Maryland State Regulations & NAIC Insurance Law

Licensing

Any individual applying for a Maryland resident producer’s license must be at least 18 years old and must be a Maryland resident before submitting an application.

Pre-licensing course and exam

Maryland does not have specific pre-licensing requirements, but an applicant must pass the licensing examination for the line of authority: since October 1, 2024, the law no longer requires a Commissioner-approved program of study before the examination (Maryland Insurance Administration Bulletin 24-19).

Fingerprints/background check

The Commissioner reviews an applicant’s background before issuing a license, and many states require applicants to submit fingerprints for a state and FBI criminal history check as part of the application.

Controlled business

Controlled business is insurance written on the producer’s own life, property or interests, or on those of the producer’s family, employer or a business the producer controls. A producer may insure themselves and their family, but a license exists to sell insurance to the public, so states generally restrict obtaining or using a license principally to write controlled business.

Non-resident license

A producer licensed in another state can obtain a Maryland nonresident license without taking Maryland’s examination. Under the NAIC’s Producer Licensing Model Act, which most states have adopted in some form, a nonresident receives the license if the person:

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Under the same model, a producer who moves to another state files a change of address, with certification from the new home state, within 30 days. A licensed producer who moves into a state applies for a resident license there within 90 days and does not repeat prelicensing education or the examination for lines already held.

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

The NAIC’s model act limits a temporary license to 180 days. In Maryland, a temporary license expires 15 months after its effective date (Md. Code, Ins. § 10-120(e)).

Military service

Under the NAIC’s model act, a producer who cannot meet license renewal requirements because of military service, or because of another extenuating circumstance such as a long-term medical disability, may request a waiver of those requirements and of any examination, fine or sanction for missing them.

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

Each state sets its own renewal cycle.

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

Under the NAIC’s model act, a lapsed license may be reinstated within 12 months of the renewal due date, for a penalty of double the unpaid renewal fee. Each state sets its own window and fee, and after the window closes the person must qualify for a new license.

Continuing education

All states, including Maryland, have continuing education requirements that must be met to renew any major lines (life, health, property, liability) insurance license. Many states also require continuing education of other licensees, such as adjusters or title or bail bond agents, while exempting producers who hold only certain limited lines; each state’s law says which. Individuals licensed in the state of Maryland must complete continuing education before renewing their license. The number of hours required is set by state law and published by the state insurance department.

Notice of change of name or address

Under the NAIC’s model act, the licensee reports a change of address to the regulator within 30 days of the change.

The model also requires a producer to report to the regulator within 30 days any administrative action taken against the producer in another state or by another government agency, counted from the final disposition, and any criminal prosecution in any jurisdiction, counted from the initial pretrial hearing date. A producer who does business under any name other than their legal name must notify the regulator before using it.

Company regulations

An insurance company must be authorized by the Insurance Administration to conduct business in Maryland. To receive a certificate of authority, the company applies to the Commissioner and files its charter or articles of incorporation, financial statements showing that it meets the state’s capital and surplus requirements, and the other documents and fees the state requires.

Capital and surplus requirement

A company authorized to conduct insurance business in Maryland must meet minimum corporate standards. The certificate of authority allows the insurer to conduct business in the state only if it maintains the minimum capital or permanent surplus required. In Maryland, the Commissioner must refuse to renew, suspend or revoke the certificate of an insurer that no longer meets its requirements because of a deficiency in assets or any other reason, and may impose a penalty of $100 to $125,000 per violation instead of or in addition to suspension or revocation (Md. Code, Ins. § 4-113(a)(2), (d)).

Duties of the Maryland Insurance Commissioner

The Maryland Insurance Commissioner serves as head of the Maryland Insurance Administration, an independent agency within the state executive branch created in 1993. Before that, insurance was part of the Department of Licensing and Regulation.

The Commissioner oversees the department’s efforts to regulate the state’s insurance companies and producers and to investigate consumer complaints about insurance coverage.

The Commissioner is responsible for establishing and enforcing regulations in the Maryland insurance market in a manner that protects consumers and encourages economic development.

Those duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Commissioner finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Examine the financial condition of insurers; the NAIC’s model examination law calls for every insurer to be examined at least once every five years.
Audit the books and records of any resident producer as frequently as necessary. In Maryland, the Commissioner may examine an insurance producer’s accounts, records, documents and transactions whenever that is advisable to determine compliance with the insurance law (Md. Code, Ins. § 2-206(1)).
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

The Commissioner does not have the authority to arrest, issue injunctions or sentence jail time. The Commissioner can start the process, but it takes a law officer to arrest and a judge or court of law to issue injunctions or sentence jail time.

Suspend, revoke or non-renew

The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Having willfully violated Maryland’s insurance laws, or willfully failed to comply with or violated a proper order, subpoena or regulation of the Commissioner (Md. Code, Ins. § 10-126(a)(1), (11)).
Committing fraud while attempting to obtain an insurance license.
Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted by final judgment in any state or federal court of a felony or a crime involving moral turpitude (Md. Code, Ins. § 10-126(a)(8)).
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than Maryland. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

If the Commissioner finds that a producer has violated the state’s insurance laws, the Commissioner may order the producer to cease and desist. A cease and desist order does not suspend or revoke the producer’s registration, but it does require the producer to stop or limit the activity addressed in the order.

Hearing and penalties

A person facing action by the Commissioner is entitled to notice and an opportunity for a hearing, within time limits set by Maryland law, and may ask a court to review the final order. In Maryland, the Commissioner gives notice at least 10 days before a hearing, and a person aggrieved by an order may demand a hearing; a demand received before the order takes effect or within 10 days after it is served stays the order pending the hearing, except an order resulting from a hearing, an emergency order, or one based on an insurer’s impairment (Md. Code, Ins. §§ 2-210(a), 2-211(a)(1), 2-212(a)). Under Maryland’s unfair trade practices law the hearing comes first: the Commissioner holds a hearing, after giving notice of the hearing and the charges, before issuing a cease and desist order, and an order resulting from a hearing is not stayed by a demand (Md. Code, Ins. §§ 27-103(a), 2-212(a)(2)).

