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2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 2 - Reciprocal Insurers › Section 3-218 - Extinguishing Subscribers' Liability and Issuance of Nonassessable Policies

(a)    If a reciprocal insurer has a surplus of assets over all liabilities at least equal to the minimum capital stock and surplus required of a domestic stock insurer authorized to engage in like kinds of insurance business, on application of the attorney in fact of the reciprocal insurer and as approved by the subscribers' advisory committee, the Commissioner shall issue a certificate that authorizes the reciprocal insurer to:
(1)    extinguish the contingent liability of subscribers under its policies then in force in the State; and
(2)    omit provisions that impose contingent liability in all policies delivered or issued for delivery in the State as long as the surplus remains unimpaired.
(b)    (1)    The Commissioner may not authorize a domestic reciprocal insurer to extinguish the contingent liability of any of its subscribers or in any of its policies to be issued unless the reciprocal insurer qualifies to extinguish and does extinguish the contingent liability of all of its subscribers and in all of its policies for all kinds of insurance that the reciprocal insurer transacts.
(2)    Notwithstanding paragraph (1) of this subsection, if required by the laws of another state in which the domestic reciprocal insurer is authorized to transact insurance, the domestic reciprocal insurer:
(i)    may issue policies that provide for the contingent liability of its subscribers who acquire policies in that state; and
(ii)    need not extinguish the contingent liability applicable to policies then in force in that state.
(c)    (1)    If the surplus described in subsection (a) of this section becomes impaired, the Commissioner immediately shall revoke the certificate that authorizes the reciprocal insurer to issue nonassessable policies.
(2)    The revocation does not subject a policy then in force to contingent liability for the remainder of the period for which the premium has been paid.
(3)    After revocation of authority to issue nonassessable policies, a reciprocal insurer may not issue or renew a policy without providing for the contingent liability of the subscriber.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 2 - Reciprocal Insurers › Section 3-219 - Savings

(a)    (1)    The attorney in fact of a reciprocal insurer:
(i)    periodically may fix and determine savings to be paid to each subscriber or policyholder on participating policies or contracts from the earned surplus of the reciprocal insurer; and
(ii)    after doing so, shall establish an adequate surplus from which the savings are to be paid.
(2)    The attorney in fact may not fix or pay savings if the payment of savings will impair the minimum surplus or other required surplus of the reciprocal insurer.
(b)    (1)    In fixing or paying savings, the attorney in fact may make reasonable classifications of policies or contracts.
(2)    Policies or contracts in the same classification shall be treated without unfair discrimination.
(3)    If the reciprocal insurer offers an alternative method or plan for savings classifications, the policy or contract shall contain an endorsement that states the class to which it is assigned.
(c)    Each reciprocal insurer shall establish a procedure for notifying each policyholder or subscriber about savings fixed and payable under the policyholder’s or subscriber's policy or contract.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 2 - Reciprocal Insurers › Section 3-220 - Advances of Money

(a)    This section does not apply to bank loans or to loans for which security is given.
(b)    The attorney in fact of a domestic reciprocal insurer or another person may advance to the reciprocal insurer on reasonable terms any money that the reciprocal insurer requires periodically in its operations.
(c)    (1)    The money advanced to a reciprocal insurer:
(i)    may not be treated as a liability of the reciprocal insurer; and
(ii)    except on liquidation of the reciprocal insurer, may be withdrawn or repaid only out of the reciprocal insurer's realized earned surplus in excess of its minimum required surplus.
(2)    A withdrawal or repayment may be made only with the previous approval of the Commissioner.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 2 - Reciprocal Insurers › Section 3-221 - Mergers and Conversions

(a)    A domestic reciprocal insurer may merge with another reciprocal insurer or be converted to a stock insurer or mutual insurer if:
(1)    at least two-thirds of the subscribers who vote on the merger or conversion after notice vote in favor of the merger or conversion; and
(2)    the Commissioner approves the terms of the merger or conversion.
(b)    The Commissioner may not approve a plan for merger or conversion unless:
(1)    the plan is equitable to subscribers; and
(2)    for conversion to a stock insurer, the plan gives each subscriber:
(i)    preferential right to acquire stock of the proposed stock insurer proportionate to the subscriber's interest in the reciprocal insurer; and
(ii)    a reasonable length of time to exercise the preferential right.
(c)    If a domestic reciprocal insurer converts to a stock insurer or mutual insurer, the successor stock insurer or mutual insurer is subject to the same capital or surplus requirements and has the same rights as a like domestic insurer that transacts like kinds of insurance business.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 2 - Reciprocal Insurers › Section 3-222 - Impaired Reciprocal Insurers

