Administrative History Effective date: Regulations .01 — .03 adopted as an emergency provision effective September 15, 1993 (20:20 Md. R. 1557); adopted permanently effective December 20, 1993 (20:25 Md. R. 1945) —————— Chapter recodified from COMAR 09.30.98 to COMAR 31.04.13 effective September 7, 1998 (25:18 Md. R. 1439) Regulation .01 amended effective January 15, 2007 (34:1 Md. R. 32) Regulation .03 amended effective January 15, 2007 (34:1 Md. R. 32) Authority Insurance Article, §§ 2-109 , 4-116 (b), 7-605 , 7-701 — 7-704 , and 10-126 , Title 7, Subtitle 1, and Title 8, Subtitle 1, Annotated Code of Maryland

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.01 Applicability. These regulations are applicable to the written contract provisions that are required within an insurance-producer-controlled holding company system involving a controlling insurance producer and a controlled authorized insurer that issues policies covered by the Property and Casualty Insurance Guaranty Corporation.

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.02 Definitions. A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) "Comparable business" includes the same lines and kinds of insurance, same kinds of risks, similar policy limits, and similar quality of business. (2) "Control", including the terms "controlling", "controlled by", and "under common control with", has the meaning stated in Insurance Article, §8-101(b), Annotated Code of Maryland . (3) "Insurance holding company system" has the meaning stated in Insurance Article, §7-101(e), Annotated Code of Maryland . (4) "Insurer" means an insurer described in Insurance Article, §8-102, Annotated Code of Maryland .

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.03 Terms of Contract. A. The terms of the contract required under this regulation between a controlling insurance producer and a controlled insurer within an insurance-producer-controlled holding company system shall comply with §B of this regulation . B. The contract required under this regulation shall provide at a minimum that: (1) The controlled insurer may: (a) Terminate the contract for cause upon written notice to the controlling insurance producer; and (b) Suspend immediately the authority of the controlling insurance producer to write business during the pendency of any dispute regarding the termination; (2) The controlled insurer shall provide the controlling insurance producer with its written underwriting and rate standards, rules and procedures, manuals, and conditions for accepting or rejecting rates; (3) The controlling insurance producer shall: (a) Provide accounts to the controlled insurer detailing all material transactions, including information necessary to support all commissions, charges, and other fees received by or owed to the controlling insurance producer; (b) Hold in a fiduciary capacity all funds collected for the account of the controlled insurer in one or more appropriately identified bank accounts in banks that are members of the Federal Reserve System in compliance with: (i) Any applicable provisions of the Insurance Article, Annotated Code of Maryland , or regulations promulgated under that article, or (ii) The requirements of the domiciliary jurisdiction of the controlling insurance producer, if the controlling insurance producer does not engage in business as an insurance producer in this State and is not required to hold a license in the State; (c) Keep a separate identifiable record of business written for the controlled insurer; and (d) Comply with the written underwriting and rates standards, rules and procedures, manuals, and conditions established by the controlled insurer; (4) The controlling insurance producer may not assign the contract in whole or in part; (5) Subject to §B(6) of this regulation , the rates, terms, and purposes of commissions, charges, and other fees of the controlling insurance producer shall be stated; (6) The rates of the commissions, charges, and other fees may not be greater than the rates charged for placing comparable business with the controlled insurer by an insurance producer other than the controlling insurance producer; (7) The written underwriting and rates standards, rules and procedures, manuals, and conditions shall be the same as those applicable to comparable business placed with the controlled insurer by an insurance producer other than the controlling insurance producer; (8) If the contract provides for a sharing of the controlled insurer's profits by the controlling insurance producer, subject to §B(9) of this regulation , the profits may not be paid until at least: (a) 5 years after the premiums are earned on casualty insurance; or (b) 1 year after the premiums are earned on any other insurance; (9) Any profits may not be paid until the adequacy of reserves on remaining claims is verified as provided in Insurance Article, §§ 8-105 (f) and (g), Annotated Code of Maryland; (10) The controlled insurer shall establish a limit on the writing of the controlling insurance producer in relation to the insurer's surplus and total writing; (11) In regard to the limit provided for in §B(10) of this regulation , the controlled insurer: (a) May establish a different limit for each line or subline of business; (b) Shall notify the controlling insurance producer when the applicable limit is approached; and (c) May not accept business from the controlling insurance producer if the limit is reached; (12) In regard to the limit provided for in §B(10) of this regulation , the controlling insurance producer may not place business with the controlled insurer, if it has been notified by the controlled insurer that the limit has been reached.

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Previous Chapter 12 Insurer Transactions With Unappointed Persons—General Business Practices

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Next Chapter 14 Life and Health Insurance Guaranty Corporation Coverage — Notice Requirements

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