A violation of the insurance laws can bring a civil penalty in addition to action against a license. State law sets the maximum, usually per violation and often with a cap on the total, and a higher tier commonly applies to a violation that was knowing or flagrant. Some violations are also crimes. In Maryland, the Commissioner may impose on a licensed producer a penalty of $100 to $5,000 for each violation, instead of or in addition to suspending or revoking the license (Md. Code, Ins. § 10-126(c)).

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Commissioner.

Depending on the line of insurance and the form, a state may require approval before a form is used, often with a period after which a filing that has not been acted on is deemed approved, or may allow the form to be used as soon as it is filed (“file and use”). In Maryland, a life or health form is filed at least 60 days before delivery and is deemed approved unless the Commissioner approves or disapproves it within that period or an extension of up to 30 days (Md. Code, Ins. § 12-203(b)-(c)).

Under the usual conformity rule, which many states’ insurance codes write into law, a policy provision that conflicts with state law does not make the policy invalid: the policy is read as amended to conform to the law.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Commissioner’s inspection.

Fraudulent producer representation

An insurance producer who represents to the public that they are licensed to conduct insurance business in Maryland, but has not passed the appropriate licensing examination, is in violation of regulation. This includes any public communication, such as advertisements, letterheads, circulars, business cards, and other methods of representation.

A producer found guilty of conducting business in Maryland in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (under the NAIC’s model act, twisting).

False advertising

Making, publishing or circulating an advertisement, announcement or statement about the business of insurance that is untrue, deceptive or misleading is an unfair trade practice under state law, based on the NAIC’s model act. The medium does not matter: the rule reaches newspapers, magazines, radio and television, and also notices, circulars, pamphlets, letters, posters and any other way of placing the statement before the public. Under the model act, such a statement is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice. Some state laws adopt this condition, and others reach a single such statement.

Defamation

Defamation of an insurer is an unfair trade practice under state law, based on the NAIC’s model act: making, publishing or circulating an oral or written statement that is false, or maliciously critical of or derogatory to the financial condition of an insurer, and that is calculated to injure such insurer. Some states’ laws reach further, to a statement calculated to injure any person engaged in the business of insurance. Spreading an untrue rumor that a competing insurer is about to fail is the classic example.

Boycott, coercion and intimidation

Entering into an agreement to commit, or by concerted action committing, any act of boycott, coercion or intimidation that results or tends to result in unreasonable restraint of, or monopoly in, the business of insurance is prohibited.

False financial statements

In Maryland, it is a fraudulent insurance act to knowingly or willfully make a false or fraudulent statement or representation in or with reference to an application for insurance (Md. Code, Ins. § 27-406(1)).

Illegal inducements

Offering anything of value not specified in the policy (money, a service, a favor or a gift) as an inducement to buy insurance is prohibited unless state law expressly allows it, and any agreement made as part of the sale must be written into the policy.

States differ on promotional gifts. The NAIC’s model act lets producers and insurers give customers non-cash gifts, meals or charitable donations up to an amount the state considers reasonable, as long as the gift is not conditioned on buying or renewing a policy and is offered without unfair discrimination. Each state sets its own limit. Maryland allows educational materials, promotional materials or articles of merchandise that cost no more than $50, as long as receiving them is not contingent on buying insurance (Md. Code, Ins. §§ 27-209(a)(4), (b), 27-212(d)).

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Errors & Omissions (E&O) insurance is a type of professional liability insurance that protects insurance agents if they are sued for negligent performance of their duties. E&O covers negligence and unintentional mistakes that cause financial harm to clients. It does not cover intentional misconduct, criminal acts, or regulatory fines.

Rebating

Maryland licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

The splitting or sharing of commissions with a licensed producer is allowed. Both parties must be licensed in the line of business in which the proposed commission is to be split. Under the NAIC’s model act, a commission may also be paid to an insurance agency, or to a person who does not sell, solicit or negotiate insurance.

Twisting

Misrepresenting a policy’s terms, conditions or benefits, or comparing policies incompletely, to induce a policyholder to lapse or surrender an existing policy is a violation of the law. Any written or oral statements used to induce the lapse, termination, exchange, or surrender of an insurance contract based on inaccurate information are prohibited.

Under the NAIC’s model act, twisting is a misrepresentation made to induce a policyholder to lapse, forfeit, surrender, exchange or convert a policy. A false or maliciously critical statement about a competing insurer’s finances, made to injure it, is defamation. Maryland’s twisting statute reaches a statement misrepresenting or incompletely comparing a policy’s terms, conditions or benefits to induce the policyholder to forfeit, surrender, retain, exchange or convert it or let it lapse (Md. Code, Ins. § 27-213); a misrepresentation about an insurer’s financial condition is prohibited separately (§ 27-202(3)), as is defamation (§ 27-204).

Unfair marketing practices

The Insurance Administration is responsible for establishing minimum standards for the full and fair disclosure of policy content. It also requires the standardization and simplification of the terms used to describe insurance coverage. Advertising may not involve the following:

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

This law repealed the parts of the Glass-Steagall Act of 1933 that kept commercial banks and securities firms apart, and allowed the consolidation of commercial banks, investment institutions and insurance companies. GLBA established a framework of responsibilities of federal and state regulators for these financial industries. It permits financial services companies to merge and engage in a variety of new business activities, including insurance, while attempting to address the regulatory issues raised by such combinations.

McCarran-Ferguson Act

Federal law signed in 1945 in which Congress declared that the insurance industry would be regulated at the state level. Grants insurers a limited exemption from federal antitrust legislation. Since 2021 the exemption does not cover the business of health insurance, apart from narrow activities such as sharing historical loss data (15 U.S.C. § 1013(c)).

National Association of Insurance Commissioners (NAIC)

The U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA, 15 U.S.C. 1681) regulates consumer reporting agencies and the use of consumer reports, such as credit reports, MIB records and investigative reports, including in insurance underwriting.

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

The federal Privacy Act of 1974 governs how federal agencies handle personal information. It does not apply to private insurers. An insurer’s use of an applicant’s personal information is governed by the FCRA, the Gramm-Leach-Bliley Act and state insurance privacy law.

