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. 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: The omission of facts fairly describing the subject matter as a life insurance policy or annuity contract and the benefits obtainable thereunder; An undue emphasis upon facts which, however true, are not relevant to the sale of life insurance or annuities; or An undue emphasis upon features which are of incidental or secondary importance to the life insurance aspects of a policy. 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. 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. 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: 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; 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; 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; 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; 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; 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 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. An insurer, agent, or broker may not within this State: 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; 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); 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; 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); 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; 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; Describe or refer to premium payments in language which states that the payment is a deposit unless: 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, 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 The term is used in connection with pension trust or deposit administration plans; Provide any illustration or projection of future dividends on a policy unless the illustration or projection: Is based upon the experience currently used by the insurer for dividends or upon a scale adopted by the insurer, and Clearly indicates that the dividends shown are not guaranteed; 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; 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); 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: What benefits or coverage would be provided at that time, and The conditions under which this would occur; State that the insured is guaranteed certain benefits if the policy is allowed to lapse without making an adequate explanation of the nonforfeiture benefits; 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; 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; 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; Make any general statement that insurers make a profit as a result of policy lapses or surrenders; 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; 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; State that a policy contains certain features which are not found in other life insurance policies or annuity contracts, unless that is true; 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 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. The above listing of proscribed acts is not intended to be exhaustive. Other acts, not listed above but otherwise unlawful, will not be condoned. 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. Insurance Article, §§2-109, 8-467, 8-468, 12-203, 12-204, 12-205, 16-112, and 27-202, Annotated Code of Maryland Effective date: September 1, 1970 Chapter recodified from COMAR 09.30.25 to COMAR 31.15.01 effective September 7, 1998 (25:18 Md. R. 1439) In this chapter, the following terms have the meanings indicated. Terms Defined. “Advertisement” includes: 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; 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 Prepared sales talks, presentations, and material for use by producers, and representations made by producers in accordance therewith. “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. “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: When issued in connection with another kind of insurance other than life; and Disability and double indemnity benefits included in life insurance and annuity contracts. “Producer” has the meaning set forth in Insurance Article §1-101(u), Annotated Code of Maryland. 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. 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. 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. 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. 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. 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. 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. 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. 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. The term “limitation” means any provision which restricts coverage under the policy other than an exception or a reduction. 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. Preexisting Conditions. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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”. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Insurance Article, §§2-109 and 27-203, Annotated Code of Maryland Effective date: March 1, 1956 Amended effective May 1, 1968 Chapter recodified from COMAR 09.30.26 to COMAR 31.15.02 effective September 7, 1998 (25:18 Md. R. 1439) 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) 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) 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) 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) 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) 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) 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) 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) 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) The purpose of this chapter is to require carriers to deliver to purchasers of life insurance information which will improve the purchaser's: Ability to select the most appropriate plan of life insurance for the purchaser's needs; and Understanding of the basic features of the policy which has been purchased or which is under consideration. 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. In this chapter, the following terms have the meanings indicated. Terms Defined. “Buyer's guide” means the most current version of the Life Insurance Buyer's Guide adopted by the National Association of Insurance Commissioners (NAIC). “Carrier” means: An insurer; or A fraternal benefit society. “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. “Element” means any of the following: A premium; A credited interest rate, including any bonus; A benefit; A value; A non-interest-based credit; A charge; and Any item in a formula used to determine any of the items listed in §B(4)(a)—(f) of this regulation. “Generic name” means a short title that is descriptive of the premium and benefit patterns of a policy or a rider. Nonguaranteed Element. “Nonguaranteed element” means an element that is subject to carrier discretion and not guaranteed at issue. “Nonguaranteed element” includes any element calculated using a nonguaranteed element. “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: Illustrated annual, other periodic, and terminal dividends; Premiums; Death benefits; Cash surrender values; and Endowment benefits. “Policy summary” means a written statement describing the elements of the policy. “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. With the exception of §C of this regulation, this chapter applies to a solicitation, negotiation, or procurement of life insurance occurring within this State. Regulation .05D of this chapter applies only to an existing nonexempt policy held by a policyowner residing in Maryland. Unless otherwise specifically included, this chapter does not apply to: Individual and group annuity contracts; Credit life insurance; Group life insurance, except for disclosures relating to preneed funeral contracts or prearrangements; 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 Variable life insurance under which the amount or duration of the life insurance varies according to the investment experience of a separate account. A carrier shall include in a policy summary all of the following: A prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION; 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; 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; The generic name of the basic policy and each rider; 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: The annual premium for the basic policy; The annual premium for each optional rider; 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; The total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider; and Any endowment amounts payable under the policy which are not included under cash surrender values above; and The date on which the policy summary is prepared. 