administration of consumer disputes and inquiries;</text> </paragraph> <paragraph num="(26)"> <text>External accreditation standards;</text> </paragraph> <paragraph num="(27)"> <text>The replacement of a group benefit plan or workers' compensation policy or program;</text> </paragraph> <paragraph num="(28)"> <text>Activities in connection with a sale, merger, transfer, or exchange of all or part of a business or operating unit;</text> </paragraph> <paragraph num="(29)"> <text>Any activity that permits disclosure without authorization pursuant to the federal Health Insurance Portability and Accountability Act privacy rules promulgated by the U.S. Department of Health and Human Services;</text> </paragraph> <paragraph num="(30)"> <text>Disclosure that is required, or is one of the lawful or appropriate methods, to enforce the licensee's rights or the rights of other persons engaged in carrying out a transaction or providing a product or service that a consumer requests or authorizes;</text> </paragraph> <paragraph num="(31)"> <text>Any activity otherwise permitted by law, required pursuant to governmental reporting authority, or to comply with legal process; and</text> </paragraph> <paragraph num="(32)"> <text>Any additional insurance functions determined by the Commissioner to the extent that they are:</text> <paragraph num="(a)"> <text>Necessary for appropriate performance of insurance functions; and</text> </paragraph> <paragraph num="(b)"> <text>Fair and reasonable to the interest of consumers.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Authorizations for Disclosure of Health Information."> <paragraph num="A."> <text>A valid authorization to disclose nonpublic personal health information pursuant to this regulation shall be in written or electronic form and shall contain all of the following:</text> <paragraph num="(1)"> <text>The identity of the consumer or customer who is the subject of the nonpublic personal health information;</text> </paragraph> <paragraph num="(2)"> <text>A general description of the types of nonpublic personal health information to be disclosed;</text> </paragraph> <paragraph num="(3)"> <text>General descriptions of the parties to whom the licensee discloses nonpublic personal health information, the purpose of the disclosure, and how the information will be used;</text> </paragraph> <paragraph num="(4)"> <text>The signature of the consumer or customer who is the subject of the nonpublic personal health information or the individual who is legally empowered to grant authority and the date signed; and</text> </paragraph> <paragraph num="(5)"> <text>Notice of the length of time for which the authorization is valid and that the consumer or customer may revoke the authorization at any time and the procedure for making a revocation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>An authorization for the purposes of this regulation shall specify a length of time for which the authorization shall remain valid, which may not be for more than 24 months.</text> </paragraph> <paragraph num="C."> <text>A consumer or customer who is the subject of nonpublic personal health information may revoke an authorization provided pursuant to this regulation at any time, subject to the rights of an individual who acted in reliance on the authorization before notice of the revocation.</text> </paragraph> <paragraph num="D."> <text>A licensee shall retain the authorization or a copy of the authorization in the record of the individual who is the subject of nonpublic personal health information.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".19" heading="Authorization Request Delivery."> <paragraph num="A."> <text>A request for authorization and an authorization form may be delivered to a consumer or a customer as part of an opt out notice pursuant to Regulation .10 of this chapter if the request and the authorization form are clear and conspicuous.</text> </paragraph> <paragraph num="B."> <text>An authorization form is not required to be delivered to the consumer or customer or included in any other notices unless the licensee intends to disclose protected health information pursuant to Regulation .17A of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".20" heading="Relationship to Federal Rules."> <text>Irrespective of whether a licensee is subject to the federal Health Insurance Portability and Accountability Act privacy rule as promulgated by the U.S. Department of Health and Human Services “Standards for the Privacy of Individually Identifiable Health Information”, if a licensee complies with all requirements of the federal rule except for its effective date provision, the licensee is not subject to the provisions of Regulations .17—.19 of this chapter.</text> </regulation> <regulation prefix="Regulation" num=".21" heading="Relationship to Maryland Laws."> <text>This chapter does not preempt or supersede existing State law related to medical records, health information privacy, or insurance information privacy.</text> </regulation> <regulation prefix="Regulation" num=".22" heading="Protection of Fair Credit Reporting Act."> <text>This chapter does not modify, limit, or supersede the operation of the federal Fair Credit Reporting Act, 15 U.S.C. §1681 et seq., and no inference shall be drawn on the basis of the provisions of this chapter regarding whether information is transaction or experience information under 15 U.S.C. §1681a.</text> </regulation> <regulation prefix="Regulation" num=".23" heading="Nondiscrimination."> <text>A licensee may not unfairly discriminate against any consumer or customer because that consumer or customer:</text> <paragraph num="A."> <text>Has opted out from the disclosure of his or her nonpublic personal financial information pursuant to the provisions of this chapter; or</text> </paragraph> <paragraph num="B."> <text>Has not granted authorization for the disclosure of his or her nonpublic personal health information pursuant to the provisions of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".24" heading="Effective Date."> <paragraph num="A."> <text>By April 1, 2002, a licensee shall provide an initial notice, as required by Regulation .05 of this chapter, to consumers who are the licensee's customers on January 1, 2002.</text> </paragraph> <paragraph num="B."> <text>Until July 1, 2002, a contract that a licensee has entered into with a nonaffiliated third party to perform services for the licensee or functions on the licensee's behalf satisfies the provisions of Regulation .14B(2) of this chapter, even if the contract does not include a requirement that the third party maintain the confidentiality of nonpublic personal information, as long as the licensee entered into the agreement on or before July 1, 2000.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109(d), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: January 21, 2002 (29:1 Md. R. 26)</annotation> <annotation type="History" subtype="Administrative History">Regulation .06 amended effective February 27, 2017 (44:4 Md. R. 256)</annotation> </annotations> </chapter> <chapter num="09" heading="Registry and Report on Slavery Era Insurance"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <paragraph num="A."> <text>This chapter sets forth standards for reporting slavery era insurance information pursuant Insurance Article, Title 30, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>This chapter requires insurers to provide information and data regarding slavery era insurance to the Maryland Insurance Administration.</text> </paragraph> <paragraph num="C."> <text>This chapter specifies how the Administration will distribute to the public the information provided pursuant to §B of this regulation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Commissioner” means the Maryland Insurance Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>“Holding company system” includes:</text> <paragraph num="(a)"> <text>An insurer that is a member of the holding company system; and</text> </paragraph> <paragraph num="(b)"> <text>Any other member, subsidiary, or division of the holding company system, in each case regardless of whether it is a licensee.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Insurer” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(4)"> <text>“Predecessor insurer” means an insurer associated with the reporting insurer that existed prior in time to the reporting insurer.</text> </paragraph> <paragraph num="(5)"> <text>“Reporting insurer” has the meaning stated in Insurance Article, §30-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Slave” has the meaning stated in Insurance Article, §30-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(7)"> <text>“Slaveholder” has the meaning stated in Insurance Article, §30-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Slaveholder insurance policies” has the meaning stated in Insurance Article, §30-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(9)"> <text>“Slavery era” has the meaning stated in Insurance Article, §30-101, Annotated Code of Maryland.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Reporting Insurers."> <paragraph num="A."> <text>An insurer authorized to do business in the State shall file a report to the Commissioner regarding slaveholder insurance policies that it wrote either directly or through a predecessor insurer during the slavery era.</text> </paragraph> <paragraph num="B."> <text>If an insurer is a member of a holding company system, a consolidated report may be filed by one insurer in the holding company on behalf of all members of the same holding company that are required to file a report.</text> </paragraph> <paragraph num="C."> <text>A consolidated report allowed pursuant to §B of this regulation shall designate one insurer as the reporting insurer for purposes of compliance with this chapter and shall specify which insurers are included in the report.</text> </paragraph> <paragraph num="D."> <text>Insurers choosing to file a consolidated report pursuant to §§B and C of this regulation shall comply with all other requirements of this chapter.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Report Format and Content."> <paragraph num="A."> <text>The report required by Regulation .03A of this chapter shall be filed on letterhead of the insurer, dated, and certified and affirmed under oath by the chief executive officer, or comparable officer, of the insurer as:</text> <paragraph num="(1)"> <text>Being true and not misleading; and</text> </paragraph> <paragraph num="(2)"> <text>Containing the most accurate information available at the time of the submission of the report.