Certificate As An Exempt
Commercial Policyholder
The 1999 Maryland legislature enacted
SB598 which exempts insurers from the
form filing requirements under Section 11-206 of the Insurance Article provided
the applicant/policyholder falls within the definition of “Exempt Commercial
Policyholder” as set forth within the statute. In
order to take advantage of
this exemption from form filing requirements, the insurer must obtain a written
certification that its applicant/policyholder meets all the criteria necessary
to qualify as an Exempt Commercial Policyholder as set forth under
Section 11-206 (J) of the Insurance Article. This
new law went into effect
on October 1, 2000.
The Maryland Insurance Administration
(“MIA”) offers the following advice and
guidance to agents, brokers and insurers that wish to take advantage of this new
legislation:
1.
SB598 places the
responsibility for certification of eligibility as an Exempt
Commercial Policyholder solely upon the applicant/policyholder. Before an
insurer issues non-filed policies or endorsements to an Exempt Commercial
Policyholder, the applicant/policyholder must properly certify to the insurer
in writing that it meets the criteria necessary for exemption from form filing
requirements.
2.
The form used for
certification of eligibility by an applicant/ policyholder
must be filed with and approved by the MIA before it can be used by an
insurer. A sample certification form is
attached to this Bulletin and will
be approved by the MIA if properly filed by the insurer.
3.
In the event that
an Exempt Commercial Policyholder has insurance policies
with multiple insurers, a properly signed certification of eligibility form shall
be maintained by each insurer that issues insurance coverage to the
policyholder under non-filed forms.
4.
Insurers are
responsible for maintaining either the original signed certification
of eligibility or a copy of that form. This
certification of eligibility form should
be maintained by the insurer for a period of
three (3) years from the expiration
of the particular policy.
5.
Agents or brokers will not be required to maintain a copy of the signed
certification of eligibility but may elect to
do so at their option.
unless the MIA specifically requests submission
of such form in writing.
7.
Exempt Commercial
Policyholders are required to assert on the certification of
the eligibility that annual aggregate property
and casualty premiums for all
commercial insurance policies issued to the
policyholder in the state of
Maryland during the current calendar year or
preceding calendar year equals or
exceeds $75,000.
8.
The relevant
statutory definitions for property and casualty insurance are
found in §1-101(k) and (ee) of the Maryland
Insurance Article.
9.
Workers’
Compensation policy forms remain subject to prior approval with no
change in filing requirements.
10.
Recertifications of eligibility are
required annually to assure that the
policyholder continues to meet the
eligibility requirements for an Exempt
Commercial Policy under Section 11-206(J) of
the Insurance Article.
11.
Recertifications of eligibility are
required whenever an applicant/policyholder
changes insurers.
12.
The MIA, during a market conduct
examination, may review all insurance policy
forms issued and delivered to Exempt Commercial
Policyholders by an insurer to
determine compliance with applicable Maryland
statutes and regulations.
13.
The MIA, upon written request to an
insurer, may require the insurer to file
any forms or endorsements issued to an
Exempt Commercial Policyholder.
14.
Insurers must comply with all other applicable Maryland
laws and regulations
in the issuance and delivery of insurance
policies to Exempt Commercial
Policyholders. Failure to properly comply will result in
appropriate regulatory
action by the MIA.
If you have any
questions about this Bulletin, contact Dave Diehl, Chief Administrator,
by telephone at (410) 468-2320 or by E-mail at ddiehl@mia.state.md.us