COMAR 31.04.22 · Chapter 22 Title Insurers

Administrative History Effective date: December 1, 2014 (41:20 Md. R. 1114) Regulation .02 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .03B amended effective April 20, 2020 (47:2 Md. R. 62); August 21, 2023 (50:15 Md. R. 729); June 9, 2025 (52:11 Md. R. 534) Regulation .04 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .04B amended effective June 20, 2016 (43:12 Md. R. 668); April 20, 2020 (47:2 Md. R. 62) Regulation .05 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .06 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .07 amended effective August 21, 2023 (50:15 Md. R. 729) Regulation .08A amended effective June 9, 2025 (52:11 Md. R. 534) Authority Insurance Article, §§ 2-108 , 2-109 , 10-121 , and 10-128 .1, Annotated Code of Maryland

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.01 Applicability. This chapter applies to a title insurer, title insurance producer, and title agency.

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.02 Scope. This chapter: A. Establishes the minimum standards and procedures for conducting a review; and B. Provides for the filing of a review report with the Commissioner.

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.03 Definitions. A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Accounts” means all accounts associated with the principal agent’s title insurance business. (2) “Appointment” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland . (3) “Certification” means a written statement signed by the principal agent that the information provided to the title insurer during the annual review is, to the best of the principal agent’s knowledge, information, and belief, full, complete, and truthful and that the principal agent has undertaken an adequate inquiry to make the required certification (4) “Claim” has the meaning set forth in COMAR 31.15.07.02B(2) . (5) “Commissioner” means the Maryland Insurance Commissioner or the Commissioner’s designee. (6) “Designated responsible licensed producer” means a licensed insurance producer who is: (a) Responsible for the principal agent’s compliance with insurance laws, rules, and regulations; and (b) Listed as a designated or responsible licensed producer on: (i) The principal agent’s uniform business entity application; or (ii) The Association/Responsible Individual Designation form filed with the Commissioner. (7) “Escrow” means the act or process of providing closing services or services under an escrow agreement by a title insurer or a principal agent. (8) “Escrow account” means an account that contains or has contained trust money deposits or other money that a person entrusts to a title insurer or a principal agent to hold for the benefit of a buyer or borrower in a real estate transaction or for a beneficial owner, in connection with an escrow, settlement, closing, or title indemnification. (9) “Insurance” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland . (10) “Insurance business” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland . (11) “Insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland . (12) “Insurer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland . (13) “Licensed insurance producer” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland . (14) “Licensee” means a title insurer, title insurance producer, or title insurance agency. (15) “MAHT” means the Maryland Affordable Housing Trust established under the Housing and Community Development Article, §10-102, Annotated Code of Maryland . (16) “Principal agent” means a title insurance producer appointed by the title insurer to act on behalf of the title insurer as described in Insurance Article, §10-121(k)(1)(i), Annotated Code of Maryland . (17) “Report” means the written report required under Insurance Article, §10-121(k), Annotated Code of Maryland , and containing the elements specified by the Commissioner. (18) “Review” means a review of the underwriting, claims, and escrow practices of each principal agent conducted by a title insurer or its designee. (19) “Title agency” has the meaning set forth in Insurance Article, §10-125, Annotated Code of Maryland . (20) “Title insurance” has the meaning set forth in Insurance Article, §1-101, Annotated Code of Maryland . (21) “Title insurance producer” has the meaning set forth in Insurance Article, §10-101, Annotated Code of Maryland . (22) “Title insurer” means an insurer authorized by the Commissioner to conduct title insurance business in the State. (23) “Trust money” has the meaning set forth in Insurance Article, §10-121, Annotated Code of Maryland . (24) “Underwriting standards” has the meaning set forth in COMAR 31.04.16.02 .