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The report required by Regulation .03A of this chapter shall include the following:</text> <paragraph num="(1)"> <text>A paragraph identifying the insurer, stating the insurer's:</text> <paragraph num="(a)"> <text>Name;</text> </paragraph> <paragraph num="(b)"> <text>Address;</text> </paragraph> <paragraph num="(c)"> <text>Telephone number;</text> </paragraph> <paragraph num="(d)"> <text>Fax number;</text> </paragraph> <paragraph num="(e)"> <text>E-mail address; and</text> </paragraph> <paragraph num="(f)"> <text>NAIC number and website URL, if any, for the main office of the insurer making the report;</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A contact person with the insurer, including the contact person's:</text> <paragraph num="(a)"> <text>Title;</text> </paragraph> <paragraph num="(b)"> <text>Address;</text> </paragraph> <paragraph num="(c)"> <text>Telephone number;</text> </paragraph> <paragraph num="(d)"> <text>Fax number; and</text> </paragraph> <paragraph num="(e)"> <text>E-mail address;</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>The research methodology used in generating and preparing the report, including:</text> <paragraph num="(a)"> <text>A description of the methods employed by the insurer to identify and compile the records and information that are responsive to this chapter; and</text> </paragraph> <paragraph num="(b)"> <text>A description of the research which was conducted at the insurer's own facility as well as a description of research which was conducted at other facilities known to the insurer;</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>If the insurer has found no responsive data, it shall so state;</text> </paragraph> <paragraph num="(5)"> <text>The names of slaves, in alphabetical order, in the following order:</text> <paragraph num="(a)"> <text>Last name;</text> </paragraph> <paragraph num="(b)"> <text>First name;</text> </paragraph> <paragraph num="(c)"> <text>The name of the slaveholder, beneficiary, policyholder, or all of them;</text> </paragraph> <paragraph num="(d)"> <text>The county or parish in which the slave resided;</text> </paragraph> <paragraph num="(e)"> <text>The state in which the slave resided; and</text> </paragraph> <paragraph num="(f)"> <text>Any other identifying information;</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>The names of slaveholders, in alphabetical order, in the following order:</text> <paragraph num="(a)"> <text>Last name;</text> </paragraph> <paragraph num="(b)"> <text>First name;</text> </paragraph> <paragraph num="(c)"> <text>The county or parish in which the slaveholder resided;</text> </paragraph> <paragraph num="(d)"> <text>The state in which the slaveholder resided; and</text> </paragraph> <paragraph num="(e)"> <text>Any other identifying information; and</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>The policy information, including:</text> <paragraph num="(a)"> <text>Copies of all records and documents regarding insurance policies issued to slaveholders that provided coverage for injury to or death of slaves; and</text> </paragraph> <paragraph num="(b)"> <text>Translations of any records or documents in any language other than English, along with a copy of the document together with a certified translation.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>An original plus one copy of the reports generated pursuant to §A of this regulation shall be filed on paper and mailed to the Maryland Insurance Administration, Slavery Era Insurance Registry, 200 St. Paul Place, Suite 2700, Baltimore, MD 21202.</text> </paragraph> <paragraph num="D."> <text>The sections of the reports outlined in §B(4) and (5) of this regulation, shall also be submitted in the electronic format approved by the Commissioner.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Submission."> <paragraph num="A."> <text>Each insurer shall file the report required by Regulation .04 of this chapter with the Commissioner on or before October 1, 2011.</text> </paragraph> <paragraph num="B."> <text>If the Commissioner determines that a report is incomplete, the Commissioner may require additional reports, as necessary, consistent with the requirements of this chapter.</text> </paragraph> <paragraph num="C."> <text>An insurer that files a report indicating that it has information responsive to the relevant statute and this chapter, which has not been provided, shall inform the Commissioner as to the reason that the required information has not been provided and when the required information will be filed.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Availability of the Slavery Era Insurance Policy Registry and Report."> <paragraph num="A."> <text>The report generated by the Commissioner pursuant to Insurance Article, Title 30, Annotated Code of Maryland, and this chapter, shall be known as the Slavery Era Insurance Policy Registry and Report.</text> </paragraph> <paragraph num="B."> <text>The Commissioner shall provide the Slavery Era Insurance Policy Registry and Report to the Governor and General Assembly on or before April 1, 2012.</text> </paragraph> <paragraph num="C."> <text>The Commissioner shall make available to the public a copy of the Slavery Era Insurance Policy Registry and Report on the Maryland Insurance Administration's website.</text> </paragraph> <paragraph num="D."> <text>The Slavery Era Insurance Policy Registry and Report shall be accessible to the public at the Thurgood Marshall Law Library at the University Of Maryland School Of Law and any other means that the Commissioner considers appropriate.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Enforcement."> <text>The Commissioner may impose on an insurer any penalty, sanction, or other form of legal enforcement which the Commissioner has the authority to impose for failure to comply with the provisions of this chapter.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§2-109(a)(1) and 30-102(c), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: December 28, 2009 (36:26 Md. R. 1999)</annotation> </annotations> </chapter> <chapter num="10" heading="Complaint Investigation and Determination Process"> <regulation prefix="Regulation" num=".01" heading="Scope."> <paragraph num="A."> <text>This chapter applies to carriers that issue or deliver insurance policies or health maintenance organization contracts in Maryland.</text> </paragraph> <paragraph num="B."> <text>This chapter does not apply to complaints filed under Insurance Article, Title 15, Subtitle 10A, Annotated Code of Maryland.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administration” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(2)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An insurer;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan;</text> </paragraph> <paragraph num="(c)"> <text>A dental plan organization;</text> </paragraph> <paragraph num="(d)"> <text>A fraternal benefit society;</text> </paragraph> <paragraph num="(e)"> <text>A health maintenance organization; or</text> </paragraph> <paragraph num="(f)"> <text>The Maryland Automobile Insurance Fund (MAIF).</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>“Commissioner” means the Insurance Commissioner of Maryland or the Insurance Commissioner’s designee.</text> </paragraph> <paragraph num="(4)"> <text>“Complainant” means a person who files a complaint with the Commissioner.</text> </paragraph> <paragraph num="(5)"> <text>Complaint.</text> <paragraph num="(a)"> <text>“Complaint” means any written communication received by the Commissioner that expresses dissatisfaction with a carrier.</text> </paragraph> <paragraph num="(b)"> <text>“Complaint” includes an oral communication received by the Commissioner, which is subsequently converted to a written form.</text> </paragraph> <paragraph num="(c)"> <text>“Complaint” does not include a dispute regarding a claim that is resolved by the Consumer Education and Advocacy Unit through the Rapid Response Program.</text> </paragraph> <paragraph num="(d)"> <text>“Complaint” includes a dispute that is initially handled by the Consumer Education and Advocacy Unit that is not resolved and is referred for a complaint investigation.</text> </paragraph> <paragraph num="(e)"> <text>“Complaint” does not include actions taken under Insurance Article, §27-1001, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(f)"> <text>“Complaint” does not include a dispute that is subject to the authority of the Workers’ Compensation Commission.</text> </paragraph> </paragraph> <paragraph num="(6)"> <text>“Complaint investigation” means the process used by the Commissioner to determine if a carrier has violated a State statute, regulation, or order in its dealings or interactions with the complainant, to the extent the Commissioner has the authority to enforce that statute, regulation, or order.</text> </paragraph> <paragraph num="(7)"> <text>Determination.</text> <paragraph num="(a)"> <text>“Determination” means a decision by the Commissioner that requires the Commissioner to provide the opportunity for a hearing to a person aggrieved by the decision under Insurance Article, §2-210, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(b)"> <text>“Determination” includes:</text> <paragraph num="(i)"> <text>A decision as to whether a carrier against whom a complaint has been received violated a law, regulation, or order; and</text> </paragraph> <paragraph num="(ii)"> <text>An order or notice issued under Insurance Article, §2-204, Annotated Code of Maryland.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(8)"> <text>“Health care provider” means:</text> <paragraph num="(a)"> <text>A hospital, as defined in Health-General Article, §19-301, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>A person who is:</text> <paragraph num="(i)"> <text>Licensed under Health Occupations Article, Annotated Code of Maryland, or similar laws of another state, to render health care services; and</text> </paragraph> <paragraph num="(ii)"> <text>The treating provider of the individual who is entitled to coverage under a contract issued or delivered in Maryland by a carrier.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(9)"> <text>“Market conduct action” has the meaning stated in COMAR 31.04.20.03.</text> </paragraph> <paragraph num="(10)"> <text>“Person” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Premium” has the meaning stated in Insurance Article, §1-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(12)"> <text>“Rapid Response Program” means the process designed by the Administration to help Maryland residents resolve personal property and casualty insurance claims directly with the individual’s insurer.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Complaint investigation."> <paragraph num="A."> <text>Upon receipt of a complaint, the Commissioner shall begin a complaint investigation.</text> </paragraph> <paragraph num="B."> <text>A complaint filed by a health care provider concerning a specific claim under a contract issued or delivered in Maryland by a life insurer, health insurer, nonprofit health service plan, dental plan organization, or health maintenance organization shall be considered to be filed on behalf of the individual who received the health care services for which the claim was filed, unless otherwise specified.</text> </paragraph> <paragraph num="C."> <text>The Commissioner shall acknowledge receipt of the complaint by sending a letter or a copy of the correspondence described in §D of this regulation to the complainant and the carrier.</text> </paragraph> <paragraph num="D."> <text>If the Commissioner determines information or documentation is needed from a carrier to conduct a complaint investigation, in accordance with Regulation .06 of this chapter:</text> <paragraph num="(1)"> <text>The Commissioner shall request information or documentation; and</text> </paragraph> <paragraph num="(2)"> <text>The carrier shall provide the information and documentation by the later of:</text> <paragraph num="(a)"> <text>15 working days after receipt of the Commissioner’s request; or</text> </paragraph> <paragraph num="(b)"> <text>The time period specified by the Commissioner in correspondence to the carrier.</text> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Determination."> <paragraph num="A."> <text>Upon completion of the complaint investigation, the Commissioner shall document the findings of the complaint investigation in a determination letter and, if applicable, an order.