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. 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. 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. 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. Policy Forms Not Marketed with an Illustration. When a carrier issues a form not marketed with an illustration, the carrier shall comply with the requirements in §C(2) of this regulation. Requirements for Forms Not Marketed with an Illustration. The carrier shall provide a policy summary, showing guarantees only, to prospective purchasers. 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. 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. The amounts listed in Regulation .04A(5) of this chapter shall be listed in total, not on a per thousand or per unit basis. If more than one insured is covered under one policy or rider, death benefits shall be displayed separately: For each insured; or For each class of insureds if death benefits do not differ within the class. Zero amounts shall be displayed numerically or as a blank space. 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. Requirements Applicable to Existing Policies. Upon request by the policyowner, the carrier shall furnish either policy data or an in-force illustration as follows: 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; 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; 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; The policy data shall be provided for 20 consecutive years beginning with the previous policy anniversary, unless otherwise requested; The statement of the policy data shall include: Nonguaranteed elements according to the current scale; The amount of outstanding policy loans; and The current policy loan interest rate; and 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. The carrier may charge a reasonable fee, not to exceed $50, for preparation of the statement. 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. 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. 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. 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: The fact that a life insurance policy is involved or being used to fund a prearrangement; 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; 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; The impact of the prearrangement on any: Changes in the life insurance policy, including but not limited to changes in the assignment, beneficiary designation, or use of the proceeds; Penalties to be incurred by the policyholder as a result of failure to make premium payments; and Penalties to be incurred by the policyholder or monies to be received as a result of cancellation, or surrender of the life insurance policy; 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; 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; Any penalties or restrictions, including but not limited to: Geographic restrictions; or The inability of the provider to perform on the delivery of merchandise, services or the prearrangement guarantee; and If a sales commission or other form of compensation is being paid: The fact that a sales commission or other form of compensation is being paid; and The identity of the individuals or entities to whom the sales commission or other form of compensation is paid. The disclosure requirements of this regulation apply to the issuance or delivery of certificates, as well as to the master policy. 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. 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. 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. In sales situations in which an insurance producer is not involved, the carrier shall identify its full name. 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: The name of the insurance producer's agency; Letterheads; Logos; Advertising or solicitation material; or Any sales presentation soliciting insurance. 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. 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. An individual citing membership in a recognized trade or professional association, if authorized only to sell insurance products, shall disclose that fact. An insurance producer may not charge an additional fee for services that are customarily associated with the solicitation, negotiation, or servicing of policies. 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. 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. 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. 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. 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. 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. 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. 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: Suspending or revoking the license of the carrier, insurance producer, or both; 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 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. Insurance Article, §§2-109(a)(1) and 27-202, Annotated Code of Maryland Effective date: January 1, 1980 (6:15 Md. R. 1271) Chapter recodified from COMAR 09.30.27 to COMAR 31.15.03 effective September 7, 1998 (25:18 Md. R. 1439) 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) Regulation .05C amended effective December 6, 2018 (45:24 Md. R. 1164) Regulation .06A amended effective June 19, 2017 (44:12 Md. R. 589) 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. 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. This chapter does not prohibit the use of additional material which is not in violation of this chapter or any other regulation or statute. 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. This chapter shall apply to: Individual deferred annuities other than: Variable annuities, Investment annuities; and 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). This chapter does not apply to: 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. Immediate annuity contracts. A single advance payment of specific premiums equal to the discounted value of these premiums. 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. 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: 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.) 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. The full name and home office or administrative office address of the insurer which will issue the annuity contract or administer the deposit fund. 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. A prominent statement that the contract does not provide cash surrender values if that is the case. 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. Illustrative Annuity Payments. 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. 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. 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. 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: The gross annual or single consideration for the annuity contract. Scheduled annual or single deposit for the deposit fund, if any. 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. Total Illustrative Cash Value. 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. 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. 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. The date on which the contract summary is prepared. 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. 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. The insurer shall provide a contract summary to a prospective purchaser upon request. 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. 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. 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. A reference to dividends or to excess interest credits shall include a statement that these dividends or credits are not guaranteed. 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. 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. 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. 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. 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. 