Title 31
MARYLAND INSURANCE ADMINISTRATION

Subtitle 03 AGENTS, BROKERS, AND OTHER INSURANCE PROFESSIONALS

31.03.06 Surplus Lines

Authority: Insurance Article, §§2-109, 3-304, and 3-308,
Annotated Code of Maryland 

On May 9, 2001, the Insurance Commissioner adopted new Regulation .09 under COMAR 31.03.06 Surplus Lines. This action, which was proposed for adoption in 27:10 Md. R. 1001 — 1002 (May 19, 2000), has been adopted.

Effective Date: June 11, 2001

.09 Disclosure Form.

A.       Printing Specifications; Provision of Form to Insured. The written disclosure required by Insurance Article, §3-308, Annotated Code of Maryland, shall be:

(1) In the form  set forth in  §B of this regulation in at least 14-point type;

(2) On a separate piece of paper that:

(a) Contains only the disclosure; and

(b) Is attached to the insurance contract or binder; and

(3) Provided to the insured at the time of the initial purchase or delivery of an insurance contract or binder from a surplus lines insurer and at each renewal of the insurance contract.

B. Form.
DISCLOSURE REGARDING SURPLUS LINES INSURANCE

Please Read the Following Carefully Before Purchasing Insurance From a Surplus Lines Insurer.

This policy is issued by a surplus lines insurer that has been approved by the Maryland Insurance Administration to issue insurance policies in the surplus lines insurance market.  Surplus lines insurers are not under the jurisdiction of the Maryland Insurance Administration and do not possess a certificate of authority to transact insurance business in the State of Maryland. Because surplus lines insurers are not under the jurisdiction of the Maryland Insurance Administration, your ability to seek assistance from the State if you have a problem with your insurance company is limited.

The Property and Casualty Insurance Guaranty Corporation provides a fund that permits claimants or policyholders to receive payment of covered claims if their insurance company becomes insolvent (i.e., bankrupt) and is unable to pay the claims. However, this fund does not apply to surplus lines insurers. If  a surplus lines insurer becomes insolvent (i.e. bankrupt), any claim that you have against the surplus lines insurer will not be covered by the fund administered by the Property and Casualty Insurance Guaranty Corporation.

If you have any questions regarding this disclosure or surplus lines insurance, please contact the Maryland Insurance Administration at 410-468-2340.

C. Signature of Insured on Disclosure Form for Policies Covering Residential Property.

(1)     This section applies only to the written disclosure form for an insurance policy covering residential property.

(2)     In this section, “residential property” means a home, townhouse, condominium, or other habitable structure that is used principally as a residence.

(3)     In addition to the text required by  §B of this regulation, the disclosure form for an insurance policy covering residential property shall include blanks for the insureds signature, the insured’s printed name, and the execution date.

(4)     Whenever residential property insurance is placed or renewed with a surplus lines insurer, the originating agent or broker shall obtain the signature of the insured, the insured's printed name, and the execution date on the disclosure form.

(5)     On execution, the originating agent or broker shall:

(a)     Send the original copy of the disclosure form to the surplus lines broker;

(b)    Provide a copy of the disclosure form to the insured; and

(c)     Keep a copy of the disclosure form in the files of the originating agent or broker for at least 3 years after the date of execution by the insured.

(6)      The Surplus Lines Broker shall:

(a)     Retain the original copy of the disclosure form for at least 3 years after the date of execution by the insured; and

(b)    Make the disclosure form available for inspection by the Commissioner on request.

D. Disclosure Form Requirements for Policies Not Covering Residential Property.

(1)     This section applies only to a written disclosure form for an insurance policy that does not cover residential property.

(2)     The surplus lines broker or the originating agent or broker shall provide the insured with the written disclosure required by §B of this regulation in the manner specified by §A of this regulation.

(3)     The surplus lines broker or the originating agent or broker shall:

(a)     Certify on a form approved by the Commissioner that the disclosure notice required by this regulation has been delivered to the insured with the insurance policy or binder; or

(b)    Obtain from the insured written acknowledgment of receipt of the disclosure form.

(4)  If the surplus lines broker or the originating agent or broker obtains written acknowledgement of receipt of the disclosure form, the surplus lines broker or the originating agent or broker shall:

(a)     Retain for at least 3 years a copy of the written acknowledgment of receipt from the insured; and

(b)   Make the acknowledgment available for inspection by the Commissioner on request.