(a)    If the assets of a reciprocal insurer at any time are insufficient to maintain the required surplus and to discharge its liabilities, other than a liability on account of money contributed by the attorney in fact or another person, the attorney in fact of a reciprocal insurer immediately shall:
(1)    make up the deficiency; or
(2)    subject to the limitations set forth in the power of attorney or subscribers’ policies, levy an assessment on the subscribers for the amount needed to cure the deficiency.
(b)    A reciprocal insurer is considered insolvent and shall be proceeded against as authorized by this article if:
(1)    the attorney in fact fails to cure the deficiency or to make the assessment within 30 days after the Commissioner orders the attorney in fact to do so; or
(2)    the deficiency is not cured fully within 60 days after the date the assessment was made.
(c)    If liquidation of a reciprocal insurer is ordered, an assessment shall be levied on the subscribers in the amount, subject to the limits provided by this subtitle, that the Commissioner determines to be necessary to discharge all liabilities of the reciprocal insurer, excluding any money contributed by the attorney in fact or another person, but including the reasonable cost of the liquidation.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-301 - Definitions

(a)    In this subtitle the following words have the meanings indicated.
(b)    “Act” means the federal Nonadmitted and Reinsurance Reform Act of 2010.
(c)    “Admitted insurer” means an insurer that is authorized to engage in the business of insurance in the State.
(d)    “Exempt commercial purchaser” has the meaning stated in § 527 of the Act.
(e)    “Home state” has the meaning stated in § 527 of the Act.
(f)    “Nonadmitted insurance” means property and casualty insurance that may be placed directly or through a surplus lines broker with a nonadmitted insurer that is eligible to accept the insurance.
(g)    (1)    “Nonadmitted insurer” means an insurer that is not authorized to engage in the business of insurance in the State.
(2)    “Nonadmitted insurer” does not include a risk retention group.
(h)    “Qualified surplus lines broker” means a person that has obtained a certificate of qualification from the Commissioner to act as a surplus lines broker under this subtitle.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-302 - Scope of Subtitle

(a)    This subtitle does not apply to:
(1)    life insurance;
(2)    health insurance, except as provided in subsection (c) of this section;
(3)    annuities;
(4)    reinsurance;
(5)    wet marine and transportation insurance, except as provided in subsection (b) of this section;
(6)    insurance on a subject that is located, resident, or to be performed wholly outside the State;
(7)    insurance on vehicles or aircraft owned and principally garaged outside the State;
(8)    insurance on property or operation of railroads engaged in interstate commerce;
(9)    insurance:
(i)    on aircraft owned or operated by aircraft manufacturers or operated in scheduled interstate flight;
(ii)    on cargo of the aircraft described in item (i) of this item; or
(iii)    against liability arising out of the ownership, maintenance, or use of the aircraft described in item (i) of this item, other than workers’ compensation or employer’s liability; or
(10)    medical stop–loss insurance, as defined in § 15–129 of this article.
(b)    This subtitle applies to wet marine and transportation insurance on:
(1)    a pleasure craft under 60 feet in length that is owned and used for pleasure and not for business, hire, or other commercial use;
(2)    fishing vessels under 50 gross tons that are not part of a fleet of 3 or more vessels; and
(3)    charter or head boats under 50 gross tons that are not part of a fleet of 3 or more vessels.
(c)    Subject to § 3–306.2 of this subtitle, this subtitle applies to:
(1)    disability insurance that:
(i)    provides for lost income, revenue, or proceeds in the event that an illness, accident, or injury results in a disability that impairs an insured’s ability to work or otherwise generate income, revenue, or proceeds that the insurance is intended to replace; and
(ii)    does not include payment for medical expenses, dismemberment, or accidental death; and
(2)    short–term medical insurance that provides limited health insurance benefits for a limited period of time to:
(i)    residents of the United States who travel to another country within 30 days after the effective date of coverage; and
(ii)    residents of another country who:
1.    travel to the United States within 30 days after the effective date of coverage; and
2.    are not traveling to the United States for the purpose of attending an institution of higher education, as defined in § 10–101 of the Education Article.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-303 - Placement of Insurance With Alien Insurer

Except as provided in § 3-319(b) of this subtitle, this subtitle does not limit the right of a surplus lines broker to place surplus lines insurance with an alien insurer that has qualified with the nonadmitted insurer information office of the National Association of Insurance Commissioners.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-304 - Regulations

