COMAR 31.04.20 · Chapter 20 Market Conduct Actions

Administrative History Effective date: April 5, 2010 (37:7 Md. R. 576) Authority Insurance Article, §§ 2-109 and 12-203 (d)( 2 ), Annotated Code of Maryland

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.01 Applicability. A. This chapter establishes the process and procedures for market conduct actions. B. This chapter does not apply to the examination or investigation of: (1) A person's financial condition as described in Insurance Article, Titles 5, 6, 7, and 9, Annotated Code of Maryland, as well as COMAR 31.04 , 31.05 , and 31.06 ; or (2) An insurance producer.

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.02 Scope. Nothing in this chapter limits the Commissioner's authority to conduct an analysis, investigation, or examination, or to issue orders pursuant to law. All applicable provisions, including the confidentiality provisions, of Insurance Article, Annotated Code of Maryland , apply to market conduct actions.

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.03 Definitions. A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) "Analysis" has the meaning stated in Insurance Article, §2-205(a), Annotated Code of Maryland . (2) "Business practices" means the operations, policies, procedures and other activities or administrative methods used by a person to conduct business. (3) "Commissioner" means the Insurance Commissioner of Maryland or the Insurance Commissioner's designee. (4) "Complaint" means a written or documented oral communication expressing dissatisfaction with a person. (5) "Market conduct action" means any of the full range of activities that the Commissioner may initiate to assess the business practices of a person or persons, or the insurance market, including a market conduct analysis, market conduct investigation, or market conduct examination. (6) "Market conduct analysis" means an evaluation conducted whenever the Commissioner considers it advisable to identify or investigate the business practices of one or more persons, or the insurance market, from filed schedules, surveys, required reports, or other sources of information. (7) "Market conduct examination" means an inspection of the accounts, records, documents, or transactions of a person to develop a detailed understanding of the person's business practices to evaluate compliance with State law. (8) "Market conduct investigation" means a process used by the Commissioner to determine if a person has violated State law in that person's business practices. (9) "Person" means an insurer or other entity subject to regulation by the Commissioner and authorized to conduct business in this State. (10) "Proposed market conduct examination report" means the completed market conduct examination report that is required under Regulation .07 of this chapter .

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.04 Market Conduct Action. A. Whenever the Commissioner has the authority to conduct an analysis, examination, or investigation of a person's business practices, the Commissioner may conduct a market conduct action. B. The Commissioner may conduct a market conduct action: (1) Based on a complaint; (2) As authorized by law; (3) Whenever the Commissioner considers it is advisable; or (4) With other states. C. If the Commissioner determines information is needed from a person to conduct a market conduct action, in accordance with Regulation .05 of this chapter : (1) The Commissioner shall request the information; and (2) The person shall provide the information. D. The Commissioner may participate in a market conduct action with one or more other states to determine if a Maryland law has been violated by the person subject to the market conduct action.

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.05 Information. A. The Commissioner may request accounts, records, documents, files, or other information needed to complete a market conduct action. B. The Commissioner may include a reference to the applicable law pertaining to the request. C. The Commissioner may request information through: (1) A survey; (2) An interrogatory; (3) An interview; or (4) Any other procedure identified by the Commissioner. D. Whenever a person receives a request from the Commissioner for information, the person shall provide the requested information: (1) Within the time specified by the Commissioner, unless an extension has been granted by the Commissioner in accordance with §§G and H of this regulation; and (2) In the manner specified by the Commissioner. E. When the person submits the information to the Commissioner, the person shall provide written certification, signed by an individual with authority to bind the person providing the response, that the: (1) Information is, to the best of that individual's knowledge, information, and belief, a full, complete, and truthful response to the Commissioner's request; and (2) Individual making the certification has undertaken an adequate inquiry to make the required certification. F. If the person fails to provide the certification required under §E of this regulation , the absence of this certification: (1) Does not relieve the person responding to a request of the Commissioner of the duty to provide a full, complete, and truthful response to the Commissioner's request; and (2) Shall constitute an explicit representation by the person that the response is full, complete, and truthful. G. A person may submit a written request, stating the reason for the request, to the Commissioner to extend the time for the submission of information: (1) For a market conduct analysis or market conduct investigation, after receipt of the request specified in §D of this regulation ; or (2) For a market conduct examination, after receipt of the notice specified in Regulation .06G of this chapter . H. If the Commissioner receives the request pursuant to §G of this regulation , the Commissioner shall: (1) Grant an extension; or (2) Notify the person that the request to extend the time is denied.

