MARYLAND INSURANCE ADMINISTRATION

ORIGIN & FUNCTIONS

[photo, St. Paul Plaza, 200 St. Paul Place, Baltimore, Maryland]

In 1872, the Maryland Insurance Administration began when the General Assembly authorized the Insurance Department under the Comptroller of the Treasury (Chapter 388, Acts of 1872). Renamed the State Insurance Department, it became an independent agency in 1878 (Chapter 106, Acts of 1878). As the Insurance Division, it moved to the Department of Licensing and Regulation in 1970 (Chapter 402, Acts of 1970). It was reorganized as the Maryland Insurance Administration, an independent agency, in 1993 (Chapter 538, Acts of 1993).

St. Paul Plaza, 200 St. Paul Place, Baltimore, Maryland, January 2001. Photo by Diane F. Evartt.

The Administration licenses and regulates insurers, insurance agents, and brokers who conduct business in the State, and monitors the financial solvency of licensed insurers. The Administration also is responsible for collecting taxes levied on all premiums collected by insurance companies within Maryland.

Periodically, the Maryland Insurance Administration examines all companies organized under the laws of Maryland, and scrutinizes nonresident companies doing business in the State. The Administration also investigates consumer complaints and questions concerning insurance companies operating in Maryland, and resolves insurance appeals and grievances about coverage decisions or claims denials.

The Administration is a specially funded State agency supported entirely through fees and assessments on the insurance industry. In lieu of a State income tax on insurance company profits, the Administration collects a 2 percent tax on premiums. Up to 60 percent of the Administration's annual appropriation is funded by assessments on the insurance industry. The remainder comes from fees.

Two separate funds support activities of the Administration: the Insurance Regulation Fund, and the Health Care Regulatory Fund. The Insurance Regulation Fund supports the administrative and regulatory activities of the Administration (Code Insurance Article, sec. 2-505). The Health Care Regulatory Fund funds the costs of compalint investigations about payment denials involving medical necessity (Code Insurance Article, sec. 2-112.3).

While the Administration does not receive money from the State General Fund, it does contribute to it. In FY2019, the Administration contributed $540,512,181 to the General Fund; $192,357,065 to the Maryland Health Care Rate Stabilization Fund; and $16,322,924 to the State Insurance Regulation Fund.

MARYLAND INSURANCE COMMISSIONER

The Maryland Insurance Administration is directed by the Maryland Insurance Commissioner who ensures that all insurance laws of the State are faithfully executed, and counsels and advises the Governor on all matters assigned to the Administration. The Commissioner authorizes and licenses insurance companies, producers, adjusters, and advisors for fire, casualty, life, accident, health, title, bail bonds and other insurance and annuities. Further, the Commissioner approves all insurance policies offered for sale in Maryland by authorized companies, authorizes rating bureaus and advisory organizations, and approves or rejects the rates for most lines of insurance (Code Insurance Article, secs. 2-101 through 2-507).

The Maryland Insurance Commissioner serves on the Board of Trustees of the Maryland Health Benefit Exchange, the Task Force to Study Cooperative Purchasing for Health Insurance; the Maryland Health Insurance Coverage Protection Commission; and the Interstate Insurance Product Regulation Commission.

Appointed by the Governor with Senate advice and consent, the Commissioner serves a four-year term. Subject to the Governor's approval, the Commissioner appoints the Deputy Commissioner (Code Insurance Article, secs. 2-103, 2-104).

Under the Commissioner, the Administration is organized into seven divisions: Chief Actuary; Financial Regulation; Insurance Fraud and Producer Enforcement; Life and Health; Market Regulation and Professional Licensing; Operations and Technology; and Property and Casualty.

OPERATIONS & TECHNOLOGY

In 2001, Operations and Technology originated as Administrative Services and reformed as Administration. Although abolished in 2009, it reorganized as Administration in 2011, and as Operations and Technology in July 2021.

Operations and Technology oversees five functions: Fiscal Services, Human Resources, Management Information Systems, Procurement, and Records Management.

HUMAN RESOURCES
Human Resources started as Professional and Consumer Services and adopted its present name in 2000. The office conducts administrative services, including personnel management, training, and facility support services.

MANAGEMENT INFORMATION SYSTEMS

RECORDS MANAGEMENT
Since October 1, 2017, the Maryland Insurance Administration has had a program for the continual, economical and efficient management of its records. The Administration's Records Officer develops and oversees the program, and serves as liaison to the Records Management Division of the Department of General Services, and to the State Archives (Chapter 539, Acts of 2017; Code State Government Article, secs. 10-608 through 10-611).

OFFICE OF CHIEF ACTUARY

Annually, the Office values and certifies the reserves held by life insurance companies in Maryland to pay future benefits. Further, the Office reviews rate requests and their supporting data to determine compliance with Maryland laws and regulations that govern health insurance. Industry trends also are tracked and analyzed by the Office.

CONSUMER EDUCATION & ADVOCACY UNIT

Origins of the Consumer Education and Advocacy Unit trace to September 1997, when the Inquiry and Investigation units of the Life and Health Section and the Property and Casualty Section merged to form the Consumer Complaint Investigation Section. The Section became the Consumer Education and Advocacy Section in September 2004, and reformed as the Consumer Education and Advocacy Unit in July 2021.

The Unit investigates and resolves complaints made by insurance policyholders, claimants, beneficiaries, and providers of health care. For consumers, it provides information about their insurance coverage, and helps them understand their rights and responsibilities under their insurance policies.