The Commissioner may adopt reasonable regulations consistent with this subtitle to:
(1)    carry out this subtitle;
(2)    establish procedures for determining the eligibility of particular proposed coverages for placement with surplus lines insurers and maintain a list of the identified coverages;
(3)    allow an exempt commercial purchaser to waive the diligent search requirement under § 3–306 of this subtitle for the procurement of a surplus lines insurance policy;
(4)    provide for the content and use of the written disclosure required under § 3–308 of this subtitle; and
(5)    provide for the periodic review, no less than annually, of information from surplus lines brokers, agents, and insurers and from other sources concerning the availability and affordability of insurance from authorized insurers in the State.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-305 - Compliance With Filing Requirement

A report, affidavit, or return that must be filed under this subtitle complies with the filing requirement if the report, affidavit, or return is:
(1)    mailed and postmarked by the United States Postal Service on or before the filing date;
(2)    delivered on or before the filing date to a private delivery service recognized by the Commissioner, if the delivery is evidenced by a receipt; or
(3)    transmitted electronically on or before the filing date in a manner approved by the Commissioner.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-306.1 - Diligent Search -- When Deemed Completed or Unnecessary

(a)    (1)    A diligent search required by § 3–306 of this subtitle shall be deemed completed if:
(i)    the insured or the surplus lines broker or insurance producer obtains declinations of a risk from three authorized insurers that are writing the particular kind and class of insurance in this State; and
(ii)    the declinations are included in the affidavit required under § 3–307 of this subtitle.
(2)    In addition to the requirement of paragraph (1)(i) of this subsection, an insurance producer shall obtain a declination from each insurer for which the insurance producer has been appointed that the insurance producer knows, or should know, is actually writing on a broad basis the particular kind and class of insurance sought.
(b)    A diligent search may not be required:
(1)    for any coverage on a list of eligible surplus lines coverages compiled by the Commissioner; or
(2)    if the diligent search is waived by an exempt commercial purchaser in accordance with the Act.
(c)    Notwithstanding the renewal provisions of § 3–306(c) of this subtitle, a diligent search shall be required for each renewal of a personal lines insurance policy written through a surplus lines insurer.
(d)    Notwithstanding subsection (b)(2) of this section, a surplus lines broker is not required to perform a diligent search to determine whether the full amount or type of insurance can be obtained from admitted insurers when the surplus lines broker is seeking to procure or place nonadmitted insurance for an exempt commercial purchaser if:
(1)    the surplus lines broker has disclosed to the exempt commercial purchaser that the insurance may or may not be available from admitted insurers that may be subject to greater protection and regulatory oversight; and
(2)    the exempt commercial purchaser subsequently has requested the surplus lines broker in writing to procure nonadmitted insurance from or place the nonadmitted insurance with a nonadmitted insurer.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-307 - Affidavit

(a)    An affidavit that sets forth the facts referred to in § 3–306 of this subtitle and any other facts required by the Commissioner must be personally executed by the surplus lines broker or the originating insurance producer at the time the surplus lines insurance is placed.
(b)    The affidavit must be filed with the Commissioner on or before the 45th day after the last day of the calendar quarter in which the surplus lines insurance was placed.
(c)    For short–term medical insurance procured from a nonadmitted insurer under this subtitle, the affidavit shall include, for each declining authorized insurer, the reason for the declination.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-308 - Endorsement of Contract or Confirmation

Each insurance contract or confirmation procured and delivered under this subtitle shall be:
(1)    endorsed or stamped conspicuously in boldface type on the first page of the insurance contract or confirmation as follows: “This insurance is issued by a nonadmitted insurer not under the jurisdiction of the Maryland Insurance Commissioner”; and
(2)    accompanied by a written disclosure, as prescribed by the Commissioner, that:
(i)    is written in clear, plain English;
(ii)    explains that the insurer does not possess a certificate of authority from the Commissioner to engage in the insurance business in the State; and
(iii)    includes any other information that the Commissioner requires.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-309 - Validity of Surplus Lines Insurance Contract

(a)    An insurance contract procured as surplus lines coverage from an unauthorized insurer in accordance with this subtitle is valid and enforceable as to all parties and shall be accepted and recognized in all matters and respects to the same effect as like insurance contracts issued by authorized insurers.
(b)    An insurance contract entered into in violation of this subtitle may be enforced by the insured in accordance with the terms of the insurance contract.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-310 - Certificate of Qualification Required for Surplus Lines Broker; Exceptions

(a)    Except as provided in subsection (b) of this section, a person must obtain a certificate of qualification to act as a surplus lines broker before the person acts as a surplus lines broker in the State.
(b)    A person is not required to obtain a certificate of qualification to act as a surplus lines broker in the State if:
(1)    the State is not the home state of the insured; and
(2)    the surplus lines broker has obtained a license or other authorization from the home state of the insured.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-311 - Qualifications of Applicants

