Maryland's insurance law is the Insurance Article of the Maryland Code (Md. Code, Ins.). Regulations are in COMAR Title 31. Workers' comp is in the Labor and Employment Article, and auto security is in the Transportation Article. This guide covers the Maryland rules on the regulator, producer licensing, appointments, CE, unfair practices, fraud, surplus lines and the guaranty corporations, with citations. General regulatory concepts are in the national Insurance Regulation guide.

About the exam

Maryland producer exams are given by Prometric. The passing score is 70%.

Maryland sells all seven exams, including both combined exams.

• No prelicensing education. Since October 1, 2024, Maryland no longer requires a prelicensing program of study or experience before the exam (Chapters 873/874 of 2024; MIA Bulletin 24-19).
• Retakes. A failed exam can be retaken after at least 4 days (Ins. § 10-108(f)).
• Exam scope. An applicant is tested only on the kinds of insurance requested and may take several exams on the same day (§ 10-107).
• Exempt from the exam:
  • nonresidents licensed in a reciprocal home state
  • credit-only applicants
  • a producer who moves to Maryland and applies within 90 days, for lines already held (§ 10-119)

The regulator

• The Maryland Insurance Administration (MIA) is an independent unit of state government headed by the Maryland Insurance Commissioner (§ 2-101).
• The Commissioner is appointed by the Governor with the Senate's advice and consent for a four-year term and is directly responsible to the Governor. The Governor may remove the Commissioner for malfeasance, incompetence or failure to carry out the duties of office (§ 2-103).
• Examinations (§ 2-205):
  • each domestic insurer and HMO at least every five years
  • every insurer applying for an original certificate of authority
  • any authorized insurer whenever advisable, including market conduct reviews
• Orders are in writing and state their purpose, grounds and legal basis (§ 2-204). Possible crimes are referred to the local State's Attorney, or to the Attorney General if statewide (§ 2-201).

Hearings and appeals:

• Hearing notice is given at least 10 days ahead (§ 2-211).
• On a demand for a hearing, the Commissioner grants it or refuses within 30 days. Silence counts as a refusal (§ 2-210).
• A demand received before an order's effective date, or within 10 days of service, stays the order (§ 2-212).
• Appeals go to the Circuit Court for Baltimore City, or for an individual, the circuit court of the county where they live (§ 2-215).

Insurers:

• An insurer needs a certificate of authority and must be a stock, mutual or reciprocal insurer (§§ 4-101, 4-102).
• The certificate must be suspended or revoked for insolvency or for failing to pay premium taxes. Revoking it automatically ends the insurer's producer appointments (§ 4-113).
• The Commissioner may fine insurers $100 to $125,000 per violation.
• An insurer in hazardous condition can be ordered to stop writing without prior notice, with a hearing within 5 days (§ 4-114).

Producer licensing

Who needs a license. An insurance producer sells, solicits or negotiates insurance for compensation, including HMO, dental plan and nonprofit health service plan contracts (§ 1-101(u)). Acting without a license is a misdemeanor, with a fine up to $500, up to 6 months in jail, or both (§§ 10-103, 10-131). It is also a fraudulent insurance act (§ 27-405).

Not required to be licensed:

• clerical employees whose pay doesn't vary with sales
• insurer employees who earn no commission and work in underwriting, loss control or claims (§ 10-103(b))

Lines of authority (§ 10-112):

• life
• accident and health or sickness
• property
• casualty
• variable life and variable annuity
• personal lines
• limited line credit

A license limited to motor vehicle coverages is also available (§ 10-123).

Applicants and names:

• Applicants must be 18, of good character and trustworthy (§§ 10-104, 10-105).
• A business entity designates a licensed producer as its principal contact. That producer reports contact changes within 10 days (§ 10-106).
• A licensee may use only the licensed name or a trade name filed with the Commissioner (§ 10-113(b)). Only an independent producer may be called an "independent insurance producer" (§ 10-129).