</text> </paragraph> <paragraph num="B."> <text>The documented findings of §A of this regulation shall be provided to the complainant and the carrier that was the subject of the complaint.</text> </paragraph> <paragraph num="C."> <text>The Commissioner may send the determination letter and, if applicable, the order to the complainant or the carrier by first-class mail or by any other means permitted by law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Reporting."> <text>The Commissioner shall report data concerning the outcome of the complaint to the National Association of Insurance Commissioners.</text> </regulation> <regulation prefix="Regulation" num=".06" heading="Information."> <paragraph num="A."> <text>The Commissioner may request accounts, records, documents, files, logs, photographs, or other information necessary to complete a complaint investigation.</text> </paragraph> <paragraph num="B."> <text>Whenever a carrier receives a request from the Commissioner for information and documentation, the carrier shall provide the requested information and documentation:</text> <paragraph num="(1)"> <text>On the date specified by the Commissioner, unless an extension has been granted by the Commissioner in accordance with §§D and E of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>In the manner specified by the Commissioner.</text> </paragraph> </paragraph> <paragraph num="C."> <text>If the carrier does not have the information or documentation requested by the Commissioner under §A of this regulation, the carrier shall provide the reason the carrier does not have the requested information or documentation.</text> </paragraph> <paragraph num="D."> <text>Request for Extension of Time to Respond.</text> <paragraph num="(1)"> <text>A carrier may submit a written request by first-class mail, facsimile, or electronic mail for an extension of time to respond to a request for information or documentation from the Commissioner.</text> </paragraph> <paragraph num="(2)"> <text>The request for an extension shall:</text> <paragraph num="(a)"> <text>Specify the reason an extension is needed; and</text> </paragraph> <paragraph num="(b)"> <text>Be received by the Commissioner prior to the date the information or documentation was due.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Upon receipt of a timely written request for an extension under §D of this regulation, the Commissioner shall:</text> <paragraph num="(1)"> <text>Grant an extension and provide the requestor with a new date by which the requested information or documentation is to be provided; or</text> </paragraph> <paragraph num="(2)"> <text>Notify the carrier that the request to extend the time is denied.</text> </paragraph> </paragraph> <paragraph num="F."> <text>Information related to a complaint investigation is subject to the Public Information Act, State Government Article, Title 10, Subtitle 6, Annotated Code of Maryland.</text> </paragraph> <paragraph num="G."> <text>A carrier submitting information to the Commissioner during a complaint investigation may submit a written request that the information not be disclosed under the Public Information Act.</text> </paragraph> <paragraph num="H."> <text>A request under §G of this regulation shall:</text> <paragraph num="(1)"> <text>Identify the particular information that the carrier requests not be disclosed; and</text> </paragraph> <paragraph num="(2)"> <text>Cite the statutory authority that permits denial of access to the information.</text> </paragraph> </paragraph> <paragraph num="I."> <text>The Commissioner may review a request made under §G of this regulation upon receipt of a request for access pursuant to the Public Information Act.</text> </paragraph> <paragraph num="J."> <text>The Commissioner may notify the carrier who made a request under §G of this regulation before granting access to information that was the subject of the request.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Commissioner’s Actions."> <text>Based on the information or documentation reviewed during a complaint investigation, the Commissioner may, in the Commissioner’s sole discretion, take one or more of the following actions in addition to issuing a determination letter or, if applicable, an order:</text> <paragraph num="A."> <text>Initiate a market conduct action in accordance with COMAR 31.04.20; or</text> </paragraph> <paragraph num="B."> <text>Take any other action authorized by State law.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Sanctions."> <text>If a carrier subject to this chapter fails to provide the information or documentation requested by the Commissioner in accordance with this chapter, the carrier may be subject to an administrative penalty not to exceed $500 per day, in addition to any other sanctions available to the Commissioner.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Hearings."> <text>A person aggrieved by the determination of the Commissioner’s complaint investigation may request a hearing in accordance with the provisions of Insurance Article, §2-210(c), Annotated Code of Maryland, and COMAR 31.02.01.</text> </regulation> <annotations> <annotation type="Authority">Insurance Article, §2-109(a); Health-General Article, §19-705(a)(2); Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date: November 12, 2012 (39:22 Md. R. 1430)</annotation> </annotations> </chapter> </subtitle> <subtitle num="17" heading="Maryland Health Insurance Plan"> <chapter num="01" heading="Plan Administrator Criteria"> <regulation prefix="Regulation" num=".01" heading="Scope."> <text>This chapter establishes criteria the Board of Directors of the Maryland Health Insurance Plan shall apply to select the Plan Administrator.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administrator” means:</text> <paragraph num="(a)"> <text>A person that is registered as an Administrator under Insurance Article, Title 8, Subtitle 3, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>A carrier.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Board” means the Board of Directors for the Maryland Health Insurance Plan.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An authorized insurer that provides health insurance in the State;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan that is licensed to operate in the State; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization that is licensed to operate in the State.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>Health Plan.</text> <paragraph num="(a)"> <text>“Health plan” means any:</text> <paragraph num="(i)"> <text>Contract providing hospital, medical, or surgical benefits on an expense incurred basis issued by an insurer;</text> </paragraph> <paragraph num="(ii)"> <text>Contract issued by a nonprofit health service plan;</text> </paragraph> <paragraph num="(iii)"> <text>Contract issued by a health maintenance organization; or</text> </paragraph> <paragraph num="(iv)"> <text>Employer-sponsored plan that provides health benefits to the employees of the employer.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Health plan” does not include one or more, or any combination of the following:</text> <paragraph num="(i)"> <text>Coverage only for accident or disability insurance;</text> </paragraph> <paragraph num="(ii)"> <text>Coverage issued as a supplement to liability insurance;</text> </paragraph> <paragraph num="(iii)"> <text>Coverage only for travel insurance;</text> </paragraph> <paragraph num="(iv)"> <text>Liability insurance, including general liability insurance and automobile liability insurance;</text> </paragraph> <paragraph num="(v)"> <text>Workers' compensation or similar insurance;</text> </paragraph> <paragraph num="(vi)"> <text>Automobile medical payment insurance;</text> </paragraph> <paragraph num="(vii)"> <text>Credit-only insurance; or</text> </paragraph> <paragraph num="(viii)"> <text>Coverage for on-site medical clinics.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Health plan” does not include the following benefits if they are provided under a separate policy, certificate, or contract of insurance or are otherwise not an integral part of a plan:</text> <paragraph num="(i)"> <text>Limited scope dental or vision benefits;</text> </paragraph> <paragraph num="(ii)"> <text>Benefits for long-term care, nursing home care, home health care, community based care, or any combination of these benefits;</text> </paragraph> <paragraph num="(iii)"> <text>Coverage only for a specified disease or illness; or</text> </paragraph> <paragraph num="(iv)"> <text>Hospital indemnity or other fixed indemnity insurance.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Health plan” does not include the following benefits if offered as a separate insurance policy:</text> <paragraph num="(i)"> <text>Medicare supplemental health insurance, as defined under §1882(g)(1) of the Social Security Act;</text> </paragraph> <paragraph num="(ii)"> <text>Coverage supplemental to the coverage provided under 10 U.S.C. Chapter 55; or</text> </paragraph> <paragraph num="(iii)"> <text>Coverage that is similar to the supplemental coverage described in §B(4)(d)(i) and (ii) of this regulation, which is provided as supplemental coverage under an employer sponsored plan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(5)"> <text>“Managed care organization” has the meaning stated in Health-General Article, §15-101, Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Member” means an individual covered under the Plan.</text> </paragraph> <paragraph num="(7)"> <text>“Plan” means the Maryland Health Insurance Plan.</text> </paragraph> <paragraph num="(8)"> <text>“Plan Administrator” means the Administrator selected by the Board to administer the Plan.</text> </paragraph> <paragraph num="(9)"> <text>“Private review agent” has the meaning stated in Insurance Article, §15-10B-01(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(10)"> <text>“Utilization review” means a system for reviewing the appropriate and efficient allocation of health care resources and services given or proposed to be given to a patient or group of patients.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Selection Criteria for Plan Administrator."> <paragraph num="A."> <text>The Board may select an administrator to be the Plan Administrator only if the administrator:</text> <paragraph num="(1)"> <text>Satisfies the requirements listed in §§C—I of this regulation; and</text> </paragraph> <paragraph num="(2)"> <text>Meets all other terms that are established in any contract between the administrator and the Board.</text> </paragraph> </paragraph> <paragraph num="B."> <text>The Board may select more than one Plan Administrator to administer different benefits or administrative functions of the Plan.</text> </paragraph> <paragraph num="C."> <text>Proven Ability to Provide Health Insurance Coverage to Individuals. An administrator shall provide evidence to the Board that it has at least 3 years experience of:</text> <paragraph num="(1)"> <text>Providing health plan benefits under insured contracts that cover at least 15,000 lives per year;</text> </paragraph> <paragraph num="(2)"> <text>Administering health plans for self-funded employer health plans that cover at least 15,000 lives per year;</text> </paragraph> <paragraph num="(3)"> <text>Enrolling at least 15,000 lives per year in the administrator's capacity as a managed care organization; or</text> </paragraph> <paragraph num="(4)"> <text>Insuring, administering, or enrolling at least 15,000 lives per year through a combination of any of the health plans or programs listed in §C(1)—(3) of this regulation.