# COMAR Title 31 — Maryland Insurance Administration

## Subtitle 15 — Unfair Trade Practices

### Chapter 14 — Administrative Service Fees

**Authority:** Insurance Article, §§2-109 and 27-216, Annotated Code of Maryland

**Administrative History:** Effective date: December 12, 2013 (40:24 Md. R. 2018)

#### Regulation .01 Purpose.

*COMAR 31.15.14.01*

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.

#### Regulation .02 Definitions.

*COMAR 31.15.14.02*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Administrative service” has the meaning stated in Insurance Article, §27-216(g), Annotated Code of Maryland.

  (2) “Administrative service fee” means a fee that is:

    (a) Charged to an employer by an insurance producer for providing an administrative service to the employer; and

    (b) A reasonable amount for the administrative services provided to the employer after consideration of:

      (i) The fee customarily charged to a similarly situated employer for the same or similar services in the employer’s location,

      (ii) The time the producer spent providing the service, and

      (iii) The expenses the producer incurred to provide the administrative service to the employer, including the cost of the product or service.

  (3) “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.

  (4) “Health benefit plan” has the meaning stated in Insurance Article, §2-112.2, Annotated Code of Maryland.

  (5) “Health insurance” has the meaning stated in Insurance Article, §1-101(p), Annotated Code of Maryland.

  (6) “Insurance producer” has the meaning stated in Insurance Article, §1-101(u), Annotated Code of Maryland.

#### Regulation .03 Administrative Service Fee.

*COMAR 31.15.14.03*

A. 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:

  (1) 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;

  (2) Lists on the disclosure form each of the administrative services to be provided and the fee for each administrative service to be provided;

  (3) 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;

  (4) Signs the completed disclosure form and obtains the signature of the authorized representative of the employer on the completed disclosure form; and

  (5) Provides the employer with a signed copy of the completed disclosure form prior to charging an administrative service fee.

B. An insurance producer may not charge an administrative service fee:

  (1) 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

  (2) 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.

#### Regulation .04 Records.

*COMAR 31.15.14.04*

A. An insurance producer shall retain a copy of the signed disclosure form for a period of 5 years.

B. 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.

#### Regulation .05 Rebating, Inducement, Coerced, or Tie-in Sales.

*COMAR 31.15.14.05*

A. An insurance producer may not provide an administrative service to an employer unless an administrative service fee is charged for the administrative service.

B. 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.

#### Regulation .06 Disclosure Form.

*COMAR 31.15.14.06*

The disclosure form required by Regulation .03 shall read as follows:

FORM AT END OF CHAPTER