Other license types:

• Public adjusters represent insureds on first-party property claims. Auto claims are excluded (§ 10-401). Maryland doesn't license company adjusters.
• An insurance adviser examines policies and advises on them for a fee (§ 10-201).

Nonresidents (§ 10-119):

• licensed by reciprocity, without a Maryland exam
• a Maryland resident who moves away files a change of address with certification from the new state within 30 days

Temporary licenses (§ 10-120):

• issued without an exam to the surviving spouse, next of kin or personal representative of a deceased producer, and to the family, an employee or the guardian of a disabled producer
• expire 15 months after their effective date

Renewal (§§ 10-115, 10-116.1):

• Licenses renew every two years and expire on the last day of the birth month. The MIA sends a renewal notice at least one month ahead.
• When a license expires, its appointments end, and the person may not do any insurance business until reinstated.
• An expired license may be reinstated for up to one year with the renewal fee, a $100 reinstatement fee and proof of CE. Within 60 days of expiration, reinstatement is retroactive. After that, it is prospective.

Reporting:

• Changes of legal name, trade name, email or address are reported within 30 days (§ 10-117).
• Administrative actions in another jurisdiction are reported within 30 days of final disposition. Criminal prosecutions are reported within 30 days after the initial court appearance (§ 10-126(f), (g)).

Continuing education (§ 10-116; COMAR 31.03.02)

• CE is due at least 15 days before the license expires.
• A P&C producer who sells flood insurance takes flood CE.
• A health producer who sells LTC takes at least 2 hours of LTC CE each period.
• Nonresidents meet Maryland CE by meeting a reciprocal home state's CE.
• An insurer may not require producers to take only its own CE courses.

Appointments (§ 10-118; COMAR 31.03.13)

• A producer needs a license and an appointment to act for an insurer (§ 10-103(c)). A license by itself creates no authority to bind an insurer (§ 10-113(c)).
• Maryland insurers don't file appointments with the MIA. Instead, each insurer keeps a producer register:
  • The producer is entered within 30 days of appointment, and any termination is entered within 30 days.
  • The insurer checks the MIA for disciplinary actions against its producers at least every 31 days.
• The insurer gives the producer written proof of the appointment within 30 days. The producer may not act for the insurer until it arrives.
• Life, health and annuity exception. An insurer may accept an application from an unappointed producer if, within 30 days, it rejects the application or appoints the producer.
• Terminations. Only a for-cause termination must be reported to the Commissioner. The producer gets a copy within 15 days and may comment within 30.
• Producers keep appointment records for the life of the appointment plus 5 years.

Premiums and commissions

• Premium accounts (COMAR 31.03.03). Premiums are held in trust. A producer who doesn't remit promptly keeps them in a premium account separate from operating and personal funds. Misappropriation is grounds for revocation.
• Payment to the producer counts. An insurer can't cancel for nonpayment if the premium was paid to the producer (§ 10-127).
• Commissions go only to licensed producers. Former life and health producers may keep receiving renewal commissions (§ 10-130).
• Producer fees (§ 27-216):
  • When no commission is payable, a producer may charge a fee of up to 15% of the premium.
  • Charging for coverage the consumer didn't request (sliding) is prohibited.
  • A health producer must disclose administrative service fees in writing before charging an employer.

Discipline (§ 10-126)

Grounds include:

• fraudulent or dishonest practices
• misappropriating money
• forgery
• using notes on the license exam
• writing substantial over-insurance
• a pattern of filing auto insurance certificates followed closely by cancellations
• child support arrears over 120 days

Penalties:

• $100 to $5,000 per violation, plus restitution
• the Commissioner may require a new exam before lifting a suspension
• a willful violation of the Insurance Article is a misdemeanor with a fine of up to $100,000 (§ 1-301)

Unfair trade practices (Title 27)