In states that adopted the NAIC’s Insurance Information and Privacy Protection Model Act, an authorization to collect personal information signed with an application is valid for no more than 30 months for life, health or disability insurance and one year for property or casualty insurance.

Under the same model act, a person told of an adverse underwriting decision may ask in writing, within 90 business days of the notice, for the specific reasons for it, which must be given within 21 business days of the request.

Telemarketing

The National Do Not Call Registry is a list of telephone numbers whose owners do not want to receive telemarketing calls. Telemarketers may not call registered numbers without the person’s permission or an established business relationship, and unsolicited sales calls:

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time under federal rules; Maryland’s own law is narrower, barring telephone solicitations, including automated or recorded calls, between 8 p.m. and 8 a.m. in the called party’s time zone (Md. Code, Com. Law § 14-4502(c)(1))
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Licensing

Minimum age 18, must be Maryland resident before applying
Applies to resident producer license applicants

Pre-licensing course and exam

No mandatory pre-licensing course as of Oct 1, 2024 (MIA Bulletin 24-19)
Must still pass licensing exam for line of authority

Fingerprints/background check

Commissioner reviews background before licensing
Many states require fingerprints for state/FBI criminal history check

Controlled business

Insurance on producer’s own life/property/family/employer/controlled business
States restrict licenses used principally to write controlled business

Non-resident license

Based on NAIC Producer Licensing Model Act
Requires: current resident license in good standing, application/fees paid, reciprocity from home state
Address change: file within 30 days
Moving to new state: apply for resident license within 90 days; no repeat of prelicensing/exam for held lines

Temporary license

Issued without exam to keep business serviced (e.g., producer’s death/disability, military deployment)
May require licensed sponsor
NAIC model: max 180 days; Maryland: expires 15 months after effective date

Military service

Waiver available for renewal requirements/exam/fines due to military service or extenuating circumstances (e.g., long-term disability)

Renewal and reinstatement

License requires timely fee payment + continuing education
Each state sets own renewal cycle
NAIC model: reinstatement within 12 months of due date, penalty = double unpaid fee
After window closes, must requalify as new applicant

Continuing education

Required in all states, including Maryland, for renewal of major lines
Hours set by state law/insurance department

Notice of change of name or address

Report address change within 30 days (NAIC model)
Report administrative actions/criminal prosecutions within 30 days of final disposition/pretrial hearing
Must notify regulator before using any name other than legal name

Company regulations

Insurer needs certificate of authority from Commissioner
Must file charter/articles, financial statements, meet capital/surplus requirements

Capital and surplus requirement

Certificate valid only if minimum capital/surplus maintained
Maryland: Commissioner must refuse/suspend/revoke for deficiency; penalty $100–$125,000 per violation (Md. Code, Ins. § 4-113)

Duties of the Maryland Insurance Commissioner

Heads Maryland Insurance Administration (independent agency, est. 1993)
Investigates complaints/violations, may refer for criminal prosecution
Examines insurer finances (NAIC model: every 5 years)
Audits producer records as needed
Collects fees, administers fines, approves forms/rates
Cannot arrest, issue injunctions, or sentence jail time (requires law officer/court)

Suspend, revoke or non-renew

Grounds include: false application info, willful law violations, fraud, misappropriation, felony/moral turpitude conviction, unfair trade practices, forged applications, cheating on exam, prior license revocation elsewhere

Cease and desist

Ordered for law violations
Does not suspend/revoke license; requires stopping specific activity

Hearing and penalties

Entitled to notice + hearing opportunity; court review of final order
Maryland: 10 days’ notice; demand for hearing can stay order (exceptions: post-hearing orders, emergency orders, insurer impairment)
Unfair trade practices: hearing occurs before cease and desist order
Civil penalties possible in addition to license action
Maryland: $100–$5,000 per violation for producers (Md. Code, Ins. § 10-126(c))

Unfair claims settlement practices

Violations when flagrant/frequent business practice
Includes: delaying payment/investigation, failing to explain denials or offers, denying without investigation, using altered application info, settling for less than the application’s advertising material led the insured to expect

Policy forms

Insurers file forms with Commissioner
May require prior approval or allow “file and use”
Maryland: life/health forms filed 60 days before use, deemed approved unless acted on (+30 day extension possible)
Conflicting provisions read as amended to match law
Policy loan interest rates limited by state law

Record maintenance

Producers must keep transaction records (policies, insureds, premiums, changes)
Available for Commissioner’s inspection

Fraudulent producer representation

Illegal to claim licensure without passing exam
Applies to all public communications (ads, cards, letterhead)
Can result in suspension/revocation of other licenses

Misrepresentation

Prohibited: inaccurate policy illustrations/quotes
Prohibited: incomplete/inaccurate benefit comparisons
Prohibited: inducing lapse/surrender via false info (twisting)

False advertising

Untrue, deceptive, or misleading statements prohibited (NAIC model)
Applies across all media types
NAIC model: unfair if flagrant and in conscious disregard of the law, or a general business practice

Defamation

False/malicious statements about insurer’s financial condition prohibited
Must be calculated to injure insurer or industry member
Example: spreading false rumors of insurer failure

Boycott, coercion and intimidation

Prohibited: concerted acts causing unreasonable restraint/monopoly in insurance business

False financial statements

Maryland: knowingly/willfully making false statements on insurance applications is fraudulent act (§ 27-406(1))

Illegal inducements

Offering unlisted value to induce purchase prohibited unless expressly allowed
NAIC model allows reasonable non-cash gifts/meals/donations (not conditioned on purchase)
Maryland limit: $50 cap on promotional items/materials

Unfair discrimination

Prohibited: differing treatment of same-class/equal-risk individuals
Prohibited: discrimination based on sex, marital status, race, religion, national origin
Property/casualty: cannot deny solely for geographic location (unless justified) or physical/mental impairment
Many states also protect blind/partially blind individuals

Errors & omissions

Professional liability insurance for producers
Covers negligence/unintentional mistakes causing client financial harm
Does NOT cover intentional misconduct, crimes, or regulatory fines

Rebating

Maryland prohibits giving refunds/discounts/credits to induce insurance purchase
Soliciting/negotiating insurance implies licensure