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Efficiency and Timeliness of Administrator's Claim Processing Procedures.</text> <paragraph num="(1)"> <text>A carrier shall provide evidence to the Board that it has procedures in place to comply with:</text> <paragraph num="(a)"> <text>The claim processing procedures required under Insurance Article, §§15-1004—15-1006, 15-1008, and 15-1009, Annotated Code of Maryland, for members covered under the Plan; and</text> </paragraph> <paragraph num="(b)"> <text>Any notice requirements specified by the Board in the request for proposals for the Plan Administrator.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An administrator that is not a carrier shall provide the following to the Board:</text> <paragraph num="(a)"> <text>A detailed description of the claim procedures and processes that the administrator uses;</text> </paragraph> <paragraph num="(b)"> <text>An assurance that the administrator shall accept the uniform claims form as adopted by the Commissioner under Insurance Article, §15-1003, Annotated Code of Maryland, for claims submitted on behalf of members of the Plan;</text> </paragraph> <paragraph num="(c)"> <text>An assurance that the administrator shall comply with the uniform claims forms regulations in COMAR 31.10.11 for claims submitted on behalf of members of the Plan;</text> </paragraph> <paragraph num="(d)"> <text>An assurance that the administrator shall pay claims for members of the Plan within the time required by Insurance Article, §15-1005, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(e)"> <text>An assurance that if the administrator denies a member's claim, the administrator, upon request of the member, shall give written notice to the member that states fully the reason for the denial;</text> </paragraph> <paragraph num="(f)"> <text>An assurance that the administrator shall comply with the requirements regarding retroactive denial of reimbursement as found in Insurance Article, §15-1008, Annotated Code of Maryland, for claims for members of the Plan;</text> </paragraph> <paragraph num="(g)"> <text>An assurance that the administrator shall comply with the requirements regarding reimbursement for preauthorized care as found in Insurance Article, §15-1009, Annotated Code of Maryland, for claims for members of the Plan; and</text> </paragraph> <paragraph num="(h)"> <text>An assurance that the administrator shall comply with any notice requirements specified by the Board in the request for proposals for the Plan Administrator.</text> </paragraph> </paragraph> </paragraph> <paragraph num="E."> <text>Estimate of Total Charges for Administering the Plan. Each administrator that responds to a request for proposals to be the Plan Administrator shall provide, in the manner requested by the Board, an estimate of the total charges for administering the Plan.</text> </paragraph> <paragraph num="F."> <text>Proven Ability to Apply Effective Cost Containment Programs.</text> <paragraph num="(1)"> <text>Each administrator that responds to a request for proposals to be the Plan Administrator shall provide to the Board:</text> <paragraph num="(a)"> <text>A description of each cost containment program that the administrator has available to use in the State; and</text> </paragraph> <paragraph num="(b)"> <text>An estimate of the savings that each cost containment program will provide to the Plan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Use of Private Review Agents. The Administrator shall provide to the Board an assurance that any utilization review performed for a member of the Plan shall be performed by a private review agent that has a certificate from the Commissioner to perform utilization review in the State.</text> </paragraph> </paragraph> <paragraph num="G."> <text>Financial Condition and Stability of the Plan Administrator.</text> <paragraph num="(1)"> <text>A carrier shall be deemed to meet the financial condition and stability requirements for the Plan Administrator if the carrier is:</text> <paragraph num="(a)"> <text>An insurer with a certificate of authority in good standing to write health insurance in the State;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan with a certificate of authority in good standing to operate in the State; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization with a certificate of authority in good standing to operate in the State.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An administrator who is not a carrier shall:</text> <paragraph num="(a)"> <text>Be registered in the State as an administrator under Insurance Article, Title 8, Subtitle 3, Annotated Code of Maryland; and</text> </paragraph> <paragraph num="(b)"> <text>File with the Board the administrator's financial statements audited by an independent certified public accountant from the preceding two calendar years.</text> </paragraph> </paragraph> </paragraph> <paragraph num="H."> <text>Provider Panel Requirements.</text> <paragraph num="(1)"> <text>A carrier shall provide evidence to the Board that it has procedures in place to comply with:</text> <paragraph num="(a)"> <text>The provider panel requirements of Insurance Article, §§15-112 and 15-115, Annotated Code of Maryland, for any provider panels used to provide health care services to Plan members;</text> </paragraph> <paragraph num="(b)"> <text>The compensation of health care practitioners requirements of Insurance Article, §15-113, Annotated Code of Maryland, for services rendered to Plan members; and</text> </paragraph> <paragraph num="(c)"> <text>The uniform credentialing form requirements of Insurance Article, §15-112.1, Annotated Code of Maryland, when credentialing providers for the Plan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>An administrator that is not a carrier shall provide assurances to the Board that the administrator shall comply with:</text> <paragraph num="(a)"> <text>The provider panel requirements of Insurance Article, §§15-112 and 15-115, Annotated Code of Maryland, for any provider panels used to provide health care services to Plan members;</text> </paragraph> <paragraph num="(b)"> <text>The compensation of health care practitioners requirements of Insurance Article, §15-113, Annotated Code of Maryland, for services rendered to Plan members; and</text> </paragraph> <paragraph num="(c)"> <text>The uniform credentialing form requirements of Insurance Article, §15-112.1, Annotated Code of Maryland, when credentialing providers for the Plan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="I."> <text>Use of Standardized Forms.</text> <paragraph num="(1)"> <text>A carrier shall provide evidence to the Board that it has procedures in place to comply with the uniform consultation referral form requirements of Insurance Article, §15-119, Annotated Code of Maryland and COMAR 31.10.12 for Plan member referrals.</text> </paragraph> <paragraph num="(2)"> <text>An administrator that is not a carrier shall provide written assurance to the Board that it will comply with the uniform consultation referral form requirements of Insurance Article, §15-119, Annotated Code of Maryland and COMAR 31.10.12 for Plan member referrals.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §14-506(a), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted as an emergency provision effective February 6, 2003 (30:5 Md. R. 365); adopted permanently effective August 4, 2003 (30:15 Md. R. 993)</annotation> </annotations> </chapter> <chapter num="02" heading="Medically Uninsurable Individual Based on a Medical or Health Condition"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>This chapter establishes the criteria for individuals who have certain medical or health conditions to qualify for coverage under the Maryland Health Insurance Plan.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An authorized insurer that provides health insurance in the State;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan that is licensed to operate in the State; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization that is licensed to operate in the State.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Medical or health condition” means any of the following:</text> <paragraph num="(a)"> <text>Acquired immunodeficiency syndrome (AIDS);</text> </paragraph> <paragraph num="(b)"> <text>Addison's disease;</text> </paragraph> <paragraph num="(c)"> <text>Amyotrophic lateral sclerosis (ALS) (Lou Gehrig's disease);</text> </paragraph> <paragraph num="(d)"> <text>Alzheimer's disease;</text> </paragraph> <paragraph num="(e)"> <text>Angina pectoris;</text> </paragraph> <paragraph num="(f)"> <text>Ankylosing Spondylitis;</text> </paragraph> <paragraph num="(g)"> <text>Anorexia;</text> </paragraph> <paragraph num="(h)"> <text>Aplastic anemia;</text> </paragraph> <paragraph num="(i)"> <text>Ascites;</text> </paragraph> <paragraph num="(j)"> <text>Banti's disease;</text> </paragraph> <paragraph num="(k)"> <text>Behavioral health in-patient treatment within the last 12 months;</text> </paragraph> <paragraph num="(l)"> <text>Bipolar disorder;</text> </paragraph> <paragraph num="(m)"> <text>Bulimia;</text> </paragraph> <paragraph num="(n)"> <text>Cancer treated or diagnosed within the last 5 years, except skin cancer;</text> </paragraph> <paragraph num="(o)"> <text>Cardiomyopathy;</text> </paragraph> <paragraph num="(p)"> <text>Chemical dependency;</text> </paragraph> <paragraph num="(q)"> <text>Chronic obstructive pulmonary disease;</text> </paragraph> <paragraph num="(r)"> <text>Cirrhosis of the liver;</text> </paragraph> <paragraph num="(s)"> <text>Coronary artery disease;</text> </paragraph> <paragraph num="(t)"> <text>Coronary heart failure;</text> </paragraph> <paragraph num="(u)"> <text>Coronary insufficiency;</text> </paragraph> <paragraph num="(v)"> <text>Coronary occlusion;</text> </paragraph> <paragraph num="(w)"> <text>Creutzfeldt-Jakob disease;</text> </paragraph> <paragraph num="(x)"> <text>Crohn's disease;</text> </paragraph> <paragraph num="(y)"> <text>Cystic fibrosis;</text> </paragraph> <paragraph num="(z)"> <text>Dementia;</text> </paragraph> <paragraph num="(aa)"> <text>Type I or II diabetes;</text> </paragraph> <paragraph num="(bb)"> <text>Disorders from organic brain damage;</text> </paragraph> <paragraph num="(cc)"> <text>Emphysema;</text> </paragraph> <paragraph num="(dd)"> <text>Esophageal varices;</text> </paragraph> <paragraph num="(ee)"> <text>Friederich's ataxia;</text> </paragraph> <paragraph num="(ff)"> <text>Guillain-Barré syndrome;</text> </paragraph> <paragraph num="(gg)"> <text>Hemochromatosis;</text> </paragraph> <paragraph num="(hh)"> <text>Hemophilia;</text> </paragraph> <paragraph num="(ii)"> <text>Hepatitis B or C;</text> </paragraph> <paragraph num="(jj)"> <text>Hodgkin's disease;</text> </paragraph> <paragraph num="(kk)"> <text>Human immunodeficiency virus (HIV);</text> </paragraph> <paragraph num="(ll)"> <text>Huntington's chorea;</text> </paragraph> <paragraph num="(mm)"> <text>Hydrocephalus;</text> </paragraph> <paragraph num="(nn)"> <text>Kidney disease requiring dialysis;</text> </paragraph> <paragraph num="(oo)"> <text>Leukemia;</text> </paragraph> <paragraph num="(pp)"> <text>Lupus erythematosus disseminate;</text> </paragraph> <paragraph num="(qq)"> <text>Major organ transplant recipient;</text> </paragraph> <paragraph num="(rr)"> <text>Melanoma;</text> </paragraph> <paragraph num="(ss)"> <text>Multiple myeloma;</text> </paragraph> <paragraph num="(tt)"> <text>Multiple or disseminated sclerosis;</text> </paragraph> <paragraph num="(uu)"> <text>Muscular dystrophy;</text> </paragraph> <paragraph num="(vv)"> <text>Myasthenia gravis;</text> </paragraph> <paragraph num="(ww)"> <text>Myotonia;</text> </paragraph> <paragraph num="(xx)"> <text>Non-Hodgkin's lymphoma;</text> </paragraph> <paragraph num="(yy)"> <text>Palsy;</text> </paragraph> <paragraph num="(zz)"> <text>Paraplegia;</text> </paragraph> <paragraph num="(aaa)"> <text>Parkinson's disease;</text> </paragraph> <paragraph num="(bbb)"> <text>Pick's disease;</text> </paragraph> <paragraph num="(ccc)"> <text>Porphyria;</text> </paragraph> <paragraph num="(ddd)"> <text>Pregnancy;</text> </paragraph> <paragraph num="(eee)"> <text>Presence of a pacemaker;</text> </paragraph> <paragraph num="(fff)"> <text>Psychotic disorder;</text> </paragraph> <paragraph num="(ggg)"> <text>Quadriplegia;</text> </paragraph> <paragraph num="(hhh)"> <text>Rheumatoid arthritis;</text> </paragraph> <paragraph num="(iii)"> <text>Scleroderma;</text> </paragraph> <paragraph num="(jjj)"> <text>Sickle cell disease;</text> </paragraph> <paragraph num="(kkk)"> <text>Cerebrovascular accident (stroke);</text> </paragraph> <paragraph num="(lll)"> <text>Syringomyelia;</text> </paragraph> <paragraph num="(mmm)"> <text>Tay-Sachs disease;</text> </paragraph> <paragraph num="(nnn)"> <text>Ulcerative colitis;</text> </paragraph> <paragraph num="(ooo)"> <text>Wernicke-Kosakoff syndrome;</text> </paragraph> <paragraph num="(ppp)"> <text>Wilm's tumor; or</text> </paragraph> <paragraph num="(qqq)"> <text>Wilson's disease.