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.04 Conducting a Review. A. A title insurer: (1) Shall, except as provided in §A(4) of this regulation , conduct a review during each calendar year of the underwriting, claims, and escrow practices of each principal agent; (2) Shall conduct a review during normal business hours; (3) May not be required to provide advance notice to the principal agent of the beginning of a review; and (4) May not be required to conduct a review of a principal agent for the calendar year during which the principal agent is initially appointed, if the appointment is made on or after June 30 of that calendar year. B. The review required under §A of this regulation shall, at a minimum, include: (1) A determination of whether: (a) The principal agent is in compliance with the title insurer’s underwriting standards in the State; and (b) The principal agent’s escrow accounts have been properly reconciled as of the date of the completed review and contain sufficient funds to disburse the trust money from all settlement files necessary to establish the lien, title or interests insured in accordance with title insurance policies issued by the title insurer conducting the review; (2) A review of the principal agent’s operations to evaluate compliance with the notice requirements under Insurance Article, §22-103, Annotated Code of Maryland , including whether the principal agent: (a) Inserted the name of each proposed insured as required under Insurance Article, §22-103(a)(1), Annotated Code of Maryland ; (b) Delivered to the buyer or agent or attorney of the buyer immediately upon receipt of the premium, written notice of the name of each insured under the title insurance policy, the face amount of the title insurance policy, the buyer’s right and opportunity to obtain simultaneous title insurance in the buyer’s favor, written notice of the additional premium that will be required for the purchase of simultaneous title insurance in the buyer’s favor; and (c) Obtained from the buyer a written statement that he or she received the notice referenced in §B(2)(b) of this regulation and a statement that the buyer wants or does not want owner’s title insurance; (3) A review of the title insurance producer’s or agency’s policy issuing and processing operations; (4) To the extent that a title insurer delegates the responsibility to the principal agent to handle any aspect of a claim, a review of whether the principal agent is in compliance with the title insurer’s policies and procedures for handling a claim; (5) Verification that: (a) The principal agent has filed the annual report required under COMAR 31.16.03.06 ; (b) Only a licensed title insurance producer exercises control over trust money; (c) Premium monies are held separate from other funds or confirmation that the principal agent has received express written consent from the title insurer in the form required by COMAR 31.03.03 to comingle premium monies with the principal agent’s personal fund; and (d) Funds received by the principal agent are accurately accounted for in the books and records of the principal agent; (6) A review of the escrow practices of the principal agent; and (7) Receipt of the written certification of the principal agent which shall contain: (a) The printed name and signature of a designated responsible licensed producer or an attorney of the law firm who is a licensed title insurance producer, if the principal agent is a law firm as defined by Insurance Article, §10-125(a)(3), Annotated Code of Maryland ; (b) The date the certification was signed; and (c) The following statement in at least 12-point font: I hereby certify that the information provided to the title insurer or its designee during the review is, to the best of my knowledge, information, and belief, full, complete, and truthful and that I have undertaken an adequate inquiry to make this certification. C. If the principal agent does not maintain separate bank or trust accounts for each title insurer it represents, the title insurer shall verify that the trust deposits held on its behalf are reasonably ascertainable from the books of account and records of the principal agent. D. A title insurer may enter into a written contract with a third party to perform a review. E. A title insurer that enters into a written contract with a third party to perform a review is: (1) Bound by the findings of the third party; and (2) Responsible for any violation of §A, B or C of this regulation, regardless of any delegation.

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.05 Failure to Cooperate. A principal agent’s failure to cooperate with a title insurer at the beginning of or during a review shall constitute a reason to believe that the principal agent has engaged in a prohibited activity under Insurance Article, §10-126, Annotated Code of Maryland , and shall be reported to the Commissioner.