An applicant for a certificate of qualification shall:
(1)    be qualified as an insurance producer;
(2)    hold an insurance producer’s license for the kind of insurance being solicited or sold; and
(3)    be competent and trustworthy, as determined by the Commissioner.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-313 - Bond

(a)    Before the Commissioner issues a certificate of qualification to an applicant, the applicant shall file with the Commissioner a bond that:
(1)    is subject to approval by the Commissioner;
(2)    runs to the State;
(3)    is executed by the applicant as principal and by a corporate surety insurer authorized to do business in the State;
(4)    is in the penal sum of $10,000; and
(5)    is conditioned that the broker will:
(i)    conduct business in accordance with this article; and
(ii)    remit promptly the taxes required by § 3-324 of this subtitle.
(b)    The total liability of the surety insurer under the bond may not exceed the penal sum of the bond.
(c)    The surety insurer may not cancel the bond unless, at least 30 days before canceling the bond, the surety insurer files written notice of the cancellation.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-315 - Scope of Certificate of Qualification

A qualified surplus lines broker may:
(1)    accept and place surplus lines insurance business from an insurance producer with a license in the State for the kind of insurance involved; and
(2)    compensate the insurance producer for the surplus lines insurance business.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-316 - Term and Renewal of Certificate of Qualification

(a)    Unless a certificate of qualification is renewed for a 2–year term as provided in this section, the certificate of qualification expires every other year on the date stated on the certificate of qualification.
(b)    At least 1 month before a certificate of qualification expires, the Commissioner shall send to the holder of the certificate of qualification, at the last known address or electronic mail address of the holder on record a notice that states:
(1)    the process for renewing the certificate of qualification;
(2)    the date by which the Commissioner must receive the renewal application; and
(3)    the amount of the renewal fee.
(c)    Before a certificate of qualification expires, the holder periodically may renew it for an additional 2–year term, if the holder:
(1)    otherwise is entitled to a certificate of qualification;
(2)    submits to the Commissioner a renewal application:
(i)    on the form that the Commissioner provides; or
(ii)    in an electronic format that the Commissioner approves;
(3)    pays to the Commissioner the renewal fee required by § 2–112 of this article; and
(4)    complies with the bond requirement of § 3–313 of this subtitle.
(d)    For an individual, a certificate of qualification renewed under this section shall have an expiration date that is the last day of the month in which the holder of the certificate of qualification was born.
(e)    (1)    If mailed, an application for renewal of a certificate of qualification shall be considered made in a timely manner if it is postmarked on or before the expiration date of the certificate of qualification.
(2)    If submitted electronically, an application for renewal of a certificate of qualification shall be considered made in a timely manner if, on or before the expiration date of the certificate of qualification, the application:
(i)    is addressed properly or otherwise directed properly to an information processing system that the Administration has designated or uses for the purpose of receiving electronic applications and from which the Administration is able to retrieve the application;
(ii)    is in a form capable of being processed by that system; and
(iii)    1.    enters an information processing system outside the control of the sender or of a person that sent the electronic application on behalf of the sender; or
2.    enters a region of the information processing system designated or used by the Administration that is under the control of the Administration or an agent of the Administration.
(f)    The Commissioner shall renew the certificate of qualification of each holder who meets the requirements of this section.
(g)    The Commissioner may adopt regulations to carry out this section.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-316.1 - Reinstatement of Certificate of Qualification

(a)    On or before September 30 of the renewal year, a person whose surplus lines broker’s certificate of qualification has expired may reinstate the expired certificate of qualification by:
(1)    filing with the Commissioner the appropriate reinstatement application;
(2)    paying to the Commissioner the applicable reinstatement fee required under subsection (b) of this section; and
(3)    complying with the bond requirement of § 3-313 of this subtitle.
(b)    (1)    The fee for a reinstatement under this section shall be:
(i)    the amount charged for a full renewal period for the type of certificate of qualification held by the person seeking the reinstatement; and
(ii)    1.    $25 for reinstatement during the period from July 1 through July 31;
2.    $50 for reinstatement during the period from August 1 through August 31; and
3.    $75 for reinstatement during the period from September 1 through September 30.
(2)    The Commissioner may limit the reinstatement fee to the amount of the renewal fee in cases where the reinstatement applicant did not make timely renewal because of temporary incapacity, hospitalization, or other hardship.
(c)    A person whose surplus lines broker’s certificate of qualification has expired is prohibited from acting as a surplus lines broker until the effective date of reinstatement of the certificate of qualification.
(d)    A person who does not comply with subsection (a) of this section on or before September 30 of the year of expiration shall apply for a surplus lines broker’s certificate of qualification under § 3-312 of this subtitle and meet any other requirements specified by the Commissioner in regulation.
(e)    The Commissioner may adopt regulations to carry out this section.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-317 - Suspensions and Revocations