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Medically Uninsurable Individual.</text> <paragraph num="(a)"> <text>“Medically uninsurable individual” means an individual who is a resident of the State and who:</text> <paragraph num="(i)"> <text>Provides evidence that, for health reasons, a carrier has refused to issue substantially similar coverage to the individual;</text> </paragraph> <paragraph num="(ii)"> <text>Provides evidence that, for health reasons, a carrier has refused to issue substantially similar coverage to the individual, except at a rate that exceeds the Plan rate;</text> </paragraph> <paragraph num="(iii)"> <text>Is an eligible individual under Insurance Article, §15-1301, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(iv)"> <text>Has a history of or suffers from a medical or health condition as defined in §B(2) of this regulation; or</text> </paragraph> <paragraph num="(v)"> <text>Is a dependent of an individual who is eligible for coverage under this subsection.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Medically uninsurable individual” does not include an individual who is eligible for coverage under:</text> <paragraph num="(i)"> <text>The federal Medicare program;</text> </paragraph> <paragraph num="(ii)"> <text>The Maryland Medical Assistance Program;</text> </paragraph> <paragraph num="(iii)"> <text>The Maryland Children's Health Program; or</text> </paragraph> <paragraph num="(iv)"> <text>An employer-sponsored group health insurance plan that includes benefits comparable to Plan benefits.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Plan” means the Maryland Health Insurance Plan.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Proof of a Medical or Health Condition."> <paragraph num="A."> <text>The Plan shall consider that an individual meets the requirements of Regulation .02B(3)(a)(iv) of this chapter if the individual supplies documentation from a licensed physician that states that the individual has a history of or suffers from a medical or health condition.</text> </paragraph> <paragraph num="B."> <text>The documentation required in §A of this regulation shall specifically list one of the medical or health conditions in Regulation .02B(2) of this chapter.</text> </paragraph> <paragraph num="C."> <text>The documentation required in §A of this regulation may be a letter from a licensed physician.</text> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §§14-501(h)(1)(iv) and 14-503(k), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.03 adopted as an emergency provision effective February 6, 2003 (30:5 Md. R. 365); adopted permanently effective August 4, 2003 (30:15 Md. R. 993)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective January 30, 2006 (33:2 Md. R. 85); May 5, 2008 (35:9 Md. R. 900); December 29, 2008 (35:26 Md. R. 2251)</annotation> </annotations> </chapter> <chapter num="03" heading="Operation and Administration of the Plan"> <regulation prefix="Regulation" num=".01" heading="Purpose."> <text>The purpose of this chapter is to describe how the Board of Directors of the Maryland Health Insurance Plan shall operate and administer the Maryland Health Insurance Plan.</text> </regulation> <regulation prefix="Regulation" num=".02" heading="Definitions."> <paragraph num="A."> <text>In this chapter, the following terms have the meanings indicated.</text> </paragraph> <paragraph num="B."> <text>Terms Defined.</text> <paragraph num="(1)"> <text>“Administrator” means:</text> <paragraph num="(a)"> <text>A person that is registered as an administrator under Insurance Article, Title 8, Subtitle 3, Annotated Code of Maryland; or</text> </paragraph> <paragraph num="(b)"> <text>A carrier.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>“Board” means the Board of Directors for the Maryland Health Insurance Plan.</text> </paragraph> <paragraph num="(3)"> <text>“Carrier” means:</text> <paragraph num="(a)"> <text>An authorized insurer that provides health insurance in the State;</text> </paragraph> <paragraph num="(b)"> <text>A nonprofit health service plan that is licensed to operate in the State; or</text> </paragraph> <paragraph num="(c)"> <text>A health maintenance organization that is licensed to operate in the State.</text> </paragraph> </paragraph> <paragraph num="(4)"> <text>“Commission” means the Health Services Cost Review Commission.</text> </paragraph> <paragraph num="(5)"> <text>“Creditable coverage” has the meaning stated in Insurance Article, §15-1301(f), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(6)"> <text>“Date of adoption” means the earlier of:</text> <paragraph num="(a)"> <text>A judicial decree of adoption; or</text> </paragraph> <paragraph num="(b)"> <text>The assumption of custody, pending adoption, of a prospective adoptive child by a prospective adoptive parent.</text> </paragraph> </paragraph> <paragraph num="(7)"> <text>“Employer sponsored plan” has the meaning stated in Insurance Article, §15-1301(h), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(8)"> <text>“Fund” means the Maryland Health Insurance Plan Fund.</text> </paragraph> <paragraph num="(9)"> <text>“Grace period” means the period of 30 days following the due date of a premium, other than the first premium payable by an individual applying for coverage under the Plan, during which an individual may pay the premium to the Plan administrator and coverage continues under the Plan, without lapse.</text> </paragraph> <paragraph num="(10)"> <text>“Health benefit plan” has the meaning stated in Insurance Article, §15-1301(k), Annotated Code of Maryland.</text> </paragraph> <paragraph num="(11)"> <text>“Hospital” means each hospital in the State for which rates are established by the Commission.</text> </paragraph> <paragraph num="(12)"> <text>Medically Uninsurable Individual.</text> <paragraph num="(a)"> <text>“Medically uninsurable individual” means an individual who is a resident of the State and who:</text> <paragraph num="(i)"> <text>Provides evidence that, for health reasons, a carrier has refused to issue substantially similar coverage to the individual;</text> </paragraph> <paragraph num="(ii)"> <text>Provides evidence that, for health reasons, a carrier has refused to issue substantially similar coverage to the individual, except at a rate that exceeds the Plan rate;</text> </paragraph> <paragraph num="(iii)"> <text>Is an eligible individual under Insurance Article, §15-1301, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(iv)"> <text>Has a history of or suffers from a medical or health condition under COMAR 31.17.02.02B(2);</text> </paragraph> <paragraph num="(v)"> <text>Is eligible for the tax credit for health insurance costs under §35 of the Internal Revenue Code; or</text> </paragraph> <paragraph num="(vi)"> <text>Is a dependent of an individual who is a medically uninsurable individual under §B(12)(a)(i)—(v) of this regulation.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Medically uninsurable individual” does not include an individual who is eligible for coverage under:</text> <paragraph num="(i)"> <text>The federal Medicare program;</text> </paragraph> <paragraph num="(ii)"> <text>The Maryland Medical Assistance Program;</text> </paragraph> <paragraph num="(iii)"> <text>The Maryland Children's Health Program; or</text> </paragraph> <paragraph num="(iv)"> <text>An employer-sponsored group health insurance plan that includes benefits comparable to Plan benefits, unless the individual is eligible for the tax credit for health insurance costs under §35 of the Internal Revenue Code.</text> </paragraph> </paragraph> </paragraph> <paragraph num="(13)"> <text>“Member” means an individual covered under the Plan.</text> </paragraph> <paragraph num="(14)"> <text>“Plan” means the Maryland Health Insurance Plan.</text> </paragraph> <paragraph num="(15)"> <text>“Plan administrator” means the administrator selected by the Board to administer the Plan.</text> </paragraph> <paragraph num="(16)"> <text>Preexisting Condition.</text> <paragraph num="(a)"> <text>“Preexisting condition” means a condition for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the date of enrollment for the Plan.</text> </paragraph> <paragraph num="(b)"> <text>“Preexisting condition” does not include pregnancy or congenital or birth defects of a newborn child.</text> </paragraph> </paragraph> <paragraph num="(17)"> <text>Substantially Similar Coverage.</text> <paragraph num="(a)"> <text>“Substantially similar coverage” means coverage under any:</text> <paragraph num="(i)"> <text>Contract providing hospital, medical, or surgical benefits on an expense incurred basis issued by an insurer;</text> </paragraph> <paragraph num="(ii)"> <text>Contract issued by a nonprofit health service plan;</text> </paragraph> <paragraph num="(iii)"> <text>Contract issued by a health maintenance organization; or</text> </paragraph> <paragraph num="(iv)"> <text>Employer-sponsored plan that provides health benefits to the employees of the employer.</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>“Substantially similar coverage” does not include one or more, or any combination of the following:</text> <paragraph num="(i)"> <text>Coverage only for accident or disability insurance;</text> </paragraph> <paragraph num="(ii)"> <text>Coverage issued as a supplement to liability insurance;</text> </paragraph> <paragraph num="(iii)"> <text>Coverage only for travel insurance;</text> </paragraph> <paragraph num="(iv)"> <text>Liability insurance, including general liability insurance and automobile liability insurance;</text> </paragraph> <paragraph num="(v)"> <text>Workers' Compensation or similar insurance;</text> </paragraph> <paragraph num="(vi)"> <text>Automobile medical payment insurance;</text> </paragraph> <paragraph num="(vii)"> <text>Credit-only insurance; or</text> </paragraph> <paragraph num="(viii)"> <text>Coverage for on-site medical clinics.