• Misrepresentation, including misleading policy names (§ 27-202).
• False advertising (§ 27-203).
• Defamation (§ 27-204).
• False statements and entries (§ 27-205).
• Boycott, coercion, intimidation (§ 27-206).
• Twisting (§ 27-213). Advising an applicant to answer "no" to the replacement question also counts as twisting.
• Coercion or tie-ins (§ 27-214). Requiring insurance through a particular producer as a condition of a loan or sale is prohibited.
• Unfair discrimination (§ 27-208). Insurers may not charge more for life insurance because of blindness, even with actuarial justification. They may not rate on harmless genetic traits such as sickle-cell trait or on past lawful travel, unless actuarially justified. Sex-based rating needs actuarial justification.
• Domestic violence status may not be used to refuse or rate life or health coverage (§ 27-504).
• Rebating (§§ 27-209, 27-210, 27-212):
  • prohibited for life, health and annuities, including offering stock as an inducement
  • for P&C, prohibited except as provided in a filing, and the insured who accepts one also violates the law
  • promotional items of up to $50 are allowed if not contingent on a purchase
  • payroll-deduction rate reductions are not rebates
• Underwriting (§ 27-501). Insurers may not refuse coverage based on race, color, creed, sex or blindness, or ask about race or national origin on an application.

Enforcement (§ 27-103). After notice and a hearing, the Commissioner issues a cease and desist order.

Unfair claim practices (§§ 27-303, 27-304, 27-305):

• Some acts are violations every time, such as refusing a claim for an arbitrary or capricious reason.
• Others are violations only as a general business practice.
• Penalties are up to $2,500 per violation. Failing to act in good faith on a first-party P&C claim can cost up to $125,000 per violation.
• Before suing for bad faith in court, the insured files a complaint with the MIA (§ 27-1001).

Medical records (§ 4-403) may be disclosed without authorization only for listed purposes, such as fraud investigation.

Fraud (§§ 27-403 to 27-408, 27-802)

Fraudulent insurance acts include:

• a false statement on an application
• a false claim
• staged accidents
• runners soliciting accident victims
• acting without a license

Criminal penalties:

• a claim worth $300 or more: a felony, punishable by up to 15 years
• under $300: a misdemeanor
• the Commissioner may also impose administrative penalties of up to $25,000 per act

Reporting. Insurers and producers who in good faith suspect fraud must report it in writing to the Commissioner, the MIA Insurance Fraud Division, or law enforcement. Good-faith reporters are immune.

Surplus lines (Title 3, Subtitle 3)

• Coverage may go to a nonadmitted insurer through a qualified surplus lines broker after a diligent search among authorized insurers (§ 3-306).
• The broker needs a certificate of qualification (§ 3-310).
• The affidavit is filed by the 45th day after the end of the quarter (§ 3-307).
• The premium receipts tax is 3% (§ 3-324).

Guaranty corporations

Life and Health Insurance Guaranty Corporation (§§ 9-402 to 9-407):

• a private nonprofit corporation; membership is required to do business in Maryland
• life death benefit: $300,000
• cash value: $100,000
• annuity present value: $250,000
• health benefit plans: $500,000
• disability and LTC: $300,000 each
• overall cap of $300,000 per life, higher for health benefit plans

Property and Casualty Insurance Guaranty Corporation (§§ 9-301 to 9-313):

• pays the part of each covered claim over $100 and under $300,000
• workers' comp is paid in full
• surplus lines and risk retention groups are excluded
• a claimant first exhausts any solvent insurer's coverage
• members recoup assessments through rates over at least three years

Common exam traps

• The Commissioner is appointed for four years, with Senate consent.
• Exams are given by Prometric, need 70%, and have no prelicensing requirement since 10/1/2024. A failed exam can be retaken after 4 days.
• CE is 24 hours with 3 of ethics, due 15 days before expiration.
• Insurers keep a producer register and report only for-cause terminations.
• A temporary license lasts 15 months.
• Promotional gifts are limited to $50.
• Fraud is a felony at $300.
• The P&C guaranty corporation pays claims over $100 and under $300,000.