(a)    The Commissioner may suspend or revoke the certificate of qualification of a surplus lines broker:
(1)    if the surplus lines broker fails to file the report required by this subtitle;
(2)    if the surplus lines broker fails to remit the tax required by this subtitle;
(3)    if the surplus lines broker fails to keep records required by this subtitle, or fails to allow the Commissioner to examine those records;
(4)    if the surplus lines broker fails to file or falsifies the affidavit required by this subtitle; or
(5)    for any applicable ground for suspending or revoking the license of an insurance producer under this article.
(b)    The Commissioner may not reinstate the certificate of qualification of a surplus lines broker whose certificate has been suspended or revoked until the broker pays all penalties and delinquent taxes that are owed.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-318 - Approval of Surplus Lines Insurer

(a)    The Commissioner may not approve an insurer as a surplus lines insurer unless the insurer:
(1)    is authorized in its domiciliary jurisdiction to write the type of insurance it seeks to write;
(2)    has capital and surplus, or their equivalent under the laws of its domiciliary jurisdiction, equal to the greater of:
(i)    the minimum capital and surplus required under the laws of its domiciliary jurisdiction; and
(ii)    $15,000,000; and
(3)    files with the Commissioner:
(i)    a written request for approval as a surplus lines insurer to write the type of insurance the insurer seeks to write;
(ii)    a certified copy of the insurer’s annual statement, on convention form, that shows the amount by line of surplus lines business written on risks located in the State during the period covered by the annual statement; and
(iii)    a certificate of compliance issued by the insurance department of the insurer’s state of domicile.
(b)    (1)    For a foreign insurer, the requirements of subsection (a)(2) of this section may be satisfied by the insurer’s possessing less than the minimum capital and surplus if the Commissioner makes an affirmative finding of acceptability.
(2)    The finding shall be based on the following or similar factors:
(i)    quality of management;
(ii)    capital and surplus of any parent company;
(iii)    company underwriting profit and investment income trends;
(iv)    market availability; and
(v)    company record and reputation of the foreign insurer in the industry.
(3)    The Commissioner may not make an affirmative finding of acceptability if the foreign insurer’s capital and surplus is less than $4,500,000.
(c)    A surplus lines insurer’s approval expires on June 30 each year unless the approval is renewed as provided in this section.
(d)    (1)    Before an approval expires, an insurer may renew the approval for a 1–year term if the insurer:
(i)    files with the Commissioner, in accordance with the procedures established by the Commissioner, an application for renewal of approval as a surplus lines insurer;
(ii)    pays to the Commissioner the applicable fee required by § 2–112 of this article; and
(iii)    submits to the Commissioner any additional information or documentation that the Commissioner requires, including any information or documentation necessary to determine whether the insurer meets the requirements of subsections (a) and (b) of this section.
(2)    The application for renewal of approval as a surplus lines insurer shall be signed by an officer of the insurer certifying that, to the best knowledge and belief of the officer, the insurer is in compliance with all statutes and regulations of the insurer’s domiciliary jurisdiction.
(e)    An unauthorized insurer shall appoint in writing the Commissioner as agent for the acceptance of service of process.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-319 - Placement of Surplus Lines Insurance Prohibited

(a)    A surplus lines broker may not place surplus lines insurance with an unauthorized insurer that:
(1)    has not been approved by the Commissioner as a surplus lines insurer in accordance with § 3–318 of this subtitle;
(2)    for an insurer not domiciled in the State, has not qualified under § 3–303 of this subtitle;
(3)    has been determined by the Commissioner to be insolvent or unsafe financially under subsection (b) of this section; or
(4)    has been determined by the Commissioner to have refused to pay just claims.
(b)    (1)    The Commissioner shall direct that surplus lines insurance may not be placed with a surplus lines insurer that has been approved by the Commissioner if the Commissioner determines that the surplus lines insurer:
(i)    is not in a safe or solvent financial condition; or
(ii)    has refused to pay just claims.
(2)    After written notice of a determination made by the Commissioner under paragraph (1) of this subsection is mailed by the Commissioner to qualified surplus lines brokers, surplus lines insurance may not be placed with the surplus lines insurer.
(c)    Notwithstanding any other provision of this subtitle, a surplus lines broker may not place surplus lines insurance with an insurer if the broker knows, or reasonably should know, that the insurer is in an unsafe or insolvent financial condition.
(d)    A qualified surplus lines broker may not place a risk in an unauthorized insurer that has not previously appointed the Commissioner as agent for the acceptance of service of process.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-320 - Receipt of Premium by Surplus Lines Broker