</text> </paragraph> </paragraph> <paragraph num="(c)"> <text>“Substantially similar coverage” does not include the following benefits if they are provided under a separate policy, certificate, or contract of insurance or are otherwise not an integral part of the health plan:</text> <paragraph num="(i)"> <text>Limited scope dental or vision benefits;</text> </paragraph> <paragraph num="(ii)"> <text>Limited scope prescription drug benefits;</text> </paragraph> <paragraph num="(iii)"> <text>Benefits for long-term care, nursing home care, home health care, community-based care, or any combination of these benefits;</text> </paragraph> <paragraph num="(iv)"> <text>Coverage only for a specified disease or illness; or</text> </paragraph> <paragraph num="(v)"> <text>Hospital indemnity or other fixed indemnity insurance.</text> </paragraph> </paragraph> <paragraph num="(d)"> <text>“Substantially similar coverage” does not include coverage listed under §B(17)(a) of this regulation if:</text> <paragraph num="(i)"> <text>The carrier is willing to issue the coverage only with a waiver rider for a specific condition or conditions; or</text> </paragraph> <paragraph num="(ii)"> <text>The coverage has annual out-of-pocket expenses for deductibles, co-payments, and other amounts, but not premiums, that exceed the amount of annual out-of-pocket expenses allowed for a high deductible plan as defined by §223(c)(2)(A) of the Internal Revenue Code, and as adjusted for inflation.</text> </paragraph> </paragraph> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".03" heading="Board Meetings."> <paragraph num="A."> <text>The Board shall meet at the times and places and with the frequency that the Board considers appropriate to conduct the business of the Plan.</text> </paragraph> <paragraph num="B."> <text>The Board shall adopt through bylaws the procedures for providing notice of Board meetings.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".04" heading="Executive Director."> <paragraph num="A."> <text>The Board shall appoint an Executive Director who shall be the chief administrative officer of the Plan.</text> </paragraph> <paragraph num="B."> <text>The Executive Director shall serve at the pleasure of the Board.</text> </paragraph> <paragraph num="C."> <text>Under the direction of the Board, the Executive Director shall perform any duty or function that is necessary for the operation of the Plan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".05" heading="Independent Consultants."> <paragraph num="A."> <text>The Board may contract with independent consultants to perform any function that the Board assigns to the consultants, including actuarial analysis and financial analysis.</text> </paragraph> <paragraph num="B."> <text>Unless permission is granted specifically by the Board, an independent consultant that contracts with the Board may not release, publish, or otherwise use any information to which the independent consultant had access under its contract with the Board.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".06" heading="Plan Administrator."> <paragraph num="A."> <text>The Board shall select a Plan administrator.</text> </paragraph> <paragraph num="B."> <text>The Board may select more than one Plan administrator, if the Board decides to contract with different administrators to administer:</text> <paragraph num="(1)"> <text>Different standard benefit packages;</text> </paragraph> <paragraph num="(2)"> <text>Specific benefits, such as a prescription drug benefit; or</text> </paragraph> <paragraph num="(3)"> <text>Specific administrative functions of the Plan, such as case management.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Each Plan administrator shall serve for a period of time specified in its contract with the Board, subject to removal for cause and any other terms, conditions, and limitations contained in the contract.</text> </paragraph> <paragraph num="D."> <text>Each Plan administrator shall perform functions relating to the Plan as required by the Board, including:</text> <paragraph num="(1)"> <text>Determination of eligibility;</text> </paragraph> <paragraph num="(2)"> <text>Data collection;</text> </paragraph> <paragraph num="(3)"> <text>Case management;</text> </paragraph> <paragraph num="(4)"> <text>Financial tracking and reporting;</text> </paragraph> <paragraph num="(5)"> <text>Payment of claims; and</text> </paragraph> <paragraph num="(6)"> <text>Premium billing.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The Board shall assume all insurance risk associated with covered benefits under the Plan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".07" heading="Hospital Assessments."> <paragraph num="A."> <text>Each year, the Commission shall calculate the monthly Plan assessment that each hospital shall pay to the Fund.</text> </paragraph> <paragraph num="B."> <text>The Commission shall send a billing notice to each hospital for its Plan assessment.</text> </paragraph> <paragraph num="C."> <text>Beginning April 1, 2003, each hospital shall forward its monthly Plan assessment to the Fund.</text> </paragraph> <paragraph num="D."> <text>Any failure by a hospital to pay the required Plan assessment shall be monitored by the Board, or its designee, and reported to the Commission.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".08" heading="Investment of Fund Assets."> <text>The assets of the Fund shall be invested in the State Treasurer's interest allocation program, which shall provide interest to the Fund at the rate the State's General Fund earns interest on its investments.</text> </regulation> <regulation prefix="Regulation" num=".09" heading="Determination of Plan Benefits and Plan Structure."> <paragraph num="A."> <text>The Board shall establish at least two standard benefit packages to be offered by the Plan.</text> </paragraph> <paragraph num="B."> <text>The Board may choose to establish the standard benefit packages with the only difference between each standard benefit package being in the area of the cost-sharing requirements.</text> </paragraph> <paragraph num="C."> <text>The standard benefit packages established by the Board shall be described in the contract between the Plan administrator and the Board and shall include:</text> <paragraph num="(1)"> <text>A list of covered benefits;</text> </paragraph> <paragraph num="(2)"> <text>A list of exclusions and limitations; and</text> </paragraph> <paragraph num="(3)"> <text>A description of the cost-sharing arrangements, including any deductibles, copayments, coinsurance, and annual or lifetime maximums.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Review of Standard Benefit Packages.</text> <paragraph num="(1)"> <text>The standard benefit packages shall be reviewed by the Board from time to time.</text> </paragraph> <paragraph num="(2)"> <text>All changes made in the standard benefit packages pursuant to the review described in §D(1) of this regulation shall be effective for contracts issued or renewed on or after the first July 1 that follows the date the Board makes the changes.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".10" heading="Determination of Plan Premium."> <paragraph num="A."> <text>The Board shall establish a premium rate for each standard benefit package in the Plan.</text> </paragraph> <paragraph num="B."> <text>The Board may contract with an actuary to establish the premium rate for each standard benefit package in the Plan.</text> </paragraph> <paragraph num="C."> <text>Standard Risk Rate.</text> <paragraph num="(1)"> <text>The Board shall establish a standard risk rate premium rate for each standard benefit package in the Plan.</text> </paragraph> <paragraph num="(2)"> <text>The standard risk rate for each standard benefit package in the Plan shall be developed by considering the premium rates charged by carriers in the State for coverage comparable to that of the standard benefit package.</text> </paragraph> <paragraph num="(3)"> <text>The Board may contract with an actuary to establish each standard risk rate.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Variations in Plan Premium.</text> <paragraph num="(1)"> <text>Except as permitted under §D(2) of this regulation, the premium rate for each standard benefit package in the Plan may vary only on the basis of family composition.</text> </paragraph> <paragraph num="(2)"> <text>If the Board determines that a standard risk rate would create market dislocation, the Board may adjust the premium rate based on member age.</text> </paragraph> </paragraph> <paragraph num="E."> <text>The premium rate for each standard benefit package in the Plan may not:</text> <paragraph num="(1)"> <text>Be less than 110 percent of the standard risk rate; or</text> </paragraph> <paragraph num="(2)"> <text>Exceed 200 percent of the standard risk rate.</text> </paragraph> </paragraph> <paragraph num="F."> <text>The premium rates for the Plan shall be reasonably calculated to encourage enrollment in the Plan.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".10-1" heading="Low-Income Subsidy."> <paragraph num="A."> <text>The Board may subsidize the premiums, deductibles, and other expenses of an individual based on the individual's income if the individual:</text> <paragraph num="(1)"> <text>Is enrolled, or eligible to enroll, in the Plan;</text> </paragraph> <paragraph num="(2)"> <text>Has an annual household income that is at or below a percentage of the federal poverty level established by the Board;</text> </paragraph> <paragraph num="(3)"> <text>Submits to the plan administrator an application for the low-income subsidy on the form required by the Board; and</text> </paragraph> <paragraph num="(4)"> <text>Provides to the plan administrator verification of annual household income in a form acceptable to the Board.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Initial Application.</text> <paragraph num="(1)"> <text>An individual may apply for a low-income subsidy at any time.</text> </paragraph> <paragraph num="(2)"> <text>If an applicant for a low-income subsidy fails to provide all of the required documentation, the plan administrator shall notify the applicant of:</text> <paragraph num="(a)"> <text>The additional documentation that is required; and</text> </paragraph> <paragraph num="(b)"> <text>The deadline set by the plan administrator for receipt of the additional documentation.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If the applicant fails to provide the additional documentation by the deadline:</text> <paragraph num="(a)"> <text>The plan administrator shall notify the applicant that the applicant has not demonstrated eligibility for the low-income subsidy and bill the applicant for standard Plan enrollment; and</text> </paragraph> <paragraph num="(b)"> <text>The applicant shall reapply for a low-income subsidy if the applicant wishes to receive future consideration for a low-income subsidy.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Recertification.</text> <paragraph num="(1)"> <text>Each year, the plan administrator shall mail a low-income subsidy recertification form to each member currently receiving a low-income subsidy.</text> </paragraph> <paragraph num="(2)"> <text>The form shall require the member to provide to the plan administrator updated verification of annual household income:</text> <paragraph num="(a)"> <text>In a form acceptable to the Board; and</text> </paragraph> <paragraph num="(b)"> <text>That demonstrates continued eligibility for the low-income subsidy.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If a member who is receiving a low-income subsidy fails to demonstrate continued eligibility for the low-income subsidy, the member may select a standard Plan design option during open enrollment.