Sharing commission

Allowed between licensed producers in same line of business
NAIC model also allows payment to agencies or non-selling persons

Twisting

Misrepresentation inducing policy lapse/surrender/exchange
Maryland statute covers misleading comparisons to induce policy changes (§ 27-213)
Distinct from defamation (§ 27-204) and financial misrepresentation (§ 27-202(3))

Unfair marketing practices

Insurance Administration sets disclosure/standardization requirements
Prohibited: false claims of government/organization endorsement
Prohibited: false statements about claims payment timeframes

Gramm-Leach Bliley Act (GLBA)

Repealed key parts of Glass-Steagall Act (1933)
Allows merging of banks, investment firms, insurers
Establishes federal/state regulatory framework for combined entities

McCarran-Ferguson Act

1945 law: insurance regulated at state level
Grants limited antitrust exemption to insurers
Since 2021: exemption excludes health insurance (except narrow data-sharing activities)

National Association of Insurance Commissioners (NAIC)

Standard-setting body governed by state insurance regulators (50 states, DC, 5 territories)
Establishes standards, conducts peer review, coordinates oversight
Forms backbone of national state-based insurance regulation system

Fair Credit Reporting Act

Regulates consumer reporting agencies/reports used in underwriting
Investigative report requests: disclose to consumer within 3 days
Adverse action: must notify consumer + identify agency; consumer has 60 days for free report; may also dispute errors

Privacy Act of 1974

Governs federal agencies’ handling of personal info only; not private insurers
Insurer privacy governed by FCRA, GLBA, state law
NAIC model: authorization valid max 30 months (life/health/disability) or 1 year (property/casualty)

Telemarketing

National Do Not Call Registry restricts unsolicited calls
Federal hours: 8 a.m.–9 p.m. local time
Maryland hours: no calls 8 p.m.–8 a.m. (stricter, includes automated calls)
Must disclose caller’s name, the company the call is made for, and a number or address for it

CAN-SPAM

Commercial emails must be clearly labeled as ads
Accurate headers/subject lines required
Must include sender’s physical postal address
Opt-out must be honored within 10 business days

Maryland State Regulations & NAIC Insurance Law

Licensing

Any individual applying for a Maryland resident producer’s license must be at least 18 years old and must be a Maryland resident before submitting an application.

Pre-licensing course and exam

Fingerprints/background check

Controlled business

Non-resident license

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

The NAIC’s model act limits a temporary license to 180 days. In Maryland, a temporary license expires 15 months after its effective date (Md. Code, Ins. § 10-120(e)).

Military service

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

Each state sets its own renewal cycle.

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

Continuing education

Notice of change of name or address

Under the NAIC’s model act, the licensee reports a change of address to the regulator within 30 days of the change.

Company regulations

Capital and surplus requirement

Duties of the Maryland Insurance Commissioner

The Commissioner oversees the department’s efforts to regulate the state’s insurance companies and producers and to investigate consumer complaints about insurance coverage.

The Commissioner is responsible for establishing and enforcing regulations in the Maryland insurance market in a manner that protects consumers and encourages economic development.

Those duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Commissioner finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Examine the financial condition of insurers; the NAIC’s model examination law calls for every insurer to be examined at least once every five years.
Audit the books and records of any resident producer as frequently as necessary. In Maryland, the Commissioner may examine an insurance producer’s accounts, records, documents and transactions whenever that is advisable to determine compliance with the insurance law (Md. Code, Ins. § 2-206(1)).
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

Suspend, revoke or non-renew

The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Having willfully violated Maryland’s insurance laws, or willfully failed to comply with or violated a proper order, subpoena or regulation of the Commissioner (Md. Code, Ins. § 10-126(a)(1), (11)).
Committing fraud while attempting to obtain an insurance license.
Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted by final judgment in any state or federal court of a felony or a crime involving moral turpitude (Md. Code, Ins. § 10-126(a)(8)).
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than Maryland. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

Hearing and penalties

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Commissioner.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Commissioner’s inspection.

Fraudulent producer representation

A producer found guilty of conducting business in Maryland in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (under the NAIC’s model act, twisting).

False advertising

Defamation

Boycott, coercion and intimidation

False financial statements

Illegal inducements

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Rebating

Maryland licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

Twisting

Unfair marketing practices

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

McCarran-Ferguson Act

National Association of Insurance Commissioners (NAIC)

Fair Credit Reporting Act

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

Telemarketing

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time under federal rules; Maryland’s own law is narrower, barring telephone solicitations, including automated or recorded calls, between 8 p.m. and 8 a.m. in the called party’s time zone (Md. Code, Com. Law § 14-4502(c)(1))
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Maryland State Regulations & NAIC Insurance Law

Licensing

Any individual applying for a Maryland resident producer’s license must be at least 18 years old and must be a Maryland resident before submitting an application.

Pre-licensing course and exam

Fingerprints/background check

Controlled business

Non-resident license

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

The NAIC’s model act limits a temporary license to 180 days. In Maryland, a temporary license expires 15 months after its effective date (Md. Code, Ins. § 10-120(e)).

Military service

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

Each state sets its own renewal cycle.

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

Continuing education

Notice of change of name or address

Under the NAIC’s model act, the licensee reports a change of address to the regulator within 30 days of the change.

Company regulations

Capital and surplus requirement

Duties of the Maryland Insurance Commissioner

The Commissioner oversees the department’s efforts to regulate the state’s insurance companies and producers and to investigate consumer complaints about insurance coverage.

The Commissioner is responsible for establishing and enforcing regulations in the Maryland insurance market in a manner that protects consumers and encourages economic development.

Those duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Commissioner finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Examine the financial condition of insurers; the NAIC’s model examination law calls for every insurer to be examined at least once every five years.
Audit the books and records of any resident producer as frequently as necessary. In Maryland, the Commissioner may examine an insurance producer’s accounts, records, documents and transactions whenever that is advisable to determine compliance with the insurance law (Md. Code, Ins. § 2-206(1)).
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

Suspend, revoke or non-renew

The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Having willfully violated Maryland’s insurance laws, or willfully failed to comply with or violated a proper order, subpoena or regulation of the Commissioner (Md. Code, Ins. § 10-126(a)(1), (11)).
Committing fraud while attempting to obtain an insurance license.
Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted by final judgment in any state or federal court of a felony or a crime involving moral turpitude (Md. Code, Ins. § 10-126(a)(8)).
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than Maryland. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

Hearing and penalties

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Commissioner.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Commissioner’s inspection.