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. Insurance Article, §§2-109 and 27-202, Annotated Code of Maryland Effective date: January 1, 1980 (6:15 Md. R. 1271) Chapter recodified from COMAR 09.30.28 to COMAR 31.15.04 effective September 7, 1998 (25:18 Md. R. 1439) 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. 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. The following shall govern the contents of advertisements and public announcements concerning financial condition of insurers: 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. 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. 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. 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. 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. 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. 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. 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. 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. Insurance Article, §§2-109, 7-103, 7-104, and 27-205(a), Annotated Code of Maryland Effective date: April 10, 1970 Chapter recodified from COMAR 09.30.29 to COMAR 31.15.05 effective September 7, 1998 (25:18 Md. R. 1439) 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. Insurance Article, §§2-109 and 27-216(b), Annotated Code of Maryland Effective date: June 6, 1940 Amended effective May 1, 1968 Chapter recodified from COMAR 09.30.33 to COMAR 31.15.06 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01 amended effective February 1, 2016 (43:2 Md. R. 129) This chapter is applicable to all property and casualty and title insurers, but does not include reinsurance, workers' compensation, or surety. In this chapter, the following terms have the meanings indicated. Terms Defined. “Application” means an initial application for the issuance of an insurance policy. “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. “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. “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. “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. “Licensed producer” means a person issued a license in accordance with the provisions of Insurance Article, Title 10, Subtitle 1, Annotated Code of Maryland. “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: Directly to the insurer in the case of a title insurance policy; Directly to the Maryland Automobile Insurance Fund in the case of a policy issued by the Fund; or 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. “Policy” means an individual or group policy, contract, or certificate issued by an insurer. “Producer” means any person authorized to represent an insurer with respect to a claim, or a licensed producer. “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. “Third-party claimant” means any person asserting a claim against a person insured under an insurance policy. “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. A prohibited unfair claim settlement practice occurs if an insurer commits one or more of the following acts: 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: Providing incomplete or misleading disclosure of pertinent facts or policy provisions relating to the claim at issue; 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; 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; Except when there is a time limit specified in the policy or provided by law, making oral or written statements to any claimant that: There is a requirement that the claimant give written notice of loss or proof of loss within a specified time, and The company is relieved of its obligations under the policy if the time limit is not complied with; 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 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. 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: Insurer knew or had reason to know of the alteration; and Alteration is material to settlement of the claim at issue. Refuses to pay a claim for an arbitrary or capricious reason based on all available information. 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. 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. Fails to promptly provide a reasonable explanation of the basis for denial of a claim when requested to do so. Fails to act in good faith in settling a first party claim under a policy of property and casualty insurance. 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: 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: Providing incomplete or misleading disclosure of pertinent facts or policy provisions related to the coverages at issue; 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; 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; Except when there is a time limit specified in the policy or provided by law, making oral or written statements to any claimant that: There is a requirement that the claimant give written notice of loss or proof of loss within a specified time, and The company is relieved of its obligations under the policy if the time limit is not complied with; 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 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. 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. Fails to promptly provide to any claimants reasonable explanations of the basis for denial of claims or the offer of compromise settlements. Fails to adopt and implement reasonable standards for the prompt investigation of claims arising under policies. Refuses to pay claims without conducting reasonable investigations based on all available information. Fails to make good faith attempts to settle claims promptly, fairly, or equitably once liability has become reasonably clear. 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. 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: Insurer knew or had reason to know of the alterations; and Alterations are material to settlement of the claims at issue. 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. 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. 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. 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. Refuses to fully satisfy claims for arbitrary or capricious reasons. Refuses or unreasonably delays payment to claimants of amounts due them when coverage, liability, and amount of damages are reasonably clear. 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. Fails to act in good faith in settling a first party claim under a policy of property and casualty insurance. 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. Insurers shall, for at least 3 years, make available for inspection by the Maryland Insurance Administration records of denials of claims and supporting documentation. 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. 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. 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. 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. 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. 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. 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: Make a notation in the insurer's claim file stating the reason for the delay; and Add to the amount otherwise payable 1-1/2 percent simple interest per month for those days in excess of the 30 days. 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. Each insurer shall maintain claims registers separately for: Private passenger automobile insurance; All other liability insurance; Homeowner's insurance; All other property insurance; and Title insurance. Claims registers may be maintained manually or on computer-generated tapes from which hard copy can be supplied. 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: Date of loss; Policy or contract number; Name of the insured; and General nature of the claim. 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. Insurers shall have 6 months from the effective date of this chapter to establish the claims registers required by this regulation. 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. 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: Less than 10,000, three claims with the same unfair claim settlement practice out of a random sampling of 50 claims; or Ten thousand or more, six claims with the same unfair claim settlement practice out of a random sampling of 100 claims. 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. 