MARYLAND INSURANCE ADMINISTRATION

ORIGIN & FUNCTIONS


[photo, St. Paul Plaza, 200 St. Paul Place, Baltimore, Maryland] The Maryland Insurance Administration began in 1872 as 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.


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 FY2011, the Administration contributed $288,414,313 to the General Fund (an increase of $9 million from FY2010) and $25.9 million in Special Fund revenue (an increase of $88,000 from FY2010). Additionally, under the federal Patient Protection and Affordable Care Act, the Administration received a $1 million federal grant on August 3, 2010. The grant is used to implement provisions of the federal act, and enhance the rate-review process for health insurers operating in Maryland.


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 Virginia I. Jones Alzheimer's Disease and Related Disorders Council, the Board of Trustees of the Maryland Health Benefit Exchange, 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 sections: Administration; Compliance and Enforcement; Consumer Education and Advocacy; Examination and Auditing; Insurance Fraud Division; Life and Health; and Property and Casualty.


ADMINISTRATION

In 2001, Administration originated as Administrative Services and reformed as Administration. Although abolished in 2009, it reorganized under its present name in 2011.

Administration oversees three units: Fiscal Services, Human Resources, and Management Information Systems.

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


COMPLIANCE & ENFORCEMENT SECTION

In August 2002, the Compliance and Enforcement Section formed 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.

The Compliance and Enforcement Section regulates insurance companies, insurance producers, title agents, public adjusters, and issuers of bail bonds in Maryland. The Section 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 Section oversees six units: Agent Enforcement; 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 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.


CONSUMER EDUCATION & ADVOCACY SECTION

Origins of the Consumer Education and Advocacy Section 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 received its present name in September 2004.

The Section 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 responsiblities under their insurance policies.


EXAMINATION & AUDITING SECTION

Functions of the Examination and Auditing Section originated 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 and returned to its previous name as the Examination and Auditing Section. When the Maryland Insurance Administration formed in 1993, the Section was made part of the Administration.

The Section 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 Section performs audits of the insurers' annual statements, and their quarterly and annual premium tax reports.

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


INSURANCE FRAUD DIVISION

In 1992, 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 unit joined the Maryland Insurance Administration.

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 Investigations, and Criminal Investigations.


LIFE & HEALTH SECTION

The Life and Health Section reviews the life, health and dental insurance policies used by Maryland insurance providers. Each annuity contract used in Maryland is reviewed by the Section, 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 Section also reviews initial rate filings by insurers.

Four units work under the Section: Appeals and Grievances; Life and Health Complaints; Medical Director and Private Review Agent Oversight; and Rates and Forms Review.


PROPERTY & CASUALTY SECTION

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

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

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