Fraudulent producer representation

A producer found guilty of conducting business in Maryland in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (under the NAIC’s model act, twisting).

False advertising

Defamation

Boycott, coercion and intimidation

False financial statements

Illegal inducements

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Rebating

Maryland licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

Twisting

Unfair marketing practices

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

McCarran-Ferguson Act

National Association of Insurance Commissioners (NAIC)

Fair Credit Reporting Act

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

Telemarketing

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time under federal rules; Maryland’s own law is narrower, barring telephone solicitations, including automated or recorded calls, between 8 p.m. and 8 a.m. in the called party’s time zone (Md. Code, Com. Law § 14-4502(c)(1))
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Licensing

Minimum age 18, must be Maryland resident before applying
Applies to resident producer license applicants

Pre-licensing course and exam

No mandatory pre-licensing course as of Oct 1, 2024 (MIA Bulletin 24-19)
Must still pass licensing exam for line of authority

Fingerprints/background check

Commissioner reviews background before licensing
Many states require fingerprints for state/FBI criminal history check

Controlled business

Insurance on producer’s own life/property/family/employer/controlled business
States restrict licenses used principally to write controlled business

Non-resident license

Based on NAIC Producer Licensing Model Act
Requires: current resident license in good standing, application/fees paid, reciprocity from home state
Address change: file within 30 days
Moving to new state: apply for resident license within 90 days; no repeat of prelicensing/exam for held lines

Temporary license

Issued without exam to keep business serviced (e.g., producer’s death/disability, military deployment)
May require licensed sponsor
NAIC model: max 180 days; Maryland: expires 15 months after effective date

Military service

Waiver available for renewal requirements/exam/fines due to military service or extenuating circumstances (e.g., long-term disability)

Renewal and reinstatement

License requires timely fee payment + continuing education
Each state sets own renewal cycle
NAIC model: reinstatement within 12 months of due date, penalty = double unpaid fee
After window closes, must requalify as new applicant

Continuing education

Required in all states, including Maryland, for renewal of major lines
Hours set by state law/insurance department

Notice of change of name or address

Report address change within 30 days (NAIC model)
Report administrative actions/criminal prosecutions within 30 days of final disposition/pretrial hearing
Must notify regulator before using any name other than legal name

Company regulations

Insurer needs certificate of authority from Commissioner
Must file charter/articles, financial statements, meet capital/surplus requirements

Capital and surplus requirement

Certificate valid only if minimum capital/surplus maintained
Maryland: Commissioner must refuse/suspend/revoke for deficiency; penalty $100–$125,000 per violation (Md. Code, Ins. § 4-113)

Duties of the Maryland Insurance Commissioner

Heads Maryland Insurance Administration (independent agency, est. 1993)
Investigates complaints/violations, may refer for criminal prosecution
Examines insurer finances (NAIC model: every 5 years)
Audits producer records as needed
Collects fees, administers fines, approves forms/rates
Cannot arrest, issue injunctions, or sentence jail time (requires law officer/court)

Suspend, revoke or non-renew

Grounds include: false application info, willful law violations, fraud, misappropriation, felony/moral turpitude conviction, unfair trade practices, forged applications, cheating on exam, prior license revocation elsewhere

Cease and desist

Ordered for law violations
Does not suspend/revoke license; requires stopping specific activity

Hearing and penalties

Entitled to notice + hearing opportunity; court review of final order
Maryland: 10 days’ notice; demand for hearing can stay order (exceptions: post-hearing orders, emergency orders, insurer impairment)
Unfair trade practices: hearing occurs before cease and desist order
Civil penalties possible in addition to license action
Maryland: $100–$5,000 per violation for producers (Md. Code, Ins. § 10-126(c))

Unfair claims settlement practices

Violations when flagrant/frequent business practice
Includes: delaying payment/investigation, failing to explain denials or offers, denying without investigation, using altered application info, settling for less than the application’s advertising material led the insured to expect

Policy forms

Insurers file forms with Commissioner
May require prior approval or allow “file and use”
Maryland: life/health forms filed 60 days before use, deemed approved unless acted on (+30 day extension possible)
Conflicting provisions read as amended to match law
Policy loan interest rates limited by state law

Record maintenance

Producers must keep transaction records (policies, insureds, premiums, changes)
Available for Commissioner’s inspection

Fraudulent producer representation

Illegal to claim licensure without passing exam
Applies to all public communications (ads, cards, letterhead)
Can result in suspension/revocation of other licenses

Misrepresentation

Prohibited: inaccurate policy illustrations/quotes
Prohibited: incomplete/inaccurate benefit comparisons
Prohibited: inducing lapse/surrender via false info (twisting)

False advertising

Untrue, deceptive, or misleading statements prohibited (NAIC model)
Applies across all media types
NAIC model: unfair if flagrant and in conscious disregard of the law, or a general business practice

Defamation

False/malicious statements about insurer’s financial condition prohibited
Must be calculated to injure insurer or industry member
Example: spreading false rumors of insurer failure

Boycott, coercion and intimidation

Prohibited: concerted acts causing unreasonable restraint/monopoly in insurance business

False financial statements

Maryland: knowingly/willfully making false statements on insurance applications is fraudulent act (§ 27-406(1))

Illegal inducements

Offering unlisted value to induce purchase prohibited unless expressly allowed
NAIC model allows reasonable non-cash gifts/meals/donations (not conditioned on purchase)
Maryland limit: $50 cap on promotional items/materials

Unfair discrimination

Prohibited: differing treatment of same-class/equal-risk individuals
Prohibited: discrimination based on sex, marital status, race, religion, national origin
Property/casualty: cannot deny solely for geographic location (unless justified) or physical/mental impairment
Many states also protect blind/partially blind individuals