FINANCIAL REGULATION DIVISION

Functions of the Financial Regulation Division started with the Bureaus of Auditing and Examination in the State Insurance Department. From 1960 to 1970, these responsibilities were consolidated into the Examination and Auditing Bureau of the State Insurance Department. Under the Insurance Division of the Department of Licensing and Regulation, the Bureau reformed in 1970, as the Examination and Auditing Section. In 1985, the Section reorganized as Examination and Licensing, and in 1990 was placed under Operations, resuming its previous name of Examination and Auditing Section. When the Maryland Insurance Administration formed in 1993, the Section was made part of the Administration. In July 2021, the Examination and Auditing Section reorganized as the Financial Regulation Division.

The Division licenses all insurance companies conducting business in Maryland. It conducts financial analyses and examinations of licensed insurers as often as the Commissioner deems advisable, but at least every five years. In addition, the Division performs audits of the insurers' annual statements, and their quarterly and annual premium tax reports.

Under the Division are Company Licensing, Financial Analysis, and Financial Examination.

INSURANCE FRAUD & PRODUCER ENFORCEMENT DIVISION

In 1992, functions of the Insurance Fraud and Producer Enforcement Division began when the Insurance Fraud Division was established by the Governor as a unit within the Department of Licensing and Regulation (Executive Order 01.01.1992.24). The unit transferred to the Office of the Governor in 1993 (Chapter 538, Acts of 1993; Executive Order 01.01.1994.16). In July 1995, the Division joined the Maryland Insurance Administration, and adopted its present name in July 2021.

Cooperating with the Department of State Police and the Office of Attorney General, the Division investigates and prosecutes individuals and companies who commit insurance fraud. In addition, the Division reviews anti-fraud plans and annual fraud statistics submitted by insurance companies.

Under the Division are two units: Civil Insurance Fraud and Producer Enforcement, and Criminal Insurance Fraud.

CIVIL INSURANCE FRAUD & PRODUCER ENFORCEMENT UNIT
The Civil Insurance Fraud and Producer Enforcement Unit started as the Civil Investigations Unit, and adopted its present name in March 2021.

Allegations of insurance fraud and of misconduct made against licensed insurance producers are investigated by the Unit, which also conducts background checks on persons applying to become licensed insurance producers. By enforcing Maryland laws, rules, and regulations, the Unit works to ensure that licensed insurance producers conduct business within legal mandates. Upon establishing clear and convincing evidence that insurance fraud has been committed, civil charges can be filed. With regard to the enforcement of laws, rules, and regulations governing licensed producers, administrative action can be taken based upon a preponderance of evidence that violations have occurred.

CRIMINAL INSURANCE FRAUD UNIT
Originally formed as the Criminal Investigations Unit, the Criminal Insurance Fraud Unit adopted its present name in March 2021.

The Unit investigates allegations of insurance fraud. Working closely with the Office of the Attorney General and the State's Attorneys in Maryland, the Unit seeks to protect Maryland consumers from the costly effects of insurance fraud by enforcing insurance fraud laws. Upon establishing probable cause that insurance fraud has been committed, criminal charges may be filed.

LIFE & HEALTH DIVISION

The Life and Health Division reviews the life, health and dental insurance policies used by Maryland insurance providers. Each annuity contract used in Maryland is reviewed by the Division, as is each health maintenance organization (HMO) subscriber and provider contract used in Maryland. To ensure that premium rates are not excessive, inadequate, or discriminatory, the Division also reviews initial rate filings by insurers.

Four units work under the Division: Appeals and Grievances; Health Insurance and Managed Care; Life and Health Complaints;and Rates and Forms Review.

MARKET REGULATION & PROFESSIONAL LICENSING DIVISION

In August 2002, the Market Regulation and Professional Licensing Division originated when the Agent Enforcement and Market Conduct Examination unit of the Life and Health Section merged with the Agent Enforcement and Market Conduct Examination unit of the Property and Casualty Section to form the Compliance and Enforcement Section. In July 2021, the Compliance and Enforcement Section reorganized as the Market Regulation and Professional Licensing Division.

The Market Regulation and Professional Licensing Division regulates insurance companies, insurance producers, title agents, public adjusters, and issuers of bail bonds in Maryland. The Division conducts general and target market-conduct examinations, which include a review of sales practices, advertising and materials, underwriting practices, and claims handling practices. Moreover, it investigates insurance producers and other unauthorized entities for compliance with insurance laws and regulations

The Division oversees five units: Life and Health Market Conduct Examinations; Market Analysis; Producer Licensing; Property and Casualty Market Conduct Examinations; and Title Enforcement and Market Conduct.

PRODUCER LICENSING
Within the Maryland Insurance Administration, Producer Licensing had organized as Company Licensing under the Examination and Auditing Section by 1996. It reformed as Licensing in 1997, and became the Producer Licensing Section in July 2001. As Producer Licensing, it transferred as a unit to Administration in September 2012 and to the Compliance and Enforcement Section (now Market Regulation & Professional Licensing Division) in December 2014.

Producer Licensing licenses insurance producers and other professionals, including bail bondsmen. It conducts background investigations of applicants for agent and broker certificates of qualification. Similarly, it conducts such investigations of officers, directors, and major stockholders of insurance companies licensed in Maryland. Further, the unit verifies that agents and brokers meet continuing education requirements, and it reviews and approves such continuing education courses.

For Maryland residents applying for licenses in other states, this unit issues letters of certification or clearance.

PROPERTY & CASUALTY DIVISION

For property, casualty, surety, mortgage guaranty and title insurance used in Maryland, the Property and Casualty Division reviews policy forms. To ensure the fairness of premium rates, the Division also reviews rate filings. In addition, the Division reviews nonfinancial activities of property and casualty insurers

The Division oversees two units: Complaints, and Rates and Forms.

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