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. 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 Effective date: July 23, 1990 (17:14 Md. R. 1758) Regulation .04G adopted effective April 1, 1991 (18:6 Md. R. 685) 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) Chapter recodified from COMAR 09.30.75 to COMAR 31.15.07 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .02B amended effective January 14, 2010 (37:1 Md. R. 17); February 1, 2016 (43:2 Md. R. 129) Regulation .03A, B amended effective January 26, 2009 (36:2 Md. R. 103) Regulation .10 amended effective January 14, 2010 (37:1 Md. R. 17) 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. In this chapter, the following terms have the meanings indicated. Terms Defined. “Agent” means any person authorized to represent an insurer with respect to a claim, and includes a licensed agent. “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. “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. “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. “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. “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. “Policy” means an individual or group policy, contract, or certificate issued by an insurer. A prohibited unfair claim settlement practice occurs if an insurer commits any of the following acts: Misrepresents or provides incomplete or misleading disclosures of pertinent facts or policy provisions relating to the claim at issue; Conceals benefits, coverages, or other provisions of a policy when those benefits, coverages, or other provisions are pertinent to a claim; 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; Refuses to satisfy a claim for an arbitrary or capricious reason based on all available information; Fails to include, in any claim paid to an insured or beneficiary, a statement setting forth the coverage under which the payment is made; 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 Fails to promptly provide a reasonable explanation of the basis for denial of a claim when requested to do so. 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: Misrepresents or provides incomplete or misleading disclosure of pertinent facts or policy provisions relating to the coverages at issue; Fails to include, in claims paid to insureds or beneficiaries, statements setting forth the coverage under which the payments are made; Fails to promptly provide reasonable explanations of the basis for denial of claims or the offer of compromise settlements; Fails to adopt and implement reasonable standards for the prompt investigation of claims arising under policies; Refuses to pay claims without conducting reasonable investigations based on all available information; Fails to make good faith attempts to settle claims promptly, fairly, and equitably once liability has become reasonably clear; 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; 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; Attempts to settle claims on the basis of applications which have been altered without notice to, or the knowledge or consent of, insureds; 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; 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; Fails, within 30 days after receipt of a claim that contains all necessary information and documentation, to: Make payment of the claim, Notify the claimant that reimbursement for the claim, or a portion of the claim, is refused, providing specific reasons for the refusal, or 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; 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; 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 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. 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. 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. Each insurer shall maintain claims registers separated for: Annuity contracts and life insurance policies, excluding credit life insurance; Health insurance policies, excluding credit health insurance; and Credit life insurance and credit health insurance policies. Claims registers may be maintained manually or on computer-generated tapes from which hard copy can be supplied. Claims registers shall list each claim received, showing the: Date of receipt; Policy or contract number; Name of the insured; General nature of the claim; and State of residence of the claimant. Each claim shall be assigned a unique claim number. If a claim is closed but subsequently reopened, the original claim number shall continue to be used. Each claim shall be considered a single claim regardless of the number of times it has been closed and reopened. 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. 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. 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. 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. 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: If the total number of annuity and life insurance claims, excluding credit life insurance claims, during any 12-month period is: Less than 100, five claims; At least 100, but less than 10,000, five claims out of a sampling of 100 claims; At least 10,000, but less than 50,000, ten claims out of a sampling of 200 claims; or 50,000 or more, 15 claims out of a sampling of 300 claims; If the total number of health insurance claims, excluding credit health insurance claims, during any 12-month period is: Less than 100, ten claims; At least 100, but less than 10,000, ten claims out of a sampling of 100 claims; At least 10,000, but less than 50,000, 15 claims out of a sampling of 200 claims; or 50,000 or more, 20 claims out of a sampling of 300 claims. For each violation of Regulation .03A of this chapter, the Commissioner may impose a penalty of up to $500. 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. 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. 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 Effective date: September 4, 1989 (16:17 Md. R. 1884) Regulation .03B amended effective September 13, 1993 (20:18 Md. R. 1429) Chapter recodified from COMAR 09.30.76 to COMAR 31.15.08 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01 amended effective October 1, 2012 (39:19 Md. R. 1238) Regulation .02B amended effective October 1, 2012 (39:19 Md. R. 1238) Regulation .03B amended effective January 26, 2009 (36:2 Md. R. 103) Regulation .06A amended effective October 13, 2014 (41:20 Md. R. 1114) Effective date: March 1, 1957 Amended effective May 1, 1968 Chapter recodified from COMAR 09.30.19 to COMAR 31.15.09 effective September 7, 1998 (25:18 Md. R. 1439) Regulations .01 and .02 repealed effective October 8, 2018 (45:20 Md. R. 921) In this chapter, the following terms have the meanings indicated. Terms Defined. “Business purposes standard” means the standard required by Insurance Article, §27-501(a)(2), Annotated Code of Maryland. “Claim” means a reported loss that is covered or coverable under a policy. “Loss” means damage or injury to body, person, or property. “Remediation” means repair of the premises or dwelling of an insured or replacement of part of the premises or dwelling of an insured that: Eliminates or significantly diminishes the condition of the premises or dwelling that gave rise to a claim; and Makes it reasonably unlikely that the same type of claim will arise again. “Repair notice” means written notice that: An insurer provides to an insured pursuant to Insurance Article, §27-501(i)(2), Annotated Code of Maryland; and Requests the insured to make reasonable or customary repairs or replacement specific to the insured's premises or dwelling. Scope. This regulation applies to homeowner's insurance. 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. Weather-Related Claims—Standard for Cancellation or Nonrenewal. 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. 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. Weather-Related Claims—Repair Notice. 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: An inspection of the insured's premises or dwelling; or 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. 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. 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. 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. Material Misrepresentation. 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: Not have provided coverage; or Have denied a claim or any part of a claim. 