(a)    In any question that arises under the coverage between an unauthorized insurer and the insured, the unauthorized insurer is deemed to have received the premium due it for surplus lines insurance if:
(1)    the unauthorized insurer has assumed a surplus lines risk under this subtitle; and
(2)    the surplus lines broker who placed the surplus lines insurance has received the premium for the surplus lines insurance.
(b)    An unauthorized insurer described in subsection (a) of this section is liable to the insured for losses covered by the surplus lines insurance and, on cancellation, for unearned premiums that may become payable to the insured, whether or not the surplus lines broker is indebted to the unauthorized insurer for the surplus lines insurance or for any other reason.
(c)    This section does not affect rights between the unauthorized insurer and the surplus lines broker.
(d)    Each unauthorized insurer that assumes a surplus lines direct risk under this subtitle subjects itself to the terms of this section.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-321 - Delivery of Policy, Binder, or Cover Note

(a)    (1)    On placing surplus lines coverage, a surplus lines broker promptly shall deliver to the insured:
(i)    the policy issued by the insurer; or
(ii)    if the policy is not available, a binder or cover note that shows:
1.    the subject, coverage, conditions, and term of the insurance; and
2.    the name and address of the insurer.
(2)    If a direct risk is assumed by more than one insurer, the policy, binder, or cover note shall state:
(i)    the name and address of each insurer; and
(ii)    the proportion of the direct risk assumed by each insurer.
(b)    Unless a copy of each binder or cover note has been filed with and approved by the Commissioner, the surplus lines broker, as soon as reasonably possible, shall get the policy from the insurer and deliver it to the insured to replace the binder or cover note previously delivered.
(c)    A surplus lines broker promptly shall deliver to the insured an appropriate substitute for or endorsement of the original binder or cover note that accurately shows the current status of the coverage and the responsible insurer if, after issuance and delivery of the original binder or cover note, there is a change in:
(1)    the identity of the insurer;
(2)    the proportion of the direct risk assumed by an insurer; or
(3)    any other material aspect of the insurance coverage.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-322 - Records

(a)    Each surplus lines broker shall keep separate records and accounts of all business transacted under the surplus lines broker's certificate of qualification, including copies of:
(1)    any daily report made by the surplus lines broker; and
(2)    each binder or cover note delivered by the surplus lines broker.
(b)    The records described by subsection (a) of this section shall be kept by the surplus lines broker for 3 years after the issuance of the coverage to which the record relates and shall be available at any reasonable time during that period for examination by the Commissioner.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-324 - Premium Receipts Tax on Surplus Lines Insurance

(a)    This section does not apply to insurance of risks of the State or a political subdivision of the State.
(b)    The premiums charged for surplus lines insurance are subject to a premium receipts tax of 3% on all gross premiums, less any returned premiums, charged for surplus lines insurance.
(c)    For policies effective before July 21, 2011:
(1)    if the policy covers property, risks, or exposures located or to be performed entirely in the State, the premium receipts tax shall be computed on the entire premium at the rate specified in subsection (b) of this section; and
(2)    if the policy covers property, risks, or exposures located or to be performed both in and outside the State, the premium receipts tax shall be computed at the rate specified in subsection (b) of this section only on that portion of the premium that is properly allocable to the risks located in the State.
(d)    For policies effective on or after July 21, 2011, if the State is the insured’s home state, the premium receipts tax shall be computed on the entire premium at the rate specified in subsection (b) of this section.
(e)    For policies effective on or after July 21, 2011, only the home state of an insured may receive premium receipts tax payments and reports for nonadmitted insurance.
(f)    (1)    On delivery of the cover note, certificate of insurance, policy, or other initial confirmation of insurance, a surplus lines broker shall charge the insured the amount of the premium receipts tax in addition to the full amount of the gross premium charged by the insurer for the surplus lines insurance.
(2)    The surplus lines broker shall return to the insured the premium receipts tax on any unearned part of the premium.
(g)    The surplus lines broker may not:
(1)    absorb the premium receipts tax; or
(2)    rebate all or part of the premium receipts tax or the surplus lines broker’s commission.
(h)    The Commissioner shall cooperate with other states to adopt and implement uniform requirements for nonadmitted insurance in compliance with the Act.
(i)    For policies effective on or after July 21, 2011, the regulation of nonadmitted insurance is subject to the statutory and regulatory requirements solely of the home state of the insured.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-325 - Report of Premium Receipts and Payment of Tax