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.06 Report. A. A title insurer shall prepare a written report setting forth the results of its annual review, which shall be made available to the Commissioner upon request. B. A title insurer shall file a report with the Commissioner within 45 calendar days after the completion of the review if the title insurer has reasonable cause to believe that the title insurance producer or agency at any time engaged in any of the prohibited activities set forth in Insurance Article, §10-126, Annotated Code of Maryland . The report shall be submitted regardless of whether the prohibited activities ceased or were remedied prior to, during the course of, or as a result of the review. The report shall be in writing on a form specified by the Commissioner and submitted by electronic means directed by the Commissioner.. C. The report shall address the following areas: (1) If applicable, a detailed description of the basis for the reasonable cause to believe that the title insurance producer or agency engaged in any of the prohibited activities set forth in Insurance Article, §10-126, Annotated Code of Maryland ; (2) The name, Maryland producer license number, and contact information of the principal agent or any insurance producer designated under Insurance Article, §10-106, Annotated Code of Maryland ; (3) The name and Maryland producer license number of any insurance producer associated with the principal agent, including the name and license number or numbers of any TIPICs utilized by the agency and confirmation that they are appointed with the insurer; (4) The file number and property address for each file that was reviewed; (5) The principal agent’s escrow accounts and related practices, including a review to ensure that: (a) Only licensed insurance producers exercise control over trust money; (b) Premium monies are held in compliance with COMAR 31.03.03 ; (c) Funds received by the principal agent are accurately accounted for in the books and records of the principal agent; and (d) The principal agent’s escrow accounts have been properly reconciled as of the date of the completed review and the trust deposits held on its behalf are reasonably ascertainable from the books of account and records of the principal agent; (6) The report shall indicate if there are or have been any escrow or account shortages at any time during the review period; (7) Except for transfers of money between the principal agent’s escrow or trust account and the principal agent’s operating account for the fees due the principal agent, transfers of money between principal agent’s accounts that contain or have contained trust money deposits; (8) Discrepancies between receipts and disbursements, and, if discrepancies are found, a description of the discrepancies in detail and whether the title producer or lender prepared the closing disclosure or HUD-1; (9) Compliance by the principal agent with the annual MAHT report requirement under COMAR 31.16.03.06 ; (10) Information relating to escrow accounts or settlement, closing, or title indemnification conducted by a principal agent, or title insurance producer acting on behalf of the title insurer; (11) The principal agent’s policy blank inventory; (12) The principal agent’s failure to comply with the title insurer’s financial accounting requirements; and (13) Any additional information requested by the Commissioner. D. A title insurer is not precluded from providing a more comprehensive description of the review. E. The report shall contain: (1) The certification from the principal agent required under Regulation .04B(7) of this chapter ; and (2) A copy of the express written consent required under Regulation .04B(5)(c) of this chapter , if premium monies are comingled with the principal agent’s personal funds.

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.07 Required Notifications. A. Except as provided in §B of this regulation , if a title insurer has reason to believe that the principal agent has engaged in, or is engaging in, conduct that is prohibited by Insurance Article, §10-126, Annotated Code of Maryland , the title insurer shall notify the Commissioner in writing, which may be through email, facsimile, or other electronic transmission, within 10 calendar days after obtaining such knowledge or belief, in addition to filing any required a report. B. A title insurer shall notify the Commissioner in writing, which may be through email, facsimile, or other electronic transmission, within 2 calendar days if a title insurer has reason to believe that a principal agent has converted or misappropriated money received or held in trust in addition to filing any required report. C. A title insurer’s written notification to the Commissioner under §§A and B of this regulation shall include the following information: (1) The name, physical address, telephone number, and email address of the principal agent or its designated insurance producer who satisfies the qualifications set forth in §10-121(c); (2) The principal agent’s producer license number; (3) The date or dates on which the principal agent failed to cooperate, if applicable; (4) A description of the facts and circumstances of the principal agent’s conduct prohibited by Insurance Article, §10-126, Annotated Code of Maryland , if applicable; and (5) A description of the facts and circumstances giving rise to the title insurer’s reason to believe that a principal agent has converted or misappropriated money received or held in trust.

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.08 Maintenance of Records. A. A licensee shall maintain for a period of 5 years after the conclusion of an annual review, and make available to the Commissioner upon request, all documentation collected, prepared, and produced by the licensee during an annual review including, but not limited to, work papers, summaries, daily log notes, and the report. B. Records required by this regulation may be maintained in paper, photographic, magnetic, mechanical, or electronic media or by any process that accurately reproduces the actual document, if the copy of the record is maintained in a manner that: (1) Is clear and legible; (2) Accurately reproduces the original document in its entirety, including any attachments to the document; (3) Is capable of producing a clear and legible hard copy of the original document; and (4) Preserves evidence of any signature contained on the document.

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