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. Scope. This regulation applies to private passenger motor vehicle insurance. Determining Number of Claims. 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: Uninsured motorist coverage; and Comprehensive coverage. The presumption in §B(1) of this regulation may be overcome if the carrier demonstrates that the claim was an at-fault claim. Complaint Proceeding Based on Accident—Determination of Fault. 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: Review the insurer's determination of fault for the accident; and Decide whether the insurer's determination of fault was arbitrary or capricious. 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. Material Misrepresentation. For purposes of Insurance Article, §27-501(l)(1)(i), Annotated Code of Maryland, a material misrepresentation is a misrepresentation: About an insured's driving record made on an initial or underwriting renewal application; or But for which an insurer would: Not have provided coverage; or Have denied a claim or any part of a claim. 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. Action Based on Criminal Conduct. 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: Operating the motor vehicle while intoxicated, or impaired by drugs; Committing homicide, reckless endangerment, or criminal negligence arising out of the operation of the motor vehicle; or Using the motor vehicle to participate in a felony. 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: May be used as evidence that the named insured or covered driver committed the conduct listed in §E(1) of this regulation; but 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. 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: Insurer applies the factors uniformly within a given classification to each proposed cancellation of, or refusal to renew, coverage for all insureds; and Factors considered are included in the insurer's underwriting guidelines or rating plan. 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. 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: Including the disclosure notice in a conspicuous location on a binder, the policy, or another form; and Mailing or delivering the binder, policy, or other form to the insured. 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. The disclosure required by §§B and D of this regulation may be met by using the form under COMAR 31.08.18.02. 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. Scope. This regulation does not apply to cancellation of a risk due to nonpayment of a premium. 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. 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. 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. 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. Insurance Article, §§2-109, 19-216(d), and 27-501, Annotated Code of Maryland Effective date: 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 Regulations .01—.08 adopted effective March 6, 2000 (27:4 Md. R. 455) Regulation .04D amended effective February 1, 2016 (43:2 Md. R. 129) Regulation .04E adopted effective November 6, 2017 (44:22 Md. R. 1038) Enactment of Legislation on Use of Credit History. During the 2002 Session, the General Assembly enacted House Bill 521 which became Ch. 580, Acts 2002. 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. 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. Purpose of Chapter. The purpose of this chapter is to: Implement Ch. 580, Acts of 2002; 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; 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 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. In General. This chapter applies to insurers that sell or offer to sell homeowner's insurance or private passenger motor vehicle insurance. Insurance Transaction Not Initiated by a Consumer. 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: Is not initiated by a consumer; and Consists of a firm offer of insurance. 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: Is not part of a transaction that is not initiated by a consumer; and 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. 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. In this chapter, the following items have the meanings indicated. Terms Defined. “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. “Consumer reporting agency” includes an insurer and any affiliate of an insurer that collects information that: Bears on a consumer's credit worthiness, credit standing, or credit capacity; and 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. “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: Ownership of voting securities or of securities convertible into voting securities; Contract, other than a commercial contract for goods or nonmanagement services; or Any other means. “Credit-based discount” means the application of a rate modification factor that is: Based on an applicant's credit history; and Less than 1.0 but greater than or equal to 0.6. “Credit-based surcharge” means the application of a rate modification factor that is: Based on an applicant's credit history; and Greater than 1.0 but less than or equal to 1.4. “Credit criterion” means information bearing on a particular aspect of an individual's credit history. Credit History. “Credit history” means a written, oral, or other communication of any information by a consumer reporting agency that: Bears on a consumer's credit worthiness, credit standing, or credit capacity; and 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. “Credit history” includes: A credit criterion; A credit report; and A credit score. “Credit history” does not include: An accident history report as defined in Insurance Article, §27-216(e), Annotated Code of Maryland; 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; 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 Any report containing information solely as to transactions or experiences between the consumer and the person making the report. “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. “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. “Firm offer of insurance” has the meaning stated in §C of this regulation. Homeowner's Insurance. “Homeowner's insurance” means insurance for residential property that provides one or more of the following coverages: Fire; Extended coverage; Vandalism and malicious mischief; Burglary; Theft; or Personal liability. “Homeowner's insurance” does not include an umbrella policy. Motor Vehicle. “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. “Motor vehicle” includes: A motorcycle; A motor home; and A trailer. “Motor vehicle” does not include: A bus as defined by Transportation Article, §11-105, Annotated Code of Maryland; or A taxicab as defined by Transportation Article, §11-165, Annotated Code of Maryland. “Private passenger motor vehicle” means a motor vehicle that is used primarily for personal, family, or household purposes. “Rate” includes: To provide or remove a discount or impose or remove a surcharge; To assign an applicant to a tier; or To place an applicant with an affiliated insurer. Residential Property. “Residential property” means property that is used primarily as a residence. “Residential property” includes: An apartment unit; A condominium unit; A mobile home; and 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. “Residential property” does not include a boat. “Tier” means a category within a single insurer into which insureds with similar risk characteristics are placed for purposes of determining a premium rate. “Firm offer of insurance” means an offer of insurance to a consumer that: 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 May be further conditioned on one or more of the following: A determination, based on information in the consumer's application for insurance, that the consumer meets specific criteria that: Bear on insurability, and Were established before selection of the consumer for the offer and for the purpose of determining whether to extend insurance pursuant to the offer; Verification: 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 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 Provision by the consumer of any collateral that is a requirement for the extension of the insurance that was: Established before selection of the consumer for the offer of insurance, and Disclosed to the consumer in the offer of insurance. With respect to homeowner's insurance, an insurer may not: 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; 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: Providing or removing a discount or imposing or removing a surcharge; Assigning the insured or applicant to a tier; or Placing an applicant or insured with an affiliated insurer; or 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. Prohibited Use of Credit History. With respect to private passenger motor vehicle insurance, an insurer may not: 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 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. 