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.06 Market Conduct Examination. A. The Commissioner shall conduct a market conduct examination in accordance with this regulation. B. The Commissioner shall notify the person subject to the market conduct examination, in writing, that a market conduct examination has commenced. C. The Commissioner's notification that a market conduct examination has commenced shall: (1) Specify the lines of insurance, scope, intent, and period covered by the market conduct examination; (2) Provide the name and contact information of the Commissioner; and (3) Provide any other information the Commissioner considers relevant. D. The person notified under §B of this regulation shall give written notice to the Commissioner of the individual who: (1) Has the authority and responsibility to respond to the Commissioner's request for accounts, records, documents, files, or other information needed in order to complete the market conduct examination; and (2) Will coordinate on behalf of the person the market conduct examination with the Commissioner. E. Following the notice provided under §§B and C of this regulation, the Commissioner shall conduct a conference with the person in a manner determined by the Commissioner to review: (1) The information the person must provide for the market conduct examination; (2) The administrative aspects of the market conduct examination, including but not limited to, market conduct examination expenses to be paid by the person examined; and (3) Any other information the Commissioner considers relevant. F. After the completion of the conference required in §E of this regulation , the Commissioner: (1) May provide a written summary of the conference to the person; and (2) Shall provide written notification of the information the person must provide for the market conduct examination in accordance with Regulation .05 of this chapter . G. The Commissioner shall notify the person subject to a market conduct examination of the date after which the Commissioner may not accept additional information unless an extension has been granted by the Commissioner in accordance with Regulation .05G and H of this chapter. H. The Commissioner shall conduct an exit conference with the person subject to the market conduct examination in a manner determined by the Commissioner I. At the discretion of the Commissioner, a report certified by the insurance supervisory official of another state may be accepted in lieu of conducting a market conduct examination.

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.07 Market Conduct Examination Report. A. Whenever a market conduct examination is conducted pursuant to Regulation .06 of this chapter , the Commissioner shall: (1) Provide the person with a copy of the draft proposed market conduct examination report; (2) Allow the person to submit written comments on the draft proposed market conduct examination report within 30 days after the receipt of the draft proposed market conduct examination report, or the period specified by the Commissioner, whichever is longer; (3) Consider the written comments submitted by the person in finalizing the draft proposed market conduct examination report; and (4) Include the written comments submitted by the person to the draft proposed market conduct examination report as an attachment to the proposed market conduct examination report. B. After receipt of the draft proposed market conduct examination report, a person may submit a written request, stating the reason for the request, to the Commissioner to extend the time for the submission of written comments. C. If the Commissioner receives a request pursuant to §B of this regulation , the Commissioner shall: (1) Grant an extension; or (2) Notify the person that the request to extend the time is denied. D. The Commissioner shall provide the person with a copy of the proposed market conduct examination report.

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.08 Commissioner's Actions. A. Based on the information reviewed during a market conduct analysis the Commissioner may, in the Commissioner's sole discretion: (1) Broaden the scope and period of the market conduct analysis; (2) Conduct a market conduct investigation or market conduct examination; (3) Issue an order; or (4) Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland . B. If the Commissioner conducts a market conduct investigation, the Commissioner may, in the Commissioner's sole discretion, based on the information reviewed during the market conduct investigation: (1) Broaden the scope and period of the market conduct investigation; (2) Conduct a market conduct examination; (3) Issue an order; or (4) Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland . C. If the Commissioner conducts a market conduct examination, the Commissioner may, in the Commissioner's sole discretion, based on the information reviewed during the market conduct examination: (1) Conduct a market conduct investigation of a particular matter; (2) Broaden the scope and period of the market conduct examination; (3) Issue an order; or (4) Take any other action authorized or reasonably implied by Insurance Article, Annotated Code of Maryland .

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.09 Sanctions. If a person subject to this chapter fails to provide the information requested by the Commissioner in accordance with this chapter, the person may be subject to an administrative fine not exceeding $500 per day, in addition to any other penalty available to the Commissioner.

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.10 Hearings. A. A person aggrieved by an order or proposed market conduct examination report may request a hearing in accordance with the provisions of COMAR 31.02.01 . B. Except as otherwise provided by law, a person may not rely on any information not timely provided in accordance with Regulation .06G of this chapter in any hearing held on an order or proposed market conduct examination report.

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