</text> </paragraph> <paragraph num="(4)"> <text>If a member who fails to demonstrate continued eligibility for the low-income subsidy fails to select a standard Plan design option during open enrollment, the plan administrator shall place the member in a Plan design option in accordance with standards established by the Board.</text> </paragraph> </paragraph> <paragraph num="D."> <text>Enrollment Capacity.</text> <paragraph num="(1)"> <text>The Board shall determine the number of members who may receive the low-income subsidy each year.</text> </paragraph> <paragraph num="(2)"> <text>If the Board determines that the maximum number of members are receiving the low-income subsidy for a year, the plan administrator shall:</text> <paragraph num="(a)"> <text>Discontinue granting the low-income subsidy; and</text> </paragraph> <paragraph num="(b)"> <text>Establish a waiting list of individuals who are eligible for the low-income subsidy.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>An individual on the waiting list may enroll in a standard Plan design option until a low-income subsidy becomes available to the individual.</text> </paragraph> </paragraph> <paragraph num="E."> <text>Fraud.</text> <paragraph num="(1)"> <text>The plan administrator immediately shall cease the low-income subsidy to a member if the plan administrator determines that the member received the low-income subsidy based on fraudulent documentation or statements, including any material misrepresentation but for which the member would not have received the low-income subsidy.</text> </paragraph> <paragraph num="(2)"> <text>The Plan may recover from any member or former member the amount of any low-income subsidy that the member or former member received due to the Plan's reliance on a material misrepresentation by the member or former member.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".11" heading="Evaluation of Plan."> <text>The Board shall annually evaluate the Plan to assure that Plan enrollment does not exceed the number of members the Plan has the financial capacity to insure.</text> </regulation> <regulation prefix="Regulation" num=".12" heading="Marketing of Plan."> <paragraph num="A."> <text>The Board shall establish and maintain public awareness of the Plan, including its eligibility requirements and enrollment procedures.</text> </paragraph> <paragraph num="B."> <text>The methods to be used by the Board to establish and maintain public awareness of the Plan shall include, but are not limited to:</text> <paragraph num="(1)"> <text>Establishing a mailing list of interested persons, advocacy groups, carriers, and potential applicants to the Plan for the purpose of notifying them of the availability of coverage under the Plan;</text> </paragraph> <paragraph num="(2)"> <text>Releasing periodic press releases and articles that provide status reports on the operation of the Plan and information and instructions to eligible individuals who might be interested in applying for coverage under the Plan;</text> </paragraph> <paragraph num="(3)"> <text>Speaking to interested health insurance industry and public groups regarding the Plan;</text> </paragraph> <paragraph num="(4)"> <text>Distributing a brochure to interested persons through the Plan administrator that describes the coverage available through the Plan and the process by which an individual may apply for coverage under the Plan;</text> </paragraph> <paragraph num="(5)"> <text>Publishing an annual report to the General Assembly, participants, and other interested persons regarding the status of the Plan, its mission, and general eligibility information;</text> </paragraph> <paragraph num="(6)"> <text>Familiarizing insurance producers with the coverage available through the Plan and the process by which they may assist individuals in applying for coverage under the Plan; and</text> </paragraph> <paragraph num="(7)"> <text>Other mechanisms and activities the Board determines would be effective and appropriate.</text> </paragraph> </paragraph> <paragraph num="C."> <text>Fees for Insurance Producers.</text> <paragraph num="(1)"> <text>The Plan administrator shall pay a referral fee of $100 to a licensed life and health insurance producer if:</text> <paragraph num="(a)"> <text>The insurance producer assists an individual in completing an application for the Plan; and</text> </paragraph> <paragraph num="(b)"> <text>The individual is accepted by the Plan.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>The licensed life and health insurance producer is not required to be appointed to the Plan to receive the $100 referral fee referenced in §C(1) of this regulation.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".13" heading="Certificates of Coverage."> <paragraph num="A."> <text>The Plan administrator shall issue certificates of coverage to individuals covered under the Plan that describe the essential features of the Plan including:</text> <paragraph num="(1)"> <text>Benefits;</text> </paragraph> <paragraph num="(2)"> <text>Exclusions and limitations;</text> </paragraph> <paragraph num="(3)"> <text>Cost-sharing requirements;</text> </paragraph> <paragraph num="(4)"> <text>Any annual or lifetime maximums;</text> </paragraph> <paragraph num="(5)"> <text>Termination provisions; and</text> </paragraph> <paragraph num="(6)"> <text>Any utilization review or precertification requirements.</text> </paragraph> </paragraph> <paragraph num="B."> <text>If dependents are included in the coverage, only one certificate shall be issued for each family unit.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".14" heading="Eligibility Requirements."> <paragraph num="A."> <text>Except as provided in §§D—F of this regulation, an individual is eligible for coverage under the Plan if the individual is:</text> <paragraph num="(1)"> <text>A medically uninsurable individual; and</text> </paragraph> <paragraph num="(2)"> <text>Satisfies any applicable residency requirement in §C of this regulation.</text> </paragraph> </paragraph> <paragraph num="B."> <text>Eligibility for Employer-Sponsored Group Health Insurance Plan.</text> <paragraph num="(1)"> <text>For purposes of determining whether an individual who is eligible for coverage under an employer-sponsored group health insurance plan is a medically uninsurable individual under Regulation .02B(12)(b)(iv) of this chapter, benefits provided by an employer-sponsored group health insurance plan are not comparable to benefits provided by the Maryland Health Insurance Plan if:</text> <paragraph num="(a)"> <text>The employer-sponsored group health insurance plan does not provide coverage for any one of the following major categories of treatments, services, or supplies:</text> <paragraph num="(i)"> <text>Blood and blood products;</text> </paragraph> <paragraph num="(ii)"> <text>Chemotherapy and radiation therapy;</text> </paragraph> <paragraph num="(iii)"> <text>Diabetic equipment and services;</text> </paragraph> <paragraph num="(iv)"> <text>Dialysis;</text> </paragraph> <paragraph num="(v)"> <text>Durable medical equipment and disposable medical supplies;</text> </paragraph> <paragraph num="(vi)"> <text>Emergency services and urgent care;</text> </paragraph> <paragraph num="(vii)"> <text>Family planning services;</text> </paragraph> <paragraph num="(viii)"> <text>Habilitative care;</text> </paragraph> <paragraph num="(ix)"> <text>Home health care;</text> </paragraph> <paragraph num="(x)"> <text>Hospice care;</text> </paragraph> <paragraph num="(xi)"> <text>Hospital inpatient services;</text> </paragraph> <paragraph num="(xii)"> <text>Infertility testing and diagnosis;</text> </paragraph> <paragraph num="(xiii)"> <text>Maternity care;</text> </paragraph> <paragraph num="(xiv)"> <text>Mental health and substance abuse services;</text> </paragraph> <paragraph num="(xv)"> <text>Organ and tissue transplants;</text> </paragraph> <paragraph num="(xvi)"> <text>Outpatient services;</text> </paragraph> <paragraph num="(xvii)"> <text>Physician services;</text> </paragraph> <paragraph num="(xviii)"> <text>Prescription drugs;</text> </paragraph> <paragraph num="(xix)"> <text>Preventive services;</text> </paragraph> <paragraph num="(xx)"> <text>Prosthetics;</text> </paragraph> <paragraph num="(xxi)"> <text>Rehabilitation services; or</text> </paragraph> <paragraph num="(xxii)"> <text>Skilled nursing facility;</text> </paragraph> </paragraph> <paragraph num="(b)"> <text>The employer-sponsored group health insurance plan imposes an annual limit on the cost or number of covered treatments, services, or supplies that is less than 50 percent of any annual limit on the cost or number of covered treatments, services, or supplies imposed by the Maryland Health Insurance Plan; or</text> </paragraph> <paragraph num="(c)"> <text>The only option or options available under the employer-sponsored group health insurance plan have annual out-of-pocket expenses for deductibles, co-payments, and other amounts, but not premiums, that exceed the amount of annual out-of-pocket expenses allowed for a high deductible plan as defined by §223(c)(2)(A) of the Internal Revenue Code, and as adjusted for inflation.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>Benefits provided by an employer-sponsored group health insurance plan are not considered to be not comparable to benefits provided by the Maryland Health Insurance Plan solely because the employer-sponsored group health insurance plan:</text> <paragraph num="(a)"> <text>Excludes coverage for a particular treatment, service, procedure, device, or type of supply that is covered by the Plan;</text> </paragraph> <paragraph num="(b)"> <text>Imposes a temporary preexisting condition exclusion at a time when the Plan does not impose a preexisting condition exclusion; or</text> </paragraph> <paragraph num="(c)"> <text>Imposes a temporary preexisting condition exclusion that is different in scope or duration from a preexisting condition exclusion that is imposed by the Plan.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Residency Requirements.</text> <paragraph num="(1)"> <text>Unless an individual satisfies the requirements of §C(2) of this regulation, an individual shall be a resident of Maryland for at least 6 months in order to be eligible for the Plan.</text> </paragraph> <paragraph num="(2)"> <text>An individual may not be required to satisfy the 6-month residency requirement found in §C(1) of this regulation if the individual is a resident of the State and:</text> <paragraph num="(a)"> <text>Is an eligible individual under Insurance Article, §15-1301, Annotated Code of Maryland;</text> </paragraph> <paragraph num="(b)"> <text>Applies for coverage under the Plan within 63 days of losing coverage under another state's high-risk pool; or</text> </paragraph> <paragraph num="(c)"> <text>Is eligible for the tax credit for health insurance costs under §35 of the Internal Revenue Code.</text> </paragraph> </paragraph> </paragraph> <paragraph num="D."> <text>Except as provided in §E of this regulation, an individual is not eligible for Plan coverage if:</text> <paragraph num="(1)"> <text>The individual's coverage under the Plan was terminated for nonpayment of premium; and</text> </paragraph> <paragraph num="(2)"> <text>The individual applies for Plan coverage within 12 months of the individual's Plan coverage being terminated for nonpayment of premium.</text> </paragraph> </paragraph> <paragraph num="E."