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. 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: The insurer uses credit history to rate new policies; and The applicant may request a premium quotation that separately identifies the portion of the premium attributable to the applicant's credit history. 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. 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: For each applicant of the insurer; or 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. Written Standard. A written standard for determining when to obtain a credit report, credit score, or other credit history shall: 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; Prohibit obtaining a credit report, credit score, or other credit history for any arbitrary, capricious, or unfairly discriminatory reason; 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 Otherwise comply with Insurance Article, §27-501, Annotated Code of Maryland. 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. Confidentiality of Information. 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. A written standard that is the subject of a confidentiality request shall be considered confidential pending review by the Commissioner. 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: Applies only to an application for inspection of a public record under General Provisions Article, Title 4, Annotated Code of Maryland; Does not apply to a hearing to determine whether an insurer has violated Insurance Article, §27-501, Annotated Code of Maryland; and 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. 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: Withdraw the written standard; or Request a hearing on the Commissioner's finding pursuant to Insurance Article, §2-210(a)(2)(ii), Annotated Code of Maryland. An insurer may not use a written standard that has been withdrawn. 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: Notify the applicant or insured that the initial inquiry failed to generate a credit report, credit score, or other credit history; Verify the accuracy of: 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; The address of the applicant or insured; and 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; Document in the appropriate file the notice to the applicant or insured and any response from the applicant or insured; and Retain the documentation for at least 3 years after the date that the notice was provided. 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: Make a second attempt to obtain a credit report, credit score, or other credit history for the applicant or insured; 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 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. Intentional Misrepresentation. 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. It is prima facie evidence of an intentional misrepresentation if an applicant: Provided inaccurate information on an application; and 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. 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. In General. 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: Does not result in rates that are excessive, inadequate, or unfairly discriminatory; Results in application of the most favorable rate modification for which an applicant qualifies; Results in placement of an applicant in the most favorably priced tier or other classification for which the applicant qualifies; Results in placement of an applicant in the most favorably priced insurer within a group of affiliated insurers for which the applicant qualifies; and Otherwise complies with Insurance Article, §11-306, Annotated Code of Maryland. 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: Excessive, inadequate, or unfairly discriminatory; and In violation of this regulation. Prohibited Factors. 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: A factor on the credit history of the applicant that occurred more than 5 years prior to the issuance of the new policy; The absence of credit history or the inability to determine the applicant's credit history; or The number, age, or other characteristics of credit inquiries about an applicant's credit history. 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. 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. Limitation on Rating Based on Credit History. 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. 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: 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 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. 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: Provide to the applicant orally, in writing, or electronically: The name, address, and telephone number of the consumer reporting agency that furnished the credit report to the insurer; 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 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 Provide to the applicant an oral, written, or electronic notice of the applicant's right: 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 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. 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: 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: On request of the insured; or If not requested earlier by the insured, every 2 years; 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 Disclose to the applicant at the time of issuance of a policy that the insurer is required to: 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: On request of the insured; or If not requested earlier by the insured, every 2 years; and Adjust the premium of an insured whose credit history was reviewed to reflect any improvement in the insured's credit history. Request for Review. An insured may request a review of the insured's credit history not more than once per term of a policy. Adjustment of Premium. 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. 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. 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. 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: In the insurer's filed rating manual, the rate-related underwriting rule that: Is included in the definition of supplementary rate information in Insurance Article, §11-101(e), Annotated Code of Maryland; and Defines the credit criteria or ranges of credit scores used to determine application of the rating factor; 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: Provision or removal of a discount or imposition or removal of a surcharge; Placement of an applicant within a particular tier; or Placement of an applicant with an affiliated insurer; 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; The underlying information, including statistical validation, that the insurer relied on for determining the rating factor; 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 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. 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: 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 The insurer fails to file the information with the Commissioner. Insurance Article, §§2-109, 11-101, 11-306, 11-307, 27-212(d), 27-406, 27-501, and 27-605, Annotated Code of Maryland Effective date: May 15, 2000 (27:9 Md. R. 861) Chapter revised effective October 14, 2002 (29:20 Md. R. 1594) Regulation .07D amended effective February 1, 2016 (43:2 Md. R. 129) 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: Collision coverage; Liability property damage coverage; Comprehensive property damage coverage; or Uninsured motorist property damage coverage. 