Errors & omissions

Professional liability insurance for producers
Covers negligence/unintentional mistakes causing client financial harm
Does NOT cover intentional misconduct, crimes, or regulatory fines

Rebating

Maryland prohibits giving refunds/discounts/credits to induce insurance purchase
Soliciting/negotiating insurance implies licensure

Sharing commission

Allowed between licensed producers in same line of business
NAIC model also allows payment to agencies or non-selling persons

Twisting

Misrepresentation inducing policy lapse/surrender/exchange
Maryland statute covers misleading comparisons to induce policy changes (§ 27-213)
Distinct from defamation (§ 27-204) and financial misrepresentation (§ 27-202(3))

Unfair marketing practices

Insurance Administration sets disclosure/standardization requirements
Prohibited: false claims of government/organization endorsement
Prohibited: false statements about claims payment timeframes

Gramm-Leach Bliley Act (GLBA)

Repealed key parts of Glass-Steagall Act (1933)
Allows merging of banks, investment firms, insurers
Establishes federal/state regulatory framework for combined entities

McCarran-Ferguson Act

1945 law: insurance regulated at state level
Grants limited antitrust exemption to insurers
Since 2021: exemption excludes health insurance (except narrow data-sharing activities)

National Association of Insurance Commissioners (NAIC)

Standard-setting body governed by state insurance regulators (50 states, DC, 5 territories)
Establishes standards, conducts peer review, coordinates oversight
Forms backbone of national state-based insurance regulation system

Fair Credit Reporting Act

Regulates consumer reporting agencies/reports used in underwriting
Investigative report requests: disclose to consumer within 3 days
Adverse action: must notify consumer + identify agency; consumer has 60 days for free report; may also dispute errors

Privacy Act of 1974

Governs federal agencies’ handling of personal info only; not private insurers
Insurer privacy governed by FCRA, GLBA, state law
NAIC model: authorization valid max 30 months (life/health/disability) or 1 year (property/casualty)

Telemarketing

National Do Not Call Registry restricts unsolicited calls
Federal hours: 8 a.m.–9 p.m. local time
Maryland hours: no calls 8 p.m.–8 a.m. (stricter, includes automated calls)
Must disclose caller’s name, the company the call is made for, and a number or address for it

CAN-SPAM

Commercial emails must be clearly labeled as ads
Accurate headers/subject lines required
Must include sender’s physical postal address
Opt-out must be honored within 10 business days

Maryland State Regulations & NAIC Insurance Law

Licensing

Any individual applying for a Maryland resident producer’s license must be at least 18 years old and must be a Maryland resident before submitting an application.

Pre-licensing course and exam

Fingerprints/background check

Controlled business

Non-resident license

Is currently licensed as a resident, and in good standing, in the home state
Has applied (the home-state application or the Uniform Application) and paid the fees
Lives in a home state that grants nonresident licenses to residents of this state on the same basis (reciprocity)

Temporary license

Most states allow the insurance regulator to issue a temporary license, without an examination, when one is needed to keep an insurance business serviced. Typical cases are:

The surviving spouse or personal representative of a producer who dies or becomes disabled, to allow time to sell the business or train new people
A member or employee of a business entity producer, on the death or disability of its designated producer
The designee of a producer entering active military service

Under the NAIC’s model act, the regulator may also issue one in any other circumstance where it finds that the public interest will best be served.

The regulator may limit what a temporary licensee may do and may require a licensed sponsor who takes responsibility for the temporary licensee’s acts.

The NAIC’s model act limits a temporary license to 180 days. In Maryland, a temporary license expires 15 months after its effective date (Md. Code, Ins. § 10-120(e)).

Military service

Renewal and reinstatement

A producer license stays in effect only while the producer renews it on schedule: paying the renewal fee and completing continuing education by the due date.

Each state sets its own renewal cycle.

A producer who misses the deadline and lets the license lapse may be able to reinstate it without retaking the examination.

Continuing education

Notice of change of name or address

Under the NAIC’s model act, the licensee reports a change of address to the regulator within 30 days of the change.

Company regulations

Capital and surplus requirement

Duties of the Maryland Insurance Commissioner

The Commissioner oversees the department’s efforts to regulate the state’s insurance companies and producers and to investigate consumer complaints about insurance coverage.

The Commissioner is responsible for establishing and enforcing regulations in the Maryland insurance market in a manner that protects consumers and encourages economic development.

Those duties include:

Investigate all claims and complaints of legal violations relating to insurance.
If the Commissioner finds that laws have been violated, the findings and supporting documents may be referred for criminal prosecution.
Monitor transactions of all companies including domestic, foreign, and alien insurance companies.
Examine the financial condition of insurers; the NAIC’s model examination law calls for every insurer to be examined at least once every five years.
Audit the books and records of any resident producer as frequently as necessary. In Maryland, the Commissioner may examine an insurance producer’s accounts, records, documents and transactions whenever that is advisable to determine compliance with the insurance law (Md. Code, Ins. § 2-206(1)).
Collect all fees associated with producers and insurers.
Determine and administer fines associated with violations for insurers and producers.
Issue reports pertaining to the suspension and revocation of licenses of producers and certificates of authority for insurers.
Approve documentation used by insurance companies such as forms and rates.

Sidenote

Know this...

Suspend, revoke or non-renew

The Commissioner has the authority to suspend, revoke, or refuse to renew a license for:

Providing false information on the application for an insurance license.
Omitting any relevant information on an application that would have disqualified the individual from being eligible to receive a license. Under the NAIC’s model act, the ground is broader: providing incorrect, misleading, incomplete or materially untrue information in the license application.
Having willfully violated Maryland’s insurance laws, or willfully failed to comply with or violated a proper order, subpoena or regulation of the Commissioner (Md. Code, Ins. § 10-126(a)(1), (11)).
Committing fraud while attempting to obtain an insurance license.
Improperly withholding, misappropriating or converting any money or property received in the course of doing insurance business.
Providing false information in reference to the terms and conditions of an insurance contract.
Having been convicted by final judgment in any state or federal court of a felony or a crime involving moral turpitude (Md. Code, Ins. § 10-126(a)(8)).
Having admitted or been found to have committed any insurance unfair trade practice or fraud.
Having engaged in activities of a fraudulent nature which allowed the person to involve themselves in dishonest, coercive, untrustworthy, and financially irresponsible practices.
Having had a prior insurance license revoked or suspended in a state other than Maryland. Under the NAIC’s model act, a license denied in another state is also a ground.
Using another person’s identity and forging their name on an insurance application.
Being found guilty of using unethical practices or cheating on an examination for an insurance license.

