Chapter 15. Underwriting Period
Regulation .01 Scope.LinkCopy Citation
This chapter applies only to a binder or policy, other than a renewal policy, of personal insurance, commercial property insurance, or commercial liability insurance.
Regulation .02 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Delivery by electronic means” includes:
(a)
Delivery to an electronic mail address at which a party has consented to receive notice; and
(b)
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.
(2)
Material Risk Factor.
(a)
“Material risk factor” means a risk factor that:
(i)
Was incorrectly recorded or not disclosed by the insured in an application for insurance;
(ii)
Was in existence on the date of the application; and
(iii)
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.
(b)
“Material risk factor” does not include:
(i)
Information that constitutes a material misrepresentation; or
(ii)
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.
(3)
“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.
Regulation .03 Underwriting Period.LinkCopy Citation
A.
A binder or policy is subject to a 45-day underwriting period beginning on the effective date of coverage.
B.
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.
Regulation .04 Discovery of Material Risk Factor During Underwriting Period.LinkCopy Citation
A.
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.
B.
Notice of Recalculated Premium.
(1)
The amount of the recalculated premium;
(2)
The reason for the increase or reduction in the premium in accordance with §C of this regulation; and
(3)
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.
C.
Reason for Increase or Reduction in Premium.
(1)
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,
(2)
Examples of acceptable reasons required by §C(1) of this regulation include, but are not limited to:
(a)
Premium recalculated due to [NAME OF DRIVER] moving violation on [DATE OF EVENT];
(b)
Safe driver discount removed due to [NAME OF DRIVER] at fault loss on [DATE OF EVENT];
(c)
[NAME OF DRIVER] was not listed on the application. Policy must be re-rated or signed driver exclusion must be completed;
(d)
Applicant does not currently have an automobile policy with the Company, Multi Policy Discount removed;
(e)
Policy was issued without the auto/home discount; or
(f)
Premium recalculated due to lack of a central alarm system.
(3)
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.
D.
Form of Notice.
(1)
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:
(a)
The form contained in Regulation .05 of this chapter; or
(b)
A form that is filed with and approved by the Commissioner.
(2)
If an insurer utilizes a form other than the one contained in Regulation .05 of this chapter, the form shall:
(a)
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
(b)
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.
(3)
If an insurer includes a notice of recalculated premium on a form that contains other information, the insurer shall:
(a)
Place the notice of recalculated premium in a conspicuous location on the form; and
(b)
Print the text of the notice of recalculated premium in at least 12-point type.
E.
Delivery of Notice.
(1)
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:
(a)
First-class mail tracking method; or
(b)
Delivery by electronic means in accordance with Insurance Article, §27-601.2, Annotated Code of Maryland.
(2)
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.
Regulation .05 Notice of Recalculated Premium Form.LinkCopy Citation
FORM AT END OF CHAPTER
Regulation .06 Cancellation of Binder or Policy During Underwriting Period.LinkCopy Citation
A.
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.
B.
Cancellation for Reason Other than Nonpayment of Premium.
(1)
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:
(a)
Provide the insured with a written notice of cancellation that clearly and specifically states the insurer’s actual reason for the cancellation; and
(b)
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.
(2)
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:
(a)
Provide the insured with a written notice of cancellation that clearly and specifically states the insurer’s actual reason for the cancellation;
(b)
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
(c)
File a copy of the notice of cancellation with the designee of the Workers’ Compensation Commission.
C.
Cancellation for Nonpayment of Premium.
(1)
An insurer that cancels a policy or binder under this regulation for nonpayment of premium shall:
(a)
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
(b)
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.
(2)
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.
Regulation .07 Refund of Premium.LinkCopy Citation
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.
Regulation .08 Notice of Ability to Cancel Binder or Policy or Recalculate Premium.LinkCopy Citation
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.
Regulation .09 Premium Audit.LinkCopy Citation
Nothing in this chapter prohibits an insurer from:
A.
Conducting an audit in accordance with the provisions of a policy; or
B.
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.
Chapter annotations
Authority: Insurance Article, §§2-109, 11-205, 11-306, 12-106, and 19-406, Annotated Code of Maryland
History: Effective date: June 9, 2014 (41:11 Md. R. 606)
History: Regulation .04 amended effective January 14, 2019 (46:1 Md. R. 13)
History: Regulation .05 amended effective January 14, 2019 (46:1 Md. R. 13)
History: Regulation .06B, C amended effective November 6, 2017 (44:22 Md. R. 1038)