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. In this chapter, the following terms have the meanings indicated. Terms Defined. “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. “Claim” means a demand for payment or reimbursement for a loss incurred under one or more coverages provided by an insurance policy. “Claimant” includes a first-party claimant and a third-party claimant. “First-party claimant” means a person asserting a right to payment: Under an insurance policy pursuant to which the person is insured; and That arises out of a loss that is covered by the insurance policy. “Motor vehicle” has the meaning stated in Insurance Article, §19-501(b), Annotated Code of Maryland. “Notification of a claim” means notification by a claimant that: Is made in writing or by other means acceptable under the terms of an insurance policy; Reasonably informs the insurer of the facts pertinent to the claim; and Is made: Directly to the Maryland Automobile Insurance Fund, in the case of a policy issued by the Fund; or 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. “Substantially similar motor vehicle” means a motor vehicle that, in comparison to a damaged motor vehicle: Is the same make and model as the damaged motor vehicle; Is the same year as, or a more recent year than, the damaged motor vehicle; Contains at least the same major options as the damaged motor vehicle; Is in a condition substantially similar to or better than the condition of the damaged motor vehicle immediately before the damage occurred; and 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. “Third-party claimant” means any person asserting a claim against a person insured under an insurance policy. “Total loss” means the condition of a motor vehicle for which: The cost of repairs equals or exceeds: The actual cash value of the motor vehicle as calculated in accordance with Regulation .04 of this chapter; or 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 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: The actual cash value of the motor vehicle as calculated in accordance with Regulation .04 of this chapter; or 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. 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: There is a good faith dispute as to the obligation of the insurer under the contract; or 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. 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: Make an offer of a cash settlement pursuant to Regulation .04 of this chapter; or If authorized by the policy, replace the motor vehicle pursuant to Regulation .07 of this chapter. 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: 30 days after receipt of notification of a claim; or The time provided in the policy. 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. 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: The total of: 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 Regardless of whether the claimant retains salvage rights, the applicable taxes and transfer fees pursuant to COMAR 11.11.05; or The total of: 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 Regardless of whether the claimant retains salvage rights, the applicable taxes and transfer fees pursuant to COMAR 11.11.05. In General. A settlement offer made by an insurer pursuant to Regulation .04 of this chapter shall: State the amount being offered; Inform the claimant that, on request from the claimant, the insurer shall provide the claimant in writing: A copy of the settlement offer; The method used to arrive at the value of the motor vehicle, including identification of any books, manuals, or databases used; 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; A list of all deductions that will be made from the value of the motor vehicle; and 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 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. 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. In General. After receipt of a settlement offer, a claimant may: Accept the offer; or In writing, reject the offer and make a counteroffer based on: Dealer quotations for a substantially similar motor vehicle; Advertisements for a substantially similar motor vehicle; or Any other source of valuation for a substantially similar motor vehicle. 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. 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: A substantially similar motor vehicle; Immediately available; and Subject to any deductible, paid for by the insurer. Insurance Article, §27-304.1, Annotated Code of Maryland Effective date: July 5, 2004 (31:13 Md. R. 996) Regulation .01 amended effective March 24, 2008 (35:6 Md. R. 702) This chapter applies to: Commercial insurance as defined in Insurance Article, §27-601(b), Annotated Code of Maryland; and Workers’ compensation insurance for employers’ liability as set forth in Labor and Employment Article, Title 9, Annotated Code of Maryland. This chapter does not apply to policies: Issued to exempt commercial policyholders, as defined in Insurance Article, §11-206(j), Annotated Code of Maryland; For which the renewal premium is: In excess of $1,000; and An increase over the expiring policy premium of the lesser of 3 percent or $300; or Of surplus lines insurance procured from a nonadmitted insurer under Insurance Article, Title 3, Subtitle 3, Annotated Code of Maryland. Exceptions. 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. An insurer is deemed unable to reasonably comply with the notice required by Insurance Article, §27-608, Annotated Code of Maryland: With respect to any portion of a premium increase that results from: An increase in the units of exposure; Application of an experience rating plan; Application of a retrospective rating plan; A premium audit performed in accordance with the terms of the policy; Any change made by the insured to the risk that increases insurer's exposure on the risk; A request made by the insured to change coverage under the policy; or If the insurer: Has given notice of its intent not to renew the policy; 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 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. 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. Content of Notice. 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: The expiring policy premium and the renewal policy premium; and 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. 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: The insurer's rating methodology requires the insured to provide information to the insurer for the insurer to calculate the premium; The insurer requests the information from the insured far enough in advance of the renewal date for: The insured to provide the information to the insurer; and 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 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. 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: A written request for an exception to the notice requirement; 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 Any information that supports the insurer's contention that it cannot reasonably comply with the notice requirement. On receipt of a request for an exception to the notice requirement, the Commissioner shall: 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 Determine whether the insurer can reasonably comply with the notice requirement for any risk, category of risk, or line of business involved. 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: Grant the insurer's request for an exception to the notice requirement; and Send to the insurer a notice that: States that the insurer's request for an exception to the notice requirement has been granted; Identifies the risk, category of risk, or line of business to which the exception applies; and States the duration of the exception to the notice requirement. If the Commissioner determines that an insurer can reasonably comply with the notice requirement, the Commissioner shall: Deny the insurer's request for an exception to the notice requirement; and Send to the insurer a notice that states that the insurer's request for an exception to the notice requirement has been denied. Insurance Article, §§2-109 and 27-608, Annotated Code of Maryland Effective date: March 27, 2006 (33:6 Md. R. 580) Chapter revised effective January 1, 2015 (41:21 Md. R. 1261) 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. In this chapter, the following terms have the meanings indicated. Terms Defined. “Administrative service” has the meaning stated in Insurance Article, §27-216(g), Annotated Code of Maryland. “Administrative service fee” means a fee that is: Charged to an employer by an insurance producer for providing an administrative service to the employer; and A reasonable amount for the administrative services provided to the employer after consideration of: The fee customarily charged to a similarly situated employer for the same or similar services in the employer’s location, The time the producer spent providing the service, and The expenses the producer incurred to provide the administrative service to the employer, including the cost of the product or service. “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. “Health benefit plan” has the meaning stated in Insurance Article, §2-112.2, Annotated Code of Maryland. “Health insurance” has the meaning stated in Insurance Article, §1-101(p), Annotated Code of Maryland. “Insurance producer” has the meaning stated in Insurance Article, §1-101(u), Annotated Code of Maryland. 