(a)    On or before March 15 and September 15 of each year, or at another interval that the Commissioner directs, each surplus lines broker that has transacted surplus lines business in the State during the reporting period shall:
(1)    file with the Commissioner a report, on a form the Commissioner prescribes, on business subject to tax during the preceding half calendar year or other interval that the Commissioner directs; and
(2)    pay to the Commissioner the total amount of tax stated in the report.
(b)    By regulation, the Commissioner shall determine the required content and filing deadlines of the report.
(c)    Each report shall be open to public inspection.
(d)    A qualified surplus lines broker may credit any examination expense paid or assessed under § 2–208 of this article against the premium receipts tax due to the State.
(e)    With respect to surplus lines premium receipts tax due to the State, a surplus lines broker is subject to the provisions of Title 6, Subtitle 1 of this article relating to penalties, interest, audits, assessments, limitations, appeals, and refunds.
2023 Maryland Statutes › Insurance › Title 3 - Kinds of Insurers › Subtitle 3 - Surplus Lines Insurance › Section 3-326 - Delivery of False Binder or Cover Note Prohibited

(a)    A surplus lines broker may not:
(1)    knowingly or negligently deliver a false binder or cover note; or
(2)    fail to notify the insured promptly of any material change with respect to surplus lines insurance by delivery to the insured of a substitute binder or cover note as provided in § 3-321 of this subtitle.
(b)    A violation of subsection (a) of this section is a violation of this article.
(c)    A person that violates subsection (a) of this section is guilty of a misdemeanor and on conviction is subject to the penalty provided by § 1-301 of this article or to any greater applicable penalty provided by law.
2023 Maryland Statutes › Insurance › Title 4 - General Requirements for Insurers › Subtitle 1 - Certificates of Authority › Section 4-101 - Certificate of Authority Required; Exceptions

(a)    (1)    Except as otherwise provided in this article, a person may not act as an insurer and an insurer may not engage in the insurance business in the State unless the person has a certificate of authority issued by the Commissioner.
(2)    An insurer may not have or maintain in this State an office, representative, or other facility to solicit or service any kind of insurance in another state unless the insurer is then authorized to engage in the same kind of insurance business in this State.
(b)    A certificate of authority is not required for an insurer to engage in:
(1)    transactions that relate to policies that were lawfully written in the State, or the liquidation of assets and liabilities of the insurer, including the collection of premiums on existing policies, resulting from former authorized operations of the insurer in the State;
(2)    transactions that occur after issuance of a policy that covers only subjects of insurance not resident, located, or expressly to be performed in the State at the time of issuance, or that covers property in the course of transportation by land, air, or water to, from, or through the State, including any incidental preparation and storage, and the coverage was lawfully solicited, written, and delivered outside the State;
(3)    transactions that relate to surplus lines coverages lawfully written under Title 3, Subtitle 3 of this article; or
(4)    reinsurance transactions, except as to domestic reinsurers.
2023 Maryland Statutes › Insurance › Title 4 - General Requirements for Insurers › Subtitle 1 - Certificates of Authority › Section 4-102 - Qualifications of Insurers

(a)    To engage in the insurance business in the State, an insurer must:
(1)    be in compliance with its charter powers and with this article; and
(2)    be an incorporated stock insurer, incorporated mutual insurer, or reciprocal insurer.
(b)    An insurer may not be authorized to engage in the insurance business in the State if the insurer has or uses a name that is so similar to the name of an insurer already so authorized as to tend to cause uncertainty or confusion or that tends to deceive or mislead about the type of organization of the insurer.
(c)    (1)    A foreign insurer may not be authorized to engage in the insurance business in the State if:
(i)    the voting control or ownership of the foreign insurer is held in whole or substantial part by a government or governmental unit; or
(ii)    the foreign insurer is operated for or by a government or governmental unit.
(2)    For purposes of this subsection, membership in a mutual insurer, subscribership in a reciprocal insurer, ownership of stock of an insurer by the alien property custodian or similar official of the United States, or supervision of an insurer by a public insurance supervisory authority are not considered to be ownership, control, or operation of the insurer.
(d)    (1)    In this subsection, “Lloyds underwriters” means an aggregation of individuals who, under a common name, engage in the insurance business for profit through an attorney in fact who has authority, within the limits specified in the power of attorney, to obligate the underwriters severally on insurance contracts made or issued by the attorney in fact, in the name of the aggregation of individuals, to and with any person insured.
(2)    A Lloyds underwriter may not be organized in the State and a foreign or alien Lloyds underwriter may not be authorized to engage in the insurance business in the State.
(3)    This subsection does not restrict the right of insurers to place surplus lines coverages in and to cede reinsurance to foreign or alien Lloyds underwriters, if the surplus lines and reinsurance transactions are otherwise allowed under this article.
2023 Maryland Statutes › Insurance › Title 4 - General Requirements for Insurers › Subtitle 1 - Certificates of Authority › Section 4-103 - Capital and Surplus Requirements -- in General

