HARRY HUGHES, Governor

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because of the termination of the agent's... contract." Both
administrative and judicial remedies are available to
enforce these safeguards.

In spite of these protections, House Bill 1037, in the
name of the agent and consumer protection, would operate so
as to enable a multi-company agent to conscientiously carry
out a three year campaign "to dump" high-risk,
non-profitable business into one of his companies in order
to improve his financial and profit sharing picture with his
other companies; indeed, he could manipulate his mix and
volume of business indefinitely under this bill.2/ Clearly,
legislation which would authorize such behavior would enduce
insurers:

(1)  To increase, at the expense of their premium
paying policyholders, their in-house underwriting
staff in order to monitor the first level
underwriting decisions of their agents;

(2)  To curtail or modify, to the detriment of the
insurance consuming public, their agents' binding
authority; and

(3)  To the detriment of independent agents and the
public which benefits from the strength of their
numbers, to rely more and more upon company
employees and less and less upon independent
agents in the writing of their insurance.

Accordingly, against the background of the protections
which Maryland law currently furnishes both independent
agents and their clients and recognizing the degree of
competition which the insurance marketplace requires in
order to better serve its consumers, it seems clear to me
that House Bill 1037 would be counterproductive.

In addition, since both annuity and wet marine
insurance is commonly written through brokers, House Bill
1037, in moving certain exceptions from present subsection
(b) to what would have been new subsection (h), would have
inadvertently but nevertheless effectively repealed
requirements which other subsections of Section 234B
presently place upon such insurers. Certainly the
Legislature did not intend this result; thus, this
consequence alone is sufficient reason for preventing this
measure from becoming law.

For these reasons, I have decided to veto House Bill
1037.

Sincerely,
Harry Hughes
Governor