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: 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; Lists on the disclosure form each of the administrative services to be provided and the fee for each administrative service to be provided; 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; Signs the completed disclosure form and obtains the signature of the authorized representative of the employer on the completed disclosure form; and Provides the employer with a signed copy of the completed disclosure form prior to charging an administrative service fee. An insurance producer may not charge an administrative service fee: 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 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. An insurance producer shall retain a copy of the signed disclosure form for a period of 5 years. 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. An insurance producer may not provide an administrative service to an employer unless an administrative service fee is charged for the administrative service. 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. The disclosure form required by Regulation .03 shall read as follows: FORM AT END OF CHAPTER Insurance Article, §§2-109 and 27-216, Annotated Code of Maryland Effective date: December 12, 2013 (40:24 Md. R. 2018) The purpose of this chapter is to: 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 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. This chapter is considered necessary to carry out Insurance Article, Title 27, Subtitle 10, Annotated Code of Maryland. 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. This chapter applies to: 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 All civil complaints that are to be reported to the General Assembly pursuant to Insurance Article, §27-1001, Annotated Code of Maryland. In this chapter, the following terms have the meanings indicated. Terms Defined. “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. “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. “Defendant insurer” means the insurer that is the subject of the complaint. “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. “Plaintiff” means the person who is asserting the cause of action set forth in a complaint. “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. Plaintiff Filing a Complaint. 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: The complaint shall include the information and be accompanied by the documents identified in Insurance Article, §27-1001(d)(2), Annotated Code of Maryland; The plaintiff shall file an original and one copy of the 27-1001 filing; and The 27-1001 filing shall be accompanied by a civil cover sheet. The form of the civil cover sheet shall be determined by the Administration and published by bulletin. The civil cover sheet shall be available: On the Administration’s website; At the Administration’s offices; and By mail on request of the plaintiff. The 27-1001 filing and civil cover sheet shall be filed by sending them by: First-class mail addressed to the Hearing and Appeals Clerk, Maryland Insurance Administration, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202; A commercial overnight delivery service addressed to the Hearing and Appeals Clerk at the Administration’s official street address; or 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. 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”. 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. 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. 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. In-Camera Inspection. 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. Each copy of each document or evidence submitted to the Administration for in-camera inspection shall be clearly stamped “Withheld for Good Cause”. 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”. 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. 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: First-class mail addressed to the Hearing and Appeals Clerk, Maryland Insurance Administration, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202; A commercial overnight delivery service addressed to the Hearing and Appeals Clerk at the Administration’s official street address; or 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. 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”. 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. 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. 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: Find that good cause has not been shown as to that document or evidence; and Require the defendant insurer to: Provide copies of the document or evidence; or Give written notice to the plaintiff of its intent to continue to withhold the documents or evidence. 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. 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. 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: Produce the document or evidence to the plaintiff as required; or Maintain its position that the document or evidence is being withheld for good cause. 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. 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. 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. 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. 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. Notice of Disposition. 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. 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. The notice of disposition shall identify: The adjudicatory body that issued the disposition; 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; Whether the complaint seeks a determination as to: Coverage; An alleged failure by the defendant insurer to adequately value, pay, or value and pay the underlying insurance claim; or Both §D(3)(c)(i) and (ii) of this regulation; The type of coverage at issue in the complaint, such as auto UM/UIM, homeowner’s, commercial general liability, individual disability, or other; The amount sought as damages in the complaint, itemized by: The amount sought as actual damages; and The amount sought as expenses and litigation costs, including attorney’s fees; The disposition with respect to each count of the complaint; A summary of any determinations made; A listing of any amounts awarded by the adjudicatory body; and Whether any further proceedings before that body or another tribunal have been filed or are expected to be filed. Notice of Pending Complaint. Each defendant insurer shall advise the Administration, in writing, when it is served with a complaint that was not originally filed with the Administration. 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. The notice of the pending complaint shall identify: The court in which the complaint was filed; The case name and number assigned to the complaint; The parties to the complaint; The reason why the complaint was not required to be filed with the Administration before being filed with the court; Whether the complaint seeks a determination as to: Coverage; An alleged failure by the defendant insurer to adequately value, pay, or value and pay the underlying insurance claim; or Both §E(3)(e)(i) and (ii) of this regulation; The type of coverage at issue in the complaint, such as auto UM/UIM, homeowner’s, commercial general liability, individual disability, or other; and The amount sought as damages in the complaint; itemized by: The amount sought as actual damages; and The amount sought as expenses and litigation costs, including attorney’s fees. Courts and Judicial Proceedings Article, §3-1701; Insurance Article, §§2-109(a)(1) and 27-1001; Annotated Code of Maryland Effective date: March 27, 2017 (44:6 Md. R. 328)