> <text>An individual may not be denied Plan coverage under §D of this regulation, if the individual:</text> <paragraph num="(1)"> <text>Becomes covered under other substantially similar coverage within 63 days of terminating Plan coverage;</text> </paragraph> <paragraph num="(2)"> <text>Is terminated from the substantially similar coverage referenced in §E(1) of this regulation for a reason other than nonpayment of premium by:</text> <paragraph num="(a)"> <text>The individual; or</text> </paragraph> <paragraph num="(b)"> <text>A family member of the individual; and</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>Applies for coverage under the Plan within 63 days of being terminated from the substantially similar coverage referenced in §E(1) of this regulation.</text> </paragraph> </paragraph> <paragraph num="F."> <text>An individual is not eligible for Plan coverage if the individual's coverage under the Plan has been previously terminated due to fraud or intentional misrepresentation.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".15" heading="Plan Enrollment Procedures."> <paragraph num="A."> <text>The Board or the Plan administrator, acting on behalf of the Board, shall accept and process applications from individuals for enrollment in the Plan.</text> </paragraph> <paragraph num="B."> <text>Except as provided in §C of this regulation, an individual may apply for coverage under the Plan throughout each year.</text> </paragraph> <paragraph num="C."> <text>If an individual's eligibility is based on the individual's prior denial of coverage by a carrier, the individual may only apply for Plan coverage within 6 months of the receipt of the prior denial.</text> </paragraph> <paragraph num="D."> <text>An individual who enrolls in one standard benefit package may change coverage to another standard benefit package under the Plan only during the time periods specified in the individual's certificate of coverage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".16" heading="Preexisting Condition Limitations."> <paragraph num="A."> <text>The Board may implement a preexisting condition exclusion for the Plan, which shall be described in the Board's contract with the Plan administrator.</text> </paragraph> <paragraph num="B."> <text>If the Board implements a preexisting condition exclusion for the Plan, the preexisting condition exclusion may not apply to:</text> <paragraph num="(1)"> <text>An eligible individual under the Maryland Health Insurance Portability and Accountability Act as defined in Insurance Article, §15-1301, Annotated Code of Maryland, if the individual applies for the Plan coverage within 63 days of losing prior coverage;</text> </paragraph> <paragraph num="(2)"> <text>A newborn child, provided that if an additional premium is required for the child's coverage, the child is enrolled within 31 days after the date of birth;</text> </paragraph> <paragraph num="(3)"> <text>A newly adopted child, provided that if an additional premium is required for the child's coverage, the child is enrolled within 31 days after the date of adoption; or</text> </paragraph> <paragraph num="(4)"> <text>An individual who:</text> <paragraph num="(a)"> <text>Has 3 months of prior creditable coverage;</text> </paragraph> <paragraph num="(b)"> <text>Is eligible for the tax credit for health insurance costs under §35 of the Internal Revenue Code; and</text> </paragraph> <paragraph num="(c)"> <text>Applies for the Plan coverage within 63 days after losing prior creditable coverage.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>If an individual applies for coverage under the Plan within 63 days of losing prior creditable coverage, the period of any preexisting condition exclusion shall be reduced by the period of time the individual was covered under prior creditable coverage.</text> </paragraph> </regulation> <regulation prefix="Regulation" num=".17" heading="Termination of Coverage."> <paragraph num="A."> <text>Termination of Plan Coverage for Nonpayment of Premium. A member's coverage automatically terminates at the end of the grace period if a premium is not received before the end of the grace period.</text> </paragraph> <paragraph num="B."> <text>Termination of Plan Coverage for Specified Causes.</text> <paragraph num="(1)"> <text>A member's coverage under the Plan terminates at the end of the month in which any of the following occur:</text> <paragraph num="(a)"> <text>For a dependent child, other than a child who is unable to self support due to physical or mental incapacity, when the dependent child reaches the limiting age found in the member's certificate of coverage; or</text> </paragraph> <paragraph num="(b)"> <text>The member ceases to be a resident of the State.</text> </paragraph> </paragraph> <paragraph num="(2)"> <text>A member's coverage shall terminate under the Plan if:</text> <paragraph num="(a)"> <text>The member or the member's covered dependent has performed an act or practice that constitutes fraud;</text> </paragraph> <paragraph num="(b)"> <text>The member has made an intentional misrepresentation of material fact in the application for Plan coverage;</text> </paragraph> <paragraph num="(c)"> <text>The member becomes covered under other coverage that is substantially similar to the coverage of the Plan;</text> </paragraph> <paragraph num="(d)"> <text>The member becomes eligible for employer sponsored coverage that includes benefits comparable to Plan benefits, unless the member is eligible for the tax credit for health insurance costs under §35 of the Internal Revenue Code; or</text> </paragraph> <paragraph num="(e)"> <text>The member becomes eligible for coverage under Medicare, the Maryland Medical Assistance Program, or the Maryland Children's Health Program.</text> </paragraph> </paragraph> <paragraph num="(3)"> <text>If a member's coverage terminates for one of the reasons described in §B(2)(a)—(e) of this regulation, coverage for the member and any of the member's dependents ends following notice from the Plan administrator on the following dates:</text> <paragraph num="(a)"> <text>If the Plan administrator gives notice of termination before the 15th day of a month, at the end of that month; or</text> </paragraph> <paragraph num="(b)"> <text>If the Plan administrator gives notice of termination on or after the 15th day of a month, at the end of the following month.</text> </paragraph> </paragraph> </paragraph> <paragraph num="C."> <text>Termination for Moving Out of the Service Area.</text> <paragraph num="(1)"> <text>If the Board selects a health maintenance organization to be one of the standard benefit packages offered under the Plan, a member's coverage under the Plan terminates at the end of the month when the member moves out of the service area of the health maintenance organization.</text> </paragraph> <paragraph num="(2)"> <text>If a member's coverage under the Plan terminates for the reason described in §C(1) of this regulation, the member shall be given an option to enroll immediately into one of the other standard benefit packages offered by the Plan, if the member continues to reside within the State.</text> </paragraph> </paragraph> </regulation> <regulation prefix="Regulation" num=".18" heading="Coordination of Benefits With Other Coverage."> <text>If a member has other health care coverage, the Plan administrator shall coordinate benefits with that other health care coverage in accordance with the terms described in the Plan administrator's contract with the Board.</text> </regulation> <regulation prefix="Regulation" num=".19" heading="Complaints."> <paragraph num="A."> <text>The Plan administrator shall comply with the complaint process for adverse decisions and grievance decisions in Insurance Article, Title 15, Subtitle 10A, Annotated Code of Maryland.</text> </paragraph> <paragraph num="B."> <text>The Plan administrator shall comply with the complaint process for coverage decisions in Insurance Article, Title 15, Subtitle 10D, Annotated Code of Maryland.</text> </paragraph> <paragraph num="C."> <text>Members and providers shall have the same appeal rights regarding denials under the Plan as found under Insurance Article, Title 15, Subtitles 10A and 10D, Annotated Code of Maryland.</text> </paragraph> <paragraph num="D."> <text>Complaints Regarding Eligibility Denials.</text> <paragraph num="(1)"> <text>An individual shall file any initial complaints regarding an eligibility denial with the Plan administrator.</text> </paragraph> <paragraph num="(2)"> <text>If the Plan administrator upholds its initial denial regarding an individual's eligibility for Plan coverage, the individual may appeal this denial to the Board or its designee.</text> </paragraph> </paragraph> </regulation> <annotations> <annotation type="Authority">Insurance Article, §14-503(k), Annotated Code of Maryland</annotation> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.19 adopted as an emergency provision effective April 8, 2003 (30:9 Md. R. 609); emergency text amended effective July 1, 2003 (30:16 Md. R. 1072); adopted permanently effective December 22, 2003 (30:25 Md. R. 1851)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective May 21, 2007 (34:10 Md. R. 891)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02B amended effective February 22, 2010 (37:4 Md. R. 343); August 9, 2010 (37:16 Md. R. 1060); January 7, 2013 (39:26 Md. R. 1666)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10E amended effective January 7, 2013 (39:26 Md. R. 1666)</annotation> <annotation type="History" subtype="Administrative History">Regulation .10-1 adopted effective May 21, 2007 (34:10 Md. R. 891)</annotation> <annotation type="History" subtype="Administrative History">Regulation .12C amended effective January 30, 2006 (33:2 Md. R. 85)</annotation> <annotation type="History" subtype="Administrative History">Regulation .14 amended effective May 4, 2009 (36:9 Md. R. 654); February 22, 2010 (37:4 Md. R. 343)</annotation> </annotations> </chapter> <chapter num="04" heading="Senior Prescription Drug Assistance Program"> <annotations> <annotation type="History" subtype="Administrative History">Effective date:</annotation> <annotation type="History" subtype="Administrative History">Regulations .01—.08 adopted as an emergency provision effective July 1, 2000 (27:15 Md. R. 1397); emergency status amended and extended at 28:3 Md. R. 202; adopted permanently effective April 16, 2001 (28:7 Md. R. 689)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised as an emergency provision effective July 1, 2001 (28:16 Md. R. 1480); revised permanently effective October 15, 2001 (28:20 Md. R. 1782)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised and recodified from 10.09.28 Senior Assistance: Short-Term Prescription Drug Subsidy Program, to 31.17.04 Senior Prescription Drug Program, as an emergency provision effective July 1, 2003 (30:14 Md. R. 934); revised and recodified permanently effective December 22, 2003 (30:25 Md. R. 1851)</annotation> <annotation type="History" subtype="Administrative History">Chapter revised effective October 8, 2007 (34:20 Md. R. 1742)</annotation> <annotation type="History" subtype="Administrative History">Regulation .01B amended effective August 10, 2009 (36:16 Md. R. 1252)</annotation> <annotation type="History" subtype="Administrative History">Regulation .02A, B amended effective August 10, 2009 (36:16 Md. R. 1252)</annotation> <annotation type="History" subtype="Administrative History">Chapter recodified from 31.17.04 Senior Prescription Drug Assistance Program, to 10.09.60 Senior Prescription Drug Program effective July 1, 2016</annotation> </annotations> </chapter> </subtitle>