(a)    Capital and surplus requirements for an insurer shall be based on all the kinds of insurance business that the insurer transacts or will transact, regardless of where the insurance business is transacted.
(b)    To qualify for an initial certificate of authority to engage in one kind or a combination of kinds of insurance business, an insurer must have and maintain the capital stock and surplus requirements of:
(1)    §§ 4–104 and 4–105 of this subtitle, for a stock insurer;
(2)    Title 3, Subtitle 1 of this article, for a mutual insurer;
(3)    Title 3, Subtitle 2 of this article, for a reciprocal insurer;
(4)    Title 8, Subtitle 4 of this article, for a fraternal benefit society; and
(5)    Title 14, Subtitle 1 of this article, for a nonprofit health service plan.
(c)    (1)    In addition to any other capital and surplus requirements of this article, each insurer’s assets and surplus as regards policyholders shall be reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs.
(2)    In determining whether an insurer’s assets and surplus as regards policyholders are reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs, the following factors, among others, shall be considered:
(i)    the size of the insurer as measured by its assets, capital and surplus, reserves, premium writings, insurance in force, and other appropriate criteria;
(ii)    the extent to which the insurer’s business is diversified among the several lines of insurance;
(iii)    the number and size of risks insured in each line of insurance;
(iv)    the geographical dispersion of the insurer’s insured risks;
(v)    the nature and extent of reinsurance of the insurer’s risks;
(vi)    the quality, diversification, and liquidity of the insurer’s investment portfolio;
(vii)    the recent past and projected future trends in the size of the insurer’s surplus as regards policyholders;
(viii)    the surplus as regards policyholders maintained by comparable insurers; and
(ix)    the financial position of the insurer, after excluding from assets investments in and other transactions with persons that directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with another person.
(d)    The provisions of this subtitle shall be supplemented by the requirements of Subtitle 3 of this title.
2023 Maryland Statutes › Insurance › Title 4 - General Requirements for Insurers › Subtitle 1 - Certificates of Authority › Section 4-104.1 - Capital Stock Requirements --Title Insurer

Notwithstanding the provisions of § 4–104 of this subtitle, a title insurer domiciled in this State shall have and maintain paid–in capital stock with a fixed nominal or par value in the amount of:
(1)    $500,000 as of July 1, 2010;
(2)    $625,000 as of July 1, 2011; and
(3)    $750,000 as of July 1, 2012, and each July 1 thereafter.
2023 Maryland Statutes › Insurance › Title 4 - General Requirements for Insurers › Subtitle 1 - Certificates of Authority › Section 4-105 - Surplus Assets or Funds Required

(a)    In addition to the minimum capital stock required by § 4-104 of this subtitle, to qualify for an initial certificate of authority to engage in one kind or a combination of kinds of insurance business, an insurer must have surplus assets or funds in an amount not less than 150% of the minimum capital stock required.
(b)    For authority to continue in the insurance business, in addition to the minimum capital stock required by § 4-104 of this subtitle, an insurer that started business in the State on or after July 1, 1966, must maintain surplus assets or funds in an amount not less than 100% of the minimum capital stock required.
(c)    (1)    For authority to continue in the insurance business, in addition to the minimum capital stock required by § 4-104 of this subtitle, an insurer that started business in the State on or before June 30, 1966:
(i)    must maintain surplus assets or funds in an amount not less than 50% of the minimum capital stock required; and
(ii)    if authorized to write vehicle liability insurance, must maintain surplus assets or funds in an amount not less than $300,000, whether or not the insurer also is authorized to write other kinds of insurance.
(2)    The combined amount of surplus required by items (i) and (ii) of paragraph (1) of this subsection may not exceed the amount of surplus required by subsection (b) of this section of an insurer authorized on or after July 1, 1966, to transact the same kinds of insurance business.
2023 Maryland Statutes › Insurance › Title 4 - General Requirements for Insurers › Subtitle 1 - Certificates of Authority › Section 4-105.1 - Surplus Requirements -- Title Insurers

Notwithstanding the provisions of § 4–105 of this subtitle, a title insurer domiciled in this State shall have and maintain minimum surplus in the amount of:
(1)    $500,000 as of July 1, 2010;
(2)    $625,000 as of July 1, 2011; and
(3)    $750,000 as of July 1, 2012, and each July 1 thereafter.