Cease and desist

Hearing and penalties

Unfair claims settlement practices

Under the NAIC’s model act, these practices are violations when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.

Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss form and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form.
Failing, in the case of claims denials or offers of compromise settlement, to promptly provide a reasonable and accurate explanation of the basis for such actions.
Refusing to pay claims without conducting a reasonable investigation.
Making settlement claims based on information contained on an application that has been altered without the insured’s consent is a violation of regulation.
Denying a claim without conducting a thorough investigation.
Attempting to settle or settling a claim for less than the amount a reasonable person would believe the insured or beneficiary was entitled to by reference to written or printed advertising material accompanying or made part of an application.

Policy forms

Insurers file their policy forms with the Commissioner.

The interest rate an insurer may charge on a life insurance policy loan is also limited by state law.

Record maintenance

A producer keeps records of each transaction (the policies placed, the insureds, the premiums received and any changes) and makes them available for the Commissioner’s inspection.

Fraudulent producer representation

A producer found guilty of conducting business in Maryland in any line of insurance for which they are not properly licensed may have any other insurance license suspended or revoked.

Misrepresentation

Misrepresentation involving the creation or distribution of policies, quotes, and illustrations designed to provide inaccurate information about the terms and conditions of a policy is prohibited. Under the NAIC’s model act, any estimate, illustration or statement that misrepresents a policy’s benefits, advantages, conditions or terms is an unfair trade practice when committed flagrantly and in conscious disregard of the law, or often enough to indicate a general business practice.
Providing inaccurate or incomplete information or comparisons regarding the benefits of a policy is an example of misrepresentation.
Providing inaccurate or incomplete information for the purpose of inducing, or tending to induce, the lapse, exchange, conversion, forfeiture, or surrender of a policy is a violation as well (under the NAIC’s model act, twisting).

False advertising

Defamation

Boycott, coercion and intimidation

False financial statements

Illegal inducements

Unfair discrimination

Unfair discrimination is treating people or risks that present the same hazard differently. The NAIC’s model act, on which state unfair trade practices laws are based, prohibits:

Unfair discrimination between individuals of the same class and equal expectation of life in life insurance and annuity rates, dividends, benefits or terms
Unfair discrimination between individuals of the same class and essentially the same hazard in health insurance premiums, benefits or terms
Refusing, limiting or canceling coverage because of a person’s sex, marital status, race, religion or national origin
In property and casualty insurance, refusing or limiting coverage solely because of a risk’s geographic location, unless sound underwriting and actuarial principles justify it, or solely because the applicant or insured is physically or mentally impaired

Many states also expressly forbid refusing or limiting coverage solely because a person is blind or partially blind.

Errors & omissions

Rebating

Maryland licensed producers are prohibited from directly or indirectly giving any refund, discount, favor, or credit to reduce premiums to induce the purchase of insurance.

Sidenote

Know this...

To “solicit” or “negotiate” insurance implies that the person is licensed.

Sharing commission

Twisting

Unfair marketing practices

Any statement or implication that policies are approved, or that the financial condition of a company is endorsed, by any government agency or by any independent group, individual, organization or society, unless that is the fact.
Any statements regarding advertising that are false or untrue in reference to the time frame in which claims are paid.

Gramm-Leach Bliley Act (GLBA)

McCarran-Ferguson Act

National Association of Insurance Commissioners (NAIC)

Fair Credit Reporting Act

When an insurer requests an investigative consumer report, it must disclose that to the consumer within 3 days of the request
When an insurer takes adverse action based on a consumer report, it must notify the consumer and identify the reporting agency. The consumer then has 60 days to request a free copy of the report and may dispute inaccurate information

Privacy Act of 1974

Telemarketing

May be made only between 8 a.m. and 9 p.m. in the recipient’s local time under federal rules; Maryland’s own law is narrower, barring telephone solicitations, including automated or recorded calls, between 8 p.m. and 8 a.m. in the called party’s time zone (Md. Code, Com. Law § 14-4502(c)(1))
Must give the caller’s name, the name of the company the call is made for, and a telephone number or address at which that company can be contacted

CAN-SPAM

A commercial email must:

Be identified clearly as an advertisement
Carry accurate header information and a subject line that is not deceptive
Include the sender’s valid physical postal address
Offer a way to opt out, and the sender must honor an opt-out within 10 business days

Licensing

Minimum age 18, must be Maryland resident before applying
Applies to resident producer license applicants

Pre-licensing course and exam

No mandatory pre-licensing course as of Oct 1, 2024 (MIA Bulletin 24-19)
Must still pass licensing exam for line of authority

Fingerprints/background check

Commissioner reviews background before licensing
Many states require fingerprints for state/FBI criminal history check

Controlled business

Insurance on producer’s own life/property/family/employer/controlled business
States restrict licenses used principally to write controlled business

Non-resident license

Based on NAIC Producer Licensing Model Act
Requires: current resident license in good standing, application/fees paid, reciprocity from home state
Address change: file within 30 days
Moving to new state: apply for resident license within 90 days; no repeat of prelicensing/exam for held lines

Temporary license

Issued without exam to keep business serviced (e.g., producer’s death/disability, military deployment)
May require licensed sponsor
NAIC model: max 180 days; Maryland: expires 15 months after effective date

Military service

Waiver available for renewal requirements/exam/fines due to military service or extenuating circumstances (e.g., long-term disability)

Renewal and reinstatement

License requires timely fee payment + continuing education
Each state sets own renewal cycle
NAIC model: reinstatement within 12 months of due date, penalty = double unpaid fee
After window closes, must requalify as new applicant

Continuing education

Required in all states, including Maryland, for renewal of major lines
Hours set by state law/insurance department

Notice of change of name or address

Report address change within 30 days (NAIC model)
Report administrative actions/criminal prosecutions within 30 days of final disposition/pretrial hearing
Must notify regulator before using any name other than legal name

Company regulations

Insurer needs certificate of authority from Commissioner
Must file charter/articles, financial statements, meet capital/surplus requirements

Capital and surplus requirement

Certificate valid only if minimum capital/surplus maintained
Maryland: Commissioner must refuse/suspend/revoke for deficiency; penalty $100–$125,000 per violation (Md. Code, Ins. § 4-113)

Duties of the Maryland Insurance Commissioner

Heads Maryland Insurance Administration (independent agency, est. 1993)
Investigates complaints/violations, may refer for criminal prosecution
Examines insurer finances (NAIC model: every 5 years)
Audits producer records as needed
Collects fees, administers fines, approves forms/rates
Cannot arrest, issue injunctions, or sentence jail time (requires law officer/court)

Suspend, revoke or non-renew

Grounds include: false application info, willful law violations, fraud, misappropriation, felony/moral turpitude conviction, unfair trade practices, forged applications, cheating on exam, prior license revocation elsewhere

Cease and desist

Ordered for law violations
Does not suspend/revoke license; requires stopping specific activity

Hearing and penalties

Entitled to notice + hearing opportunity; court review of final order
Maryland: 10 days’ notice; demand for hearing can stay order (exceptions: post-hearing orders, emergency orders, insurer impairment)
Unfair trade practices: hearing occurs before cease and desist order
Civil penalties possible in addition to license action
Maryland: $100–$5,000 per violation for producers (Md. Code, Ins. § 10-126(c))

Unfair claims settlement practices

Violations when flagrant/frequent business practice
Includes: delaying payment/investigation, failing to explain denials or offers, denying without investigation, using altered application info, settling for less than the application’s advertising material led the insured to expect

Policy forms

Insurers file forms with Commissioner
May require prior approval or allow “file and use”
Maryland: life/health forms filed 60 days before use, deemed approved unless acted on (+30 day extension possible)
Conflicting provisions read as amended to match law
Policy loan interest rates limited by state law

Record maintenance

Producers must keep transaction records (policies, insureds, premiums, changes)
Available for Commissioner’s inspection

Fraudulent producer representation

Illegal to claim licensure without passing exam
Applies to all public communications (ads, cards, letterhead)
Can result in suspension/revocation of other licenses

Misrepresentation

Prohibited: inaccurate policy illustrations/quotes
Prohibited: incomplete/inaccurate benefit comparisons
Prohibited: inducing lapse/surrender via false info (twisting)

False advertising

Untrue, deceptive, or misleading statements prohibited (NAIC model)
Applies across all media types
NAIC model: unfair if flagrant and in conscious disregard of the law, or a general business practice

Defamation

False/malicious statements about insurer’s financial condition prohibited
Must be calculated to injure insurer or industry member
Example: spreading false rumors of insurer failure

Boycott, coercion and intimidation

Prohibited: concerted acts causing unreasonable restraint/monopoly in insurance business

False financial statements

Maryland: knowingly/willfully making false statements on insurance applications is fraudulent act (§ 27-406(1))

Illegal inducements

Offering unlisted value to induce purchase prohibited unless expressly allowed
NAIC model allows reasonable non-cash gifts/meals/donations (not conditioned on purchase)
Maryland limit: $50 cap on promotional items/materials

Unfair discrimination

Prohibited: differing treatment of same-class/equal-risk individuals
Prohibited: discrimination based on sex, marital status, race, religion, national origin
Property/casualty: cannot deny solely for geographic location (unless justified) or physical/mental impairment
Many states also protect blind/partially blind individuals

Errors & omissions

Professional liability insurance for producers
Covers negligence/unintentional mistakes causing client financial harm
Does NOT cover intentional misconduct, crimes, or regulatory fines

Rebating

Maryland prohibits giving refunds/discounts/credits to induce insurance purchase
Soliciting/negotiating insurance implies licensure

Sharing commission

Allowed between licensed producers in same line of business
NAIC model also allows payment to agencies or non-selling persons

Twisting

Misrepresentation inducing policy lapse/surrender/exchange
Maryland statute covers misleading comparisons to induce policy changes (§ 27-213)
Distinct from defamation (§ 27-204) and financial misrepresentation (§ 27-202(3))

Unfair marketing practices

Insurance Administration sets disclosure/standardization requirements
Prohibited: false claims of government/organization endorsement
Prohibited: false statements about claims payment timeframes

Gramm-Leach Bliley Act (GLBA)

Repealed key parts of Glass-Steagall Act (1933)
Allows merging of banks, investment firms, insurers
Establishes federal/state regulatory framework for combined entities

McCarran-Ferguson Act

1945 law: insurance regulated at state level
Grants limited antitrust exemption to insurers
Since 2021: exemption excludes health insurance (except narrow data-sharing activities)

National Association of Insurance Commissioners (NAIC)

Standard-setting body governed by state insurance regulators (50 states, DC, 5 territories)
Establishes standards, conducts peer review, coordinates oversight
Forms backbone of national state-based insurance regulation system

Fair Credit Reporting Act

Regulates consumer reporting agencies/reports used in underwriting
Investigative report requests: disclose to consumer within 3 days
Adverse action: must notify consumer + identify agency; consumer has 60 days for free report; may also dispute errors

Privacy Act of 1974

Governs federal agencies’ handling of personal info only; not private insurers
Insurer privacy governed by FCRA, GLBA, state law
NAIC model: authorization valid max 30 months (life/health/disability) or 1 year (property/casualty)

Telemarketing

National Do Not Call Registry restricts unsolicited calls
Federal hours: 8 a.m.–9 p.m. local time
Maryland hours: no calls 8 p.m.–8 a.m. (stricter, includes automated calls)
Must disclose caller’s name, the company the call is made for, and a number or address for it

CAN-SPAM

Commercial emails must be clearly labeled as ads
Accurate headers/subject lines required
Must include sender’s physical postal address
Opt-out must be honored within 10 business days